>>from around the globe. It's the Cube with digital coverage of AWS reinvent 2020 sponsored by Intel, AWS and our community partners. Welcome back to the Cubes Live coverage of AWS reinvent 2020. It's virtual this year. We're not in person because of the pandemic. We're doing the remote Cube Cube Virtual were the Cube virtual. I'm your host, John for here with Andy Jassy, the CEO of Amazon Web services, in for his annual at the end of the show comes on the Cube. This year, it's virtual Andy. Good to see you remotely in Seattle or in Palo Alto. Uh, Dave couldn't make it in a personal conflict, but he says, Hello, great to see you. >>Great to see you as well, John. It's an annual tradition. On the last day of reinvent. I wish we were doing it in person, but I'm glad at least were able to do it. Virtually >>the good news is, I know you could arrested last night normally at reinvent you just like we're all both losing our voice at the end of the show. At least me more than you, your and we're just at the end of like okay, Relief. It happens here. It's different. It's been three weeks has been virtual. Um, you guys had a unique format this year went much better than I expected. It would go on because I was pretty skeptical about these long, um, multiple days or weeks events. You guys did a good job of timing it out and creating these activations and with key news, starting with your keynote on December 1st. Now, at the end of the three weeks, um, tell me, are you surprised by the results? Can you give us, Ah, a feeling for how you think everything went? What's what's your take So far as we close out reinvented >>Well, I think it's going really well. I mean, we always gnome or a Z get past, reinvent and you start, you know, collecting all the feedback. But we've been watching all the metrics and you know, there's trade offs. Of course, now I think all of us giving our druthers would be together in Las Vegas, and I think it's hard to replace that feeling of being with people and the excitement of learning about things together and and making decisions together after you see different sessions that you're gonna make big changes in your company and for your customer experience. And yeah, and there's a community peace. And there's, you know, this from being there. There's a concert. The answer. I think people like being with one another. But, you know, I think this was the best that any of us could imagine doing doing a virtual event. And we had to really reinvent, reinvent and all the pieces to it. And now I think that some of the positive trade offs are they. You get a lot mawr engagement than you would normally get in person So normally. Last year, with about 65,000 people in Las Vegas this year, we had 530,000 people registered to reinvent and over 300,000 participate in some fashion. All the sessions had a lot more people who are participating just because you remove the constraints of of travel in costs, and so there are trade offs. I think we prefer being together, but I think it's been a really good community event, um, in learning event for for our customers, and we've been really pleased with it so >>far. No doubt I would totally agree with you. I think a lot of people like, Hey, I love to walk the floor and discover Harry and Sarah Davis moments of finding an exhibit her and the exhibit hall or or attending a session or going to a party, bumping into friends and seeing making new friends. But I think one of the things I want to get your reaction to it. So I think this is comes up. And, you know, we've been doing a lot of Q virtual for the past year, and and everyone pretty much agrees that when we go back, it's gonna be a hybrid world in the sense of events as well as cloud. You know that. But you know, I think one of the things that I noticed this year with reinvent is it almost was a democratization of reinvent. So you really had to reinvent the format. You had 300,000 plus people attend 500 pending email addresses, but now you've got a different kind of beehive community. So you're a bar raiser thinker. It's with the culture of Amazon. So I gotta ask you do the economics does this new kind of extra epiphany impact you and how you raise the bar to keep the best of the face to face when it comes back. And then if you keep the virtual any thoughts on how to leverage this and kind of get more open, it was free. You guys made it free this year and people did show up. >>Yeah, it's a really good question, and it's probably a question will be better equipped to answer in a month or two after we kind of debrief we always do after reading that we spend. Actually, I really enjoy the meeting because the team, the Collective A. W s team, works so hard in this event. There's so many months across everything. All the product teams, um, you know, all the marketing folks, all the event folks, and I think they do a terrific job with it. And we we do about 2.5 3 hour debrief on everything we did, things that we thought was really well the things that we thought we could do better and all the feedback we get from our community and so I wouldn't be surprised if we didn't find things from what we tried this year that we incorporate into what we do when we're back to being a person again. You know, of course, none of us really know when we'll be back in person again. Re event happens to fall on the time of the year, which is early December. And so you with with a lot of people seemingly able to get vaccinated, probably by you know, they'd spring early summer. You could kind of imagine that we might be able to reinvent in person next year. We'll have to see e think we all hope we will. But I'm sure there are a number of pieces that we will take from this and incorporate into what we do in person. And you know, then it's just a matter of how far you go. >>Fingers crossed and you know it's a hybrid world for the Cube two and reinvent and clouds. Let's get into the announcement. I want to get your your take as you look back now. I mean, how many announcements is you guys have me and a lot of announcements this year. Which ones did you like? Which one did you think were jumping off the page, which ones resonated the most or had impact. Can you share kind of just some stats on e mean how many announcements launches you did this >>year? But we had about 100 50 different new services and features that we announced over the last three weeks and reinvent And there, you know the question you're asking. I could easily spend another three hours like my Kino. You know, answering you all the ones that I like thought were important. You know, I think that, you know, some of the ones I think that really stood out for people. I think first on the compute side, I just think the, um the excitement around what we're doing with chips, um, is very clear. I think what we've done with gravitas to our generalized compute to give people 40% better price performance and they could find in the latest generation X 86 processors is just It's a huge deal. If you could save 40% price performance on computer, you get a lot more done for less on. Then you know some of the chip work we're doing in machine learning with inferential on the inference chips that we built And then what? We announced the trainee, um, on the machine learning training ship. People are very excited about the chip announcements. I think also, people on the container side is people are moving to smaller and smaller units of compute. I think people were very taken with the notion of E. K s and D. C s anywhere so they can run whatever container orchestration framework they're running in A. W s also on premises. To make it easier, Thio manage their deployments and containers. I think data stores was another space where I think people realize how much more data they're dealing with today. And we gave a couple statistics and the keynote that I think are kind of astonishing that, you know, every every hour today, people are creating mawr content that there was in an entire year, 20 years ago or the people expect more data to be created. The next three years in the prior 30 years combined these air astonishing numbers and it requires a brand new reinvention of data stores. And so I think people are very excited about Block Express, which is the first sand in the cloud and there really excited about Aurora in general, but then Aurora surveillance V two that allow you to scale up to hundreds of thousands of transactions per second and saved about 90% of supervision or people very excited about that. I think machine learning. You know, uh, Sage Maker has just been a game changer and the ease with which everyday developers and data scientists can build, train, tune into play machine learning models. And so we just keep knocking out things that are hard for people. Last year we launched the first i D for Machine Learning, the stage maker studio. This year, if you look at things that we announced, like Data Wrangler, which changes you know the process of Data Prep, which is one of the most time consuming pieces in machine learning or our feature store or the first see, I see deeper machine learning with pipelines or clarify, which allow you to have explain ability in your models. Those are big deals to people who are trying to build machine learning models, and you know that I'd say probably the last thing that we hear over and over again is really just the excitement around Connect, which is our call center service, which is just growing unbelievably fast and just, you know, the the fact that it's so easy to get started and so easy to scale so much more cost effective with, you know, built from the ground up on the cloud and with machine learning and ai embedded. And then adding some of the capabilities to give agents the right information, the right time about customers and products and real time capabilities for supervisors. Throw when calls were kind of going off the rails and to be ableto thio, stop the the contact before it becomes something, it hurts. The brand is there. Those are all big deals that people have been excited about. >>I think the connecting as I want to just jump on that for a second because I think when we first met many, many years ago, star eighth reinvent. You know the trends are always the same. You guys do a great job. Slew of announcements. You keep raising the bar. But one of the things that you mentioned to me when we talked about the origination of a W S was you were doing some stuff for Amazon proper, and you had a, you know, bootstrap team and you're solving your own problems, getting some scar tissue, the affiliate thing, all these examples. The trend is you guys tend to do stuff for yourself and then re factor it into potentially opportunities for your customers. And you're working backwards. All that good stuff. We'll get into that next section. But this year, more than ever, I think with the pandemic connect, you got chime, you got workspaces. This acceleration of you guys being pretty nimble on exposing these services. I mean, connect was a call center. It's an internal thing that you guys had been using. You re factored that for customer consumption. You see that kind of china? But you're not competing with Zoom. You're offering a service toe bundle in. Is this mawr relevant? Now, as you guys get bigger with more of these services because you're still big now you're still serving yourself. What? That seems to be a big trend now, coming out of the pandemic. Can you comment on um, >>yeah, It's a good question, John. And you know we do. We do a bunch of both. Frankly, you know, there there's some services where our customers. We're trying to solve certain problems and they tell us about those problems and then we build new services for him. So you know a good example that was red shift, which is our data warehouse and service, you know, two or three very large customers of ours. When we went to spend time with them and asked them what we could do to help them further, they just said, I wish I had a data warehousing service for the cloud that was built in the AWS style way. Um and they were really fed up with what they were using. Same thing was true with relation databases where people were just fed up with the old guard commercial, great commercial, great databases of Oracle and Sequel Server. And they hated the pricing and the proprietary nature of them and the punitive licensing. And they they wanted to move to these open engines like my sequel and post dress. But to get the same performance is the commercial great databases hard? So we solve that problem with them. With Aurora, which is our fastest growing service in our history, continues to be so there's sometimes when customers articulate a need, and we don't have a service that we've been running internally. But we way listen, and we have a very strong and innovative group of builders here where we build it for customers. And then there are other cases where customers say and connect with a great example of this. Connect with an example where some of our customers like into it. And Capital One said, You know, we need something for our contact center and customer service, and people weren't very happy with what they were using in that space. And they said, You, you've had to build something just to manage your retail business last 15, 20 years Can't you find a way to generalize that expose it? And when you have enough customers tell you that there's something that they want to use that you have experienced building. You start to think about it, and it's never a simple. It's just taking that technology and exposing it because it's often built, um, internally and you do a number of things to optimize it internally. But we have a way of building services and Amazon, where we do this working backwards process that you're referring to, where We build everything with the press release and frequently asked questions document, and we imagine that we're building it to be externalized even if it's an internal feature. But our feature for our retail business, it's only gonna be used as part of some other service that you never imagine Externalizing to third party developers. We always try and build it that way, and we always try to have well documented, hardened AP eyes so that other teams can use it without having to coordinate with those teams. And so it makes it easier for us to think about Externalizing it because we're a good part of the way there and we connect we. That's what we did way generalized it way built it from the ground up on top of the cloud. And then we embedded a bunch of AI and it so that people could do a number of things that would have taken him, you know, months to do with big development teams that they could really point, click and do so. We really try to do both. >>I think that's a great example of some of the scale benefits is worth calling out because that was a consistent theme this past year, The people we've reported on interviewed that Connect really was a lifeline for many during the pandemic and way >>have 5000 different customers who started using connect during the pandemic alone. Where they, you know, overnight they had to basically deal with having a a call center remotely. And so they picked up connect and they spun up call center remotely, and they didn't really quickly. And you know, it's that along with workspaces, which are virtual desktops in the cloud and things like Chime and some of our partners, Exume have really been lifelines for people. Thio have business continuity during a tandem. >>I think there's gonna be a whole set of new services that are gonna emerge You talked about in your keynote. We talked about it prior to the event where you know, if this pandemic hit with that five years ago, when there wasn't the advancements in, say, videoconferencing, it'd be a whole different world. And I think the whole world can see on full display that having integrated video communications and other cool things is gonna have a productivity benefit. And that's kind >>of could you imagine what the world would have been like the last nine months and we didn't have competent videoconferencing. I mean, just think about how different it would have been. And I think that all of these all of these capabilities today are kind of the occult 1.5 capabilities where, by the way, thank God for them. We've we've all been able to be productive because of them. But there's so early stage, they're all going to get evolved. I'm so significantly, I mean, even just today, you know, I was spending some time with with our team thinking about when we start to come back to the office and bigger numbers. And we do meetings with our remote partners, how we think about where the center of gravity should be and who should be on video conferencing and whether they should be allowed to kind of video conference in conference rooms, which are really hard to see them. We're only on their laptops, which are easier and what technology doesn't mean that you want in the conference rooms on both sides of the table, and how do you actually have it so that people who are remote could see which side of the table. I mean, all this stuff is yet to be invented. It will be very primitive for the next couple few years, even just interrupting one another in video conferencing people. When you do it, the sound counsel cancels each other out. So people don't really cut each other off and rip on one another. Same way, like all that, all that technology is going to get involved over time. It's a tremendous >>I could just see people fighting for the mute button. You know, that's power on these meetings. You know, Chuck on our team. All kidding aside, he was excited. We talked about Enron Kelly on your team, who runs product marketing on for your app side as well as computer networking storage. We're gonna do a green room app for the Q because you know, we're doing so many remote videos. We just did 112 here for reinvent one of things that people like is this idea of kind of being ready and kind of prepped. So again, this is a use case. We never would have thought off if there wasn't a pandemic. So and I think these are the kinds of innovation, thinking that seems small but works well when you start thinking about how easy it could be to say to integrate a chime through this sdk So this is the kind of things, that kind thing. So so with that, I want to get into your leadership principles because, you know, if you're a startup or a big company trying to reinvent, you're looking at the eight leadership principles you laid out, which were, um don't be afraid to reinvent. Acknowledge you can't fight gravity. Talent is hungry to reinvent solving real customer problems. Speed don't complex. If I use the platform with the broader set of tools, which is more a plug for you guys on cloud pull everything together with top down goals. Okay, great. How >>do you >>take those leadership principles and apply them broadly to companies and start ups? Because I think start ups in the garage are also gonna be there going. I'm going to jump on this wave. I'm inspired by the sea change. I'm gonna build something new or an enterprise. I'm gonna I'm gonna innovate. How do you How do you see these eight principles translating? >>Well, I think they're applicable to every company of every size and every industry and organization. Frankly, also, public sector organizations. I think in many ways startups have an advantage. And, you know, these were really keys to how to build a reinvention culture. And startups have an advantage because just by their very nature, they are inventive. You know, you can't you can't start a company that's a direct copy of somebody else that is an inventive where you have no chance. So startups already have, you know, a group of people that feel insurgent, and they wanted their passionate about certain customer experience. They want to invent it, and they know that they they only have so much time. Thio build something before money runs out and you know they have a number of those built in advantages. But I think larger companies are often where you see struggles and building a reinvention and invention culture and I've probably had in the last three weeks is part of reinvent probably about 40 different customer meetings with, you know, probably 75 different companies were accomplished in those or so and and I think that I met with a lot of leaders of companies where I think these reinvention principles really resonated, and I think they're they're battling with them and, you know, I think that it starts with the leaders if you, you know, when you have big companies that have been doing things a certain way for a long period of time, there's a fair bit of inertia that sets in and a lot of times not ill intended. It's just a big group of people in the middle who've been doing things a certain way for a long time and aren't that keen to change sometimes because it means ripping up something that they that they built and they remember how hard they worked on it. And sometimes it's because they don't know what it means for themselves. And you know, it takes the leadership team deciding that we are going to change. And usually that means they have to be able to have access to what's really happening in their business, what's really happening in their products in the market. But what customers really think of it and what they need to change and then having the courage and the energy, frankly, to pick the company up and push him to change because you're gonna have to fight a lot of inertia. So it always starts with the leaders. And in addition to having access that truth and deciding to make the change, you've gotta also set aggressive top down goal. The force of the organization moved faster than otherwise would and that also, sometimes leaders decide they're gonna want to change and they say they're going to change and they don't really set the goal. And they were kind of lessons and kind of doesn't listen. You know, we have a term the principal we have inside Amazon when we talk about the difference between good intentions and mechanisms and good intentions is saying we need to change and we need to invent, reinvent who we are and everyone has the right intentions. But nothing happens. Ah, mechanism, as opposed to good intention, is saying like Capital One did. We're going to reinvent our consumer digital banking platform in the next 18 months, and we're gonna meet every couple of weeks to see where we are into problem solved, like that's a mechanism. It's much harder to escape getting that done. Then somebody just saying we're going to reinvent, not checking on it, you know? And so, you know, I think that starts with the leaders. And then I think that you gotta have the right talent. You gotta have people who are excited about inventing, as opposed to really, Justin, what they built over a number of years, and yet at the same time, you're gonna make sure you don't hire people who were just building things that they're interested in. They went where they think the tech is cool as opposed to what customers want. And then I think you've got to Really You gotta build speed into your culture. And I think in some ways this is the very biggest challenge for a lot of enterprises. And I just I speak to so many leaders who kind of resigned themselves to moving slowly because they say you don't understand my like, companies big and the culture just move slow with regulator. There are a lot of reasons people will give you on why they have to move slow. But, you know, moving with speed is a choice. It's not something that your preordained with or not it is absolutely a leadership choice. And it can't happen overnight. You can't flip a switch and make it happen, but you can build a bunch of things into your culture first, starting with people. Understand that you are gonna move fast and then building an opportunity for people. Experiment quickly and reward people who experiment and to figure out the difference between one way doors and two way doors and things that are too way doors, letting people move quick and try things. You have to build that muscle or when it really comes, time to reinvent you won't have. >>That's a great point in the muscle on that's that's critical. You know, one of things I want to bring up. You brought on your keynote and you talk to me privately about it is you gave attribute in a way to Clay Christensen, who you called out on your keynote. Who was a professor at Harvard. Um, and he was you impressed by him and and you quoted him and he was He was your professor there, Um, your competitive person and you know, companies have strategy departments, and competitive strategy is not necessarily departments of mindset, and you were kind of brought this out in a zone undertone in your talk, we're saying you've got to be competitive in the sense of you got to survive and you've got to thrive. And you're kind of talking about rebuilding and building and, you know, Clay Christians. Innovative dilemma. Famous book is a mother, mother teachings around metrics and strategy and prescriptions. If he were alive today and he was with us, what would he be talking about? Because, you know, you have kind of stuck in the middle. Strategy was not Clay Christensen thing, but, you know, companies have to decide who they are. Their first principles face the truth. Some of the things you mentioned, what would we be talking with him about if we were talking about the innovator's dilemma with respect to, say, cloud and and some of the key decisions that have to be made right now? >>Well, then, Clay Christensen on it. Sounds like you read some of these books on. Guy had the fortunate, um, you know, being able to sit in classes that he taught. And also I got a chance. Thio, meet with him a couple of times after I graduated. Um, school, you know, kind of as more of a professional sorts. You can call me that. And, uh, he he was so thoughtful. He wasn't just thoughtful about innovation. He was thoughtful about how to get product market fit. And he was thoughtful about what your priorities in life were and how to build families. And, I mean, he really was one of the most thoughtful, innovative, um, you know, forward thinking, uh, strategist, I had the opportunity Thio encounter and that I've read, and so I'm very appreciative of having the opportunity Thio learn from him. And a lot of I mean, I think that he would probably be continuing to talk about a lot of the principles which I happen to think are evergreen that he he taught and there's it relates to the cloud. I think that one of the things that quite talked all the time about in all kinds of industries is that disruption always happens at the low end. It always happens with products that seem like they're not sophisticated enough. Don't do enough. And people always pooh pooh them because they say they won't do these things. And we learned this. I mean, I watched in the beginning of it of us. When we lost just three, we had so many people try and compare it Thio things like e m. C. And of course, it was very different than EMC. Um, but it was much simpler, but And it and it did a certain set of activities incredibly well at 1 1/100 of the price that's disrupted, you know, like 1 1/100 of the price. You find that builders, um, find a lot of utility for products like that. And so, you know, I think that it always starts with simple needs and products that aren't fully developed. That overtime continue to move their way up. Thio addressing Maura, Maura the market. And that's what we did with is what we've done with all our services. That's three and easy to and party ass and roar and things like that. And I think that there are lots of lessons is still apply. I think if you look at, um, containers and how that's changing what compute looks like, I think if you look at event driven, serverless compute in Lambda. Lambda is a great example of of really ah, derivative plays teaching, which is we knew when we were building Lambda that as people became excited about that programming model it would cannibalize easy to in our core compute service. And there are a lot of companies that won't do that. And for us we were trying to build a business that outlasts all of us. And that's you know, it's successful over a long period of time, and the the best way I know to do that is to listen to what customers We're trying to solve an event on their behalf, even if it means in the short term you may cannibalize yourself. And so that's what we always think about is, you know, wherever we see an opportunity to provide a better customer experience, even if it means in the short term, make cannibalism revenue leg lambda with complete with easy to our over our surveillance with provisions or are we're going to do it because we're gonna take the long view, and we believe that we serve customers well over a long period of time. We have a chance to do >>that. It's a cannibalize yourself and have someone else do it to you, right? That's that's the philosophy. Alright, fine. I know you've got tight for time. We got a you got a hard stop, But let's talk about the vaccine because you know, you brought up in the keynote carrier was a featured thing. And look at the news headlines. Now you got the shots being administered. You're starting to see, um, hashtag going around. I got my shot. So, you know, there's a There's a really Momenta. Mit's an uplifting vibe here. Amazon's involved in this and you talked about it. Can you share the innovation? There can just give us an update and what's come out of that and this supply chain factor. The cold chain. You guys were pretty instrumental in that share your your thoughts. >>We've been really excited and privileged partner with companies who are really trying to change what's possible for all of us. And I think you know it started with some of the companies producing vaccines. If you look at what we do with Moderna, where they built their digital manufacturing sweet on top of us in supply chain, where they used us for computing, storage and data warehousing and machine learning, and and on top of AWS they built, they're Cove in 19 vaccine candidate in 42 days when it normally takes 20 months. I mean, that is a total game changer. It's a game changer for all of us and getting the vaccine faster. But also, you just think about what that means for healthcare moving forward, it zits very exciting. And, yeah, I love what carriers doing. Kariya is building this product on top of AWS called links, which is giving them end and visibility over the transportation and in temperature of of the culture and everything they're delivering. And so it, uh, it changes what happens not only for food, ways and spoilage, but if you think about how much of the vaccine they're gonna actually transport to people and where several these vaccines need the right temperature control, it's it's a big deal. And what you know, I think there are a great example to what carrier is where. You know, if you think about the theme of this ring and then I talked about in my keynote, if you want to survive as an organization over a long period of time, you're gonna have to reinvent yourself. You're gonna have to probably do it. Multiple times over and the key to reinventing his first building, the right reinvention culture. And we talk about some of those principles earlier, but you also have to be aware of the technology that's available that allows you to do that. If you look at Carrier, they have built a very, very strong reinvention culture. And then, if you look at how they're leveraging, compute and storage and I o. T at the edge and machine learning, they know what's available, and they're using that technology to reinvent what's what's possible, and we're gonna all benefit because of >>it. All right. Well, Andy, you guys were reinventing the virtual space. Three weeks, it went off. Well, congratulations. Great to go along for the ride with the cube virtual. And again. Thank you for, um, keeping the show alive over there. Reinvent. Um, thanks for your team to for including the Cube. We really appreciate the Cube virtual being involved. Thank you. >>It's my pleasure. And thanks for having me, John and, uh, look forward to seeing you soon. >>All right? Take care. Have a hockey game in real life. When? When we get back, Andy Jesse, the CEO of a W s here to really wrap up. Reinvent here for Cuba, Virtual as well as the show. Today is the last day of the program. It will be online for the rest of the year and then into next month there's another wave coming, of course. Check out all the coverage. Come, come back, It's It's It's online. It's all free Cube Cube stuff is there on the Cube Channel. Silicon angle dot com For all the top stories, cube dot net tons of content on Twitter. Hashtag reinvent. You'll see all the commentary. Thanks for watching the Cube Virtual. I'm John Feehery.

