In this episode of Cowen Insights, Natasha Franck, Founder & CEO of EON, joins Cowen’s Retail and Luxury Analyst, Oliver Chen. Together they explore the inevitable merger of the digital and physical worlds in the future of retail and discuss EON’s mission to change the way consumers buy, sell, own, and connect with products by bringing physical goods to the cloud with digital ID’s.
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Let’s get phygital. This is a retail visionary podcast series about visionary ideas and people. My name is Oliver Chen. I’m Cowen’s new platform retail and luxury analyst.
In this episode, we are excited to discuss the inevitable merging of the digital and physical worlds.
The phygital world is a topic Cowen sees as pivotable to the future development of the retail industry.
Today we’re featuring Natasha Franck, the CEO and founder of EON, which is a company that uses digital IDs to turn products into assets that can digitally connect with customers, applications, and business models.
Before launching EON, Natasha was SVP of global business development at Delos, a technology and research organization focused on improving health and wellness through the built environment.
And prior to Delos, Natasha worked at Jonathan Ross in sustainable real estate development and urban planning.
She holds a bachelor degree from Georgetown University.
Natasha, great to have you here.
Hi, so good to be here. Thank you.
What is an intelligent asset? How do they connect digitally with customers, and what’s EON?
Well, that’s a good place to begin. I guess we can begin by what is today.
Today brands produce billions and billions of products, and the moment they sell them, they remove the ID from the product They remove the RFID chip. They remove the barcode and they say, “This product will go out into the wild and we will never know what happens to it. We’ll never generate any revenue from it. We’ll never generate any customer relationships. We’ll never access any data from it.”
And so with the rise of intelligent assets, brands are basically moving away from that into a place where they ID the products in a way that product can connect to customers. The customer can instantly scan and reorder and engage with the product.
That product can also be IDed by new business models like resale so brands can generate revenue from that product.
And that product can also now start to generate data for that brand. Brands now understand exactly how their products are being used by the customers, where they’re going for resale, when they’re reaching recycle, whether they’re being brought into virtual gaming.
Every product now has a life, an intelligence, a data, and a source of ongoing revenue associated with it.
So it’s a pretty transformational shift.
Natasha, why should companies look towards merging their digital and physical environments? What financial benefits come from this, and why should consumers?
Well, this is, I guess in some ways, an early form of the internet of things. Digital ID is bringing intelligence into each and every physical product, and that is going to entirely change the way that brands and customers interact.
What a digital ID is essentially a digital twin of a physical product, and if we look at what Airbnb did, they created a digital twin of your home, which unlocks the monetization and utility of your home. Right now that there’s a digital twin, you can rent it, and post it, and monetize it.
Same with Uber. It’s a digital twin of a car that tracks that car and lets someone call it, and use it.
Now that same digital twinning technology is moving into physical products. Each and every physical product now has a digital twin associated to it on the EON platform.
And what that enables with that digital twin is that product can connect to different stakeholders, and it means that product, when in the hands of the customer, that customer can scan and engage that product, so brands can actually increase their customer lifetime value, generating revenue, royalties, and delivering services to customers long after point of sale.
And they can also serve as new business models. We have the rise of resale, and today brands cannot manage resale. How could you possibly manage resale with billions of products when you don’t even have as much as a barcode on it? So they cannot profitably manage resale or authenticate products.
With digital ID they can do that, and so they can control, monetize, and generate revenue through each of their products.
And then also they can access unprecedented insights about their products, about how they’re being used by their customers to better service and engage with users post sale.
And they will also have to do this for sustainability, transparency, and circularity. New policy will actually demand item level digital ID or product passports.
So this is coming for brands. A lot of the brands are now already moving on it to capture the commercial benefits, as well as meet the upcoming policy requirements to have to have this on every product portfolio-wide.
Natasha, what’s the vision for consumers? What will I be able to do that will be unique, and what do you see happening over time?
I’d say with customers, there’s an instant value to the digital product. One, you could think of it in some ways like a VIN number for cars, what that does. Every product is now an asset. When you purchase it, one, you know exactly where it came from, the materials, the story. You have the care instructions. You have where to resell it.
Now also when you go to resell it, you can instantly resell it, either back through the original brand, through a preferred partner network. It makes the movement of assets very easy for the consumer.
Now, when a customer goes to resell a product today, they’re manually typing in the information. They’re rephotographing the product. They’re doing all of this stuff that makes resale very high friction, and it prevents customers from really capturing the second market value of the product.
With digital ID, they simply scan and repost, and so seamlessly enabling, just how you could always rent your apartment, but Airbnb made it seamless. You can now just really access a network where those products can be posted and connected.
That’s what the digital ID is doing for customers as well. It really creates an entirely new aligned incentive between brands and customers that directly ties back to sustainability.
Brands can now generate revenue throughout the product’s utility. They generate revenue through resale. They generate revenue through peer-to-peer sharing. They generate revenue through recapturing of materials with the ID stewarding recycling.
It’s very powerful to see the sustainability impacts of that because for the first time, the digital ID actually aligns the business and sustainability incentives.
Natasha, what about ESG? ESG is such a big topic for us at Cowen with lots of opportunity for life cycle management. How does this product intersect with that?
