>>Welcome to this IBM Watson health client conversation here. We're probing the dynamics of the relationship between IBM and its clients. And we're looking back, we're going to explore the present. We're going to discuss the future state of healthcare. My name is Dave Volante from the Cuban with me are Robert Stell horn. Who's associate director, H E O R at sukha, otherwise known as pharmaceuticals, America and Rena Felton. Who's with of course, IBM Watson health. Welcome folks. Great to have you. Hi, so like strong relationships, as we know, they're the foundation of any partnership. And of course over the past year, we've had to rely on both personal and professional relationships to get us through some of the most challenging times, if not the most challenging times of our lives. So let me start with you, Robert, how has the partnership with IBM helped you in 2020? >>I think it was just a continuation of the excellent relationship we have with Rena and IBM. Um, starting in March, we had really a shift to an all remote, uh, workplace environment. And I think that constant communication with Rina and IBM helped that situation because she kept us up to date with, uh, additional products and offerings. And basically we came up with some additional solutions towards the end of the year. So we're gonna watch >>Pick it up from here. Let's go, let's go a little bit deeper and maybe you can talk about some of the things that you've done with Robert and his team and, and maybe some of the accomplishments that you're most proud of in 2020. >>No, absolutely. And I have to kind of echo what you first said about the foundation and our partnerships being the foundation, um, of our past present and future. So I do want to take the opportunity to thank Rob again for joining us today. It is, um, I know, you know, with his kids home and remote learning, um, it's a lot, uh, to, to ask in addition to, you know, your day to day work. So, so thank you, Rob. Um, I guess the question that I have for you is what would be the greatest accomplishment, um, that Watseka and IBM Watson had in 2020? >>I would say it was the addition of the linked claims EMR data, the LDCD product that we were able to license in-house, uh, thanks to your attention and to show the advantages and the strengths of that data. We are able to license that in to our, uh, set up assets we have internally. And what that's gonna allow us to do is really find out more information about the patients. Uh, we're existing users of the Mark IBM, uh, market scan data. Um, this is going to allow us to tie into those same patients and find out more about them. Um, in particular, uh, a lot of our products are in the mental health space and a lot about standing questions we have are why are the patients getting different products? And with the notes are available in that link data. We're going to now be able to tap into more information about what is happening with the patient. >>Okay. Can I ask a question on that? Um, if you guys don't mind, I mean, you know, when you, when you hear about, you know, uh, EMR, uh, in the early days, it was a lot about meaningful use and getting paid. It sounds like you guys are taking it much deeper and as a, as a, you know, as an individual, right, you're, you're really happy to hear that this information is now going to be used to really improve, uh, healthcare is, do I have that right? Is that, you know, kind of the nature of where you guys are headed? >>Well, I think ultimately it's the, the, the, the main goal is to help the patients and provide the products that can really, um, help them in their daily lives. So, um, really with this data, now, we're going to be able to tap into more of the why, um, exist in claims data. We cannot really get that information, why VC information, about what diagnoses they incurred during their treatment history. And we also can see, uh, different prescriptions that are given to them, but now we're going to be able to tie that together and get more understanding to really see more focused treatment pattern for them. >>So, Reno, w w you sit down with Rob, do you have like a, sort of a planning session for 2021? Why don't you sort of bring us up to, uh, to what your thinking is there and how you guys are working together this year? >>Yeah, no, absolutely. Um, actually, before we get to that, I wanted to kind of add onto what Rob was saying as well. It's interesting given, you know, the pandemic in 2020 and what the LCD data is going to do, um, to really be able to look back. And as Rob mentioned, looking specifically at mental health, the ability to look back and start looking at the patients and what it's really done to our community and what it's really done to our country, um, and looking at patients, you know, looking back at, at sort of their, their patient journey and where we are today. Um, but Rob and I talk all the time, we talk all the time, we probably talk three or four times a day sometimes. So I would say, um, we, we text, uh, we do talk and have a lot of our strategic, um, sessions, uh, our outlook for 2021 and what the data strategy is for Otsuka. Um, in addition, additional data assets to acquire from IBM, as well as how can we sort of leverage brander IBM, um, assets like our red hat, our OpenShift, our cloud-based solutions. So, you know, Rob and I are constantly talking and we are, um, looking for new ways to bring in new solutions into Otsuka. Um, and you know, yeah, we, we, we talk a lot. What do you think, Rob? >>I think we have an excellent partnership. Uh, basically, um, I think their relationship there is excellent. Um, we have excellent communication and, you know, I find when there's situations where I may be a bind Reno's is able to help out instantly. Um, so it's, it's really a two way street and it's an excellent partnership. >>I wonder if I could double click on that. I mean, relative to maybe some of your, I mean, I'm sure you have lots of relationships with lots of different companies, but, but what makes it excellent specifically with regard to IBM? Is there, is there anything unique Rob, that stands out to you? >>It would be the follow-up, um, really, it's not just about, uh, delivering the data and say, okay, here you have your, your product work with it in basically the, the, the vendor disappears, it's the constant followup to make sure that it's being used in any way they can help and provide more