>> From theCUBE Studios in Palo Alto in Boston, bringing you data-driven insights from theCUBE in ETR. This is Breaking Analysis with Dave Vellante. >> Snowflake is not going to grow into its valuation by stealing the croissant from the breakfast table of the on-prem data warehouse vendors. Look, even if snowflake got 100% of the data warehouse business, it wouldn't come close to justifying its market cap. Rather Snowflake has to create an entirely new market based on completely changing the way organizations think about monetizing data. Every organization I talk to says it wants to be, or many say they already are data-driven. why wouldn't you aspire to that goal? There's probably nothing more strategic than leveraging data to power your digital business and creating competitive advantage. But many businesses are failing, or I predict, will fail to create a true data-driven culture because they're relying on a flawed architectural model formed by decades of building centralized data platforms. Welcome everyone to this week's Wikibon Cube Insights powered by ETR. In this Breaking Analysis, I want to share some new thoughts and fresh ETR data on how organizations can transform their businesses through data by reinventing their data architectures. And I want to share our thoughts on why we think Snowflake is currently in a very strong position to lead this effort. Now, on November 17th, theCUBE is hosting the Snowflake Data Cloud Summit. Snowflake's ascendancy and its blockbuster IPO has been widely covered by us and many others. Now, since Snowflake went public, we've been inundated with outreach from investors, customers, and competitors that wanted to either better understand the opportunities or explain why their approach is better or different. And in this segment, ahead of Snowflake's big event, we want to share some of what we learned and how we see it. Now, theCUBE is getting paid to host this event, so I need you to know that, and you draw your own conclusions from my remarks. But neither Snowflake nor any other sponsor of theCUBE or client of SiliconANGLE Media has editorial influence over Breaking Analysis. The opinions here are mine, and I would encourage you to read my ethics statement in this regard. I want to talk about the failed data model. The problem is complex, I'm not debating that. Organizations have to integrate data and platforms with existing operational systems, many of which were developed decades ago. And as a culture and a set of processes that have been built around these systems, and they've been hardened over the years. This chart here tries to depict the progression of the monolithic data source, which, for me, began in the 1980s when Decision Support Systems or DSS promised to solve our data problems. The data warehouse became very popular and data marts sprung up all over the place. This created more proprietary stovepipes with data locked inside. The Enron collapse led to Sarbanes-Oxley. Now, this tightened up reporting. The requirements associated with that, it breathed new life into the data warehouse model. But it remained expensive and cumbersome, I've talked about that a lot, like a snake swallowing a basketball. The 2010s ushered in the big data movement, and Data Lakes emerged. With a dupe, we saw the idea of no schema online, where you put structured and unstructured data into a repository, and figure it all out on the read. What emerged was a fairly complex data pipeline that involved ingesting, cleaning, processing, analyzing, preparing, and ultimately serving data to the lines of business. And this is where we are today with very hyper specialized roles around data engineering, data quality, data science. There's lots of batch of processing going on, and Spark has emerged to improve the complexity associated with MapReduce, and it definitely helped improve the situation. We're also seeing attempts to blend in real time stream processing with the emergence of tools like Kafka and others. But I'll argue that in a strange way, these innovations actually compound the problem. And I want to discuss that because what they do is they heighten the need for more specialization, more fragmentation, and more stovepipes within the data life cycle. Now, in reality, and it pains me to say this, it's the outcome of the big data movement, as we sit here in 2020, that we've created thousands of complicated science projects that have once again failed to live up to the promise of rapid cost-effective time to insights. So, what will the 2020s bring? What's the next silver bullet? You hear terms like the lakehouse, which Databricks is trying to popularize. And I'm going to talk today about data mesh. These are other efforts they look to modernize datalakes and sometimes merge the best of data warehouse and second-generation systems into a new paradigm, that might unify batch and stream frameworks. And this definitely addresses some of the gaps, but in our view, still suffers from some of the underlying problems of previous generation data architectures. In other words, if the next gen data architecture is incremental, centralized, rigid, and primarily focuses on making the technology to get data in and out of the pipeline work, we predict it's going to fail to live up to expectations again. Rather, what we're envisioning is an architecture based on the principles of distributed data, where domain knowledge is the primary target citizen, and data is not seen as a by-product, i.e, the exhaust of an operational system, but rather as a service that can be delivered in multiple forms and use cases across an ecosystem. This is why we often say the data is not the new oil. We don't like that phrase. A specific gallon of oil can either fuel my home or can lubricate my car engine, but it can't do both. Data does not follow the same laws of scarcity like natural resources. Again, what we're envisioning is a rethinking of the data pipeline and the associated cultures to put data needs of the domain owner at the core and provide automated, governed, and secure access to data as a service at scale. Now, how is this different? Let's take a look and unpack the data pipeline today and look deeper into the situation. You all know this picture that I'm showing. There's nothing really new here. The data comes from inside and outside the enterprise. It gets processed, cleanse or augmented so that it can be trusted and made useful. Nobody wants to use data that they can't trust. And then we can add machine intelligence and do more analysis, and finally deliver the data so that domain specific consumers can essentially build data products and services or reports and dashboards or content services, for instance, an insurance policy, a financial product, a loan, that these are packaged and made available for someone to make decisions on or to make a purchase. And all the metadata associated with this data is packaged along with the dataset. Now, we've broken down these steps into atomic components over time so we can optimize on each and make them as efficient as possible. And down below, you have these happy stick figures. Sometimes they're happy. But they're highly specialized individuals and they each do their job and they do it well to make sure that the data gets in, it gets processed and delivered in a timely manner. Now, while these individual pieces seemingly are autonomous and can be optimized and scaled, they're all encompassed within the centralized big data platform. And it's generally accepted that this platform is domain agnostic. Meaning the platform is the data owner, not the domain specific experts. Now there are a number of problems with this model. The first, while it's fine for organizations with smaller number of domains, organizations with a large number of data sources and complex domain structures, they struggle to create a common data parlance, for example, in a data culture. Another problem is that, as the number of data sources grows, organizing and harmonizing them in a centralized platform becomes increasingly difficult, because the context of the domain and the line of business gets lost. Moreover, as ecosystems grow and you add more data, the processes associated with the centralized platform tend to get further genericized. They again lose that domain specific context. Wait (chuckling), there are more problems. Now, while in theory organizations are optimizing on the piece parts of the pipeline, the reality is, as the domain requires a change, for example, a new data source or an ecosystem partnership requires a change in access or processes that can benefit a domain consumer, the reality is the change is subservient to the dependencies and the need to synchronize across these discrete parts of the pipeline or actually, orthogonal to each of those parts. In other words, in actuality, the monolithic data platform itself remains the most granular part of the system. Now, when I complain about this faulty structure, some folks tell me this problem has been solved. That there are services that allow new data sources to really easily be added. A good example of this is Databricks Ingest, which is, it's an auto loader. And what it does is it simplifies the ingestion into the company's Delta Lake offering. And rather than centralizing in a data warehouse, which struggles to efficiently allow things like Machine Learning frameworks to be incorporated, this feature allows you to put all the data into a centralized datalake. More so the argument goes, that the problem that I see with this, is while the approach does definitely minimizes the complexities of adding new data sources, it still relies on this linear end-to-end process that slows down the introduction of data sources from the domain consumer beside of the pipeline. In other words, the domain experts still has to elbow her way into the front of the line or the pipeline, in this case, to get stuff done. And finally, the way we are organizing teams is a point of contention, and I believe is going to continue to cause problems down the road. Specifically, we've again, we've optimized on technology expertise, where for example, data engineers, well, really good at what they do, they're often removed from the operations of the business. Essentially, we created more silos and organized around technical expertise versus domain knowledge. As an example, a data team has to work with data that is delivered with very little domain specificity, and serves a variety of highly specialized consumption use cases. All right. I want to step back for a minute and talk about some of the problems that people bring up with Snowflake and then I'll relate it back to the basic premise here. As I said earlier, we've been hammered by dozens and dozens of data points, opinions, criticisms of Snowflake. And I'll share a few here. But I'll post a deeper technical analysis from a software engineer that I found to be fairly balanced. There's five Snowflake criticisms that I'll highlight. And there are many more, but here are some that I want to call out. Price transparency. I've had more than a few customers telling me they chose an alternative database because of the unpredictable nature of Snowflake's pricing model. Snowflake, as you probably know, prices based on consumption, just like AWS and other cloud providers. So just like AWS, for example, the bill at the end of the month is sometimes unpredictable. Is this a problem? Yes. But like AWS, I would say, "Kill me with that problem." Look, if users are creating value by using Snowflake, then that's good for the business. But clearly this is a sore point for some users, especially for procurement and finance, which don't like unpredictability. And Snowflake needs to do a better job communicating and managing this issue with tooling that can predict and help better manage costs. Next, workload manage or lack thereof. Look, if you want to isolate higher performance workloads with Snowflake, you just spin up a separate virtual warehouse. It's kind of a brute force approach. It works generally, but it will add expense. I'm kind of reminded of Pure Storage and its approach to storage management. The engineers at Pure, they always design for simplicity, and this is the approach that Snowflake is taking. Usually, Pure and Snowflake, as I have discussed in a moment, is Pure's ascendancy was really based largely on stealing share from Legacy EMC systems. Snowflake, in my view, has a much, much larger incremental market opportunity. Next is caching architecture. You hear this a lot. At the end of the day, Snowflake is based on a caching architecture. And a caching architecture has to be working for some time to optimize performance. Caches work well when the size of the working set is small. Caches generally don't work well when the working set is very, very large. In general, transactional databases have pretty small datasets. And in general, analytics datasets are potentially much larger. Is it Snowflake in the analytics business? Yes. But the good thing that Snowflake has done is they've enabled data sharing, and it's caching architecture serves its customers well because it allows domain experts, you're going to hear this a lot from me today, to isolate and analyze problems or go after opportunities based on tactical needs. That said, very big queries across whole datasets or badly written queries that scan the entire database are not the sweet spot for Snowflake. Another good example would be if you're doing a large audit and you need to analyze a huge, huge dataset. Snowflake's probably not the best solution. Complex joins, you hear this a lot. The working set of complex joins, by definition, are larger. So, see my previous explanation. Read only. Snowflake is pretty much optimized for read only data. Maybe stateless data is a better way of thinking about this. Heavily right intensive workloads are not the wheelhouse of Snowflake. So where this is maybe an issue is real-time decision-making and AI influencing. A number of times, Snowflake, I've talked about this, they might be able to develop products or acquire technology to address this opportunity. Now, I want to explain. These issues would be problematic if Snowflake were just a data warehouse vendor. If that were the case, this company, in my opinion, would hit a wall just like the NPP vendors that proceeded them by building a better mouse trap for certain use cases hit a wall. Rather, my promise in this episode is that the future of data architectures will be really to move away from large centralized warehouses or datalake models to a highly distributed data sharing system that puts power in the hands of domain experts at the line of business. Snowflake is less computationally efficient and less optimized for classic data warehouse work. But it's designed to serve the domain user much more effectively in our view. We believe that Snowflake is optimizing for business effectiveness, essentially. And as I said before, the company can probably do a better job at keeping passionate end users from breaking the bank. But as long as these end users are making money for their companies, I don't think this is going to be a problem. Let's look at the attributes of what we're proposing around this new architecture. We believe we'll see the emergence of a total flip of the centralized and monolithic big data systems that we've known for decades. In this architecture, data is owned by domain-specific business leaders, not technologists. Today, it's not much different in most organizations than it was 20 years ago. If I want to create something of value that requires data, I need to cajole, beg or bribe the technology and the data team to accommodate. The data consumers are subservient to the data pipeline. Whereas in the future, we see the pipeline as a second class citizen, with a domain expert is elevated. In other words, getting the technology and the components of the pipeline to be more efficient is not the key outcome. Rather, the time it takes to envision, create, and monetize a data service is the primary measure. The data teams are cross-functional and live inside the domain versus today's structure where the data team is largely disconnected from the domain consumer. Data in this model, as I said, is not the exhaust coming out of an operational system or an external source that is treated as generic and stuffed into a big data platform. Rather, it's a key ingredient of a service that is domain-driven and monetizable. And the target system is not a warehouse or a lake. It's a collection of connected domain-specific datasets that live in a global mesh. What is a distributed global data mesh? A data mesh is a decentralized architecture that is domain aware. The datasets in the system are purposely designed to support a data service or data product, if you prefer. The ownership of the data resides with the domain experts because they have the most detailed knowledge of the data requirement and its end use. Data in this global mesh is governed and secured, and every user in the mesh can have access to any dataset as long as it's governed according to the edicts of the organization. Now, in this model, the domain expert has access to a self-service and obstructed infrastructure layer that is supported by a cross-functional technology team. Again, the primary measure of success is the time it takes to conceive and deliver a data service that could be monetized. Now, by monetize, we mean a data product or data service that it either cuts cost, it drives revenue, it saves lives, whatever the mission is of the organization. The power of this model is it accelerates the creation of value by putting authority in the hands of those individuals who are closest to the customer and have the most intimate knowledge of how to monetize data. It reduces the diseconomies at scale of having a centralized or a monolithic data architecture. And it scales much better than legacy approaches because the atomic unit is a data domain, not a monolithic warehouse or a lake. Zhamak Dehghani is a software engineer who is attempting to popularize the concept of a global mesh. Her work is outstanding, and it's strengthened our belief that practitioners see this the same way that we do. And to paraphrase her view, "A domain centric system must be secure and governed with standard policies across domains." It has to be trusted. As I said, nobody's going to use data they don't trust. It's got to be discoverable via a data catalog with rich metadata. The data sets have to be self-describing and designed for self-service. Accessibility for all users is crucial as is interoperability, without which distributed systems, as we know, fail. So what does this all have to do with Snowflake? As I said, Snowflake is not just a data warehouse. In our view, it's always had the potential to be more. Our assessment is that attacking the data warehouse use cases, it gave Snowflake a straightforward easy-to-understand narrative that allowed it to get a foothold in the market. Data warehouses are notoriously expensive, cumbersome, and resource intensive, but they're a critical aspect to reporting and analytics. So it was logical for Snowflake to target on-premise legacy data warehouses and their smaller cousins, the datalakes, as early use cases. By putting forth and demonstrating a simple data warehouse alternative that can be spun up quickly, Snowflake was able to gain traction, demonstrate repeatability, and attract the capital necessary to scale to its vision. This chart shows the three layers of Snowflake's architecture that have been well-documented. The separation of compute and storage, and the outer layer of cloud services. But I want to call your attention to the bottom part of the chart, the so-called Cloud Agnostic Layer that Snowflake introduced in 2018. This layer is somewhat misunderstood. Not only did Snowflake make its Cloud-native database compatible to run on AWS than Azure in the 2020 GCP, what Snowflake has done is to obstruct cloud infrastructure complexity and create what it calls the data cloud. What's the data cloud? We don't believe the data cloud is just a marketing term that doesn't have any substance. Just as SAS is Simplified Application Software and iOS made it possible to eliminate the value drain associated with provisioning infrastructure, a data cloud, in concept, can simplify data access, and break down fragmentation and enable shared data across the globe. Snowflake, they have a first mover advantage in this space, and we see a number of fundamental aspects that comprise a data cloud. First, massive scale with virtually unlimited compute and storage resource that are enabled by the public cloud. We talk about this a lot. Second is a data or database architecture that's built to take advantage of native public cloud services. This is why Frank Slootman says, "We've burned the boats. We're not ever doing on-prem. We're all in on cloud and cloud native." Third is an obstruction layer that hides the complexity of infrastructure. and fourth is a governed and secured shared access system where any user in the system, if allowed, can get access to any data in the cloud. So a key enabler of the data cloud is this thing called the global data mesh. Now, earlier this year, Snowflake introduced its global data mesh. Over the course of its recent history, Snowflake has been building out its data cloud by creating data regions, strategically tapping key locations of AWS regions and then adding Azure and GCP. The complexity of the underlying cloud infrastructure has been stripped away to enable self-service, and any Snowflake user becomes part of this global mesh, independent of the cloud that they're on. Okay. So now, let's go back to what we were talking about earlier. Users in this mesh will be our domain owners. They're building monetizable services and products around data. They're most likely dealing with relatively small read only datasets. They can adjust data from any source very easily and quickly set up security and governance to enable data sharing across different parts of an organization, or, very importantly, an ecosystem. Access control and governance is automated. The data sets are addressable. The data owners have clearly defined missions and they own the data through the life cycle. Data that is specific and purposely shaped for their missions. Now, you're probably asking, "What happens to the technical team and the underlying infrastructure and the cluster it's in? How do I get the compute close to the data? And what about data sovereignty and the physical storage later, and the costs?" All these are good questions, and I'm not saying these are trivial. But the answer is these are implementation details that are pushed to a self-service layer managed by a group of engineers that serves the data owners. And as long as the domain expert/data owner is driving monetization, this piece of the puzzle becomes self-funding. As I said before, Snowflake has to help these users to optimize their spend with predictive tooling that aligns spend with value and shows ROI. While there may not be a strong motivation for Snowflake to do this, my belief is that they'd better get good at it or someone else will do it for them and steal their ideas. All right. Let me end with some ETR data to show you just how Snowflake is getting a foothold on the market. Followers of this program know that ETR uses a consistent methodology to go to its practitioner base, its buyer base each quarter and ask them a series of questions. They focus on the areas that the technology buyer is most familiar with, and they ask a series of questions to determine the spending momentum around a company within a specific domain. This chart shows one of my favorite examples. It shows data from the October ETR survey of 1,438 respondents. And it isolates on the data warehouse and database sector. I know I just got through telling you that the world is going to change and Snowflake's not a data warehouse vendor, but there's no construct today in the ETR dataset to cut a data cloud or globally distributed data mesh. So you're going to have to deal with this. What this chart shows is net score in the y-axis. That's a measure of spending velocity, and it's calculated by asking customers, "Are you spending more or less on a particular platform?" And then subtracting the lesses from the mores. It's more granular than that, but that's the basic concept. Now, on the x-axis is market share, which is ETR's measure of pervasiveness in the survey. You can see superimposed in the upper right-hand corner, a table that shows the net score and the shared N for each company. Now, shared N is the number of mentions in the dataset within, in this case, the data warehousing sector. Snowflake, once again, leads all players with a 75% net score. This is a very elevated number and is higher than that of all other players, including the big cloud companies. Now, we've been tracking this for a while, and Snowflake is holding firm on both dimensions. When Snowflake first hit the dataset, it was in the single digits along the horizontal axis and continues to creep to the right as it adds more customers. Now, here's another chart. I call it the wheel chart that breaks down the components of Snowflake's net score or spending momentum. The lime green is new adoption, the forest green is customers spending more than 5%, the gray is flat spend, the pink is declining by more than 5%, and the bright red is retiring the platform. So you can see the trend. It's all momentum for this company. Now, what Snowflake has done is they grabbed a hold of the market by simplifying data warehouse. But the strategic aspect of that is that it enables the data cloud leveraging the global mesh concept. And the company has introduced a data marketplace to facilitate data sharing across ecosystems. This is all about network effects. In the mid to late 1990s, as the internet was being built out, I worked at IDG with Bob Metcalfe, who was the publisher of InfoWorld. During that time, we'd go on speaking tours all over the world, and I would listen very carefully as he applied Metcalfe's law to the internet. Metcalfe's law states that the value of the network is proportional to the square of the number of connected nodes or users on that system. Said another way, while the cost of adding new nodes to a network scales linearly, the consequent value scores scales exponentially. Now, apply that to the data cloud. The marginal cost of adding a user is negligible, practically zero, but the value of being able to access any dataset in the cloud... Well, let me just say this. There's no limitation to the magnitude of the market. My prediction is that this idea of a global mesh will completely change the way leading companies structure their businesses and, particularly, their data architectures. It will be the technologists that serve domain specialists as it should be. Okay. Well, what do you think? DM me @dvellante or email me at david.vellante@siliconangle.com or comment on my LinkedIn? Remember, these episodes are all available as podcasts, so please subscribe wherever you listen. I publish weekly on wikibon.com and siliconangle.com, and don't forget to check out etr.plus for all the survey analysis. This is Dave Vellante for theCUBE Insights powered by ETR. Thanks for watching. Be well, and we'll see you next time. (upbeat music)

