The rules governing cell division and differentiation are central to understanding the mechanisms of development, aging, and cancer. By utilizing inducible genetic labeling, recent studies have shown that the clonal population in transgenic mouse epidermis can be tracked in vivo. Drawing on these results, we explain how clonal fate data may be used to infer the rules of cell division and differentiation underlying the maintenance of adult murine tail-skin. We show that the rates of cell division and differentiation may be evaluated by considering the long-time and short-time clone fate data, and that the data is consistent with cells dividing independently rather than synchronously. Motivated by these findings, we consider a mechanism for cancer onset based closely on the model for normal adult skin. By analyzing the expected changes to clonal fate in cancer emerging from a simple two-stage mutation, we propose that clonal fate data may provide a novel method for studying the earliest stages of the disease.