The Honesty Labs Senior Design team, made up of students from the Howe School of Technology Management and the College of Arts and Letters, is designing a business model for computer software that identifies deception in text. Working in parallel with a Computer Science design team that is developing the software, the Honesty Labs business team is conducting market research and writing a business plan to propel the software, ScamScout, into the marketplace.
Team members Bryan Franklin, Ted Pfeifer, and Stan Yakoff are working with their advisors, Dr. Lex McCusker and William Reinisch, to research the market for this product, which was developed by Dr. K. P. Subbalakshmi and Dr. Rajarathnam Chandramouli, faculty in Electrical and Computer Engineering.
Starting last summer on SEED scholarship support, Bryan, Ted, and Stan first collaborated with the faculty founders and Computer Science students to gain a better understanding of how this software works. Deception proliferates in the online domain where true identities are difficult to establish. Defined as "the intentional falsification of text," deception is detected using a powerful algorithm that analyzes linguistic data for patterns recognized as potentially deceptive in nature.
Currently the team is focused on two key markets: e-mail and insurance fraud. The Coalition Against Insurance Fraud estimates that the annual cost of insurance fraud nationwide is as much as $80 billion, with such losses resulting in higher subscriber premiums. ScamScout has the ability to analyze thousands of insurance claims to identify those most likely to be fraudulent, saving companies significant time and money in processing, and ultimately reducing losses to fraud.
The e-mail market was especially interesting to Stevens students surveyed in two focus groups that the Honesty Labs team held in the fall. With the constant threat of phishing, work-at-home, and other scams not likely to diminish, the students believed ScamScout would be useful tool to have on a personal computer.
In a focus group held among lawyers, there was expressed interest in applications for the software that the team had not considered before. One of those was real-time detection of deception, in which a court reporters' dictation is analyzed immediately to test if sworn statements are potentially deceptive.
The team has already had one interest meeting with an insurance company in the area, which had many good suggestions for the team moving into the future. One idea brought forward was partnering with a large insurance company to gain access to a large database of claims and develop a strong case for the effectiveness of the software.
Given the real-world entrepreneurship of this project, the Honesty Labs team also developed a two-minute presentation on ScamScout and competing against a dozen other Senior Design teams on April 29 at Research and Entrepreneurship Day. Each student on the team wrote his own elevator pitch, and these were critiqued by the two advisors. Using the best material from each student, the team developed a two-minute pitch that they feel can win over investors.
At the Student Elevator Pitch Competition, four experienced venture capitalists provided scores and feedback to the student presenters on both quality of presentation and the fundability of the business. Honesty Labs was well-received by the judges on both accounts and placed 3rd in the pitch competition, just 1 point behind the teams tied for first place.
Developing the necessary materials to compete and present a strong case for the company provided a key learning experience.
"This project gave us real-world experience," says Bryan, the team's elevator pitch representative. "We held focus groups and customer visits and wrote a business plan, the basis of every business out there. It is an experience that everyone wants to have."