>> From Cambridge, Massachusetts, it's The Cube! Covering MIT Chief Data Officer and Information Qualities Symposium 2019. Brought to you by SiliconANGLE Media. >> Welcome to Cambridge, Massachusetts everybody. You're watching The Cube, the leader in live tech coverage. My name is Dave Vellante and I'm here with my cohost Paul Gillin. And we're covering the 13th annual MIT CDOIQ conference. The Cube first started here in 2013 when the whole industry Paul, this segment of the industry was kind of moving out of the ashes of the compliance world and the data quality world and kind of that back office role, and it had this tailwind of the so called big data movement behind it. And the Chief Data Officer was emerging very strongly within as we've talked about many times in theCube, within highly regulated industries like financial services and government and healthcare and now we're seeing data professionals from all industries join this symposium at MIT as I say 13th year, and we're now seeing a lot of discussion about not only the role of the Chief Data Officer, but some of what we heard this morning from Mark Ramsey some of the failures along the way of all these north star data initiatives, and kind of what to do about it. So this conference brings together several hundred practitioners and we're going to be here for two days just unpacking all the discussions the major trends that touch on data. The data revolution, whether it's digital transformation, privacy, security, blockchain and the like. Now Paul, you've been involved in this conference for a number of years, and you've seen it evolve. You've seen that chief data officer role both emerge from the back office into a c-level executive role, and now spanning a very wide scope of responsibilities. Your thoughts? >> It's been like being part of a soap opera for the last eight years that I've been part of this conference because as you said Dave, we've gone through all of these transitions. In the early days this conference actually started as an information qualities symposium. It has evolved to become about chief data officer and really about the data as an asset to the organization. And I thought that the presentation we saw this morning, Mark Ramsey's talk, we're going to have him on later, very interesting about what they did at GlaxoSmithKline to get their arms around all of the data within that organization. Now a project like that would've unthinkable five years ago, but we've seen all of these new technologies come on board, essentially they've created a massive search engine for all of their data. We're seeing organizations beginning to get their arms around this massive problem. And along the way I say it's a soap opera because along the way we've seen failure after failure, we heard from Mark this morning that data governance is a failure too. That was news to me! All of these promising initiatives that have started and fallen flat or failed to live up to their potential, the chief data officer role has emerged out of that to finally try to get beyond these failures and really get their arms around that organizational data and it's a huge project, and it's something that we're beginning to see some organization succeed at. >> So let's talk a little bit about the role. So the chief data officer in many ways has taken a lot of the heat off the chief information officer, right? It used to be CIO stood for career is over. Well, when you throw all the data problems at an individual c-level executive, that really is a huge challenge. And so, with the cloud it's created opportunities for CIOs to actually unburden themselves of some of the crapplications and actually focus on some of the mission critical stuff that they've always been really strong at and focus their budgets there. But the chief data officer has had somewhat of an unclear scope. Different organizations have different roles and responsibilities. And there's overlap with the chief digital officer. There's a lot of emphasis on monetization whether that's increasing revenue or cutting costs. And as we heard today from the keynote speaker Mark Ramsey, a lot of the data initiatives have failed. So what's your take on that role and its viability and its longterm staying power? >> I think it's coming together. I think last year we saw the first evidence of that. I talked to a number of CDOs last year as well as some of the analysts who were at this conference, and there was pretty good clarity beginning to emerge about what they chief data officer role stood for. I think a lot of what has driven this is this digital transformation, the hot buzz word of 2019. The foundation of digital transformation is a data oriented culture. It's structuring the entire organization around data, and when you get to that point when an organization is ready to do that, then the role of the CDO I think becomes crystal clear. It's not so much just an extract transform load discipline. It's not just technology, it's not just governance. It really is getting that data, pulling that data together and putting it at the center of the organization. That's the value that the CDO can provide, I think organizations are coming around to that. >> Yeah and so we've seen over the last 10 years the decrease, the rapid decrease in cost, the cost of storage. Microprocessor performance we've talked about endlessly. And now you've got the machine intelligence piece layering in. In the early days Hadoop was the hot tech, and interesting now nobody talks even about Hadoop. Rarely. >> Yet it was discussed this morning. >> It was mentioned today. It is a fundamental component of infrastructures. >> Yeah. >> But what it did is it dramatically lowered the cost of storing data, and allowing people to leave data in place. The old adage of ship a five megabytes of code to a petabyte of data versus the reverse. Although we did hear today from Mark Ramsey that they copied all the data into a centralized location so I got some questions on that. But the point I want to make is that was really early days. We're now entered an era and it's underscored by if you look at the top five companies in terms of market cap in the US stock market, obviously Microsoft is now over a trillion. Microsoft, Apple, Amazon, Google and Facebook. Top five. They're data companies, their assets are all data driven. They've surpassed the banks, the energy companies, of course any manufacturing automobile companies, et cetera, et cetera. So they're data companies, and they're wrestling with big issues around security. You can't help but open the paper and see issues on security. Yesterday was the big Capital One. The Equifax issue was resolved in terms of the settlement this week, et cetera, et cetera. Facebook struggling mightily with whether or not how to deal fake news, how to deal with deep fakes. Recently it shut down likes for many Instagram accounts in some countries because they're trying to protect young people who are addicted to this. Well, they need to shut down likes for business accounts. So what kids are doing is they're moving over to the business Instagram accounts. Well when that happens, it exposes their emails automatically so they've all kinds of privacy landmines and people don't know how to deal with them. So this data explosion, while there's a lot of energy and excitement around it, brings together a lot of really sticky issues. And that falls right in the lap of the chief data officer, doesn't it? >> We're in uncharted territory and all of the examples you used are problems that we couldn't have foreseen, those companies couldn't have foreseen. A problem may be created but then the person who suffers from that problem changes their behavior and it creates new problems as you point out with kids shifting where they're going to communicate with each other. So these are all uncharted waters and I think it's got to be scary if you're a company that does have large amounts of consumer data in particular, consumer packaged goods companies for example, you're looking at what's happening to these big companies and these data breaches and you know that you're sitting on a lot of customer data yourself, and that's scary. So we may see some backlash to this from companies that were all bought in to the idea of the 360 degree customer view and having these robust data sources about each one of your customers. Turns out now that that's kind of a dangerous place to be. But to your point, these are data companies, the companies that business people look up to now, that they emulate, are companies that have data at their core. And that's not going to change, and that's certainly got to be good for the role of the CDO. >> I've often said that the enterprise data warehouse failed to live up to its expectations and its promises. And Sarbanes-Oxley basically saved EDW because reporting became a critical component post Enron. Mark Ramsey talked today about EDW failing, master data management failing as kind of a mapping and masking exercise. The enterprise data model which was a top down push for a sort of distraction layer, that failed. You had all these failures and so we turned to governance. That failed. And so you've had this series of issues. >> Let me just point out, what do all those have in common? They're all top down. >> Right. >> All top down initiatives. And what Glaxo did is turn that model on its head and left the data where it was. Went and discovered it and figured it out without actually messing with the data. That may be the difference that changes the game. >> Yeah and it's prescription was basically taking a tactical approach to that problem, start small, get quick hits. And then I think they selected a workload that was appropriate for solving this problem which was clinical trials. And I have some questions for him. And of the big things that struck me is the edge. So as you see a new emerging data coming out of the edge, how are organizations going to deal with that? Because I think a lot of what he was talking about was a lot of legacy on-prem systems and data. Think about JEDI, a story we've been following on SiliconANGLE the joint enterprise defense infrastructure. This is all about the DOD basically becoming cloud enabled. So getting data out into the field during wartime fast. We're talking about satellite data, you're talking about telemetry, analytics, AI data. A lot of distributed data at the edge bringing new challenges to how organizations are going to deal with data problems. It's a whole new realm of complexity. >> And you talk about security issues. When you have a lot of data at the edge and you're sending data to the edge, you're bringing it back in from the edge, every device in the middle is from the smart thermostat. at the edge all the way up to the cloud is a potential failure point, a potential vulnerability point. These are uncharted waters, right? We haven't had to do this on a large scale. Organizations like the DOD are going to be the ones that are going to be the leaders in figuring this out because they are so aggressive. They have such an aggressive infrastructure and place. >> The other question I had, striking question listening to Mark Ramsey this morning. Again Mark Ramsey was former data God at GSK, GlaxoSmithKline now a consultant. We're going to hear from a number of folks like him and chief data officers. But he basically kind of poopooed, he used the example of build it and they will come. You know the Kevin Costner movie Field of Dreams. Don't go after the field of dreams. So my question is, and I wonder if you can weigh in on this is, everywhere we go we hear about digital transformation. They have these big digital transformation projects, they generally are top down. Every CEO wants to get digital right. Is that the wrong approach? I want to ask Mark Ramsey that. Are they doing field of dreams type stuff? Is it going to be yet another failure of traditional legacy systems to try to compete with cloud native and born in data era companies? >> Well he mentioned this morning that the research is already showing that digital transformation most initiatives are failing. Largely because of cultural reasons not technical reasons, and I think Ramsey underscored that point this morning. It's interesting that he led off by mentioning business process reengineering which you remember was a big fad in the 1990s, companies threw billions of dollars at trying to reinvent themselves and most of them failed. Is digital transformation headed down the same path? I think so. And not because the technology isn't there, it's because creating a culture where you can break down these silos and you can get everyone oriented around a single view of the organizations data. The bigger the organization the less likely that is to happen. So what does that mean for the CDO? Well, chief information officer at one point we said the CIO stood for career is over. I wonder if there'll be a corresponding analogy for the CDOs at some of these big organizations when it becomes obvious that pulling all that data together is just not feasible. It sounds like they've done something remarkable at GSK, maybe we'll learn from that example. But not all organizations have the executive support, which was critical to what they did, or just the organizational will to organize themselves around that central data storm. >> And I also said before I think the CDO is taking a lot of heat off the CIO and again my inference was the GSK use case and workload was actually quite narrow in clinical trials and was well suited to success. So my takeaway in this, if I were CDO what I would be doing is trying to figure out okay how does data contribute to the monetization of my organization? Maybe not directly selling the data, but what data do I have that's valuable and how can I monetize that in terms of either saving money, supply chain, logistics, et cetera, et cetera, or making money? Some kind of new revenue opportunity. And I would super glue myself for the line of business executive and go after a small hit. You're talking about digital transformations being top down and largely failing. Shadow digital transformations is maybe the answer to that. Aligning with a line of business, focusing on a very narrow use case, and building successes up that way using data as the ingredient to drive value. >> And big ideas. I recently wrote about Experian which launched a service last called Boost that enables the consumers to actually impact their own credit scores by giving Experian access to their bank accounts to see that they are at better credit risk than maybe portrayed in the credit store. And something like 600,000 people signed up in the first six months of this service. That's an example I think of using inspiration, creating new ideas about how data can be applied And in the process by the way, Experian gains data that they can use in other context to better understand their consumer customers. >> So digital meets data. Data is not the new oil, data is more valuable than oil because you can use it multiple times. The same data can be put in your car or in your house. >> Wish we could do that with the oil. >> You can't do that with oil. So what does that mean? That means it creates more data, more complexity, more security risks, more privacy risks, more compliance complexity, but yet at the same time more opportunities. So we'll be breaking that down all day, Paul and myself. Two days of coverage here at MIT, hashtag MITCDOIQ. You're watching The Cube, we'll be right back right after this short break. (upbeat music)

>> live from New York. It's the Q covering AWS Global Summit 2019 brought to you by Amazon Web service, is >> Welcome back. Rush hours started a little bit early here in New York City, with over 10,000 people in attendance for any of US Summit in New York City. I'm stupid, and my co host for today is Corey Quinn. Having a welcome to the program to first time guests from our host Amazon Web service is to my right. Here is Deepak Singh, who is the director of Compute Service's. To his right is Aaron Cow, Who's the senior manager product marketing Gentlemen, thanks so much for joining us. Thank >> you for having us >> for having us, all right, so we know that every day we wake up and there's new announcements coming from Amazon, and the only way most of us keep up with it is trying to re Cory's newsletter here. But in your group and computer, we know there's a lot going on and quite a few announcements. So, Aaron, what do you kick us off with? Some of the hard news that went >> through this morning? Yeah, we just launched Amazon event. Bridgette's Ah, serverless event boss that allows youto connect your applications with data from sources like sass applications. A devious resource is in your own applications. >> All right, So Deepak would look to dig into that a little bit. I like you said, you that Amazon. You learned a lot from cloudwatch in building this tool. Everybody looking at kind of lambda and the service faces, Like Okay, how all these pieces together is that all? Amazon service is all the time. And, of course, Amazon has a huge ecosystem. But help help us understand a layer down. You know how this works. >> Yeah. So, you know, a dress service send events watchman consumer event from one of the best ways to do it is through Lando. Lando. One of London's biggest trends is the number off integration we have with events both taking in events and triggering event. But to your point there already events inside database system. I think one of the things as a service owner, that really excites me about event. How now? Customers of access, not just two ventricles inside eight of us were awesome apartments extended so that the application you can build will be really exciting. >> Quite a few other announcements maybe August or someone CK >> is another announcement where it's open. Source. Software development framework allows you to model your applications using programming language like typescript Job a python and got that. You know the whole thing with building in the cloud. It's slightly different. You usedto take your coat. Put it on a servant. Run it. Now people are building things a little more distributed. Using a lot of different resource is for their applications, so it's getting provisioning. Your infrastructure is a little bit harder, right? Either Have to do a lot of things manually. Are maybe you're writing. A lot of scripts are using a domain specific language, But with CD Kay, you're now able to use the programming languages that you're hurting your applications with two model and provisions your infrastructure. So it's super helpful. Really think it's gonna help developers increase their development velocity? They're able to use things like loops, conditions, object oriented programming. They don't have to do context switching and just a few lines of code. They're able to do a lot more. All right, >> I want I want a playing with it a little bit when it was in review, and one of things that I found that it was extremely helpful was it was a lot easier for me to write something in using CD kay and then see what that rendered down to in terms of cloud formation. And then, oh, I guess that's how I do it in cloud formation, which was great. The counterpoint, though, is it also felt, at times like it was super wordy. So if I read that what it generates compared to what I normally right, which is admittedly awful. But it's all right, we'll start to feel like I'm doing it wrong with that. And then with amplify and with Sam and the rest. There's a lot of higher level abstractions that build cloud formation for you. But then it renders down in a few different key ways under the hood. How much are these products that you're coming out with starting to shape the direction of confirmation itself? Or is that mostly baked and done? >> There's a lot of products that we're building that you know are complimenting information. Information is the template ing modeling language to provisional abusive resource is put on top of that. We have things like Sam, right? That provides a declared of ATM or high level abstracted declared way to build on topical information. You know, we have amplified also use this information to help you build mobile applications in front development and then finally have see decay for general use other things. They're all complimenting and you know are things customers are asking for helping us >> get the ecosystem. Deepak. The container space, of course, has been You know what one of these tidal waves that we've been watching on It's fundamentally changing the way people architect their applications. That huge impact on your product line Give us the update. If you could just start with some of the high level. Remember first when I talk to you. A couple of years ago, the whole kubernetes piece was sorting out. So you know, e c s E. K s usedto have a much longer name that Cory >> Cory. Finally, you fix the compensation problem where someone was getting compensated based upon number of syllables in a service name. So good on you on that one. >> Right on. Uh, you know, acronym, am I? Maybe you can you know, settle once and for all. You know how how we pronounce that >> I'm old school in love with the Army. >> But what what walk us through? Kind of. You know, your container service is, >> I think, the great thing about container, I said, adoption is everywhere on what we find. It brought a VCs the growth of cares where they're running it on to our fargate. Everything is growing like crazy because people find new interesting ways to run applications based on what they know. One what they're comfortable with their customers. Customers like Snap. There's no community well, and they're building on their building a big chunk of their new infrastructure on kneecaps or need to be with, and it basically helped develop a velocity. On the flip side, your customers like Turner Broadcasting that run a lot of their Web service is the comedy central content properties like that on Fargate because they can just stamp them out. They all you know, it's about time. It's a service that you can just keep expanding. So it boils down to one of the key things that you're comfortable with. One of the reasons you fix something if you are running like snap across. You know, in many different looks places you are likely to choose community and standardize on that. So that's the best part for me is people have choices and then the pic based on what they need. At that point in time, it can be two different teams at the same place. Picking a different solution. I will add that one of the areas that we are focused on now is a dub ability and develop experience, though the areas that our customers have been asking for CD Kay played into that record in the demo this morning. And with the probability with container inside on with the fluid that be announced, I think though that area, they do a lot more >> going forward, right? That was one of those cloudwatch container insights. Just explain what that one is >> so historically, when you do cloudwatch look very bm centric, you're looking at CPU memory. You're zooming application. We are instances run for a particular period of time. At the container world you have service is with the underlying tasks. Come and go all you know, a very different rate container inside. It's meant to be a world aware of the fact that you're containerized application that fast service is and part, they're able to get more fine grained metrics on the things that container customers care about. And you're not trying to use the BM centric language to look at the content. That's the biggest reason for doing that. And then on the floor in bedside Boy, our customers want loud rounding to whatever they want to do it on where they understand three or elasticsearch. We do that with data borrows. So we basically wrote a bunch of open source plug in for fluent, but they just end your log where you want them to go. That's kind of maybe a >> Yeah, I view it as more of a log router than I do. Almost anything else? Yeah, a question of where did it come from? Where does it go? How do you do? Keep straight. It's at this point. What is it out? What is it output to these days of their various destination options? Third party vendors cloudwatch history >> to plug in 14315413 because so many people in the center there with three the other one was like Anita. There. Apart from there, you can send it to read, Chef, you can send it todo you can send it to elasticsearch. So based on what however you want and I'll analyze it, you can send it to a custom resource. So you want you're using some third party provider. You can just send your logs over to those. >> Corey, you know, you're dealing with a lot of customers. You know, there's so many, you know, different instance types and some of some of the pieces. You know, what's the feedback you're giving? You know, Amazon these days >> entire depends upon the service teams, and it ranges from This is amazing. Excellent job, too. Okay, it's a good start, and it's always a question, though. It's when you have what 200 service options are darn near. It at this point aren't 70. It's impossible to wind up with something that is evenly consistent, and you have service is that air sub components of other service is built on top. I mean, I think the uh, I guess the feedback I've been giving almost universally across the board is assume that I am about 20% as smart as you right now seem to think I am and then explain it to me, and then I'll probably understand it a lot better. It comes down to service the storytelling more or less of meeting people of various points along their journey, and that I was mentioning in our editorial session just before this segment that that's something that AWS has markedly improved on the last two or three years, where you have customer stories that are rapidly moving up the up the stack as Faras Leverage Service's It's not just we took the EMS, and now we run them somewhere else. Now it's about building of extremely volume intensive applications on top of a whole bunch of managed service is and these air serious cos these air regulators. It's not just Twitter for pets anymore. >> Nothing wrong with that. No, >> So way were discussing like Enron was a great case this morning, and they talked about in the four years that they've been on, they re architected three times, you know, how do you balance all of these new wins is coming out with, you know, how do we make sure that I deploy something today that I've got the flexibility to change. But, you know, I want to be able to lock in my pricing and make it easier. >> Actually, we think about that quite a bit. One of the reasons we met, the way we did something that sits outside a container orchestrator. What? It doesn't lock you into choosing one or the other or even using an architecture. You can start over the monolith, start putting sidecars on it. It's getting with the ability to all your traffic portions of applications. You can start breaking out. You can put them on target. You can put them on PCs. You can put them on it, too. I think that is something we did very consciously because so many of our customers are in that position. And I think more and more are going to go higher up the stock using managed databases. You think lambda. But it's not decision they need to make all up front. They can do it piecemeal, and we see a custom fender. The good example there done that. >> I think one of the >> philosophies of like eight of us is giving customers building blocks the buildings on, so the whole thing is here's a new primitive that you can use. Then you can take it out, replace something with something else, depending on your needs. So we give