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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We all harbor magical and romantic ideas about the transformative power of both technology and entrepreneurship. “Build a better mousetrap and the world will beat a path to your door.” That romantic idea is at the heart of many start ups, and the Internet has created a platform on which a never ending stream of new “mousetraps” can be conceived. Think, for example, of the NEST thermostat – that iconic Internet of Things product, which stylishly re-imagined the boring old thermostat: outfitting it with brains, motion sensors, a cool graphical interface and a powerful, web-based back end.  

Company Town 2.0

But technology can just as easily create dystopias as utopias: obscuring the operation of formerly mechanical instruments whose workings were easily observable, or harvesting data from unwitting users and ferrying it off to the cloud for use by shadowy global corporations. Technology can even trap owners and business people in a kind of servitude – like the share croppers or the residents of “company towns” in the 19th and 20th centuries whose lives were prescribed and diminished by invisible bonds of contract and dependence, rather than by physical chains. 

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As the Internet of Things expands from “smart thermostats” to cars; home appliances; the agricultural equipment that plants and harvests our food; or the machinery that businesses rely on; the chances that you or someone you love might end up as a digital share cropper or the resident of one of these virtual  “company towns” are growing. 

And that’s what our podcast this week is about. In the first part of a two part episode, we’re joined by Jeremy O’Sullivan, co-founder of the IoT analytics company, Kytch. Jeremy and his wife and co-founder, Melissa Nelson, were the subjects of an amazing profile in Wired Magazine by Andy Greenberg that described the young company’s travails with the commercial ice cream machine manufacturer, Taylor, a storied multi-national whose equipment is used by businesses from the corner soft serve joints to giants like Burger King and McDonalds. 

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Despite the company’s sterling reputation and dominant position in the marketplace, O’Sullivan found that the Taylor equipment was notoriously unreliable – to the point of becoming an Internet meme. Today, sites like use McDonald’s online ordering websites to determine that anywhere from 5% to almost a quarter of all McDonald’s ice cream machines in major U.S. metro regions are not operational at any given time.

O’Sullivan’s big idea for Kytch: use technology he had developed to allow franchise owners better stay on top of the Taylor machines maintenance and cleaning functions – to keep their machines running and churning out soft serve to happy consumers.

A Cautionary Tale for IoT Entrepreneurs

It wasn’t to be, for reasons that still aren’t that clear, but are the subject of a lawsuit filed in Superior Court in California on May 10 by Kytch against Taylor and a prominent McDonald’s franchisee: Jonathan Tyler Gamble.

Regardless of how that lawsuit turns out or what it reveals, O’Sullivan’s story is a cautionary tale for entrepreneurs who are hoping to carve out a niche in what amount to software-enforced monopolies that are becoming more and more common. That’s true whether those monopolies govern Apple’s phones (see the ongoing lawsuit between Apple and Epic over access to the AppStore), John Deere’s monopoly on service and repair of its agricultural equipment or – in this case – Taylor’s strangle hold on its ice cream machines. 

In this first installment, Jeremey tells us about the origins of Kytch in the fabulously named “Fro Bot,” which he and Melissa – soft serve enthusiasts – imagined as a kind of “Red Box” that automated Taylor’s ice cream machines. What starts out as a story about a plucky entrepreneur showing an older, richer company how to make their business better ends up in a different, darker place. In this episode, Jeremy takes us back to the beginning.

As always,  you can check our full conversation in our latest Security Ledger podcast at Blubrry. You can also listen to it on iTunes and check us out on SoundCloudStitcherRadio Public and more. Also: if you enjoy this podcast, consider signing up to receive it in your email. Just point your web browser to to get notified whenever a new podcast is posted.