Good morning, everyone, im scott mcgrew. I learned something new on this show every week. This week two things. One, fico, the Company Famous for the fico score does not decide your Credit Rating. Who knew . Fico is head quartered in silicon valley, two blocks from this studio. Again, who knew . Will lansing is ceo and i assume he walked from his office, past ceo of fingerhut and info space, joined by Mark Sullivan and laura of usa today. Lets start with the idea that my fico score is so important but youre not the Credit Rating . The way it works, were an Analytics Company and we produce the algorithm and score, the data is held by someone else and they use ours to produce the score when they then share with banks and sthaz how the credit walk me through that. I have a macys bill, i dont pay the macys bill, its xper onor one of the others that knows i didnt and they tell you . Exactly. Whats going on, were trying a a bank is trying to figure out whether youre likely to repay a loan if they give you a loan. The best predictor for that, the best thing you could look at is whether youre pretty good about paying things in the past. Sure. A data set that provides that information is what we call trade line data, whether you paid your credit card bill on time. That turns out to be highly predictive of your propensity to repay debt. The fico score is built on top of the trade line data which is accumulated by the Credit Bureaus why do the Credit Bureaus tell you . If they know i dont pay my macys bill they dont actually tell us. We take their data and figure out a score for how likely it is that a consumer will repay debt in the future and then they take their data and our score theyve computed on top of their data and share that with a bank and they use it toe make a determination for you in the future. This calculation, i imagine its gotten more intense and complicated over the years. When you look up the fico score, your income, your credit ceiling or are there more pieces of it now . Is it a more complicated algorithm. The most important thing is your past payment behavior, its actually not really income driven. It turns out theres wealthy people who are bad credits and poor people who are very good credit and has everything to do with responsibility and payment behavior and not a lot to do with wealth. While that sort of seems to have been what youve done for years, decades, right, the whole field and weve heard a lot about this over the last couple of months seems to be going to anticipating what youre going to do on your smartphone, what youre going to ask google and after that what google is going to tell you thats predictive and Artificial Intelligence plays a big part of that. Do you have a lot of ai engineers trying to figure out what a borrower is going to do in a year or so . Our greatest skill is predicting consumer behavior. Were all about understanding what a consumer is likely to do in the future. Historically, the people who are most interested in that were big stakes decisions like money decisions, should we give you a mortgage, a credit card . Increasingly weve made it lower cost to figure out how consumer is going to behave. Its interesting for marketing and what should we offer and how likely is a consumer to click on this link for upsale and process. Youre not using my score whether i would click on that link, just saying youre good at gathering data . Good point. We have a predicted anl lit tick software business, 3 4 of our business, bigger than our scorers business. Its good about predicting behavior. And were all of the an littics. Thats our main thing. Isnt it a more crowded market. It used to be most of the information was from payments but now, google or facebook or anybody who has these consumer based websites has so much information and thats how they are predicting everything. Where do you o stack . Were just the math company that sits on top. What were really good at, taking whatever the data is, your customers data, Third Party Data and figuring out what kind of decision youre going to make with that data. We think of ourselves as a Decisioning Company and its all about what decision youre trying to make and whats the best data to predict that decision and where the analytics that help you get from the data to the decision. Scores are one way of doing that. Thats one small way of doing it. But were in all kinds of places, we have a big fraud detection business. When your credit card gets evaluated for is it you or not . We have a 90 market share in credit card fraud transaction, fraud detection. In your analytinalytics, bus can you name a real live fortune 500 company that you work with to help you make a decision with your data ten of the top ten banks in north america use our predictable Analytics Software extensively. Lending decisions . Lending decisions and some we have big retailers that use us for making marketing decisions. I see. If you are that good at if past behavior predicts future action, can you get any better at predicting whether or not ill pay that loan . Youve got more powerful computers and youve got ai but your system works pretty well now. Great point. Our system does work well now. Were proud of the fico score which is the Industry Standard, all about fairness and transparency and access to credit and those great things have happened and theres still people in the margin who are underbanked and arent been recognized. Maybe you dont have a credit card. Were developing new scores to solve for that then the other thing is, you know, i said we focus on the tradeline data, but if you mix in other datasets youre going to get more information. Maybe a data set thats not as predictive as the credit card payment data, but still has some kind of cool value. A frequent guest on this show doing something with firm, where im