customers flexibility and choice. >> And part of the problem is that that very much becomes a double edged sword. I mean, most recently you've had effectively declared war on alphabet. I don't mean the large cloud provider that turns things off for a living. I'm talking about the English alphabet where you take a look at all the different ec2 instance types. I think in US East one. Now there's over. What is it? 100 90 different instances you can pick from. It leads to analysis paralysis. Which one do I pick? What's the right answer? What am I committing to? What am I not? And you see that? That's a microcosm. The larger service problem. I want to build a Web app that does a thing. Which service is do I use? You open up the service listing and you just get this sort of sinking sensation. I get that. I can't imagine what someone new to the space is getting to >> you, and this is where things like amplify fargate aws patch. You don't need to select an instance where you just tell us for your requirements are on Batch makes that collection for you the core building. What's important because you can't really figure out what to do. But then you see us too much more about the attack to help people get there. It's an ongoing thing that will keep trying to tackle, but you see a lot more of that. >> It's controversial. One of my favorite things about Lambda, for example, is there's one knob ram, and as you turn that up, other performance characteristics increase and people complain about it. But I love the simplicity because I don't have to sit and think and make all these different decisions. It's one access, >> but if you want more knob, you can you fuck it. So I think that that's the beauty ofit that you do have that choice. >> Yeah, one lines there, and I really liked it. Borders keynote. Is he said way? Really? You know my words, commoditized. I t We all have access to all of the tools now, you know that was you know what big date originally file. It also was used to have to be a nation state 4100 to be able to do some of these things. So, you know, what do you hear from customers? How do they make sure you know, they're staying competitive and ahead on their four in that relationship between the business and I T. What do you hear from your customers these days? >> In terms of that? Well, I think, um, for you know, for customers like I think of Emperor age is a, uh, a pretty good example off that in terms of customers asking us for ability to, you know, integrate their SAS providers and a great a lot of different things and not have thio you No, no, no. >> I have >> to do a lot of undifferentiated heavy lifting and things like that. And customers are increasingly moving towards, like avenger oven architectures. And they asked us, Hey, we really like cloudwatch events and how you do things with a iittie automation and then bringing SAS providers and on way wantto you know, we don't want to build a polling infrastructure and orderto access athe eyes and do all all the heavy lifting. What we did was we built out way took cloudwatch events and added new features for SAS applications and build that into a separate service for people to use. That's like, you know, a lot of the relationships we have our customers listening to what they need and giving them what they want. >> I think that that's a very valuable thing. We used to say, You know, five years ago you would talk about, you know, let's get rid of indifferent, heavy lifting Well, now it's like, No, no, let's enable you know some thing that you would have thought was heavy lifting and we're daunted to be able to do it. But now hopefully it's easier because a lot of this stuff, you know, he said, This is still a little bit daunting, and you know, you've got a lot of ecosystem and service providers, and service is help us. You take care of, you know, because it's the paradox of choice. With all the options that you >> have on. I think that's the beauty of what I'm in a customer that smart. They managed to find interesting ways to keep challenging us and keep us busy. But I also think that really, really many of them the ones who've been able to be successful. I figured out what it needs to be. Take all the tools to give them which other ones where they want to completely hand it over to AWS and give us the responsibility. And then which ones today really feeling, get they care about and the ones who can find their balance of the ones that we see moving faster. I think that's what we're trying to >> write that one thing that does absolutely permeates virtually every service team I've worked with that AWS. I mean, I've had this experience with you where I talk about how my use case isn't a terrific fit for your product, and your response is always well, what is your use case? It's not. Is starting off on the baseline assumption that my use cases ridiculous, which, let's face it, it probably is. But being able to address a customer need to understand that even if it doesn't dictate, road map is incredibly valuable, and I don't find there are too many players in any space, let alone this one that are willing to have the patience to listen to. Frankly, some loud person wearing a suit. >> Way try. I mean, I think you heard me say this so much like a big junk. 85 90% of a road map. Customer request. I would say that even though remember remaining 10% maybe not think that they're directly asked for but think that you observed their running to or that we run into working with, you know, the one of the customers go ahead of the pack. Okay. They have this problem, Baker. How do you generalize that? And we try and understand what it means. One of the reasons to be made the container road map public was This space is moving so quickly. It's almost impossible for us to talk to enough customers to figure that out. So, like, okay, that gives us an avenue for them to come to us and just tell us and get have >> issues. Yeah, s o right. Final question for both of you directions. Looking forward, you know, the road map we love when there is publicly facing material, not under the NBA's that we normally have to be able to hear. So what are you hearing from your customers? What direction are they pulling you towards and that we should expect tow watch aws kind of a cz we head towards reinvent later this year. Yeah, >> like customers are asking us for different things for developer experience, especially event driven architectures. I think there's gonna be a lot of interesting things happening in the land of space and that entire space >> on to add to that. I think your point earlier helping the simplified choices is going to be a big part of it. Meeting them where they are in their ideas with the cooling is a big part of what you'll see us do. So you know, I think you saw examples today. We'll keep building on top of >> All right. Well, send our congratulations to the two pizza teams that worked on all of the projects that were announced today. Look forward to seeing you. You know, down the road in tracking down. Thanks so much. And welcome to be in Cuba one night having us Deepak, you know, from AWS. He's Cory Quinn on student back with lots more coverage from 80 West Summit here in New York City. Thanks for watching

>> Live from Barcelona, Spain it's theCUBE! Covering Cisco Live! Europe brought to you by Cisco and its ecosystem partners. >> Hello everyone, welcome back to theCube's live coverage here in Barcelona, Spain for Cisco Live! Europe 2019. We're at day three of three days of coverage I'm John Furrier with Dave Vellante Our next two guests we're going to talk about privacy data Michelle Dennnedy, VP and Chief Privacy officer at Cisco and Robert Waitman who is the Director of Security and Trust. Welcome back, we had them last year and everything we talked about kinda's happening on steroids here this year >> Yep. >> Welcome back >> Thank you glad to be here >> Thanks for having us >> So security, privacy all go hand in hand. A lot going on. You're seeing more breaches you're seeing more privacy challenges Certainly GDPR's going to the next level. People are, quote, complying here's a gig of data go figure it out. So there's a lot happening, give us the update. >> Well, as we suggested last year it was privacypalooza all year long running up to the enforcement deadline of May 25, 2018. There were sort of two kinds of companies. There's one that ran up to that deadline and said woohoo we're ready to drive this baby forward! And then there's a whole nother set of people who are still sort of oh my gosh. And then there's a third category of people who still don't understand. I had someone come up to me several weeks ago and say what do I do? When is this GDPR going to be a law? I thought oh honey you need a hug >> Two years ago, you need some help. >> And some companies in the US, at least were turning off their websites. Some media companies were in the news for actually shutting down their site and not making it available because they weren't ready. So a lot of people were caught off guard, some were prepared but still, you said people would be compliant, kind of and they did that but still more work to do. >> Lots more work to do and as we said when the law was first promulgated two and a half years ago GDPR and the deadline A, It's just one region but as you'll hear as we talk about our study it's impacting the globe but it's also not the end of anything it's the beginning of the information economy at long last. So, I think we all have a lot to do even if you feel rather confident of your base-level compliance now it's time to step up your game and keep on top of it. >> Before we get into some of the details of the new finding you guys have I want you to take a minute to explain how your role is now centered in the middle of Cisco because if you look at the keynotes data's in the center of a lot of things in this intent based network on one side and you've got cloud and edge on the other. Data is the new ingredient that's feeding applications and certainly collective intelligence for security. So the role of data is critical. This is a big part of the Cisco tech plan nevermind policy and or privacy and these other things you're in the middle of it. Explain your role within Cisco and how that shapes you. >> How we sort of fit in. Well it's such a good question and actually if you watch our story through theCUBE we announced, actually on data privacy day several years ago that data is the new currency and this is exactly what we're talking about the only way that you can operationalize your data currency is to really think about it throughout the platform. You're not just pleasing a regulator you're not just pleasing your shareholders you're not just pleasing your employee base. So, as such, the way we organize our group is my role sits under the COO's office our Chief Operations Office under the office of John Stewart who is our Chief Trust officer. So security, trust, advanced research all live together in operations. We have sister organizations in places like public policy, legal, marketing, the sales groups the people who are actually operationalizing come together for a group. My role really is to provide two types of strategy. One, rolling out privacy engineering and getting across inside and outside of the company as quickly as possible. It's something new. As soon as we have set processes I put them into my sister organization and they send them out as routine and hopefully automated things. The other side is the work Robert and I do together is looking at data valuation models. Working about the economics of data where does it drive up revenue and business and speed time to closure and how do we use data to not just be compliant in the privacy risk but really control our overall risk and the quality of our information overall. It's a mouth full >> So that's interesting and Robert, that leads me to a question when we've seen these unfunded mandates before we saw it with Y2K, the Enron backlash certainly the United States the Federal Rules of Civil Procedure. And the folks in the corner office would say oh, here we go again. Is there any way to get more value beyond just reducing risk and complying and have you seen companies be able to take data and value and apply it based on the compliance and governance and privacy policies? >> Dave that's a great question. It's sort of the thought that we had and the hypothesis was that this was going to be more valuable than just for the compliance reasons and one of the big findings of the study that we just released this week was that in fact those investments you know we're saying that good privacy is very good for business. It was painful, some firms stuck their head in the sand and said I don't want to even do this but still, going through the GDPR preparation process or for any of the privacy regulations has taken people to get their data house in order and it's important to communicate. We wanted to find out what benefits were coming from those organizations that had made those investments and that's really what came out in our study this week for international data privacy day we got into that quite a bit. >> What is this study? can you give us some details on it? >> It's the Data Privacy Benchmark study we published this week for international data privacy day. It's sort of an opportunity to focus on data privacy issues both for consumers and for businesses sort of the one day a year kind of like mother's day that you should always think of your mom but mother's day's a good day so you should always think of privacy when you're making decisions about your data but it's a chance to raise awareness. So we published our study this year and it was based on over thirty-two hundred responses from companies around the world from 18 countries all sorts of sizes of companies and the big findings were in fact around that. Privacy has become a serious and a boardroom level issue that the awareness has really skyrocketed for companies who are saying before I do business with you I want to know how you're using my data. What we saw this year is that seven out of eight companies are actually seeing some sales delay from their customers asking those kinds of questions. But those that have made the investment getting ready for GDPR or being more mature on privacy are seeing shorter delays. If you haven't gotten ready you're seeing 60% longer delays. And even more interestingly for us too is when you have data breaches and a lot of companies have them as we've talked about those breaches are not nearly as impactful. The organizations that aren't ready for GDPR are seeing three times as many records impacted by the breach. They're seeing system downtime that's 50% longer and so the cost of the whole thing is much more. So, kind of the question of is this still something good to do? Not only because you have to do it when you want to avoid 4% penalties from GDPR and everything else but it's something that's so important for my business that drives value. >> So the upshot there is that you do the compliance. Okay, check the box, we don't want to get fined So you're taking your medicine basically. Turns into an upside with the data you're seeing from your board. Sales benefit and then just preparedness readiness for breaches. >> Right, I mean it's a nice-- >> Is that right? >> That's exactly right John you've got it right. Then you've got your data house in order I mean there's a logic to this. So then if you figured out where your data is how to protect it, who has access to it you're able to deal with these questions. When customers ask you questions about that you're ready to answer it. And when something bad goes wrong let's say there is a breach you've already done the right things to control your data. You've got rid of the data you don't need anymore. I mean 50% of your data isn't used for anything and of course we suggest that people get rid of that that makes it less available when and if a breach occurs. >> So I got to ask you a question on the data valuation because a lot of the data geeks and data nerds like myself saw this coming. We saw data, mostly on the tech side if you invested in data it was going to feed applications and I think I wrote a blog post in 2007 data's going to be part of the development kits or development environment you're seeing that now here. Data's now part of application development it's part of network intelligence for security. Okay, so yes, check, that's happening. At the CFO level, can you value the data so it's a balance sheet item? Can you say we're investing in this? So you start to see movement you almost project, maybe, in a few years, or now how do you guys see the valuation? Is it going to be another kind of financial metric? >> Well John, it's a great point. Seeing where we're developing around this. So I think we're still in somewhat early days of that issue. I think the organizations that are thinking about data as an asset and monetizing its value are certainly ahead of this we're trying to do that ourselves. We probed on that a little bit in the survey just to get a sense of where organizations are and only about a third of organizations are doing those data mature things. Do they have a complete data map of where their stuff is? Do they have a Chief Data Officer? Are they starting to monetize in appropriate ways, their data? So, there's a long way to go before organizations are really getting the value out of that data. >> But the signals are showing that there's value in the data. Obviously the number of sales there's some upside to compliance not just doin it to check the box there's actually business benefits. So how are you guys thinking about this cause you guys are early adopters or leaders in this how are you thinking about the data measurement of it? Can you share your insights on that? >> Yeah, so you know, data on the balance sheet Grace Hopper 1965, right? data will one day be on the corporate balance sheet because it's in most cases more valuable than the hardware that processes. This is the woman who's making software and hardware work for us, in 1965! Here we are in 2019. It's coming on the balance sheet. She was right then, I believe in it now. What we're doing is, even starting this is a study of correlation rather than causation. So now we have at least the artifacts to say to our legal teams go back and look at when you have one of our new improved streamline privacy sheets and you're telling in a more transparent fashion a deal. Mark the time that you're getting the question. Mark the time that you're finishing. Let's really be much more stilletto-like measuring time to close and efficiency. Then we're adding that capability across our businesses. >> Well one use case we heard on theCUBE this week was around privacy and security in the network versus on top of the network and one point that was referenced was when a salesperson leaves they take the contacts with them. So that's an asset and people get sued over it. So this again, this is a business policy thing. so business policy sounds like... >> Well in a lot of the solutions that exist in the marketplace or have existed I've sat on three encrypted email companies before encrypted email was something the market desired. I've sat on two advisory boards of-- a hope that you could sell your own data to the marketers. Every time someone gets an impression you get a micro cent or a bitcoin. We haven't really got that because we're looking on the periphery. What we're really trying to do is let's look at what the actual business flow and processes are in general and say things like can we put a metric on having less records higher impact, and higher quality. The old data quality in the CDO is rising up again get that higher quality now correlate it with speed to innovation speed to close, launch times the things that make your business run anyway. Now correlate it and eventually find causal connections to data. That's how we're going to get that data on the balance sheet. >> You know, that's a great point the data quality issue used to be kind of a back office records management function and now it's coming to the fore and I just make an observation if you look at what were before Facebook fake news what were the top five companies in the United States in terms of market value Amazon, Google, Facebook was up there, Microsoft, Apple. They're all data companies and so the market has valued them beyond the banks, beyond the oil companies. So you're starting to see clearer evidence quantifiable evidence that there's value there. I want to ask you about we have Guillermo Diaz coming up shortly, Michelle and I want to ask you your thoughts on the technical function. You mentioned it's a board level issue now, privacy. How should the CIO be communicating to the board about privacy? What should that conversation be like? >> Oh my gosh. So we now report quarterly to the board so we're getting a lot of practice We'll put it that way. I think we're on the same journey as the security teams used to you used to walk into the board and go here's what ransomware is and all of these former CFOs and sales guys would look at you and go ah, okay, onto the financials because there wasn't anything for them to do strategically. Today's board metrics are a little soft. It's more activity driven. Have you done your PIAs? Have you passed some sort of a third party audit? Are you getting rejected for third party value chain in your partner communities? That's the have not and da da da. To me I don't want my board telling us how to do operations that's how we do. To really give the board a more strategic view what we're really trying to do is study things like time to close and then showing trending impacts. The one conversation with John Chambers that's always stuck in my head is he doesn't want to know what today's snapshot is cause today's already over give me something over time, Michelle, that will trend. And so even though it sounds like, you know who cares if your sales force is a little annoyed that it takes longer to get this deal through legal well it turns out when you multiply that in a multi-billion dollar environment you're talking about hundreds of millions of dollars probably a week, lost to inefficiency. So, if we believe in efficiency in the tangible supply chain that's the more strategic view I want to take and then you add on things like here's a risk portfolio a potential fair risk reporting type of thing if we want to do a new business Do we light up a business in the Ukraine right now versus Barcelona? That is a strategic conversation that is board level. We've forgotten that by giving them activity. >> Interesting what you say about Chambers. John you just interviewed John Chambers and he was the first person, in the mid 90s to talk about a virtual close, if you remember that. So, obviously, what you're talking about is way beyond that. >> Yeah and you're exactly right. Let's go back to those financial roots. One of the things we talk about in privacy engineering is getting people's heads-- the concept that the data changes. So, the day before your earnings that data will send Chuck Robbins to jail if someone is leaking it and causing people to invest accordingly. The day after, it's news, we want everyone to have it. Look at how you have to process and handle and operationalize in 24 hours. Figuring out those data stories helps it turn it on its head and make it more valuable. >> You know, you mentioned John Chambers one of the things that I noticed was he really represented Silicon Valley well in Washington DC and there's been a real void there since he retired. You guys still have a presence there and are doing stuff there and you see Amazon with Theresa Carlson doing some great work there and you still got Oracle and IBM in there doing their thing. How is your presence and leadership translating into DC now? Can you give us an update of what's happening at-- >> So, I don't know if you caught a little tweet from a little guy named Chuck Robbins this week but Chuck is actually actively engaged in the debate for US federal legislation for privacy. The last thing we want is only the lobbyists as you say and I love my lobbyists wherever you are we need them to help give information but the strategic advisors to what a federal bill looks like for an economy as large and complex and dependent on international structure we have to have the network in there. And so one of the things that we are doing in privacy is really looking at what does a solid bill look like so at long last we can get a solid piece of federal legislation and Chuck is talking about it at Davos as was everyone else, which was amazing and now you're going to hear his voice very loudly ringing through the halls of DC >> So he's upping his game in leadership in DC >> Have you seen the size of Chuck Robbins? Game upped, privacy on! >> It's a great opportunity because we need leadership in technology in DC so-- >> To affect public policy, no doubt >> Absolutely. >> And globally too. It's not just DC and America but also globally. >> Yeah, we need to serve our customers. We win when they win. >> Final question, we got to get wrapped up here but I want to get you guys a chance to talk about what you guys announced here at the show what's going on get the plug in for what's going on Cisco Trust. What's happening? >> Do you want to plug first? >> Well, I think a few things we can add. So, in addition to releasing our benchmark study this week and talking about that with customers and with the public we've also announced a new version of our privacy data sheets. This was a big tool to enable salespeople and customers to see exactly how data is being used in all of our products and so the new innovation this week is we've released these very nice, color created like subway maps, you know? They make it easy for you to navigate around it just makes it easy for people to see exactly how data flows. So again, something up on our site at trust.cisco.com where people can go and get that information and sort of make it easy. We're pushing towards simplicity and transparency in everything we do from a privacy standpoint and this is really that trajectory of making it as easy as possible for anyone to see exactly how things go and I think that's the trajectory we're on that's where the legislation both where GDPR is heading and federal legislation as well to try to make this as easy as reading the nutrition label on the food item. To say what's actually here? Do I want to buy it? Do I want to eat it? And we want to make that that easy >> Trust, transparency accountability comes into play too because if you have those things you know who's accountable. >> It's terrifying. I challenge all of my competitors go to trust.cisco.com not just my customers, love you to be there too go and look at our data subway maps. You have to be radically transparent to say here's what you get customer here's what I get, Cisco, here's where my third party's. It's not as detailed as a long report but you can get the trajectory and have a real conversation. I hope everybody gets on board with this kind of simplification. >> Trust.cisco.com we're going to keep track of it. Great work you guys are doing. I think you guys are leading the industry, Congratulations. >> Thank you. >> This is not going to end, this conversation continues will continue globally. >> Excellent >> Thanks for coming on Michelle, appreciate it. Robert thanks for coming on. CUBE coverage here day three in Barcelona. We'll be back with more coverage after this break.

