What Boards Must Know About “Digital Exhaust”
How Boards Can Leverage User “Exhaust” to Authenticate Digital Assets, Mitigate Acquisition Risks, and Elevate Ongoing Technology Oversight
In our first article of our series on Technology Governance, we asserted that boards must begin to apply the same investigative rigor to oversight of technology assets as they do to financial assets. We looked at the failure by the JPMorgan Chase in the technology governance of the acquisition of Frank, college financial aid enablement startup the financial giant agreed to acquire for $175 million. JPMorgan later sued the company’s founder for falsifying data and she was ultimately convicted of fraud.
We urged boards to ask harder technology questions and become more fluent. That’s not an idle ask. We believe any board can become a more effective technology oversight board, given the right framing, some basic education on how to understand and govern technology processes, products and teams and, together with management, partnering with a well qualified third party advisor with the required expertise and experience.
From Fraud to Embellishment, Knowing Technology Asset Worth is Critical
The basic story is well known by now: Frank claimed to have over 4 million users. JPMorgan alleged in its lawsuit that fewer than 300,000 were real. The bank only discovered the fraud after sending a test marketing email to the user base and receiving an alarmingly low response. The fake user base, allegedly invented by Frank’s founder using purchased lists and synthetic records, should have been caught earlier. But the due diligence process missed it. In the case of Frank, a basic random check of emails and phone numbers would have turned up problems. That said, this instance is crude fraud.
Far more common are cases where perhaps the value of technology assets are inflated or skewed, which may not rise to the level of fraud but can cause acquirers to significantly overpay. So how should boards and executive teams evaluate the digital truth of an acquisition and delve into questions of technology? Clearly, this is terrain where technology expertise is required.
One increasingly useful lens is digital exhaust — the trail of data left by real users interacting with digital systems. This "exhaust" is difficult to fake convincingly and, when analyzed properly, offers powerful insight into the authenticity and health of a digital business.
Here are some of the sources and questions that should be on every board’s radar. If the questions delve into technical areas where boards need support, they should seek outside support from technical experts who can more easily read a “technology balance sheet”, just as the board relies on audit and other finance professionals to parse, interpret and analyze company finances and controls.
Cloud Spend Data
Cloud platforms (like AWS, Azure, or GCP) offer detailed invoices that correlate strongly to user volume and service intensity. If a company claims millions of active users but is spending what you'd expect for a prototype with a few beta testers, that's a red flag. Sudden spikes in spending, too, can also indicate problems with poor infrastructure or software architecture design. To be fair, it can also mean a product has gone viral or a new service was launched. Either way, cloud spending bills usually tell an important tale.
Ask for: Monthly cloud infrastructure bills, broken down by compute, storage, and bandwidth and trends over the past year or more. A new discipline, FinOps (or financial operations) attempts to normalize cloud spend data and format types across different clouds, making it easier to track and provide a coherent picture
Why it matters: Real user activity has real cost. While cloud infrastructure is elastic, sustained usage should leave a visible financial footprint.
Traffic and Engagement Analytics
Tools like Google Analytics, Mixpanel, or Amplitude log user visits, time on site, click paths, conversion rates, and seasonal fluctuations. These platforms are difficult to spoof convincingly over time, especially for products that claim millions of users.
Ask for: Ask your technology analysts and partners to look at analytics dashboards (not exports or screenshots), evidence of historical usage patterns (especially for seasonal products like college aid platforms), and geographic distribution and traffic source.
Why it matters: If a company claims 4 million active users and the site gets 100,000 visits per month, something is wrong. Patterns should align with the stated business model and user narrative. Yes, it is possible to skew analytics dashboards but the same team showing you the data should also be able to answer hard questions about their data.
Third-Party Service Data (Email, Payments, etc.)
This is closely related to cloud spend data. Most companies today rely on SaaS products or API-driven products like SendGrid, Mailchimp, Stripe, or Auth0 for core functionalities such as payment processing, messaging, map data or user authentication. These tools retain rich logs about system activity and user behavior—emails sent, payment subscriptions, bounces, open rates, churn.
Ask for: Ask your technology analysts and partners to verify existing or have the responsible internal teams build out dashboards and data showing usage and spend patterns for third-party tools with historical data, metrics on growth (or decline of records or transactions, email list growth over time, campaign performance metrics, payment volume history (if applicable)
Why it matters: External service logs are hard to manipulate and often give a clear picture of business momentum or, in some cases, manipulation attempts.
Customer Support Tickets and Interaction Logs
Genuine users ask questions, run into issues, and request new features. A product claiming a large user base should have a correspondingly large volume of support activity—through email, chat, phone logs, or ticketing platforms like Zendesk, Intercom, or Freshdesk.
What to ask for: Ask to see evidence of customer support activities and trends.Your technology analysts and partners can review and summarize customer support dashboard (read-only or screen share), volume of tickets per week/month over a relevant period, distribution of ticket categories (bugs, onboarding, feature requests, complaints), transcripts of representative support interactions across time.
Example insight:
A platform claiming 4 million users should be fielding hundreds of support tickets per week, not a few dozen per month. Even a passive consumer app should show some regular interaction if engagement is real.
More Tech Savvy Board’s for Proper Governance
For large companies (and for Private Equity firms), major acquisitions generally rise to the level of board approval. Directors are expected to understand the material risks of a transaction. That includes technology risks. For most Boards, this will mean engaging technology efforts to help them analyze and monitor technology execution and progress.
That should cover more than pre-acquisition due diligence, which is only a small part of required information to understand technology health. In point of fact, technology guidance must become an ongoing “health check” monitored by experts just as finance experts and forensic accountants must monitor and assess company finances on an ongoing basis.
It’s no longer enough to ask for a basic technology sign-off or to go off a basic checklist from a third-party. In the case of Frank, a simple check of emails and phone numbers would have been enough but had Frank’s founder presented a more sophisticated effort, she might have evaded these initial detection steps. Even non-technical board members should be asking the following set of questions.
How do we know it works?
Where is the evidence that users are real and engaged?
Have we seen unedited, direct-sourced digital data from core systems?
Have we verified that the tech stack is consistent with the stated scale?
Boards do not need to become technical experts themselves, but they must ensure that independent technical diligence is performed, documented, and challenged. And they must be conversant in the kinds of questions and the general mechanics of digital exhaust examinations. This is especially important when acquiring companies where the primary assets are intangible: users, data, engagement, and code.
Even for companies where technology assets are internal and not part of the product, digital exhaust can illuminate how efficiently a firm is using technology, how well their technology teams manage their IT estate, and whether large technology problems lurk beneath the surface. Digital exhaust is one of a number of ways that Boards should consider tapping to get a better read on how well their technology assets and teams are performing. No company today can become a great company without mastering technology. Boards that embrace this reality and elevate technology governance to the same level as other concerns will enjoy a strong advantage and provide better overall governance in support of their fiduciary roles.
Alex Salkever is a partner at Techquity.ai. He is the author of four award-winning books and has worked at multiple startups and scale-out technology companies over his career.