taking although he uses your fico data too, doesnt he . Of course he does. Is that what youre talking about, this revolutionizing finding other ways of predicting who somebody who maybe doesnt have say great score but there may be evidence they would pay back that loan . Very much so. In the old days you would look for a single data set with the most Predictive Value and it worked pretty well. And we still use it. Today its easier to mix and match data in. We use utility payment data, telephone payment data, things like that. I interrupted you, lets take you with the last question. This is all personal data but how do you incorporate sort of external events which can disrupt everything like the housing crisis . Theres a ton of data that allowed for the rise of option r and the explanation was we have all of the technology to do that. And then there were many, many other factors which made all of those go under water or we do revise and improve the score and were on fico score 8 is the Industry Standard today but we have new score fico score xd and 9. So were constantly improving and theres new data that comes into the picture. But is there like a black swan ability to you can predict, say, marks ability to pay but this external event like the asteroid hits, he may not be able to pay. That you have to get another way. Fair enough. Will lansing, ceo of fico, who knew, a silicon valley. Inside one of silicon valleys most promising dna labs when press here returns. Welcome back. There are Amazing Things happening in Genetic Research right here in silicon valley. Researchers and scientists working around the clock, beaten in their industry outness by technicians in the lab because they can work all day every day around the clock. The first fully ought to mated lab, robots in the workplace something weve talked about and worried about several times on this show before. Eric evans is one of the founders of counsyl and chief science officer. Thanks for being with us this morning. Robots lend themselves to this sort of thing because your requirements, you have to be exact and repeat the thing, the same way every time et cetera. Robots in medicine make a heck of a lot of sense to me. Thats absolutely right. At counsyl were focused on providing dna information for Important Health choices. The advantage of having a robotic process, you can have High Precision and reliability in the process. But it really goes far beyond that and we could get into that discussion. Id like to get into that discussion. You have x number of robots now, where could they work that you still have people working currently . So, i think its good to understand how the lab is composed and what it can do. We have 36 people who work in the lab. Its not absent of people. What robots help to do, take a problem that requires a lot of road work and a lot of precision and three people to supervise and see what has been identified by the robot and Software Stack as an area needing trouble shooting and humans can come in and look at those areas. It frees scientists to focus on the area where they are problem solving and trouble shooting abilities can be best deployed. The scientists are developing the tests and robots are going and doing them . At counsyl, we have a number of groups contributing to making the testing possible. One group is focused on building the product, we have Software Engineers and mechanical engineers and scientists and they build the products. Then in our laboratory, Clinical Laboratory that serves patients and physicians across the country, they have specialized staff with licenses that are required by the state of california to perform Laboratory Testing and directors who are experts in how to interpret these results. They work with the robots to perform the tests. And what that permits is really this division of labor between the robots performing tasks that require or only possible with automason, to monitor every action, log it, track it, see if theres drifts in the process. That leaves the scientists to analyze the test results and deliver those test results to the physicians. I have a question about the genesis, i know several years ago we were very excited about the human genome project and consumer facing dna testing and some others. But weve seen the regularry hurdle be so steep. Was selling direct to consumers the right way . What makes you confident that you wont have these same set backs . One thing i want to correct, we dont sell our tests directly to consumers, they are physicians treating their patients and want to have dna testing information to help them make choices that are going to direct their care. So for example, a woman who may have a positive Family History for cancer and a test to tell her whether shes a carrier for a gene where she would have a lifetime risk of cancer, 85 . Were embedded within the traditional medical infrastructure, different from today other Companies Direct to consumer. Our physicians are sort of direct will you interfacing with us and ordering tests for their patients, we interface with the health plans and have Extensive Health insurance coverage. And we are doing all of these things to really supplement and expand the capability of physicians to offer these tests. Whether any more expensive, more bureaucratic way they would have gotten the same tests . Whats changed is a number of things in technology. We didnt have the ability to do next Generation Sequencing and other things that permit you to generate huge amounts of data from dna. Now that these new tests are available, what has to change is the ability for physicians to offer these tests in the context of a 15minute appointment with the patient and for the patient to then be able to understand the test results. We provide Genetic Counseling Services to every patient. After a test is