>> Live from Toronto Canada, it's The Cube, covering Global Cloud and Blockchain Summit 2018, brought to you by The Cube. >> Hello, everyone welcome back to The Cube's live coverage here in Toronto for the first Global Cloud and Blockchain Summit in conjunction with the Blockchain futurist happening this week it's run. I'm John Fourier, my cohost Dave Vellante, we're here with Cube alumni, Bradley Rotter, pioneer Blockchain investor, seasoned pro was there in the early days as an investor in hedge funds, continuing to understand the impacts of cryptocurrency, and its impact for investors, and long on many of the crypto. Made some great predictions on The Cube last time at Polycon in the Bahamas. Bradley, great to see you, welcome back. >> Thank you, good to see both of you. >> Good to have you back. >> So I want to just get this out there because you have an interesting background, you're in the cutting edge, on the front lines, but you also have a history. You were early before the hedge fund craze, as a pioneer than. >> Yeah. >> Talk about that and than how it connects to today, and see if you see some similarities, talk about that. >> I actually had begun trading commodity futures contracts when I was 15. I grew up on a farm in Iowa, which is a small state in the Midwest. >> I've heard of it. >> And I was in charge of >> Was it a test market? (laughing) >> I was in charge of hedging our one corn contract so I learned learned the mechanisms of the market. It was great experience. I traded commodities all the way through college. I got to go to West Point as undergrad. And I raced back to Chicago as soon as I could to go to the University of Chicago because that's where commodities were trading. So I'd go to night school at night at the University of Chicago and listen to Nobel laureates talk about the official market theory and during the day I was trading on the floor of the the Chicago Board of Trade and the Chicago Mercantile Exchange. Grown men yelling, kicking, screaming, shoving and spitting, it was fabulous. (laughing) >> Sounds like Blockchain today. (laughing) >> So is that what the dynamic is, obviously we've seen the revolution, certainly of capital formation, capital deployment, efficiency, liquidity all those things are happening, how does that connect today? What's your vision of today's market? Obviously lost thirty billion dollars in value over the past 24 hours as of today and we've taken a little bit of a haircut, significant haircut, since you came on The Cube, and you actually were first to predict around February, was a February? >> February, yeah. >> You kind of called the market at that time, so props to that, >> Yup. >> Hope you're on the right >> Thank you. >> side of those shorts >> Thank you. >> But what's going on? What is happening in the capital markets, liquidity, why are the prices dropping? What's the shift? So just a recap, at the time in February, you said look I'm on short term bear, on Bitcoin, and may be other crypto because all the money that's been made. the people who made it didn't think they had to pay taxes. And now they're realizing, and you were right on. You said up and up through sort of tax season it's going to be soft and then it's going to come back and it's exactly what happened. Now it's flipped again, so your thoughts? >> So my epiphany was I woke up in the middle of the night and said oh my God, I've been to this rodeo before. I was trading utility tokens twenty years ago when they were called something else, IRUs, do you remember that term? IRU was the indefeasible right to use a strand of fiber, and as the internet started kicking off people were crazy about laying bandwidth. Firms like Global Crossing we're laying cable all over the ocean floors and they laid too much cable and the cable became dark, the fiber became dark, and firms like Global Crossing, Enron, Enron went under really as a result of that miss allocation. And so it occurred to me these utility tokens now are very similar in characteristic except to produce a utility token you don't have to rent a boat and lay cable on the ocean floor in order to produce one of these utility tokens, that everybody's buying, I mean it takes literally minutes to produce a token. So in a nutshell it's too many damn tokens. It was like the peak of the internet, which we were all involved in. It occurred to me then in January of 2000 the market was demanding internet shares and the market was really good at producing internet shares, too many of them, and it went down. So I think we're in a similar situation with cryptocurrency, the Wall Street did come in, there were a hundred plus hedge funds of all shapes and sizes scrambling and buying crypto in the fall of last year. It's kind of like Napoleon's reason for attacking Russia, seemed like a good idea at the time. (laughing) And so we're now in a corrective phase but literally there's been too many tokens. There are so many tokens that we as humans can't even deal with that. >> And the outlook, what's the outlook for you? I mean, I'll see there's some systemic things going to be flushed out, but you long on certain areas? What do you what do you see as a bright light at the end of the tunnel or sort right in front of you? What's happening from a market that you're excited about? >> At a macro scale I think it's apparent that the internet deserves its own currency, of course it does and there will be an internet currency. The trick is which currency shall that be? Bitcoin was was a brilliant construct, the the inventor of Bitcoin should get a Nobel Prize, and I hope she does. (laughing) >> 'Cause Satoshi is female, everyone knows that. (laughing) >> I got that from you actually. (laughing) But it may not be Bitcoin and that's why we have to be a little sanguine here. You know, people got a little bit too optimistic, Bitcoin's going to a hundred grand, no it's going to five hundred grand. I mean, those are all red flags based on my experience of trading on the floor and investing in hedge funds. Bitcoin, I think I'm disappointed in Bitcoins adoption, you know it's still very difficult to use Bitcoin and I was hoping by now that that would be a different scenario but it really isn't. Very few people use Bitcoin in their daily lives. I do, I've been paying my son his allowance for years in Bitcoin. Son of a bitch is rich now. (laughing) >> Damn, so on terms of like the long game, you seeing the developers adopted a theory and that was classic, you know the decentralized applications. We're here at a Cloud Blockchain kind of convergence conference where developers mattered on the Cloud. You saw a great developer, stakeholders with Amazon, Cloud native, certainly there's a lot of developers trying to make things easier, faster, smarter, with crypto. >> Yup. >> So, but all at the same time it's hard for developers. Hearing things like EOS coming on, trying to get developers. So there's a race for developer adoption, this is a major factor in some of the success and price drops too. Your thoughts on, you know the impact, has that changed anything? I mean, the Ethereum at the lowest it's been all year. >> Yup. Yeah well, that was that was fairly predictable and I've talked about that at number of talks I've given. There's only one thing that all of these ICOs have had in common, they're long Ethereum. They own Ethereum, and many of those projects, even out the the few ICO projects that I've selectively been advising I begged them to do once they raised their money in Ethereum is to convert it into cash. I said you're not in the Ethereum business, you're in whatever business that you're in. Many of them ported on to that stake, again caught up in the excitement about the the potential price appreciation but they lost track of what business they were really in. They were speculating in Ethereum. Yeah, I said they might as well been speculating in Apple stock. >> They could have done better then Ethereum. >> Much better. >> Too much supply, too many damn tokens, and they're easy to make. That's the issue. >> Yeah. >> And you've got lots of people making them. When one of the first guys I met in this space was Vitalik Buterin, he was 18 at the time and I remember meeting him I thought, this is one of the smartest guys I've ever met. It was a really fun meeting. I remember when the meeting ended and I walked away I was about 35 feet away and he LinkedIn with me. Which I thought was cute. >> That's awesome, talk about what you're investing-- >> But, now there's probably a thousand Vitalik Buterin's in the space. Many of them are at this conference. >> And a lot of people have plans. >> Super smart, great ideas, and boom, token. >> And they're producing new tokens. They're all better improved, they're borrowing the best attributes of each but we've got too many damn tokens. It's hard for us humans to be able to keep track of that. It's almost like requiring a complicated new browser download for every website you went to. We just can't do that. >> Is the analog, you remember the dot com days, you referred to it earlier, there was quality, and the quality lasted, sustained, you know, the Amazon's, the eBay's, the PayPal's, etc, are there analogs in this market, in your view, can you sniff out the sort of quality? >> There are definitely analogs, I think, but I think one of the greatest metrics that we can we can look at is that utility token being utilized? Not many of them are being utilized. I was giving a talk last month, 350 people in the audience, and I said show of hands, how many people have used a utility token this year? One hand went up. I go, Ethereum? Ethereum. Will we be using utility tokens in the future? Of course we will but it's going to have to get a whole lot easier for us humans to be able to deal with them, and understand them, and not lose them, that's the big issue. This is just as much a cybersecurity play as it is a digital currency play. >> Elaborate on that, that thought, why is more cyber security playing? >> Well, I've had an extensive background in cyber security as an investor, my mantra since 9/11 has been to invest in catalyze companies that impact the security of the homeland. A wide variety of security plays but primarily, cyber security. It occurred to me that the most valuable data in the world used to be in the Pentagon. That's no longer the case. Two reasons basically, one, the data has already been stolen. (laughing) Not funny. Two, if you steal the plans for the next generation F39 Joint Strike Force fighter, good for you, there's only two buyers. (laughing) The most valuable data in the world today, as we sit here, is a Bitcoin private key, and they're coming for them. Prominent Bitcoin holders are being hunted, kidnapped, extorted, I mean it's a rather extraordinary thing. So the cybersecurity aspect of if all of our assets are going to be digitized you better damn well keep those keys secure and so that's why I've been focused on the cybersecurity aspect. Rivets, one of the ICOs that I invested in is developing software that turns on the power of the hardware TPM, trusted execution environment, that's already on your phone. It's a place to hold keys in hardware. So that becomes fundamentally important in holding your keys. >> I mean certainly we heard stories about kidnapping that private key, I mean still how do you protect that? That's a good question, that's a really interesting question. Is it like consensus, do you have multiple people involved, do you get beaten up until you hand over your private key? >> It's been happening. It's been happening. >> What about the security token versus utility tokens? A lot of tokens now, so there's yeah, too many tokens on the utility side, but now there's a surge towards security tokens, and Greg Bettinger wrote this morning that the market has changed over and the investor side's looking more and more like traditional in structures and companies, raising money. So security token has been a, I think relief for some people in the US for sure around investing in structures they understand. Is that a real dynamic or is that going to sustain itself? How do you see security tokens? >> And we heard in the panel this morning, you were in there, where they were predicting the future of the valuation of the security tokens by the end of the year doubling, tripling, what ever it was, but what are your thoughts? >> I think security tokens are going to be the next big thing, they have so many advantages to what we now regard as share certificates. My most exciting project is that I'm heavily involved in is a project called the Entanglement Institute. That's going to, in the process of issuing security infrastructure tokens, so our idea is a public-private partnership with the US government to build the first mega quantum computing center in Newport, Rhode Island. Now the private part of the public-private partnership by the issuance of tokens you have tremendous advantages to the way securities are issued now, transparency, liquidity. Infrastructure investments are not very liquid, and if they were made more liquid more people would buy them. It occurred to me it would have been a really good idea if grandpa would have invested in the Hoover Dam. Didn't have the chance. We think that there's a substantial demand of US citizens that would love to invest in our own country and would do so if it were more liquid, if it was more transparent, if the costs were less of issuing those tokens. >> More efficient, yeah. >> So you see that as a potential way to fund public infrastructure build-outs? >> It will be helpful if infrastructure is financed in the future. >> How do you see the structure on the streets, this comes up all the time, there's different answers to this. There's not like there's one, we've seen multiple but I'm putting a security token, what am i securing against, cash flow, equity, right to convert to utility tokens? So we're starting to see a variety of mechanisms, 'cause you have to investor a security outcome. >> Yeah, so as an investor, what do you look for? >> Well, I think it's almost limitless of what these smart securities, you know can be capable of, for example one of the things that were that we're talking with various parts of the government is thinking about the tax credit. The tax credit that have been talked about at the Trump administration, that could be really changed on its head if you were able to use smart securities, if you will. Who says that the tax credit for a certain project has to be the same as all other projects? The president has promised a 1.5 trillion dollar infrastructure investment program and so far he's only 1.5 trillion away from the goal. It hasn't started yet. Wilbur Ross when, in the transition team, I had seen the white paper that he had written, was suggesting an 82% tax credit for infrastructure investment. I'm going 82%, oh my God, I've never. It's an unfathomable number. If it were 82% it would be the strongest fiscal stimulus of your lifetime and it's a crazy number, it's too big. And then I started thinking about it, maybe an 82% tax credit is warranted for a critical infrastructure as important as quantum computing or cyber security. >> Cyber security. >> Exactly, very good point, and maybe the tax credit is 15% for another bridge over the Mississippi River. We already got those. So a smart infrastructure token would allow the Larry Kudlow to turn the dial and allow economic incentive to differ based on the importance of the project. >> The value of the project. >> That is a big idea. >> That is a big idea. >> That is what we're working on. >> That is a big idea, that is a smart contract, smart securities that have allocations, and efficiencies, and incentives that aren't perverse or generic. >> It aligns with the value of the society he needs, right. Talk about quantum computing more, the potential, why quantum, what attracted you to quantum? What do you see as the future of quantum computing? >> You know, you don't you don't have to own very much Bitcoin before what wakes you up in the middle of the night is quantum computing. It's a hundred million times faster than computing as we know it today. The reason that I'm involved in this project, I believe it's a matter of national security that we form a national initiative to gain quantum supremacy, or I call it data supremacy. And right now we're lagging, the Chinese have focused on this acutely and are actually ahead, I believe of the United States. And it's going to take a national initiative, it's going to take a Manhattan Project, and that's that's really what Entanglement Institute is, is a current day Manhattan Project partnering with government and three-letter agencies, private industry, we have to hunt as a pack and focus on this or we're going to be left behind. >> And that's where that's based out of. >> Newport, Rhode Island. >> And so you got some DC presence in there too? >> Yes lots of DC presence, this is being called Quantum summer in Washington DC. Many are crediting the Entanglement Institute for that because they've been up and down the halls of Congress and DOD and other-- >> Love to introduce you to Bob Picciano, Cube alumni who heads up quantum computing for IBM, would be a great connection. They're doing trying to work their, great chips to building, open that up. Bradley thanks for coming on and sharing your perspective. Always great to see you, impeccable vision, you've got a great vision. I love the big ideas, smart securities, it's coming, that is, I think very clear. >> Thank you for sharing. >> Thank you. The Cube coverage here live in Toronto. The Cube, I'm John Furrier, Dave Vellante, more live coverage, day one of three days of wall-to-wall coverage of the Blockchain futurist conference. This is the first global Cloud Blockchain Summit here kicking off the whole week. Stay with us for more after this short break.

>> Announcer: Live from Nassau in the Bahamas, it's the Cube. Covering Polycon '18. Brought to you by Polymath. >> Welcome back, everyone. This is the Cube's exclusive coverage. We're live in the Bahamas, here for day two of our wall to wall coverage of Polycon '18. It's a security token conference, securitizing, you know, token economics, cryptography, cryptocurrency. All this is in play. Token economics powering the world. New investors are here. I'm John Furrier, Dave Vellante. Our next guest is Nithin Eapen Who's the Chief Investment Officer for Arcadia Crypto Ventures. Welcome to the Cube. >> Thank you very much gentlemen. >> Thanks for joining us. >> Thanks for coming out. >> Excited to have you on for a couple reasons. One, we've been talking since day one, lot of hallway conversations. Small, intimate conference, so we've had a chance to talk. Folks haven't heard that yet, so let's kind of get some of the key things we discussed. You are very bullish and long on cryptocurrency and Blockchain. You guys are doing a variety of deals. You're also advising companies and you guys are rolling your sleeves up. So kind of interesting dynamics. So take a minute to explain what you guys are doing, your model. >> Okay. >> And we're going to try to get some of your partners on later. You have a great team. >> Yep. >> Experienced pros in investing. And you got wales, you got pros. So you got a nice balance. >> Yes we do. >> So take a minute to explain Arcadia, your approach and philosophy. >> Okay. Okay. So Arcadia Crypto Ventures primarily we are a private fund. We invest other money. We believe in the whole crypto space. We believe this market is expanding and it is growing and it's going to be the biggest thing that ever happened. It's going to be this fusion of internet and PC and mobile. And everything is going to go batshit, okay. We believe in the whole tokenization world. Everything is going to be tokenized. So as a whole, we believe this space is going to go very big. Okay, so that's one piece and because of that, we invest in the space, the whole space. Not one bitcoin or Ethereum, but everything in the space that makes sense. People who have a use case. Now the second piece of it is we advised great founders. We want to get founders to come out and build these new things because this is the new internet of the new era and people have to come out and build these things. And so many of them are traditional businesses and we have to explain to them why this matters, why you should come to this space and be decentralized and reach the whole world. Because initially, the internet came. The idea of the internet was everybody gets information. Now information did get everywhere. You don't have to worry that the mailman is there to deliver your email anymore. Even if it's a Sunday, your mail will get delivered. So that part was good. But now you have these few companies that's holding all your data. It's okay for most people, but they do censor a lot of people. So that is one point. That censorship. We want a censorship-resistant world where everybody's ideas get out. So that way, we believe that's how this whole internet space itself is going to change because of that. See this is if I explained in one word, this is the greatest sociopolitical economic experimental revolution ever that has happened in humankind. >> In the history of the world. I mean this is important. I'd said that on my opening today. >> Uh-huh. >> Dave and I were riffing and Dave and I have always been studying. We've been entre-- We are entrepreneurs. We live in Silken Valleys in Boston and so you seeing structural change going on. So it's not just make money. >> Nope. >> There's mission-based, younger demographics. So you starting to see really great stuff. So I want to ask you specifically, 'cause you guys are unique in the sense that you're investing in a lot of things. But startups, pure-playing startups? >> Which had only one path before, or two paths. >> Right, yeah. >> Cashflow financing and venture capital. >> Okay. >> So that's a startup model. The growing companies that are transform their growth business with token economics, those would have long odds. Those are the best deals. >> Okay. Then there's like the third deal. Well we're out of business, throw the Hail Mary, repivot. (laughs) Right, so categorically, you're starting to see the shape of the kinds of swim lanes of deals. >> Okay. >> Okay, pivoting, that Hail Mary. Okay, you can evaluate that pretty much straight up on that. Startups need nurturing, right? >> Yeah. >> So the VC1 al-oc-chew works really well for startups because of the product market fits going to be developed. You got cloud computing so you can go faster. So you guys are nurturing startups. At the same time, you're also doing growth deals. >> We do. >> Explain the dynamic between those kinds of deals, how you guys approach them. What's the dynamic? What are the key things that you're bringing? Is it just packaging? Is it tech? So on, so forth. >> So with a lot of people, when they are on the advisory side. Primarily we look at the founder and the tech. What are they trying to solve? That is key. If it's a turd, you can't package it. No matter how you package it, that's not going to work. >> You can't package dog you-know-what. >> Yeah, exactly, okay. >> So that's one thing that we look at. The founders and their idea. Now their idea, can it be decentralized? Some models are meant to be centralized maybe so it doesn't work, okay. Like, see it all boils down to-- Let me break it down. We look at it. Okay, do you have an asset? Behind the scenes, is there an asset? Is that asset being transferred among parties? If you have an asset and it's being transferred, is there some central mechanism in between? Because if there is a central mechanism in between, that means you're going to be paying rent to that. Okay, all right. You have these things. Okay, great. Now you have your asset. Do you have that in between party? But in some of them, let's say you have money in your pocket. You walk, it falls down. Somebody else pick ups the money. It's his. It's a bearer asset, okay? So that's where bitcoin solved a very big problem. It was bearer asset. >> Unless they hack your wallet, then they take your money. >> Right. That happens in real life too, right? Somebody can take money from your wallet. So it can happen in bitcoin. They can hack your wallet. All right. So bitcoin was solving that problem. Now the second piece is a registered asset. And I mean by registered asset is take your car. You buy your car, you go to the DMV, stand in line, register. There's a record of data at the DMV in their central database. If somebody steals your car, the car is still not his. It's only if they can change the record over there in DMV. Then it becomes his. Now there maybe you do want the DMV to be there. Or maybe we can-- But the DMV being there, now you have a problem. They're going to charge you rent and they can decide, oh you know what? John, I'm not going to give him a license or a car in the state of California. They can decide, right? So that is where now you decide do you want to go the centralized route or the decentralized route? So we break it down to the asset. >> So there could be a fit for decentralized. I get that. >> Yeah. >> Let me ask you a tactical question, because I know a lot of entrepreneurs out there. They're watching and they'll hear this. A big strategic decision up front is, obviously, token selection. >> So it's pretty clear that security token works really well for funding and whatnot. Then there's a role for security tokens. I mean utility tokens. >> Yes. >> So do people, should they start from a risk management standpoint, a new company. So let's just say we had an existing business. Entrepreneur says, "Hey, you know what? We're doing well. We're doing 10 million dollars in revenue and I want to do tokenize 'cause we're a decentralized business. That's a perfect fit." Do they start a new company or do they just use the security token with their existing stable company? >> I would suggest, usually at that time, that's more of a legal question at that time. I don't know if I'm a lawyer to answer that. I tell them, you have a business. The business model is going well. If you're happy with it, let that be there. Make a new company. If your business model was not doing good, you might as well start from there because you figure out it's not working. But again, at that time, we tried to come up with this question. Are you trying to put the old wine in a new bottle kind of thing? If the wine is old, it ain't going to work. You have to get to that realization. So, here. >> People are being sued. So mainly the legal question is do I want to risk being. >> All right, let me hop in here. I wanted to ask, go back to something you said about censorship. I had this conversation with my kid the other day. I was explaining Google essentially censors your search results based on what they think you're going to click on. >> They do that. >> He's like no and then he thought about it and he's like okay, yeah they kind of do that. Okay, so that's an underpinning of we're going to take back the internet, right? >> Yeah. >> Okay, I just wanted to sort of clarify that. From an investment philosophy standpoint, you're technical, yet you don't exclusively vet or invest in infrastructure protocols and dig deep into what-- You read the white papers, but there are some folks out there hedge funds, et cetera. All they do is just invest in utility tokens. They're trying to invest in stuff that's going to be infrastructure for the next internet. Your philosophy is different. You're saying, we talked about this, we don't really know what's going to win, but we make prudent investments in areas that we think will win. We like to spread it around a little bit. Why that philosophy? May reduce your return, but it also reduces your risk. Maybe you could describe that a little bit. >> Sure. See, in general, picking winners in the long run has been-- It's a proved fact that nobody could pick winners. Like if you take active hedge fund managers. Active hedge fund managers, in the long run, if you take 10 to 20 years, they lag the S and P. So if you had money, if you give it to an active hedge fund manager, and so that you just had to buy the S and P, you will have beaten 93%. >> That's Buffet's advice. Buy an S and P 500. >> Buffet made a bet for a billion dollars or something where, you know. So take Warren Buffet for that matter, his fund is lagging too. In reality, all his stock investments are down. He put it in IBM at $200 after eight years, it's at the 143 or something, right? So realistically,-- There's a lot of luck element, okay. You can do all of the analysis and you could still end up buying Enron, Lehman, and Bear Stearns, right? >> Right, yeah. >> And at that time, see they were using some models that they knew 'til then. Most people, investment comes from, you have this background that you know, okay this is what I look at. Cash flow, discounted cash flow. Great. If that is there, price to earnings, I'm going to buy. But then an Amazon came, most of the traditional investors never invested in Amazon. They were like, it's a loss- making company. They never going to survive. But they forgot the fact that companies like that there's this network effect and once the people are there, at any point, Jeff Bezos can just turn off the switch and take off the discount. You're not going to change your shopping from Amazon at that point because this month I lost my 15%. We're so used to it so people missed that. Nowadays they see that, but when it came to Blockchain they're like, oh, no, no, this is a fad. That's what most people said. >> So we talked about discounted cashflow as a classic valuation method. I see guys trying to do DCF on these investments. I mean, we were joking about that. (laughs) How do you-- What's your reaction to that? >> If anybody's saying that if they come to me and I'm like you-- I don't know what Kool-Aid do you drink at that point because what cashflow are they discounting? There's no cashflow. It's not like you're going to get dividends from these tokens. There's no dividends. It's like can you find out how many people are going to use it. What is the network effect? And again, for that, a lot of people are coming with a lot of these matrices or matrix right now. But I think even that, they're trying to retrofit into it. They're like, oh I can use this matrix. But, really we don't know. >> So people tend to want metrics. Dave and I talk about this all the time. When people part with their money, they need to know what they're betting on. So the question is when you look at investments, when you spend cash, when you write checks, what is your valuation technique? Do you look for the l-- How do you play that long game? What's the criteria? Besides like the normal stuff like founders, disruptive, like you got to write the check, let's say. Okay, buying a token. It's got to be worth something in the future, obviously. >> So we look at that space, where invariably they are trying to disrupt. Is there a big market? And even if it's a niche market, okay? So we're doing an error chain token. It's a very niche market. It's just the pilot, the maintenance folks, and the charter people, or the plain charter guys. It's a very small market, but that's good enough. It's very niche. They can have an ecosystem between themselves rather than being incentivized to long game miles and stuff like that, right? It doesn't have to be a very big market. We just look at it, okay. Founder is good, he has an idea, it is a space that can be decentralized and people can come in and they feel that they're part of the ecosystem. See the whole thing with the token economy and a traditional economy like let's say I'm spending money to buy a