Everledger CEO Leanne Kemp has founded four startups since 1996, and taken the same lesson from running each of them. “There’s really one thing that you learn, and that is timing,” she says. “The appropriate timing to make the right decisions to build a product or to enter into a particular market, the timing on when to create components of the team and the building blocks of the business.” In 2015, Kemp thought the timing was right to found Everledger, a company that uses blockchain technology to track the provenance of diamonds and other high-value products. The startup, headquartered in London, now has 70 employees across six countries. Last March, it completed a $10.4 million funding round.
BREAKERMAG recently spoke to Kemp about why Everledger doesn’t consider itself a blockchain company, how it ensures the pricey bottle of wine you’re about to drink isn’t counterfeit, and what motivated her to live in a converted train.
I read that you started thinking about diamond supply chains while watching the Leonardo DiCaprio movie Blood Diamond.
I’m not sure that if you’ve read that correctly, but I do remember watching Blood Diamond, which confronts real world problems that you don’t often experience when you’re living in a First World nation like Australia. But my first exposure to diamonds was in 2003, when I became involved with the diamond and jewelry business. That was really my first understanding of the supply chain and how participants within the industry were interacting in terms of larger-scale issues, like sustainability and ethical trade.
You’ve said that at Everledger, “we don’t even see ourselves as a blockchain company.” Then how would you define it?
We’re building a platform of provenance to enable traceability for supply chains. So we are an enterprise software platform. When I talk about us not seeing ourselves as a blockchain company, it’s because the wholeness of our proposition is not around building the core infrastructure of blockchain. We utilize blockchain in this very specific way, to provide transparency to gems, metals, and minerals in the world. We are building on top of the infrastructure of blockchain to provide for a service within industry.
The Kimberley Process, a system of cross-border certification for diamonds, was introduced in 2003. How does Everledger’s technology improve on that?
Firstly, the Kimberley Process is paper-based. And we have seen and continue to see issues around fraud, where people will duplicate or document-tamper certification, and there’s no global cross-registry to enable the validation of those certificates that are in a paper format easily. Everledger provides a digital-reconciliation mechanism. If a certificate is created in Country One, that data exists on a global ledger, so that Country Two is able to access real-time validation and reconciliation of those certificates.
What methods does Everledger use to track a diamond from the mine?
We recognize that a diamond is unique by its very nature and has a PUF, a physical unclonable feature. Diamonds are extracted out of the ground, and we can go through a series of scientific methods of identity. We also can and have put subsurface laser-engraving on the stone, which is the work that we did with [jewelry group] Chow Tai Fook, so you can effectively brand and serialize the diamond, on top of the physical features of that diamond being made available for industry participants.
It seems like Everledger’s system would be best for reassuring consumers that what they’re purchasing aren’t blood diamonds or fake stones. Is it useful in other ways?
Sure. We have other participants, like banks and insurance companies, that are taking the risk on supply chain, and they want to be sure that the diamond they are financing is real and that the chain of custody has held tight. And then, of course, if a diamond has been lost or stolen, they often make themselves back into the supply chain at some point in time. So identifying the stone’s rightful owner is another use case.
"This is really about a reduction in risk, rather than an elimination of what’s, unfortunately, human nature. We’d have to reprogram all of us on the planet to have black market trade disappear."
There’s reportedly a market for raw and cut conflict diamonds on the dark web. How much do you know about black market?
Personally, I don’t know a lot about that market. It’s not necessarily something that we connect with at Everledger. And even with Everledger and other initiatives around provenance, that black market trade will still exist. It’s not about a zero-sum game. This is really about a reduction in risk, rather than an elimination of what’s, unfortunately, human nature. We’d have to reprogram all of us on the planet to have black market trade disappear.
De Beers, the world’s leading diamond seller by value, has announced its own blockchain platform called Tracr. How does Everledger’s technology differ?
We’re excited that De Beers has recognized the importance of technology that we identified so very early on. We differ from De Beers in many different ways. Firstly, around the scientific methodology that I mentioned. And whilst De Beers has a certain level of value within markets, certainly they’re not the lion’s share of the volume of diamonds across the world. And a lot of their focus has been and remains to be on their own commercial partnerships. Everledger is stretching well beyond that. And we’ve already proven ourselves in markets beyond the diamond industry, like colored gemstones, which Tracr does not provide any solutions for.
To a certain extent, Tracr and Everledger are tackling the same set of challenges and problems. We’re doing that with different forms of technologies. And I’m delighted. It’s fair to say that with the efforts that are being underpinned by De Beers and others and by Everledger, that the diamond industry is legitimately and substantially moving towards a platform of provenance to enable transparency. You’ll see interoperability becoming a really high part of the industry’s focus in 2019. And we are sitting at the same table as De Beers and as the Tracr team in these discussions to ensure that the new operations for the industry are done in a collaborative and aligned and globally acceptable way.
Another area that Everledger has moved into is fine wine. How does that system differ from the one for, say, diamonds?
Wine is definitely very different from diamonds, in that it’s very difficult to be able to taste for authenticity. There’s been some developments in universities around creating technology called an electric tongue, where you’re able to taste for authenticity, but it’s still a very early-stage technology and it’s certainly not scientifically proven. The work that we have undertaken in the wine industry was to identify and be able to combat counterfeit and fraud, which can be in the hundreds of millions of dollars.
We’re using technology called NFC, which is near-field communication. A wafer-thin silicon chip was injected within the labeling itself and as corks or capsules were put on top of the bottle, we were also putting in an inlay. You can interact with that using any mobile phone device; with Android and the new iPhones, you do not need a separate application to know authenticity exists, to understand the story of provenance, and to know that that bottle has not been tampered with.
You’ve also moved into fine art verification. What other asset classes are you considering tracking?
We care about gems, metals, and minerals, so anything that has a traditional element of conflict or some heightened concerns around sustainability and civil society. There’s some interesting work that’s being undertaken involving particular types of rare-earth minerals for the battery supply chain. Cobalt and lithium being two in particular. And then of course, we look at it from a customer-demographic perspective. There was a Twitter post just the other day: “When is Everledger chocolate coming?” I thought that was funny.
I have to ask about your estate in Australia, where you live in the Train Mahal, which is built out of an old railroad train that you bought on eBay. What inspired this unusual living situation?
I was caring for elderly family members and was looking to build a granny flat to care for them in their last moments in time. It would be very easy to call a builder and create an extension to a home, but I’m championing a lot of work that’s happening in the world of sustainability and the circular economy. It was something that I think is important. And the [model] year of the train is the year I was born. So why not? Let’s give it another life.
Photo courtesy Everledger.
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