Episode 215-2: Leave the Gun, Take the McFlurry

In this episode of the podcast, we bring you the second installment of our interview with Jeremy O’Sullivan of the Internet of Things analytics firm Kytch. (The first part is here.) In this episode Jeremy talks about the launch of Kytch, his second start-up, which helped owners of soft ice cream machines by the manufacturer Taylor to monitor and better manage their equipment. We hear about how what Kytch revealed about Taylor’s hardware put him at odds with the company and its long-time partner: McDonald’s.

We generally view and talk about phenomena like “digital transformation” in a positive light. The world’s growing reliance on software, cloud computing, mobility and Internet connected “things” is remaking everything from how we catch a cab, to how we grow food or educate our children

Jeremy O’Sullivan, co-founder of Kytch
Jeremy O’Sullivan, co-founder of Kytch.

But what happens when that “digital transformation” is transformation to something worse than what came before, not the better? What happens when technology isn’t used to build a “better mousetrap” but to support a racket that enshrines expensive inefficiencies or a monopoly that stifles competition

What the hell is going on?

In his week’s episode, we’re digging deep on that question with the second installment of our interview with Jeremy O’Sullivan, the co-founder of the Internet of Things intelligence start-up Kytch. As we discussed last week, O’Sullivan and his wife, Melissa Nelson, launched the company in an effort to use data analysis to revolutionize the industrial kitchen, starting with one common but troublesome piece of machinery: soft ice cream machines manufactured by the company Taylor and used by the likes of McDonald’s and Burger King. 

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“What the hell is going on with the software on this ice cream machine? Why as the versions increase…is the software getting worse?”

– Jeremy O’Sullivan of Kytch on the Taylor soft ice cream machines.

The Dark Possibilities of Digital Transformations

Kytch-Iphone Display

In this episode, O’Sullivan talks about how – as  McDonald’s franchisees scooped up Kytch devices- his understanding of Taylor’s “business model” changed, even as the relationship with the company soured, culminating in what O’Sullivan alleges was the theft of a Kytch device and the reverse engineering of its proprietary technology. 

Far more than a story about massive, wealthy incumbents crushing a smaller challenger, the Kytch story is one that hints at the dark possibilities of digital transformation, as equipment makers use software to lock out their customers and deliver on “planned obsolescence.”

We start with Jeremy’s account of how his relationship with Taylor, which had been amicable when he was trying to build Fro Bot, a platform for stand-alone yogurt and ice cream kiosks, suddenly soured when he introduced the Kytch product and began giving Taylor customers better control over their equipment. The relationship with Taylor and its partner, McDonald’s, went down hill fast from there, as Taylor’s previously friendly management cut off contact with O’Sullivan and Kytch.

Law Suit Filed

In recent weeks, O’Sullivan and Kytch filed suit against Taylor and one of its major distributors for breach of contract, misappropriation of trade secrets and “tortious interference.” (PDF) Kytch alleges, among other things, that the company – working with a customer who was a prominent McDonald’s franchisee and a Taylor distributor – illegally obtained a Kytch device and reverse engineered it. Soon after, the company announced that it would be launching its own Kytch like device in 2021. At around the same time, McDonald’s warned franchisees using the Kytch device that doing so could violate its warranty with Taylor and put its employees physical safety at risk – a message that many franchisees interpreted as a warning against using the device from McDonald’s corporate leadership.

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For O’Sullivan, the behaviors reinforced concerns and misgivings he had about Taylor after analyzing data from the large number of Kytch devices deployed in McDonald’s in other restaurants. The company’s software, he said, seemed to get worse over time not better – with each software update introducing more instability – not less- more ways for the ice cream machines to break down, not fewer. Most suspicious of all: Taylor refused to talk about it.

“These people don’t want to have a forthright, open conversation about their software because they’re using for malicious means – to support their healthy service and repair business.”

A Fairytale of the Deflating Variety

In this podcast, we talk with Jeremy about his experience with Taylor and McDonald’s, the role that software can play in creating powerful constraints on customers and the marketplace. We also discuss the lawsuit Kytch filed and some of the other unseemly revelations contained in his suit.

For O’Sullivan, the lessons of his experience aren’t the uplifting kind. “This is a very sad story and a very un-American story,” O’Sullivan told me. If Kytch was a “vaccine” for the virus of software-driven inefficiency, the real story is about the virus and the “McDonald’s industrial complex” that gave rise to it, not his company’s cure for it.

“This is crazy because it’s a story about McDonald’s that is also about the demise of McDonald’s. McDonald’s is supposed to be a symbol for America and a forward thinking tech-oriented company and its really exposes how the company has devolved.”

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