done, they can contact one of our genetic counselors at no cost and then talk about the test result and then understand what the choices are. At the end of the day, the test is all about making a choice available to a patient. Are there any medical emphasis involved when it gets time for counseling discussion. Genetic counseling is a well established area in medicine. They have their own guidelines about how to practice this area. And its really just a routine part of clinical medicine that folks only experience at particular times in their life. If you have a particular indication that needs testing and planning a pregnancy, already pregnant. Youll interact with this area of medicine. I want to ask you a question, a little bit off subject. You got your ph. D. At stanford and founded this janetgenetics company and got funding. Elizabeth holmes, i know its not exactly the same sort of thing, but as laboratories, got scads for funding than you did. Did you think, wait a minute, you have genetics. From stanford, how did this go her way and not my way . Were very different from you are. What it highlights is the importance of having sound Science Behind health tech and biotech and all of those areas and well established science. You need transparency, thats something that myself and my team has focused on how we publish putting it in venues where theres open access to data and being very transparent what things we do and how we do them. At the end of the day, thats the right way for medicine to be practiced and science to be practiced. Has there been any aftershock from whats happened with their theranos, it looked like Venture Capital had a record for bioterk, but the stigma for the general field for startups . Its a lesson that Everyone Needs to Pay Attention to details and its been a opportunity to contrast the hype of whats concrete sound clinical medicine an thats been sort of an opportunity. Im going to jump in, got a couple of seconds left. You have a website in which you show some of the things you can do. But i dont get the stuff from you, i get it from my doctor. It as simple as talking to my doctor, i saw something on counsly. Com and interested in getting this test . They want to understand do you have a Family History and is it the right test for you and talk to you about and potentially offer it. And take it from there. Eric evans, with counsyl. Welcome back. Each year a group called catalyst measures the number of women on boards here in america. Last near 19. 2 of Board Members of companies in the s p 500 were female. The fact i had to add. 2 is a sign that the number is too small. This year the number went up, 19. 9 . Maybe the number went up because Theresa Briggs was appointed to the board of directors the deloit, helping other women find board seats worldwide. Your research, i looked at that too, women on boards in tech is more like 18 . So even lower. Right, little bit lower. What do you do to help people in general and women specifically get on board . If i say, id like to be on a board of directors, how do i go about doing that . The first thing i would tell you, you need to clearly define why you want to be on a board. What are the skill sets and what are the experiences that will make you valuable to a board. The second thing ill tell you, network like crazy. Some people think board placements are similar to executive placements where executive recruiters play a big role. Only 25 of board placements come through recruiters and 70 come from ceo members themselves. Networking becomes particularly important if youre trying to line yourself up for a board opportunity. I talked to one of the founders of the board list, lie a linkedin for this purpose. An interesting feature was that men and women would endorse. So put forward somebody and that al gorithm, whats designed to service more women. Can tech sort of solve the problem . Its an interesting model. What im saying be more effective today is more person to person relationships. I had an experience in the last year, i introduced women from my network to a handful of ceos in the valley and three successful board placements came out of that. I dont think that those ceos would have ever met those amazing women if they hadnt been networked together. Do you start small, i assume . I mean, a Charity Board. Is that even comparable . Is a Charity Board and fortune 500 board, are those doing the same things that i might want to start on a Charity Board and work my way up . Its always a great idea to get board experience, so from a skillset development, its good. It doesnt make a huge difference when i interview for a board seats. What matters more is your experience from your corporate career. But some people do start with private companies or Smaller Public Companies and then work their way on to a larger Public Company board. Do you im kind of curious how you accelerate. I think it seems like theres a lot of countries around one fifth of the boards. And it may have been the catalyst, the uk had this big jump between like 13 to 23 . If you had more of that kind of growth and could get to 50 sooner, i mean, are we going to grow by one percentage point a year . Super charge it . Well, some of the European Countries have mandate. When you have a mandate, you can spike your percentage up quickly. Do you support a mandate . I dont support a mandate. What i support is really more kind of voluntary ceo commitment to diversifying their boards. Im starting to see a real shift, talking about wanting diversity of thought in the board room and that can come from different elements of diversity, one of which can be women. You are at the point where we no longer have to have say discussion, women are valuable on boards. Its a matter of time and i suppose the networking will have a Tipping Point bringing more women on boa