stock. So I buy stock. As an investor, what do I want? I want maximum returns. The employee, he wants to get maximum pay. And the consumer who's buying the product, he wants to get it at the cheapest price. So there's a-- It start aligned, okay? The moment you give 'em the cheapest price, my profits go down. If I increase the employees' salary, my profits go down. So we are all three of us are totally misaligned. >> If I for an important point, do you favor certain asset classes, you know, token, security tokens, or utility tokens, or you looking for equity? I mean, maybe just ... >> Right now, we've moved away from the whole equity bonds, or any of those things. We are totally concentrated on the utility or security tokens. We don't mind if it's a security token or utility token. >> And if it's a security token, are you looking for dividends, are you looking for >> At that point it's some kind of dividend. >> So you're not expecting equity as part of that security token? >> No, I like to expect equity, but if they are saying okay my token, if people buy and if they pay me $10, and out of that you're going to get $1 back, okay that's fine. We don't mind that as long as it's legal and all those things we're fine because it just makes the process easier. Earlier you invest and you didn't know when you could get out of your investment. At this point, it's become so liquid, at any point of time within two or three months, the token is less to people are either buying and selling. We know, otherwise, earlier when we used to do Ren Chain investments, we would get into our product, have it it's time seven to 10 years to get out. And in the meanwhile, they say great stories. Oh we're doing great. Who do I check with that we are doing great? I'm not getting any dividends. Nobody's buying this from me. How do I know? Where am I? I really don't know. I can make these values up and on my Excel sheet and say okay we valuing this company at a billion. >> So your technique is to say okay look at the equity plays the long game. You need an exit on liquidity, either M and A or IPO. >> Yes. >> Now you have a new liquidity market, so you play the game differently. I won't say spray and pray, but you have multiple bets going on so you can monitor liquidity opportunity. So that's a new calculation. >> And it's a great calculation, also. Because see we're in the market and now we know at any point of time, we don't have things on our books that are like we don't know what the value is. We know what that price is because the market is there, the exchange is there. What other people are willing to pay for us doesn't surprise. It's like saying my house is worth a million dollars. Actually it might be worth to me. It depends on what people are willing to pay me. >> Right exactly. >> If I have to synthesize this, you're taking high frequency trading techniques with classic venture investing, handling token from those two perspectives. >> Yes. >> High frequency trading meaning I'm looking at volatility and then option to abandon and get rid of whatever or whatever. >> The only thing is, we're not exiting our positions. We are in the long game. We believe the score market is supposed to at least reach eight trillion. When we started this whole investing, at that time, the whole market was at six billion and we said okay this market, based on our thesis, is supposed to reach eight trillion. Until then, we keep buying, okay? >> But to your HFT, you're not really arbitraging. >> No, no, we're not doing any of those. Because see >> They're applying real time techniques to token evaluations so they're game is try to get into a winner. >> Yes. >> With some tokens. >> A lot of the funds, they're doing this arbitrage more. They're trying to do arbitrage. But the problem is they're missing the big picture that way. So, arbitrage works in a very tight market. So S and P, let's say, somebody's doing 5% return on S and P. The guy with a arbitrage is coming and saying I made five point three, 5.5% or 6%. That's great in the equity world. Now, I want returns last year are 10 x or 30 x or 50 x. And somebody comes and tells me I made an extra 0.2%, doesn't really matter to me. I'm like instead of wasting that time doing arbitrage and paying taxes, I might just hold it. >> You believe in the fundamentals. >> You guys are in New York. Obviously, Arcadia Crypto Ventures, that's how they get ahold of you guys. Final question for you to end the segment. As new real pros come in, and let's take New York as a since you're in New York. The New York crowd comes in or the Silken Valley comes crowd existing market players other markets come in here. How important is optics packaging and compatibility with the sector, meaning I just can't throw my weight around on the hedge fund scene. We do it this way, I got money. Because people here have money. So what's the dynamic of pros coming in, we're seeing institutional folks come in, we're seeing real pros come in. They've never been to Burning Man. So, you know, they get that Burning Man culture exists, but this is not a Burning Man industry. >> Right, right. >> Business doesn't run like Burning Man. Maybe it should, that's a debate we'll have. Your take. >> So the new funds that are coming in, so they have a fear that they have missed out. They are missing the picture that this is just the beginning. So they've seen that this industry has gone from six billion to 500 billion in a year or year and a half. They're like, oh my god, I missed it. >> It's got to be over. >> So I have to write these big checks to get this. We don't write big checks. We write much smaller checks because we believe that if a founder is raising money, he has to raise it through small checks from everybody. That means all those people are really interested in this. And they're all of them really want the token to go up. Whether it's the investor, the user, and the employee who is working there because all of them they're interests are aligned. The moment you give a big check, so let's say you could raise 10 million from 10,000 people or you could raise it from one person. So when the big check is there, let's say I go to raise my money. There's this fund who's missed it and he says here's 10 million dollars. Okay, now I've got me and the fund and my tokens. Nobody else knows about my tokens. My tokens are as good as valueless. Now the funders looking okay, I need to exit. Nobody knows about my tokens. The fund is the only guy who has my tokens, he's trying to exit. Obviously the market is going to crash. There's no market. And he's like why did I get into this. So he missed that point that you need people around you. It's not just you alone. See, earlier days when ... >> This is your point about understanding how token economics works. >> Yes. >> So having more people in actually creates a game mechanic for trading. >> Because then you know that you're not the only guy interested in this. And earlier venture capital space there were these bunch of few venture capitals who wanted to capture that whole thing and tried to sell it to the next guy. Here, I'm what I'm saying is, we all have to come in together. We all can be together at the same price, which is good because the small person has, the common man has a chance to be a VC right now. Earlier you could never be a VC. I could only see Google, after IPO. I could never get it at what KPCB or Sequoia got it at. I had to wait 'til they got through CDA, CDB, which they bought at five cents. I would get at about $40 maybe. In this case, the big fund has a lot more money than me, but I can have my small 5,000 or 10,000. I can invest in the ICO. >> If you picked the right spot and you were there at the right place, the right time. 'Cause you are seeing guys come in and try to buy up all the tokens early on. >> They're trying to do that. They don't get it, but they will understand. So it is a learning (mumbles). Even they will evolve. They're like okay this is not how it works. And you have to make mistakes. >> Sorry, got to ask you one final, final since you brought it up. More people the better. So we're hearing rumors inside the hallways here that big wales are buying full allocations and then sharing them with all their friends. >> Possible, it is possible. >> We see some of that behavior. Dave calls it steel on steel, you know. Groups, you know. I'm going to take this whole deal down. We see that in venture capital. Used to be syndicates. Now you seeing Andreessen Horowitz doing the whole deals. That kind of creates some alienation, my opinion, but what's your take on that? I'm a big wale. I'm taking down the whole allocation. >> It's okay. Some of those things are going to happen, okay. It is fine. The only problem is usually when that happens the big wale who takes it he will realize very quickly. >> He's got to get more people. >> He needs more people otherwise he might be able to exit to his five buddies who were always taking it from him. Now those guys, they also have to exit at some point. Nobody knows about the product. Might as well just take a small piece, even the founders in this case typically in a token model. Founders who've taken 20% or 10% have done better than founders who took 60% of the whole tokens. >> Right. Nithin, great to have you on. Love your business model. Arcadia Crypto Ventures. They got real pros, they got a wale, they got people who know what they're doing, and they're active. They understand the ethos. I think you guys are well-aligned and you're not trying to come in and saying this is how we did it in New York before. You get the culture. You're aligned and you're making investments. Great perspective. Thanks for sharing. >> Thank you so much. >> This is the Cube, bringing the investor perspective live here in the Bahamas. More exclusive Cube coverage. Token economics, huge opportunity for entrepreneurs and investors to create value and capture it. That's Blockchain, that's crypto, that's token economics. I'm John with Dave Vallante. We'll be back with more coverage after this short break. (futuristic digital music)

>> Announcer: Live from New York, it's theCUBE covering Machine Learning Everywhere, Build Your Ladder To AI, brought to you by IBM. (techy music playing) >> Welcome back to New York City as we continue here at IBM's Machine Learning Everywhere, Build Your Ladder To AI bringing it to you here on theCUBE, of course the rights to the broadcast of SiliconANGLE Media and Dave Vellante joins me here. Dave, good morning once again to you, sir. >> Hey, John, good to see you. >> And we're joined by Madhu Kochar, who is the Vice President of Analytics Development and Client Success at IBM, I like that, client success. Good to see you this morning, thanks for joining us. >> Yeah, thank you. >> Yeah, so let's bring up a four letter / ten letter word, governance, that some people just cringe, right, right away, but that's very much in your wheelhouse. Let's talk about that in terms of what you're having to be aware of today with data and all of a sudden these great possibilities, right, but also on the other side, you've got to be careful, and I know there's some clouds over in Europe as well, but let's just talk about your perspective on governance and how it's important to get it all under one umbrella. >> Yeah, so I lead product development for IBM analytics, governance, and integration, and like you said, right, governance has... Every time you talk that, people cringe and you think it's a dirty word, but it's not anymore, right. Especially when you want to tie your AI ladder story, right, there is no AI without information architecture, no AI without IA, and if you think about IA, what does that really mean? It means the foundation of that is data and analytics. Now, let's look deeper, what does that really mean, what is data analytics? Data is coming at us from everywhere, right, and there's records... The data shows there's about 2.5 quintillion bytes of data getting generated every single day, raw data from everywhere. How are we going to make sense out of it, right, and from that perspective it is just so important that you understand this type of data, what is the type of data, what's the classification of this means in a business. You know, when you are running your business, there's a lot of cryptic fields out there, what is the business terms assigned to it and what's the lineage of it, where did it come from. If you do have to do any analytics, if data scientists have to do any analytics on it they need to understand where did it actually originated from, can I even trust this data. Trust is really, really important here, right, and is the data clean, what is the quality of this data. The data is coming at us all raw formats from IOT sensors and such. What is the quality of this data? To me, that is the real definition of governance. Right, it's not just about what we used to think about compliance, yes, that's-- >> John: Like rolling a rag. >> Right, right. >> But it's all about being appropriate with all the data you have coming in. >> Exactly, I call it governance 2.0 or governance for insights, because that's what it needs to be all about. Right, compliance, yes indeed, with GDPR and other things coming at us it's important, but I think the most critical is that we have to change the term of governance into, like, this is that foundation for your AI ladder that is going to help us really drive the right insights, that's my perspective. >> I want to double click on that because you're right, I mean, it is kind of governance 2.0. It used to be, you know, Enron forced a lot of, you know, governance and the Federal Rules of Civil Procedure forced a lot of sort of even some artificial governance, and then I think organization, especially public companies and large organizations said, "You know what, we can't just do "this as a band-aid every time." You know, now GDPR, many companies are not ready for GDPR, we know that. Having said that, because it is, went through governance 1.0, many companies are not panicked. I mean, they're kind of panicking because May is coming, (laughs) but they've been through this before. >> Madhu: Mm-hm. >> Do you agree with that premise, that they've got at least the skillsets and the professionals to, if they focus, they can get there pretty quickly? >> Yeah, no, I agree with that, but I think our technology and tools needs to change big time here, right, because regulations are coming at us from all different angles. Everybody's looking to cut costs, right? >> Dave: Right. >> You're not going to hire more people to sit there and classify the data and say, "Hey, is this data ready for GDPR," or for Basel or for POPI, like in South Africa. I mean, there's just >> Dave: Yeah. >> Tons of things, right, so I do think the technology needs to change, and that's why, you know, in our governance portfolio, in IBM information server, we have infused machine learning in it, right, >> Dave: Hm. >> Where it's automatically you have machine learning algorithms and models understanding your data, classifying the data. You know, you don't need humans to sit there and assign terms, the business terms to it. We have compliance built into our... It's running actually on machine learning. You can feed in taxonomy for GDPR. It would automatically tag your data in your catalog and say, "Hey, this is personal data, "this is sensitive data, or this data "is needed for these type of compliance," and that's the aspect which I think we need to go focus on >> Dave: Mm-hm. >> So the companies, to your point, don't shrug every time they hear regulations, that it's kind of built in-- >> Right. >> In the DNA, but technologies have to change, the tools have to change. >> So, to me that's good news, if you're saying the technology and the tools is the gap. You know, we always talk about people, process, and technology the bromide is, but it's true, people and process are the really-- >> Madhu: Mm-hm. >> Hard pieces of it. >> Madhu: Mm-hm. >> Technology comes and goes >> Madhu: Mm-hm. >> And people kind of generally get used to that. So, I'm inferring from your comments that you feel as though governance, there's a value component of governance now >> Yeah, yeah. >> It's not just a negative risk avoidance. It can be a contributor to value. You mentioned the example of classification, which I presume is auto-classification >> Madhu: Yes. >> At the point of use or creation-- >> Madhu: Yes. >> Which has been a real nagging problem for decades, especially after FRCP, Federal Rules of Civil Procedure, where it was like, "Ugh, we can't figure "this out, we'll do email archiving." >> Madhu: Mm-hm. >> You can't do this manually, it's just too much data-- >> Yeah. >> To your point, so I wonder if you could talk a little bit about governance and its contribution to value. >> Yeah, so this is good question. I was just recently visiting some large banks, right, >> Dave: Mm-hm. >> And normally, the governance and compliance has always been an IT job, right? >> Dave: Right. >> And they figure out bunch of products, you know, you can download opensource and do other things to quickly deliver data or insights to their business groups, right, and for business to further figure out new business models and such, right. So, recently what has happened is by doing machine learning into governance, you're making your IT guys the heroes because now they can deliver stuff very quickly, and the business guys are starting to get those insights and their thoughts on data is changing, you know, and recently I was talking with these banks where they're like, "Can you come and talk to "our CFOs because I think the policies," the cultural change you referred to then, maybe the data needs to be owned by businesses. >> Dave: Hm. >> No longer an IT thing, right? So, governance I feel like, you know, governance and integration I feel like is a glue which is helping us drive that cultural change in the organizations, bringing IT and the business groups together to further drive the insights. >> So, for years we've been talking about information as a liability or an asset, and for decades it was really viewed as a liability, get rid of it if you can. You have to keep it for seven years, then get rid of it, you know. That started to change, you know, with the big data movement, >> Madhu: Yeah. >> But there was still sort of... It was hard, right, but what I'm hearing now is increasingly, especially of the businesses sort of owning the data, it's becoming viewed as an asset. >> Madhu: Yes. >> You've got to manage the liabilities, we got that, but now how do we use it to drive business value. >> Yeah, yeah, no, exactly, and that's where I think our focus in IBM analytics, with machine learning and automation, and truly driving that insights out of the data. I mean, you know, people... We've been saying data is a natural resource. >> Dave: Mm-hm. >> It's our bloodline, it's this and that. It truly is, you know, and talking to the large enterprises, everybody is in their mode of digital transformation or transforming, right? We in IBM are doing the same things. Right, we're eating our own, drinking our own champagne (laughs). >> John: Not the Kool-Aid. >> You know, yeah, yeah. >> John: Go right to the dog. >> Madhu: Yeah, exactly. >> Dave: No dog smoothie. (laughs) >> Drinking our own champagne, and truly we're seeing transformation in how we're running our own business as well. >> Now what, there are always surprises. There are always some, you know, accidents kind of waiting to happen, but in terms of the IOT, you know, have got these millions, right, of sensors-- >> Madhu: Mm-hm. >> You know, feeding data in, and what, from a governance perspective, is maybe a concern about, you know, an unexpected source or an unexpected problem or something where yeah, you have great capabilities, but with those capabilities might come a surprise or two in terms of protecting data and a machine might provide perhaps a little more insight than you might've expected. So, I mean, just looking down the road from your perspective, you know, is there anything along those lines that you're putting up flags for just to keep an eye on to see what new inputs might create new problems for you? >> Yeah, no, for sure, I mean, we're always looking at how do we further do innovation, how do we disrupt ourselves and make sure that data doesn't become our enemy, right, I mean it's... You know, as we are talking about AI, people are starting to ask a lot of questions about ethics and other things, too, right. So, very critical, so obviously when you focus on governance, the point of that is let's take the manual stuff out, make it much faster, but part of the governance is that we're protecting you, right. That's part of that security and understanding of the data, it's all about that you don't end up in jail. Right, that's the real focus in terms of our technology in terms of the way we're looking at. >> So, maybe help our audience a little bit. So, I described at our open AI is sort of the umbrella and machine learning is the math and the algorithms-- >> Madhu: Yeah. >> That you apply to train systems to do things maybe better than, maybe better than humans can do and then there's deep learning, which is, you know, neural nets and so forth, but am I understanding that you've essentially... First of all, is that sort of, I know it's rudimentary, but is it reasonable, and then it sounds like you've infused ML into your software. >> Madho: Yes. >> And so I wonder if you could comment on that and then describe from the client's standpoint what skills they need to take advantage of that, if any. >> Oh, yeah, no, so embedding ML into a software, like a packaged software which gets delivered to our client, people don't understand actually how powerful that is, because your data, your catalog, is learning. It's continuously learning from the system itself, from the data itself, right, and that's very exciting. The value to the clients really is it cuts them their cost big time. Let me give you an example, in a large organization today for example, if they have, like, maybe 22,000 some terms, normally it would take them close to six months for one application with a team of 20 to sit there and assign the terms, the right business glossary for their business to get data. (laughs) So, by now doing machine learning in our software, we can do this in days, even in hours, obviously depending on what's the quantity of the data in the organization. That's the value, so the value to the clients is cutting down that. They can take those folks and go focus on some, you know, bigger value add applications and others and take advantage of that data. >> The other huge value that I see is as the business changes, the machine can help you adapt. >> Madhu: Yeah. >> I mean, taxonomies are like cement in data classification, and while we can't, you know, move the business forward because we have this classification, can your machines adapt, you know, in real time and can they change at the speed of my business, is my question. >> Right, right, no, it is, right, and clients are not able to move on their transformation journey because they don't have data classified done right. >> Dave: Mm-hm. >> They don't, and you can't put humans to it. You're going to need the technology, you're going to need the machine learning algorithms and the AI built into your software to get that, and that will lead to, really, success of every kind. >> Broader question, one of the good things about things like GDPR is it forces, it puts a deadline on there and we all know, "Give me a deadline and I'll hit it," so it sort of forces action. >> Madhu: Mm-hm. >> And that's good, we've talked about the value that you can bring to an organization from a data perspective, but there's a whole non-governance component of data orientation. How do you see that going, can the governance initiatives catalyze sort of what I would call a... You know, people talk about a data driven organization. Most companies, they may say they are data driven but they're really not foundational. >> Mm-hm. >> Can governance initiatives catalyze that transformation to a data driven organization, and if so, how? >> Yeah, no, absolutely, right. So, the example I was sharing earlier with talking to some of the large financial institutes, where the business guys, you know, outside of IT are talking about how important it is for them to get the data really real time, right, and self-service. They don't want to be dependent on either opening a work ticket for somebody in IT to produce data for them and god forbid if somebody's out on vacation they can never get that. >> Dave: Right. >> We don't live in that world anymore, right. It's online, it's real time, it's all, you know, self-service type of aspects, which the business, the data scientists building new analytic models are looking for that. So, for that, data is the key, key core foundation in governance. The way I explained it earlier, it's not just about compliance. That is going to lead to that transformation for every client, it's the core. They will not be successful without that. >> And the attributes are changing. Not only is it self-service, it's pervasive-- >> Madhu: Yeah. >> It's embedded, it's aware, it's anticipatory. Am I overstating that? >> Madhu: No. >> I mean, is the data going to find me? >> Yeah, you know, (laughs) that's a good way to put it, you know, so no, you're at the, I think you got it. This is absolutely the right focus, and the companies and the enterprises who understand this and use the right technology to fix it that they'll win. >> So, if you have a partner that maybe, if it is contextual, I mean... >> Dave: Yeah. >> So, also make it relevant-- >> Madhu: Yes. >> To me and help me understand its relevance-- >> Madhu: Yes. >> Because maybe as a, I hate to say as a human-- >> Madhu: Yes. >> That maybe just don't have that kind of prism, but can that, does that happen as well, too? >> Madhu: Yeah, no. >> John: It can put up these white flags and say, "Yeah, this is what you need." >> Yeah, no, absolutely, so like the focus we have on our natural language processing, for example, right. If you're looking for something you don't have to always know what your SQL is going to be for a query to do it. You just type in, "Hey, I'm looking for "some customer retention data," you know, and it will go out and figure it out and say, "Hey, are you looking for churn analysis "or are you looking to do some more promotions?" It will learn, you know, and that's where this whole aspect of machine learning and natural language processing is going to give you that contextual aspect of it, because that's how the self-service models will work. >> Right, what about skills, John asked me at the open about skillsets and I want to ask a general question, but then specifically about governance. I would make the assertion that most employees don't have the multidimensional digital skills and domain expertise skills today. >> Yeah. >> Some companies they do, the big data companies, but in governance, because it's 2.0, do you feel like the skills are largely there to take advantage of the innovations that IBM is coming out with? >> I think I generally, my personal opinion is the way the technology's moving, the way we are getting driven by a lot of disruptions, which are happening around us, I think we don't have the right skills out there, right. We all have to retool, I'm sure all of us in our career have done this all the time. You know, so (laughs) to me, I don't think we have it. So, building the right tools, the right technologies and enabling the resources that the teams out there to retool themselves so they can actually focus on innovation in their own enterprises is going to be critical, and that's why I really think more burn I can take off from the IT groups, more we can make them smarter and have them do their work faster. It will help give that time to go see hey, what's their next big disruption in their organization. >> Is it fair to say that traditionally governance has been a very people-intensive activity? >> Mm-hm. >> Will governance, you know, in the next, let's say decade, become essentially automated? >> That's my desire, and with the product-- >> Dave: That's your job. >> That's my job, and I'm actually really proud of what we have done thus far and where we are heading. So, next time when we meet we will be talking maybe governance 3.0, I don't know, right. (laughs) Yeah, that's the thing, right? I mean, I think you hit it on the nail, that this is, we got to take a lot of human-intensive stuff out of our products and more automation we can do, more smarts we can build in. I coined this term like, hey, we've got to build smarter metadata, right? >> Dave: Right. >> Data needs to, metadata is all about data of your data, right? That needs to become smarter, think about having a universe where you don't have to sit there and connect the dots and say, "I want to move from here to there." System already knows it, they understand certain behaviors, they know what your applications is going to do and it kind of automatically does it for you. No more science fake, I think it can happen. (laughs) >> Do you think we'll ever have more metadata than data... (laughs) >> Actually, somebody did ask me that question, will we be figuring out here we're building data lakes, what do we do about metadata. No, I think we will not have that problem for a while, we'll make it smarter. >> Dave: Going too fast, right. >> You're right. >> But it is, it's like working within your workforce and you're telling people, you know, "You're a treasure hunter and we're going to give you a better map." >> Madhu: Yeah. >> So, governance is your better map, so trust me. >> Madhu: Hey, I like that, maybe I'll use it next time. >> Yeah, but it's true, it's like are you saying governance is your friend here-- >> Madhu: Yes. >> And we're going to fine-tune your search, we're going to make you a more efficient employee, we're going to make you a smarter person and you're going to be able to contribute in a much better way, but it's almost enforced, but let it be your friend, not your foe. >> Yes, yeah, be your differentiator, right. >> But my takeaway is it's fundamental, it's embedded. You know, you're doing this now with less thinking. Security's got to get to the same play, but for years security, "Ugh, it slows me down," but now people are like, "Help me," right, >> Madhu: Mm-hm. >> And I think the same dynamic is true here, embedded governance in my business. Not a bolt on, not an afterthought. It's fundamental and foundational to my organization. >> Madhu: Yeah, absolutely. >> Well, Madhu, thank you for the time. We mentioned on the outset by the interview if you want to say hi to your kids that's your camera right there. Do you want to say hi to your kids real quick? >> Yeah, hi Mohed, Kepa, I love you so much. (laughs) >> All right. >> Thank you. >> So, they know where mom is. (laughs) New York City at IBM's Machine Learning Everywhere, Build Your Ladder To AI. Thank you for joining us, Madhu Kochar. >> Thank you, thank you. >> Back with more here from New York in just a bit, you're watching theCUBE. (techy music playing)

