ID.me: Innovation in Digital Identity Verification
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
[vi] NATIONAL STRATEGY FOR TRUSTED IDENTITIES IN CYBERSPACE https://www.nist.gov/itl/nstic
[vii] U.S. Department of Veterans Affairs Awards Vets.gov Contract To Ad Hoc LLC https://www.adhocteam.us/2016/05/03/vets.gov/
[viii] [viii]About ID.me https://wallet.id.me/about
Student comments on ID.me: Innovation in Digital Identity Verification
Sam, excellent article on a platform I’d never heard of before! The opportunities for companies to apply ID.me’s technology are clear in so many different contexts, particularly in today’s expanding sharing economy. From both a business and consumer’s standpoint, it would be so convenient to have all ID verification taken care of through one portal, rather than have to deal with verification on each individual website. I recently had to upload photos of my passport and my driver’s license in order to make a reservation on Airbnb, and having to jump through the same set of hoops for other websites would not only be a pain, but would also a bit unnerving given the sensitivity of sending those documents over the internet.
It’s clear that ID.me has focused its early efforts on military and/or government-related discounts. I imagine that if the company wishes to provide broad-based verification services for a wide array of consumers and businesses, achieving scale across its network will be crucial. To that end, how has the company organized its efforts (strategic and marketing) to grow its user base? Will the company aim for rapid expansion or focus on building up its current platform at a more measured pace?
Great article Sam – ID.me sounds like an extremely interesting platform with a ton of opportunity ahead. Given the clear need for such a service and what appears to be relatively low amount of competition currently, I would also think the company’s churn rate has been essentially zero to date. Secondly, I would think cybersecurity would be a major concern for a company like this, given the extensive dissemination of extensive personal information over the web that it requires. To that end, I’d be curious to hear how the company thinks about cybersecurity and protecting this information, as doing so appears to be key to the company’s value proposition.
Sam – Interesting article, thanks for sharing! It got me thinking what the applications are beyond ID verification for specific groups to broader digital identification for facilitating online transactions. In the long run it seems this could be integrated further into the actual organizations/government bodies that issue different forms of identification (i.e. digital driver’s license, passport, student id, etc). The partnership with NIST seems promising along these lines to eventually make a standardized form of online identification. Going through a standardized approach could better address the identity theft issues more directly than other localized efforts for digital IDs. For example, Colorado recently started a 2-year pilot program for digital driver’s licenses ; however, many localized developments may leave holes for identify theft.
 Sorto, G. Colorado will soon allow digital driver’s licenses. CNN (Nov 16 2016). Accessed from: http://www.cnn.com/2016/11/16/us/digital-drivers-license-trnd/
Thanks for the interesting article Sam! Even though I’ve been on ID.me for almost four years (I just looked back at my old emails and it looks like I originally signed up 2012), I had no idea how far they were looking to potentially take this platform. I’ve used ID.me for military discounts various times over the years, but the ability for a company to be able to quickly and accurately verify the actual identity of an online user would be a very powerful service. As they expand into this new field, one area where I would be worried if I were running ID.me (and I’m sure they are working hard on it) is their service’s security. While it would be inconvenient for a store looking to offer a military discount of 15% to have that discount extended to a broader customer base, it would be potentially catastrophic if the database of all veterans using services on Vets.gov was compromised.