information to really extract the full value out of it. >>So I'm gonna forget to ask you guys, maybe each of you, you know, both personally and professionally, I feel like, you know, 20, 20 never ended it just sort of blended in, uh, and, and, but some things have changed. We all talk about, geez, what's going to be permanent. How have you each been affected? Um, how has it helped you position for, for what's coming in in the years ahead, maybe Reena, you could start and then pick it up with, with Rob. >>Oh man. Um, you know, 2020 was definitely challenging and I think it was really challenging given the circumstances and in my position where I'm very much used to meeting with our customers and having lunch and really just kind of walking down the hallways and bumping into familiar faces and really seeing, you know, how we can provide value with our solutions. And so, you know, that was all stripped in 2020. Uh, so it's been, it's been quite challenging. I will say, working with Rob, working with some of my other customers, um, I've had, uh, I've had to learn the resilience and to be a little bit more relentless with phone calls and follow ups and, and being more agile in my communications with the customers and what their needs are, and be flexible with calendars because there's again, remote learning and, and, um, and the like, so I think, you know, positioned for 2021 really well. Um, I am excited to hopefully get back out there and start visiting our customers. But if not, I certainly learned a lot and just, um, the follow-up and again, the relentless phone calls and calling and checking up on our customers, even if it's just to say, hi, see how everyone's doing a mental check sometimes. So I think that's, that's become, um, you know, what 2020 was, and, and hopefully, you know, what, 2021 will be better and, uh, kind of continue on that, that relentless path. >>What do you think, Rob? Hi, how are you doing? >>I would echo a lot of Rina's thoughts and the fact of, yeah, definitely miss the in-person interaction. In fact, I will say that I remember the last time I was physically in the office that Scott, it was to meet with Rina. So I distinctively remember that they remember the date was March, I believe, March 9th. So it just shows how this year as has been sort of a blur, but at the same time, you remember certain milestones. And I think it's because of that relationship, um, we've developed with IBM that I can remember those distinctive milestones and events that took place. >>So Rob, I probably should have asked you upfront, maybe tell us a little bit about Alaska, uh, maybe, maybe give us the sort of quick soundbite on where you guys are mostly focused. Sure. >>Oh, it's guys, uh, a Japanese pharmaceutical company. The focus is in mental health and nephrology, really the two main business areas. Um, my role at guys to do the internal research and data analytics within the health economics and outcomes research group. Um, currently we are transitioned to a, uh, name, which is global value and real world evidence. Um, fact that transition is already happened. Um, so we're going to have more of a global presence going forward. Um, but my role is really to, uh, do the internal research across all the brands within the company. >>So, so Rena, I wonder this, thank you for that, Robert. I wonder if you could think, thinking about what you know about Scott and your relationship with Robin, your knowledge of, of the industry. Uh, there's so much that IBM can bring to the table. Rob was talking about data earlier, talking about EMR, you were talking about, you know, red hat and cloud and this big portfolio you have. So I wonder if you could sort of start a conversation for our audience just around how you guys see all those assets that you have and all the knowledge, all that data. How do you see the partnership evolving in the future to affect, uh, the industry and the, in the future of healthcare? >>Well, I would love to see, um, the entire, uh, uh, platform, um, shift to, to the IBM cloud, um, and certainly, you know, leverage the cloud pack and analytics that, that we have to offer, um, baby steps most definitely. Um, but I do think that there is, uh, the opportunity to really move, um, and transform the business into something a lot more than, than what it is. >>Rob has the pandemic effected sort of how you think about, um, you know, remote services and cloud services and the, like, were you already on the path headed there? Did accelerate things, have you, you know, have you not had time because things have been so busy or maybe you could comment? >>Yeah, I think it's really a combination. And so I think you hit on a, a fair point there, just the time, uh, aspect. Um, it's definitely been a challenge and your, um, I have two children and remote learning has definitely been a challenge from that perspective. So time has definitely been, uh, on the short side. Um, I do see that there are going to in the future be more and more users of the data. So I think that shift to a potential cloud environment is where things are headed. >>So we, I have a bunch more questions, but I want to step back for a second and see if there's anything that you'd like to ask Rob before I go onto my next section. Okay. So I wonder if you could think about, um, maybe both of you, the, the, when you think back on, on 2020 and all the, you know, what's transpired, what, what transitions did you guys have to make? Uh, maybe as a team together IBM and Alaska. Um, and, and, and what do you see as sort of permanent or semi-permanent is work from home? We're gonna going to continue at a higher rate, uh, are there new practice? I mean, I know just today I made an online appointment it's for a remote visit with my doctor, which never could have happened before the pandemic. Right. But are there things specific to your business and your relationship that you see as a transition that could be permanent or semi-permanent? >>Well, I, I think it's there, there's definitely a shift that's happened that will is here to stay, but I don't know if it's full, it's going to be a combination in the future. I think that in-person interactions, especially what Rena mentioned about having that face-to-face interaction is still going to be one things are in the right place and safe they're going to happen again. But I think the ability to show that work can happen in a virtual or a full