Yeah. Oliver, the way you share is exactly why the EU Commission will be mandating item level digital ID for products in the EU for ES and G. And the reason for that is today there is absolutely zero, no accountability in measurement of products, post point of sale in circular economy. There is no circular economy, really.
And the reason for that is without product ID, it’s impossible to…
Circular economy is the largest global logistics challenge. How do we manage all those products?
With digital ID, brands can basically now start to steward that. And then on top of that, you have all of the data about the life cycle of a product. So you can see this exact shirt was resold on this date for this price. It was recycled on this date. And that for the first time, brings measurement and accountability to circular economy such that incentive plans, and tax plans, and extended producer responsibility can just be designed around how brands perform in circular economy.
The other important topic is regulation and what’s happening, particularly in Europe. Could you brief us on some of the key drivers and what you see ahead from that angle?
Yeah, I think it’s the EU Commission’s mandate for the digital product passport. And in the US, it’s the digital care label. So both of those two regulatory initiatives are mandating digital ID. And so in addition to all of the commercial drivers, the policy incentives are really driving brands to accelerate adoption very quickly.
Natasha, the circular product data protocol is a key part of your architecture and proprietary technology. Could you speak to that? What is it and how does it work?
What EON is doing as a platform is we’re enabling the communication between entities within the fashion and retail industry.
So when a brand creates a digital ID on EON, once that data profile complete, they can really share that data with a resale partner or a recycle partner.
The product can actually communicate and share data to different stakeholders, and that’s incredibly important because those stakeholders need that data to drive their business processes. Those stakeholders, whether it’s resellers, or recyclers, or sorters, or collectors, or really any post-sale stakeholder, they need that data in specific formats, and EON spent several years with industry, with groups like SAP, GS1, Microsoft as partners at the table, developing the standard industry-wide data protocol for products in the circular economy, and that is the circular data protocol.
When we work with brands, we digitize products in alignment with that protocol, such that we can solve for interoperability and ensure that those products can be connected to resale, recycle, repair partners.
And without that interoperability, brands actually can only capture about 20% of the value of a connected product, because they don’t truly have a connected product.
The value of a connected product actually relies on the imperative to solve for interoperability, and so that’s why EON dedicated years to building that protocol such that we can enable brands to capture that 90% of the value of connected products, and connect their products to the entire life cycle.
Yeah. The network effect really matters in building that across and collaborating. What companies do you partner with now and what are the most popular use cases currently?
Yeah, so we believe at EON every single product will have an ID, and we’re seeing that thesis hold true because we work with brands like H&M and Target, and we work at the luxury spectrum with groups like Chloe and we have steward commitments with brands like Giorgio Armani, Burberry, Stella McCartney, and many more to digitize portfolio-wide by 2025.
So there is just so much momentum on both sides for brands to implement, so it’s exciting to see that tip.
I’d also say that with that, brands are leveraging different functionality of the ID. EON luxury brands that are on EON are layering in authentication. They’re layering in a customer ID, so you can see this is Natasha’s or purse, what have you.
With the fast fashion brands, it’s a lot of big data as well, but they may not be leveraging authentication, or blockchain, or other functions of the product ID.
And congratulations as well on your Series A from IMAGINARY at the beginning of the year.
What are your thoughts on how funds will be used here and your major priorities for growth opportunities?
Most of our funds go into the product development and the extensibility of future ID. So now that brands are leveraging the platform to create digital IDs at scale, we look at how brands can increase the profitability per ID. Because the ID in essence is actually a revenue generator for brands. They can now charge for access to connect to their digital IDs, and so what we do is we work with brands to build that ecosystem around each product to drive that revenue for them through each asset.
Natasha, what part of the business has been the most fun for you?
I’d say building a team. That’s been really incredible. We’re a New York City based startup for the most part, but we have team all over the world and it’s amazing to see a small, I guess we’re not that small at this point anymore, but a group so dedicated and with such clear purpose.
I’d say at EON, our why is very clear. We are digitizing products at scale and we are increasing the value of each product. And with that sort of clarity around the value proposition, we’ve been really able to accelerate and scale a software platform in a very complicated space.
And the impact of what we’re doing is tremendous, because we are essentially laying data plumbing between the entire stakeholders across the industry, between brands and resellers, brands and recyclers, brands and gaming, brands and retailers. This whole network for communication across industry. And we now are starting to scale all of the data and communication that run through those networks.
And as a team, I think it’s just really incredible to be working on something that’s so foundational.
Final question, Natasha. Can you highlight the top milestones and top hurdles you’ve overcome since EON’s inception and how have these helped shaped your vision for the future of retail, and any closing remarks you may have?
Oh, what a nice question. I think honestly, that’s the tenacity. To do something like this you just have to say, we will go again tomorrow. It is so big. It is an ID for every product and it is complicated, and it is cross department, and it is a behemoth component of the enterprise tech stack.
It will be really the core of where all product data and data generated through physical products exist, so it is really an exercise in tenacity and continuing to exercise that muscle on a daily basis.
Well, Natasha, it was a pleasure to be here. Digital meets physical. The digitization of physical assets seems inevitable and it clearly unlocks so much potential from ESG to consumer engagement, to the future of brands, to smart homes. It’s very exciting. Thank you.
Thanks for joining us. Stay tuned for the next episode of Cowen Insights.
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