ID.me started as TroopSwap with the aim of simplifying the process of extending discounts to active duty service members and veterans. As its founders, two former Army Rangers and members of the HBS Class of 2010, implemented their business model they found that they needed an entirely different operating model in order to succeed.
Before TroopSwap, the task of making discounts more attainable had been stymied by the ability of retailers to reliably verify the identities of the target population. To remedy this, TroopSwap developed an application programming interface (API) that served to create a digital ID card for individuals who signed up so that TroopSwap could verify that a customer was entitled to a discount for a participating retailer. While many organizations existed to help military members and veterans, there was no existing operating model that functioned the way TroopSwap did. After gaining traction and recognizing that their operating model could be extended far beyond the world of military discounts, TroopSwap was renamed ID.me in 2013 and expanded its verification services to teachers, students and first responders.[i] The service links an individual’s digital ID card to an e-mail address, similar to the way PayPal connects to a bank account, in order to quickly and accurately verify the user’s identity. As described in a Harvard Business School Alumni Stories Article, “service members and veterans can validate their military service against a government database or a military financial institution catering to nine million military customers through a real-time process.”[ii]
ID.me has become a leader in digital verification services and has raised $19.5 million as of its latest round (Series A) in April 2014.[iii] The Wall Street Journal summarized ID.me’s revenue model as charging “its clients up to $1 per verification. It also makes a commission each time it refers shoppers from its own website to a client’s store online where they complete a purchase.”[iv] The market for this type of verification function is already large and will continue to grow as Americans become even more reliant on the internet in daily life. According to the National Cyber Security Alliance, “concern about identity theft rates slightly higher than fears of job and healthcare loss.”[v] Recognizing that this is really a policy issue as well as a business issue, ID.me has partnered with the National Institute of Standards and Technology’s (NIST) National Strategy for Trusted Identities in Cyberspace (NSTIC) program which has goals of “improving online identity for individuals and organizations, promoting government and commercial adoption of privacy-enhancing, secure, interoperable, and easy to use identity solutions, and driving trust, convenience, and innovation in digital identity.”[vi] Through this partnership ID.me received a $2.8 million grant to continue its mission of improving online identity verification.
ID.me continues to find new applications for its technology, including an important role within a team led by AdHoc to design and run Vets.gov, the “new veterans-centered website that will consolidate all of [the Department of Veterans Affairs]’s existing services in to a single, self-service user experience.”[vii] The company now provides solutions to federal agencies, ecommerce, FinTech, ticketing, travel companies and healthcare and has been responsible for over 12 million API calls to date.[viii] The unique operational technology that ID.me developed has allowed it to greatly expand its business model. In order for its success to continue, I think ID.me needs to become a more well-known brand amongst consumers so that they will begin to recognize the value of doing transactions with organizations using ID.me services and start to demand that others begin to use ID.me. While it will remain a B2B company, I think raising awareness amongst consumers will help fuel its growth.
[i]About ID.me https://wallet.id.me/about
[ii] HBS Alumni Stories HBS Thanking Veterans Online https://www.alumni.hbs.edu/stories/Pages/story-bulletin.aspx?num=1263
[iii] About ID.me https://wallet.id.me/about
[iv] Wall Street Journal ID.me Raises $7.5M to Help Teachers, Veterans Get Deals Safely Online http://blogs.wsj.com/venturecapital/2014/03/19/id-me-raises-7-5m-to-help-teachers-veterans-get-deals-safely-online/
[v] Stop | Think | Connect https://www.stopthinkconnect.org/research-surveys/research-findings