(orchestral string music) >> Welcome to this special Cube Conversation here in our Palo Alto studios, the Cube office here. I'm John Furrier, the co-founder of SiliconAngle Media, and also the co-host of the Cube. Our next guest is Jeremy Almond who is the CEO of PayStand, a hot startup doing some really new things in and around Blockchain, decentralized, and really targeting the B to B space on a really compelling and an interesting topic that a lot of people are interested in. Jeremy, welcome to this Cube Conversation. >> Awesome, thank you John. >> John: Hey, so tell me a little bit about the company and set the table for us...Paystand, what you guys are doing, why you were founded, and what's the disruptive enabler you guys are taking? What's the angle of your business? >> Jeremy: Yeah, sure...so Paystand, like you mentioned, is a B to B software platform specifically focused on payment. So you can imagine what PayPal or Venmo does from the consumer level. We do for complicated commercial transactions between accounts receivable and accounts payable departments that normally would be paying with paper checks in a manual process. >> John: So basically, accounting, ledger, I'm kind of guessing...nice fit for Blockchain... >> Correct, yeah, yeah. So what we do is we apply Blockchain technology to help a company speed up their time-to-cash, automate their business process, and dramatically lower their transaction costs. >> I'll get your thoughts on this...I interviewed Don Tapscott at an event and we were riffing on this notion of the nature of the firm, right? People would come to an office, you'd have accounting, all these things that you'd have to put in place of systems. Now with this decentralized world we're living in, internet, and with Blockchain in particular, and a crypto-currency market that's pretty frothy but, you know, you look at Blockchain and separate those two for a minute, you really can look at ways to change how work is organized. How do you guys view that? I mean, it's obviously a new, big wave coming. Then you got businesses who are just trying to operate and make money, right? Keep the lights on, but they almost have to start rethinking about the future. So, what is this block wave...Blockchain wave coming? How do you talk about that? Is it that disruptive? I mean, certainly centralized databases aren't going away anytime soon, but it's coming. What's your thoughts in reaction to that? >> It's coming, you know...I think it's... It will affect the enterprise which is where we spend our time and space, in a lot of ways like Cloud did, right? So I've spent probably 15 years doing un-sexy B to B tech, in some way, shape, or form. And what we've seen is digital transformation in the enterprise has happened in a few key areas. CRM is now in the Cloud, right? You have companies like SalesForce that have become significant. ERP is now in the Cloud, your financial software is now automated, right? Kind of ironically, the last mile piece, that part that lubricates the business, the core of the business, the money-movement piece, is actually still really, really manual. So, you have humans that sit around and they take an invoice and then a paper check and then they move it, and that process is very, very ineffecient. And so, having a more automatic, smart financial system can improve the business's life in really significant ways. >> Also, you know, one of the things we've been commenting on and opining here on the Cube is... I made a statement a couple weeks ago, "Oh, MarTech"...you know, marketing technology wave, all those logos on those landscape slides, "didn't really pan out 'cause the Cloud kind of changes that." I mean, it's panning out, but not the way people thought. FinTech...financial tech...is also certainly important. Banks, subsidy trading, you see that. What is the inhibitor for these new trends? Because you mentioned they're moving paper around. I mean, it's money, they probably don't want to mess with an operational system that's core to their business. Is it fear? Is it tech? Both? What's your view on why it's taking so long? Or is it moving along at a speed you think it's going to... Be adopted? >> Jeremy: Yeah, it's actually kind of a unique point in time right now. I think on one hand, financial services in general, part of their job is to manage risk, right? And so they're going to be a lagging, in some ways, industry. And so, digital transformation, right? The internet has opened up and democratized media. It's opened up so many other areas. Blockchain now is the entry point for digital transformation of financial services, and so the time is probably right, right now. We've been in the space...we started the company in 2014. And, you know, I've seen over the last three years, hearing banks, other large institutions, large enterprises, go from skepticism to curiosity. >> John: What's the technology stack look like? Obviously four years is, like, decades in the Blockchain world, and obviously, people are running as fast as they can. It's kind of a moving train at many levels. Business model side as well as a tech stack. And this is really the opportunity. A lot of these systems... I mean, some of the e-commerce systems are 20-year-old tech stacks, some are even older. >> Jeremy: Yeah. >> Just going back four years, since you were founded... What's the big moving glacier, if you will, of change and how are you guys managing that? How should people think about managing the risk of the tech stack? >> Jeremy: Yeah, I mean I think...you know... On the Blockchain-specific side... in the early days, a lot of it was about currency, and actual payment, right? I think what we're seeing now is the opportunity for Blockchain, particularly in the enterprise, to actually dramatically improve their operations side, right? Ethereum, private Blockchains... actually have the ability to not just decentralize how money movement or networks operate, but how an internal system operates. I'll give you an example...we used the Blockchain to... A private Blockchain to actually control approval workflow. So when a payment goes out, oftentimes you need your accounts payable person to send a payment out, but the controller or the treasury or someone else has to sign off on it, right? So that signature, you need it to be valid, trusted, the identity around it, right? And you want an audit record. And so Blockchain's a really, really good use case for something like that. That's not peer-play payments, it's not peer-play settlement. It doesn't require, you know, a million people to get on. It just can operate in the business in a really critical function, in a better way than the current technology does. >> John: It's interesting, I love these new technology opportunities 'cause... There's always going to be a tipping point and the famous Steve Jobs quote is, "Hey if I was asked to build a better "phone in 2005, I would have built an excellent... "better Blackberry." But he...then he built the iPhone, so he thought differently. No one was really asking for the iPhone. The question I get a lot from skeptics in Blockchain is, "No one's really asking for Blockchain." So, again, this is kind of like...you could always say, "I'm building a better centralized database system "in a distributed computing environment." Okay, we've done that. >> Yeah. >> Are people asking for Blockchain, or are they just asking for it in a different way? What's your thoughts to that? >> Yeah, I would say that there's... There's a big picture question of, "Are people asking for it." And I'd say society's actually asking for it. Part of my personal story is, you know, my family, blue collar family, they... My mother's side immigrated here, her generation. My brick-layer father, they spent their entire lives getting their first home. And you know, 800 square foot home, that's nothing special, but it was their American dream. In 2008, in the financial crisis, they lost the house. And so I think, you know, society said, "Financial services and core parts of our economy "actually could...we could do better, right?" And I think the magic thing about technology is we get to imagine the world not as it is but as it ought to be. So one, I think society is actually asking for... Can the core parts of our economy actually do better? Can we dream up something better? And I think that's the purest part of what the folks in the Blockchain movement are trying to do. That's, you know, at a very high level. And then I think, practically, right, for businesses like we operate day in and day out...you know... If there's technology that allows them to be able to operate their business more efficiently, drop their costs and grow faster, you know... How would that work, right? It's in some ways like Cloud. How does Cloud work? You know, I think... now we're really getting into the deep mess of it, but you know, Cloud was transformative to the business, right? VOIP was transformative to some businesses. Inbound marketing was transformative to some businesses. Blockchain is the same kind of concept. >> I mean, and Cloud, too...there was a lot of naysayers. I remember I used the first EC2 instances of Amazon when it came out, being an entrepreneur, I'm like, "I don't have to provision servers? "This is amazing, I can put my credit card down "and pay a few bucks..." And then even still, up until, I would say, even three or four years ago they were dismissed as relevant. >> Jeremy: Yeah. >> And again, the rest is history, look what they've done. So there's always going to be those naysayers. But to the point about Cloud and Blockchains, and even crypto, this is a wave, and we've, you know... We're very bullish on this movement because we see the wave coming way out there and it's huge. This is probably bigger than the other waves combined, in our opinion. So you mentioned societal change. This is a big deal. I mean, you're seeing regulations right now in GDPR in Europe, kind of trying to govern an old database market that's...it's a mess, database wise. But it makes sense from a society standpoint. People want to pull their data out. This is a trend. You got societal forces, and then technical legacy. I mean, this could be an opportunity for Blockchain to say, "Hey, optimize for the new wave." Don't try to retrofit, say, an old wave. What's your thoughts? >> Jeremy: Correct, yeah, I mean I think there's a... ...a number of areas... Even in the data cyber society. Take an Enron scandal, right? That happened a decade plus ago. Out of that came regulation called Sarbanes-Oxley, right? And Sarbanes-Oxley's concept, right, is to ensure that companies publicly account for their records in a proper way, right? If there's an audit trail, that they don't sort of take their financial systems and misrepresent them, right? Blockchain, because it's a source of truth that's immutable, meaning it can't be changed, is a great way, right, to have more efficiency in that process. Today there's a whole industry that's popped up just for Sarbanes-Oxley, just to regulate the financial system, just to ensure that the books actually say what they're supposed to say, right? That's kind of the definition of what a smart contract can and should do. >> John: This is really an opportunity for entrepreneurs, if you think about it. I mean, a lot of alpha entrepreneurs are really licking their chops on Blockchain because they can see how it could disrupt industries. And I showed you some of the things we're working on, and what we're thinking about for SiliconAngle about media and data. But it brings up things that we obviously see every day in the press: the election, weaponizing content for bad things. Facebook's having a challenge right now on how they optimize their data for their own self-service reasons. This is a problem, this is a revolution. People are kind of tired, so...what's your view of the role of data to the human? I mean, obviously, you know, the cliche: "Oh, the users are in charge, "they should own their own data." Okay I got that. But how...how do you see that vision playing out? I mean not just from a Facebook which is a social network example, but how does data impact a user going forward in your vision? Because they could really change from the outside in. >> Yeah, I mean I think...part of what's critical with data is two things: one, identity really matters, right? How do you manage identity? And so I think there's a number of really fascinating Blockchain companies that are specifically focused on the identity question, right? And that's...that's true around the social media side, it's true around...how do I actually manage where I move... Identity around? So I think that's one side that's really, really critical to solve. I don't know that we've got a crystal ball yet on what it will ultimately look like. But the Blockchain model for identity allows us to... rethink the fabrics of what privacy is, what permission looks like, and what trust looks like with people I want to engage with and with people I don't want to engage with. It's interesting, you talk about the Blockchain culture being more societal and mission-driven. My word, but you're kind of implying that. I remember when the Cloud came out, it was... The network guys were in charge, and the app guys were like, have to feed off the network requirements. And then that sea-change flipped around. The app guys are in charge, data driving requirements for the network. Question for you is: Do you see a day, soon, where societal requirements will dictate technology? I mean, you're seeing... you're seeing that pattern kind of emerging now, it's kind of not yet been fully thought through in public commentary but, you know...we see these pressure points potentially impacting tech design. >> Jeremy: Yeah, yeah...I think there's actually a good tug-of-war or balance, right? So entrepreneurs naturally are going to run as fast as they can to see innovation hopefully with means of improving society, right? And then, you know, you have regulators and you have government agencies who are looking and saying, "Okay, you might be thinking about one myopic view "and we need to make sure "we're looking at the good of society." And so I think that tug-of-war you saw with the internet, right, where how much do we regulate the internet, right? And I think the balance was mostly healthy. And we're sort of seeing that through today with Blockchain as well, where...you know, things like ICOs have good and bad implications. The regulators have been watching it relatively closely. But they also haven't completely came down and clamped down on it, you know, even this week there's... There was a relative balance in the discussions that came out. >> John: The SEC's done a good job, they've... >> Correct. >> John: They whipped a few people in shape to send the signal, but they weren't foreclosing any innovation. >> Jeremy: That's correct, yeah. >> And ICOs...certainly there're some scams. What's the good sides of ICO? Obviously the scams are out there. What's the good side? The fundraising? Democratization? What's your take on the ICO? Initial coin offering opportunity. >> Yeah, you know, I think...in some ways, democratization has become such a buzzword it's lost its meaning, right? But if you think about what it really is, it's so powerful, because it's this concept, right, that we distribute power and control to the hands of many. And so, you know, I think there are a lot of public good technologies that actually can use that concept, right? The internet is a public good. You could argue Wikipedia is a public good, right? And so, utility-type tokens actually are valuable because they can have a dual nature to them. I think the other thing that I'm particularly interested in watching how ICOs evolve is...I think there's some danger in ICOs...coming in and... in the early stage market. Because early stage companies tend to be... They're so nascent that they need guidance, right? And I actually...I might be contradictory here to most people in the Blockchain space, but I actually think early stage investors have a lot of value in that space. And so, I am actually fascinated about what happens in later stage rounds and what do ICOs become there. So I think utility, and later stage rounds are actually two fascinating areas of ICOs. >> John: Sure, that's a great point. I would also say that the trend that we're seeing is... There's an early stage component that needs mentoring and needs some nurturing, I would agree with that. That's a classic VC, maybe some token economics in there, but again, different playbook. The tokenization of business is really interesting 'cause now you have token economics being applied to a preexisting, proven business, with a disruptive nature on the other side, is super interesting. So I have to ask you: Are we going to have a chief economic officer as a new role soon? Or, is that going to be...'cause remember, if you think about token economics, it's about opening up and changing the distribution of data and wealth, you can argue both are the same, but...how do you view that? Because that's a trend we're seeing. The tokenization of a business to disrupt an industry incumbent...set of incumbents. >> Correct, yeah, and I think it's a... it's really, really early days and what... You have really early stage companies that are thinking about tokenizing their business before they exist, right? And then you have other companies which are maybe past the innovation curve and they're trying to apply tokens to their business. >> A pivot of an existing business. >> Yeah, so we've seen these, right? Public companies that have added Blockchain to the name. I think the fascinating thing will become where... Fast-growing, real businesses, where there's a there there, they've crossed the chasm, go, "Okay how do we apply "tokenization to our company? "And how do we think about it, from both a... "commercial economic part of the business, "and then how do we think about it "from tokenizing the business?" And we haven't seen many cases yet, but I actually think that's one of the next waves we'll see. >> John: Great insight. I got to ask you on a personal level. You're doing some talking, obviously the founder of the company, CEO. What's going on? What do you talk about these days? What are you passionate about? I know you were talking to some folks at UC Santa Barbara. You mentioned going to teach down there. What are you talking about? What are you sharing publicly? what's on your mind these days? >> Yeah, I mean, I think...I'm personally deeply motivated every day by waking up and going, you know, "The financial service industry can go through a massive transformation, right? And I think there's a lot of really good companies that are doing that at the consumer level, and so, you know, I think our space...we have a unique place in time to be working at the commercial level. So the commercial level affects big parts of our economic infrastructure in ways that we don't think about. The Equifax breach was a pretty big deal to people, right? The financial crisis was a big deal to people. So, how do we imagine those kinds of industries, right? Supply chain, title, logistics, right? And how do we think about those industries, democratizing them with Blockchain? Those, to me, are the unsung heroes of what Blockchain will ultimately help transform society. >> John: It's interesting, you said you were kind of humble when you came on earlier. "I'm in boring areas of B to B..." But I got to say to your point about Cloud earlier, there's a calm before the storm, these boring areas that are, say, calm are really the grounds where you see disruption, and I think that's an area... Not just high-frequency trading, that's going to be, you know, always an issue, but in terms of real financial plumbing. >> Yeah. >> Perfect for a ledger, perfect for those things. Okay, take a plug for your company. How are people using you guys? What's the value proposition? What are some of the things that you guys are involved in? How does someone engage with you guys? Give the plug for PayStand. >> Yeah, so at PayStand, we tend to work with companies where there are high volumes of paper checks in the process. So if you have a $100,000 invoice that goes out, for example, with a company that you've been working at for a decade, and you have a contract that says it's a Net 60 contract, right? The challenge is, it's a paper check, you want to move it digitally, what do you move it digitally to? And the reality is the consumer payment companies that are focused on credit cards are not really an ideal solution for that because their business model is a percentage business model. There's nothing wrong with a percentage business model that charges a company two or three percent if I'm swiping for a five dollar cup of coffee, right? If it's a $100,000 payment that I owe someone that I know, and I have contract terms, I'm not going to pay the bank $3,000 to move ones and zeroes from this bank database to this bank database. So what we do with our network is we make that money movement fast, instant, automatic, verified, validated, right, with control, in a way where we can automate the process. >> It's so funny what jumped in my mind is punch cards to computers, tape to storage. This is interesting. So paper checks, probably big, I don't know what the numbers are, you might have them handy. People are doing paper checks, so you're building a system around paper checks, did I get that right? >> Yeah, so we digitize what would have been a paper check. Today over 50 percent of all commercial payments are still done in paper checks. So they're gone in our digital world, right? Like, you and I, we Venmo each other. But when a business goes to write a check, when they get an invoice, they send out a check. And so we digitize the whole process. The moment that the invoice is ready to go, to the moment it gets in the bank, it all becomes digital space. >> John: And the alternative is what, I got to go check when it was mailed, was it received, was it cashed, did it get put into the accounting system? And that's kind of... >> Jeremy: That's correct. >> That's the manual... >> Jeremy: That's the manual. So they spend...they'll spend a week tracking down the payment from the moment the controller says, "Okay to pay," to the time it sits in their bank account, that's humans, time, money. >> And an old, antiquated system that doesn't change because of...what? >> Jeremy: Well, it's legacy infrastructure in one way. But in another, you know, even the banking infrastructure, the...most of the banking infrastructure that are for commercial payments was designed in the 60s and 70s. And last time I checked, the 60s and 70s was before the internet of today. So they weren't really designed for digital realtime payments. And they weren't designed for commercial use cases like today. >> Is fraud a factor, or is that not a factor? Is that part of it, or...yes? >> Jeremy: Yeah and I think a key thing with what we do, enterprise payments, security is really, really important. We take it very, very seriously. And this is, again, one of the downsides to the legacy commercial infrastructure. When you have a check, right? You have this checking and routing number on it. Anybody takes that, in theory, that's all that identifies you and your company and your account. And so money can actually be moved and ran against in that case. With a network like ours, we can validate that you are who you say you are, you have the money in your account, it moved when it should, and you've actually authorized it. These are all things that we should know, but we just don't. >> John: And you take the data around it, you take that check, put it into the system. Okay so when does a company want...should be calling you. Is it like, "I'm overloaded with paper, "I want a new system, I'm doing a refresh." I mean, when do people call PayStand? What's the signals that would give your buyer some indicator of time to call PayStand? >> Yeah, so generally it's after...it's when they have high-volumes of checks and they're growing, and/or that they've basically taken their ERP, and they've done an ERP Cloud migration, right? And so now they've got their general ledger, and that financial system's not in a shoebox anymore, right? It's in a critical core ERP system. And so what they're finding is they've bought digital transformation for financial services and their accountant only sort of has half the solution. And so they come in and they use us to close the last mile. >> John: Okay, so I'm going to put my naysayer hat on and ask you the question: I love it, but what's this Blockchain thing? I'm an accounting guy, took one computer class, whatever, I get blockchained. How do you stay up to date, how do you ensure that I'm going to have a system that's going to be working? I know that Blockchain standards are changing. How do you guys mitigate that? How do you handle that question? >> Jeremy: Yeah, I mean I think the critical thing for our customers, right, is... For us, our customers, money moves in dollars, right? It leaves their bank account, and goes into their supplier's bank account, the supplier's bank account goes into their customer's bank account, right? Their financial system does not change. We're actually very, very sensitive to that. We think about this very different than a consumer solution, which is...consumer solutions almost have a... A critical mass question. They need everybody to get into the system for it to work. For commercial, you don't actually want to change the business process of your partners, right? It's really important, they've been doing this...so... So we are very thoughtful about our software doesn't change business process, it doesn't require you to enter into some kind of new economy or a new currency. You simply do what you're always doing, with the systems you're already using, right? And we just digitize the process to make them faster, cheaper, and automated. >> Awesome. Talk about your goals for the year at PayStand. Where are you guys at, company-wise? Funding, goals, hiring, what's going on? Give a quick final word on the company. >> Jeremy: Yeah, I mean I think we...you know... We're blessed right now, I would say we're one of, if not the fastest B to B payment company... fastest-growing B to B payment company today. So, you know, I think we have a long way to go... I would call this inning two for us, right? We ultimately...I think much more about what does 10 years look like than 12 months look like. Because this is the beginning of the commercial financial service wave. And so, you know, I think we ultimately believe the digital transformation is going to reinvent our industry. And if we can go lead the way, we'll be very happy. QAnd for us that just means continue growing, continue serving our customers, continue hiring, you know. I think if we do all that, you know, right place right time. >> John: Awesome...final question for you. To the folks out there watching, you're an expert in the industry...again, fintech as well as computer engineering. If my sister who is not savvy says, "Jeremy, what is Blockchain?" How would you describe Blockchain to someone who's interested and needs to know the definition and importance of Blockchain? >> Jeremy: Okay, so Blockchain, to me, is basically a way to be able to take information like you might have on your checkbook, or you might have in a spreadsheet, and use it where anybody can access it in a way that's actually easily, controllable, visible, secure, and automated. That doesn't sound very sexy, but the important thing is how we keep records affects all of society, right? We have records of who owns their houses, we have records of how much money we have in our account, we have records of who did we vote on, right? Those records are the foundation for our society. Currently companies own those records. Companies are fallible, right? And so what Blockchain does is it allows us to make a more infallible system to keep access to those records you and I care about. >> John: And this is an infrastructure opportunity, not so much crypto currency... kind of a distinction between the two, right? >> That's right, that's right. I would say crypto currency and money is like the first pillar app on top of Blockchain. >> John: Jeremy Almond, CEO, founder of PayStand, hot company, doing something really good in a growing, changing market called checks, paper checks, and if you have them and groan, digitize them. Great entry strategy for Blockchain. Thanks for coming on this Cube Conversation. And thanks for joining us here in Palo Alto. I'm John Furrier in the Cube Studios for Cube Conversations. Thanks for watching. (exciting orchestral music)

(orchestral music) >> Welcome to the special Cube Conversation here at Palo Alto studios, at the Cube office yeah I'm John Furrier, the co-founder of SiliconANGLE Media, and also co-host the Cube. Our next guest is Jeremy Almond is the CEO of Paystand, hot startup doin' some really new things in and around blockchain, decentralize, and really targeting the B2B space on a really compelling and interesting topic that a lot of people are interested in. Jeremy welcome to this Cube conversation. >> Awesome, thank you John. >> Hey so talk a little about the company, set the table for us, PayStand, what you guys are doing, why you were founded, and what's the disruptive enabler that you guys are taking, and what's the angle of your business? >> Yeah sure so, PayStand like you mentioned, is a B2B software platform, specifically focused on payment. So, you can imagine what Paypal or Venmo does from the consumer level, we do for complicated commercial transactions between accounts receivable and accounts payable departments that normally would be paying with paper checks in manual process. >> So basically accounting, ledger, I'm kind of guessing. Nice bit for blockchain. >> Correct, yeah, yeah. So, what we do is we apply blockchain technology to help a company speed up their time to cash, automate their business process and dramatically lower their transaction cost. >> I'll get your thoughts on this. I interviewed Don Tapscott at an event and we were riffing on this notion of the nature of the firm, right? People would come to an office, you'd have accounting, all these things that you'd have to put in place as systems. Now with this decentralized world we're living in, internet and with blockchain in particular, and a cryptocurrency market that's pretty frothy. But, you look at blockchain and you separate those two for a minute. You really can look at ways to change how work is organized. How do you guys view that, I mean, It's obviously a new, big wave coming. Then you've got businesses who are just trying to operate and make money, right? So, keep the lights on, but they also have to start rethinking about the future. So, what is this block wave, blockchain wave coming? How do you talk about that? Is it that disruptive? I mean, certainly centralized databases aren't going a away any time soon, but it's coming. What's your thoughts and reaction to that? >> It's coming. You know, I think it's... It will effect the enterprise, which is where we spend our time and space. In a lot of ways like cloud did. So, I've spent probably 15 years doing unsexy B2B tech in some way shape or form. And what we've seen is digital transformation in the enterprise has happened in a few key areas. CRM is now in the cloud. You have companies like Salesforce that have become significant. ERP is now in the cloud, you're financial software is now automated. Kind of ironically the last mile piece, the part that lubricates the business, the core of the business, the money movement piece, is actually still really, really manual. So, you have humans that sit around and they take an invoice and then a paper check and then they move it. And that process is very, very inefficient. And so, having a more automatic, smart financial system can improve the business's life in really significant ways. >> Also, you know, one of the things we've been commenting on opining here on the Cube is, I made a statement a couple weeks ago, OMAR tech, marketing technology, Wave, all those logos on those landscape slides, didn't really pan out cause the cloud kind of changed that. It's panning out, but not the way people thought. FinTech, financial tech, is also certainly important. Banks of safe trading, you see that. What is the inhibitor for these new trends? Because you mentioned moving paper around. I mean it's money, they probably don't want to mess with an operational system that's a quarter of their business. Is it fear? Is it tech? Both? What's your view on why it's taking so long? Or is it moving along at a speed you think is going to... Being adopted? >> Yeah, it's actually kind of a unique point in time right now. I think in one hand, financial services in general, part of their job is to manage risk. And so, they're going to be a lagging, in some ways, industry. And so, digital transformation, the internet has opened up and democratized media. It's opened up so many other areas. Blockchain, now, is the entry point for digital transformation of financial services. And so, the time is probably right now. We've been in the space. We started the company in 2014. I'd seen over the last three years, hearing banks, other large institutions, large enterprises go from skepticism to curiosity. >> What's the technology stack look like? Obviously, four years is like decades in the blockchain world. Obviously, people are running as fast as they can. It's kind of a moving train, at many levels, business model side, as well as the tech stack. And this is really the opportunity a lot of these systems-- I mean some of the e-commerce systems are 20 year old tech stacks, some are even older. Just going back four years since you were founded, what's the big moving glacier, if you will, of change and how are you guys managing that? And how should people think about managing the risk of the tech stack? >> Yeah, I mean, I think on the blockchain specific side, in the early days a lot of it was about currency and actual payment. I think what we're seeing now is the opportunity for blockchain, particularly in the enterprise, to actually dramatically improve their operations side. So, Ethereum, private blockchains, actually have the ability to, not just decentralize how money movement or networks operate, but how an internal system operates. I'll give you an example, we used the blockchain to-- A private blockchain to actually control approval work flow. So when a payment goes out, often times you need your accounts payable person to send a payment out, but the controller or the treasury or someone else has to sign off on it. So that signature, you need it to be valid, trusted, the identity around it, right? And you want an audit record. And so blockchains a really, really good use case for something like that. That's not pure play payments, it's not pure play settlement, it doesn't require a million people to get on. It just can operate in the business in a really critical function in a better way than the current technology does. >> It's interesting. I love these new technology opportunities, cause there's always going to be a tipping point and the famous Steve Jobs quote is, "Hey, if I was asked to build a better phone "in 2005 I would've built an excellent, better Blackberry" But then he built the Iphone, so he thought differently. No one was really asking for the Iphone. So, the question I get a lot from skeptics in blockchain is, no one's really asking for blockchain. So, again, this is kind of like, you could always say, I'm building a better centralized database system in a distributive computing environment. Okay, we've done that. >> Yeah >> Are people asking for blockchain? Or are they just asking for it in a different way? What's your thoughts to that? >> Yeah, I would say that there's a big picture question of are people ask for it? And I'd say, society is actually asking for it. Part of my personal story is, my family, blue collar family, my mother's side immigrated here, her generation. My brick layer father, they spent their entire lives getting their first home. 800 square foot home, it was nothing special, but it was their American dream. In 2008, in the financial crisis, they lost that house. And so I think society said financial services and core parts of our economy actually could-- we could do better. And I think the magic thing about technology is we get to imagine the world not as it is, but as it ought to be. So, one, I think society is actually asking for can the core parts of our economy actually do better? Can we dream up something better? I think that's the purest part of what the folks in the blockchain movement are trying to do. That's at a very high level. And then I think practically, right, for businesses like we operate day in and day out, if there's technology that allows them to be able to operate their business more efficiently, drop their costs and grow faster, how would that work? It's in some ways like cloud. How does cloud work? I think now we're really getting into the deep mess of it. But cloud was transformative to the business. VOIP was transformative to some businesses. Inbound marketing was transformative to some businesses. Blockchain is the same kind of concept. >> And cloud too, there's a lot of naysayers. I remember I use the first EC2 instances of Amazon, when it came out being an entrepreneur I don't have to have provision servers. This is amazing. And I can put credit card down and pay a few bucks? And then even still, up until three or four years ago, they were dismissed as relevant. And, again, the rest is history. Look what they've done. So, there's always going to be those naysayers. But, to the point about cloud and blockchain, and say even crypto, this is a wave and we are very bullish on this movement because we see the waves coming way out there and it's huge. And this is probably bigger than the other waves combined, in our opinion. So, you mentioned societal change. This is a big deal. You're seeing regulations right now in GDPR, in Europe. Trying to govern an old database market, that's even in an own problem. It's a mess database wise. But it makes sense from a society standpoint. People want to pull their data out. This is a trend. You've got societal forces and then technical legacy. This could be an opportunity for a blockchain to saying, hey optimize for the new wave, don't try to retrofit, say, an old wave. What's your thoughts? >> Correct. Yeah, I think there's a number of areas, even in the data side with society. Take an Enron scandal that happened a decade plus ago. Out of that came regulation called Sarbanes-Oxley. And Sarbanes-Oxley's concept is to ensure that companies publicly account for their records in the proper way. That there's an audit trail. That they don't, sort of, pick their financial systems and misrepresent them. The blockchain, because it's a source of truth that's immutable, meaning it can't be changed, is a great way to have more efficiency in that process. Today, there's a whole industry that's popped up just for Sarbanes-Oxley, just to regulate the financial system, just to ensure that the books actually say what their supposed to say. That's kind of the definition of what a smart contract can and should do. >> This is though, really an opportunity for entrepreneurs when you think about it. A lot of alpha entrepreneurs are really lickin' their chops on blockchain, because they can see how it could disrupt industries. And this is really, again, I showed you some things we're working on and what we're thinking about with SiliconANGLE about media and data. But it brings up things that we, obviously, see every day in the press. The election, weaponizing content for bed, things-- Facebooks having a challenge right now in how they optimize their data for their own self service reasons. This is a problem. This is a revolution. People are kind of tired. So, what's your view of the role of data to the human? Obviously the cliche, oh the users are in charge, they should own their own data. Okay, I get that, but how do you see that vision playing out? Not just from Facebook, that's just a social network example. But how does data impact a user going forward in your vision? Because they could really change from the outside in. >> Yeah, I think part of what's critical with data is two things. One, identity really matters. How do you manage identity? So, I think there's a number of really fascinating blockchain companies that are specifically focused on the identity question. And that's true around the social media side. It's true around, how do I actually manage where I move identity around? So, I think that's one side that's really, really critical to solve. I don't know that we've got a crystal ball yet on what it will ultimately look like. But the blockchain model for identity allows us to rethink the fabrics of what privacy is, what permission looks like and what trust looks like with people I want to engage with and with people I don't want to engage with. >> That's interesting. You talk about the blockchain culture being more societal and mission driven, my word, but you're kind of implying that. I remember when the cloud came out. It was, the network guys were in charge and the app guys had to feed off the network requirements. And then that seat changed, flipped around. The app guys are in charge, data is driving requirements for the network. Question for you is do you see a day soon where societal requirements will dictate technology? You're seeing that pattern kind of emerging now, kind of not yet been fully thought through in public commentary. We see the pressure points potentially impacting tech design. >> Yeah, I think there's actually a good tug of war balance. So, entrepreneurs naturally are going to run as fast as they can to see innovation. Hopefully with means of improving society. And then you have regulators and you have government agencies who are looking and saying okay, you might be thinking about one myopic view and we need to make sure we're looking at the good of society. And so, I think that tug of war you saw with the internet, where how much do we regulate the internet? And I think the balance was mostly healthy. And we're sort of seeing that through today with blockchain as well. Where things like ICOs have good and bad implications. The regulators have been watching it relatively closely. But they also haven't completely came down and clamped down on it. Even this week there's... There was a relative balance in the discussions that came out. >> The SECs done a great job. >> Correct. >> They've whipped a few people into shape, sent the signal, but they weren't foreclosing any innovation. >> That's correct. >> And ICOs certainly had some scams. What's the good sides of ICOs? Obviously the scams are out there. What's the good sides? The fundraising, democratization? What's your take on the ICO, initially coin offering opportunity? >> Yeah, I think in some ways democratization has become such a buzz word it's lost it's meaning. But if you think about what it really is it's so powerful, because it's this concept that we distribute power and control to the hands of many. And so, I think there are a lot of public, good technologies that actually can use that concept. The internet is a public good. You could agree Wikipedia is a public good. And so, utility type tokens actually are valuable, because they can have a dual nature to them. I think the other thing, that I'm particularly interested in watching how ICOs evolve, is-- I think there's some danger in ICOs coming in, in the early stage market. Because early stage companies tend to be... They're so nascent that they need guidance. And I actually, I might be contradictory here to most people in the blockchain space, but I actually think early stage investors have a lot of value in that space. And so, I am actually fascinated about what happens in later stage rounds and what do ICOs become there. So, I think utility and later stage rounds are actually two fascinating areas of ICOs. >> Jeremy, that's a great point. I would also say that the trend that we're seeing is: there's an early stage component that needs mentoring and needs some nurturing, I would agree with that. That's a classic VC-- Maybe some token economics in there, but again different playbook. The tokenization of business is really interesting, cause now you have token economics being applied to a pre-existing proven business with a disruptive nature on the other side. >> Correct. >> Is super interesting. So, I have to ask you. Are we going to have a chief economic officer as a new role soon? Or is that going to be-- Cause it made me think about token economics it's about opening up and changing the distribution, or data and wealth, you could argue both are the same. But how do you view that? Because that's a trend were seeing. The tokenization of a business to disrupt an industry incumbent, set of incumbents. >> Correct, yeah. And I think it's really, really early days in what... You have really early stage companies that are thinking about tokenizing their business before they exist. And then you have other companies which are maybe past the innovation curve and their trying to apply tokens to their business. >> A pivot of an old, existing business. >> Yeah, so we've seen these, right? Public companies that have added blockchain to their name. I think the fascinating thing will become where fast growing, real businesses where there's a there, there. They've crossed the chasm. Go, okay, how do we apply tokenization to our company? And how do we think about it, from both a commercial economic part of the business and then how do we think about it from tokenizing the business? We haven't seen many cases yet, but I actually think that's one of the next waves we'll see. >> Great. Great insight. I got to ask you, on a personal level, you're doing some talking, obviously your the founder of the company, CEO, what's goin' on? What are you talking about these days? What are you passionate about? I know your talking to some folks at University of Santa Barbara. You mentioned going to teach down there. What are you talking about? What are you sharing publicly? What's on your mind these days? >> Yeah, I think I'm personally deeply motivated every day by waking up and going. The financial service industry can go through a massive transformation. And I think there's a lot of really good companies doing that at the consumer level. And so, I think our space, we have a unique place and time to be working at the commercial level. So, the commercial level effects big parts of our economic infrastructures in ways that we don't think about. The Equifax breach was a pretty big deal to people, right? The financial crisis was a big deal to people. So, how do we imagine those kinds of industries? Supply chain, title, logistics. And how do we think about those industries democratizing them with blockchain? Those, to me, are the unsung heroes of what blockchain will ultimately help transform society. >> That's interesting. You said you were kind of humble when you came on earlier. I'm in boring areas of B2B, but I got to say, to see your point about cloud earlier. There's a calm before the storm, these boring areas that are, say, calm, are really the grounds where you see disruption. I think that's an area-- Not just high frequency trading, that's going to be always an issue, but in terms of real financial plumbing. Perfect for a ledger, perfect for those things. Okay, explain-- Take a plug for your company. How are people using you guys? What's the value proposition? What are some of the things you guys are involved in? How does someone engage with you guys? Give the plug for Paystand. >> Yeah, so at Paystand we tend to work with companies where there are high volumes of paper checks in the process. So if you have a hundred thousand dollar invoice that goes out, for example, with a company you've been working out with for a decade. And you have a contract that says it's a net 60 contract. The challenge is, it's paper check. You want to move it digitally. What do you move it digitally to? And the reality is, the consumer payment companies that are focused on credit cards are not really an ideal solution for that because their business model is a percentage business model. And there's nothing wrong with a percentage business model that charges a company two or three percent if I'm swiping for a five dollar cup of coffee. If it's a hundred thousand dollar payment that I owe someone that I know and I have a contract terms. I'm not going to pay the bank 3,000 dollars to move ones and zeros from this bank database to this bank database. So, what we do with our network is we make that money movement fast, instant, automatic, verified, validated with control, in a way that we can automate the process. >> It's so funny. What jumps into my mind is punchcards to computers, tape to duck storage. This is interesting. So, paper checks, probably big, I don't know what the numbers are, you might have them handy. People are doing paper checks. So, you're doing a system around paper checks, did I get that right? >> Yeah, so we digitized what would have been a paper check. Today, over 50 % of all commercial payments are still done in paper checks. So, they're gone in our digital world. You and I, we Venmo each other. But when the business goes to write a check, when they get an invoice they send out a check. And so we digitized the whole process. The moment that the invoice is ready to go to the moment it gets in the bank. It all becomes digital space. >> And the alternative is what? I got to go check when it was mailed, was it received, was it cashed, did it get put into the accounting system? And that's kind of, that's the manual-- >> That's the manual. So, they'll spend a week tracking down the payment. From the moment the controller says okay to pay, to the time it sits in their bank account. That's humans, time, money. >> And an old antiquated system that doesn't change because of what? >> Well it's legacy infrastructure in one way. But in another, even the banking infrastructure-- Most of the banking infrastructure that are for commercial payments was designed in the 60s and 70s. And last time I checked, the 60s and 70s was before the internet today. So, they weren't really designed for digital real time payments. And they weren't designed for commercially used cases like today. >> Is fraud a factor or is that not a factor? Or is that not a part of it? Or yes? >> Yeah, I think a key thing with what we do, enterprise payments, is security is really, really important. We take it very, very seriously. And this is, again, one of the down sides to the legacy commercial infrastructure is when you have a check, you have this checking and routing number on it. Anybody takes that, in theory, that's all that identifies you and your company and your account. Money can actually be moved and ran against in that case. With a network like ours, we can validate that you are who you say you are, you have the money in your account, it moved when it should and you've actually authorized it. These are all things that we should know, but we just don't. >> And you put the data around it. You take that payload, aka check, put it into the system. So, when does a company want-- Should be calling you? Is it like, I'm overloaded with paper. I want a new system. I'm doing a refresh. When do people call Paystand? What's the signals that would give your buyer some indicator of time to call Paystand? >> Yeah, so generally it's after-- It's when they have high volumes of checks and they're growing. And, or, that they've basically taken their ERP and they've done an ERP cloud migration. So, now they've got their general ledger and that financial system is not in a shoebox anymore, it's in a critical, core ERP system. And so, what they're finding is they bought digital transformation for financial services and their accountant only sort of has half the solution. And so they come in and they use us to close the last mile. >> Okay, so I'm going to put my naysayer hat on and ask you the question. I love it, but what's this blockchain thing? I'm an accounting guy. Look at one computer class or whatever, I get blockchain. How do you stay up to date? How do you ensure that I'm going to have a system that's going to be working? I know that blockchain standards are changing. How do you guys mitigate that? How do you handle that question? >> Yeah, I think the critical thing for our customers is for us, our customers, money moves in dollars. It leaves their bank account and goes into their supplier's bank account. The supplier's bank account goes into their customer's bank account. Their financial system does not change. We're actually very, very sensitive to that. We think about this very different than a consumers solution. Which is, consumer solutions almost have a critical mass question. They need everybody to get into the system for it to work. For commercial, you don't actually want to change the business process of your partners. It's really important, they've been doing this. So, we are very thoughtful about our software. It doesn't change business process. It doesn't require you to enter into come kind of new economy or new currency. You simply do what your always doing with the systems you're already using. And we just digitize the process to make them faster, cheaper and automated. >> Awesome. Talk about your goals for the year with Paystand. Where you guys at company wise? Funding? Goals? Hiring? What's going on? Give a quick final word on the company. >> Yeah, I think we're blessed right now. I would say we're one of, if not the fastest B2B payment companies, fastest growing B2B payment companies today. I think we have a long way to go. I would call this inning two for us. We ultimately-- I think much more about what does ten years look like than twelve months look like because this is the beginning of the commercial financial service way. And so, I think we ultimately believe that digital transformation is going to reinvent our industry. And if we can go lead the way we'll be very happy. And for us that just means continue growing, continue serving our customers, continue hiring. I think if we do all that... Right place, right time. >> Awesome. Final question for you. The folks out there watching, your an expert in the industry, again, FinTech as well as computer engineering. If my sister, who is not savvy, says Jeremy what is blockchain? How would you describe blockchain to someone who's interested and needs to know the importance definition and the importance of blockchain? >> Okay, so blockchain to me is basically a way to be able to take information like you might have on your techbook or you might have in a spreadsheet and use it where anybody can access it in a way that's actually easily controllable, visible, secure and automated. That doesn't sound very sexy, but the important thing is how we keep records effects all of society. We have records of who owns our houses. We have records of how much money we have in our account. We have records of who did we vote on. Those records are the foundation for our society. Currently, companies own those records. Companies are fallible And so, what blockchain does, is it allows us to make a more infallible system to keep access to those records you and I care about. >> And this is an infrastructure opportunity, not so much cryptocurrency, kind of a distinction between those two, right? >> That's right. I would say, cryptocurrency and money is like the first pillar app on top of blockchain. >> Jeremy Almond, CEO, founder of Paystand, hot company doing something really good in a growing, changing market called checks, paper checks. And if you have um', grow um', digitize them. Great entry strategy for blockchain. Thanks for coming on this Cube Conversation. Thanks for joining us here in Palo Alto. I'm John Furrier in the Cube studios For Cube conversation, thanks for watching. (orchastral music)

>> Hi, I'm Stu Miniman with theCUBE and we're here at the Winslow Technology Group Dell EMC User Group. Happen to have on the program one of the users here at the event, Andrew Baxter, who's the Director of Systems Engineering with Commonwealth Financial Network. Andrew, thanks so much for joining me. >> Thanks for having me. >> Alright, tell us a little bit about your organization and your role there. >> Certainly, Commonwealth Financial Network is an independent broker-dealer. We have a network of roughly 2,000 advisors throughout the country, just based in the U.S right now and we, that's what we do. We're a clearing house for them. We provide all their IT infrastructure for them. >> Okay, the good news is that financial, like most industries, isn't going through any change today, right, Andrew? >> Oh, yeah, absolutely no. We've got the Department of Labor is our big bugaboo right now. >> Yep. So what are some of the biggest challenging? Is it regulation? Is it uncertainty? Is it, you know, technology? What are some of the drivers of the business? >> It's a combination of both. We have a lot of issues with regulation because of such people as Enron and whatnot. >> Smartest people in the room, right? >> Exactly. And it's not, the regulation's not a bad thing. It's just, can be problematic to work with. So the most recent one is the Department of Labor where they have decided how your retirement funding can be managed and to make sure that there is no conflict of interest. >> Okay, so. (laughs) It, yeah, we're not going to get political here. >> No, nope, no, absolutely. >> And go into how much government and all everything like that. >> What does that mean to your all? Tell us a little bit about what you manage >> Sure >> and really from that standpoint. >> So my group is responsible for our virtualization, our server platform, all of our storage, our data protection be it back up, antivirus, things like that. So we've got several different systems from a performance standpoint, and then we've got also have things from a compliance standpoint, a lot of WORM drives in the form of Centera or Hitachi Content Platform, and then the storage that goes around it and the applications that go with them. >> Alright. Well, you've got one of the hot button topics, security. >> Yeah. >> Tell us a little bit about, you know, there's the compliance and the security, how is that impacting what you're doing these days? >> So they're sort of two different things. Compliance is one thing, >> Yeah. maintaining your compliance with the security level. You know, we have a whole group, two groups actually, independent of each other, that sort of check each other, and then check us to make sure that, one, we're keeping the patch levels up, but also that we're following best practices to try to keep the bad guys out. We, I think everybody knows that you can't keep them out if they really want in. It really comes down to how you're going to react and so we've got to make sure that we have the tools in place to be able to react appropriately. >> Yeah, one of the things we've been looking at is, you know, security used to just be ah let the networking people take care of it. >> Right. >> We put up some firewalls. We do some things. Now, security, a lot of times, getting up to the board level type of discussion. What's the dynamic in your organization? >> Yeah, so, we do have the traditional on the network side. But we have a group within that that is specifically focused on that and it's more than just the network side of it. And then we have the information security group and that's more the board level where they're helping to define what types of data are critical, you know, personally identifiable information. We have HIPAA, other regulations like that, FINRA, the SEC, that we have to make sure we secure your information as well as possible. >> Okay, what brings you to this event? >> So, we've been a customer or partner with Winslow. I like to think of my vendors, for lack of a better word, as partners. I don't want to just use them as somebody I call when I need something. I want them to be somebody who is involved in the process, whatever that may be. And in this case, right now we're currently using them for all of our virtual desktop infrastructure, from the storage, the server standpoint. We're using some Dell products for wireless and things like that. And then, as time goes on, we start to do more refresh of equipment, then we're going to be looking at all of the vendors and not just the traditional ones. So, you know, you got the big three, sort of, HP, Dell and Lenovo in the server market or UCS as well. So we're going to make sure we look at all of them to see who has the best offering for us, for what we need. >> Okay. What about a cloud? How does that fit into your organization? Do you have, you know, cloud means many things to many people. >> Sure. >> But what does it mean to your organization? What's the strategy look like today? >> So we have two situations. One, we are actually a cloud for all of our advisors. We provide them with their exchange, their active directory, their antivirus, their patching, things like that. And then we're also looking at the Azure and the AWS offerings. We had to be very careful as we move to those offerings because we have to make sure that we retain this security level when that data leaves our hands, as it were. The financial markets tend to be a little slow moving to that kind of stuff because we've got very sensitive data that we've got to make sure that doesn't go away, doesn't get breached, and doesn't become generally available to the world. >> Yeah. Talk to us a little bit about what data means to your organization >> Sure. >> Of course, securities piece. How are you, are there initiatives to leverage data more, you know, you look almost like a service provider. >> Sure. >> We've seen many organizations that leverage that kind of technology. >> So, one of the, there's a couple different ways we do that. One of them is the actual software we've written for our advisors to use. So we're providing them with all the information they could ever want about their clients, their performance of the portfolios, things like that. But then there's also, on the other side, we're starting to look more into the power of BI and that kind of information so that we can start leveraging, sort of, paying more attention to how our products are being used in a more proactive manner instead of reactive. >> Okay, Curious how things like Hyperledger and Blockchain, you know, play into, does it play into anything you're doing today? What does your organization look at? >> Not currently. It will be down the road, I'm sure. But at this point it's not something we, because we really just haven't moved anything out to that area yet. >> Okay, great. I want to give you, really, the last word. What do you, kind of, when you come into an event like this, what are you looking for? What do you hope to take away from this? >> I'm looking for what's new, what's coming. I want, I need to make sure that I'm trying to stay ahead of things because part of what we have to do is we have to set the tone for what's going to be coming in the coming years. And so, I don't want to just see the same old thing. And that's one thing I like about Winslow. They do keep on the cutting edge. They do keep on forward. They've got cloud, you know, for lack of a better term, as part of their portfolio. And I feel that they actually know what they're doing. I have worked with some vendors that, they could spell the word, but that was about it. >> Absolutely. The cloud washing if you will. >> Yes. >> Alright, well, thank you so much for joining us. Appreciate the updates on where all of this technology fits into your environment and you've been watching theCUBE.