remote workplace, that's going to just allow that to continue and really give the flex of people. The flexibility I know for myself, flexibility is key. Like I mentioned, with two small children, um, that, that, that becomes such a valuable addition to your work, your life and your work life in general, that I think that's here to stay. >>Okay. Um, so let me ask you this, uh, w one of the themes of this event is relentless re-invention. So what I'm hearing from you Rob, is that it kind of a hybrid model going forward, if you will, uh, maybe the option to work from home, but that face to face interaction, especially when you're creating things like you are in the pharmaceutical business and the deep R and D that collaborative aspect, you know, you, it's harder when you're, when, when, when you're remote. Um, but maybe you could talk about, you know, some of those key areas that you're, you're going to be focused on in 2021 and, and really where you would look for IBM to help. >>I think in 2021, the team I'm part of it, part of is, is growing. So I think there's going to be additional demand for internal research, uh, uh, capabilities for analysis done within the company. So I think I'm going to be looking to Rena to, uh, see what new data offerings are available and all what new products are going to be available. But beyond that, um, I think it's the potential that, you know, there's so much, uh, projects, um, that are going to be coming to the table. We may need to outsource some of that projects and IBM could be potentially be a partner there to do some of the analysis on to help out there. >>Anything you'd add. >>Uh, no, I think that, that sounds good. >>How would you grade IBM and your relationship with IBM Rob? >>Well, I have to be nice to Rina cause she's been very nice to me. I would say an a, an a plus >>My kids, I got kids in college. Several, they get A's, I'm happy. Oh, that's good. You know, you should be proud. So, congratulations. Um, anything else Reno, you give you, I'll give you a last word here before we wrap, >>You know, 2020 was, was a challenging. And, you know, we talked a little bit about, you know, what time in 2020, you know, Rob and I have always had a really good relationship. I think 2020, we got closer, um, with just both professionally and really diving in to key business challenges that they have, and really working with him to understand what the customer needs are and how we can help, not only from, you know, an HR perspective, but also how can we help Otsuka, um, as a company in, in totality. So, you know, we've been able to do that, but personally, I would say that I really appreciated the relationship. I mean, we can go from talking about work to talking about children, to talking about family, um, all in the same five minute conversation or 10 minute conversation, sometimes our conversation. So, you know, thank you, Rob 2020 was definitely super challenging. >>I know for you on so many levels. Um, but I have to say you've been really great at just showing up every time picked up the phone, asked questions. If I needed something I can call you, I knew you were going to pick up, I had an offering and be like, do you have 10 minutes? Can I share this with you? And you would pick up the phone, no problem, and entertain a call or set up a call with all your internal colleagues. And I, I appreciate that so much. And, you know, I appreciate our relationship. I appreciate the business and I, I do hope that we can continue on in 2021, we will continue on in 2021. Uh, but, um, but yeah, I thank you so much. >>Rain has been extremely helpful. I don't want to thank you for all the help. Um, just to add to that one point there, you know, we have, uh, also another product, which I forgot to mention that we licensed in from IBM, it's the treatment pathways, um, tool, which is an online tool. Um, and we have users throughout the globe. So there's been times where I've needed a new user added very quickly for someone in the home office in Japan. And Rena has been extremely helpful in getting things done quickly and very proactively. >>Well, guys, it's really clear that the depth of your relationship I'm interested that you actually got closer in 2020. Uh, the fact that you communicate, you know, several times a day is I think Testament to that relationship. Uh, I'm really pleased to hear what you're doing and the potential with the EMR data for patient outcomes. Uh, as I say in the early days, I used to hear all about how well you have to do that to get paid. And it's really great to see a partnership that's, that's really focused on, on, on patient health and, and changing our lives. So, and mental health is such an important area that for so many years was so misunderstood and the, and the data that we now have, and of course, IBM's heritage and data is key. Uh, the relationship and the follow-up and also the flexibility is, is something I think we all learned in 2020, we have to, we've kind of redefined, you know, resilience in our organizations and, uh, glad to see you guys are growing. Congratulations on the relationship. And thanks so much for spending some time with me. >>Thank you. Thank you, Dave. Thank you, Raina >>For watching this client conversation with IBM Watson health.

>> from our studios in the heart of Silicon Valley, Palo Alto, California It is a cute conversation. >> Well, the Special Cube conversation. We are here in Palo Alto, California, Cube studios here. Tony, Gino, Domenico, Who's the senior security strategist and research at for Net and four to guard labs live from Las Vegas. Where Black Hat and then Def Con security activities happening, Tony, also known as Tony G. Tony G. Welcome to this cube conversation. >> Hey, Thanks, John. Thanks for having me. >> So a lot of action happening in Vegas. We just live there all the time with events. You're there on the ground. You guys have seen all the action there. You guys are just published. Your quarterly threat report got a copy of it right here with the threat index on it. Talk about the quarterly global threats report. Because the backdrop that we're living in today, also a year at the conference and the cutting edge is security is impacting businesses that at such a level, we must have shell shock from all the breaches and threats they're going on. Every day you hear another story, another story, another hack, more breaches. It said all time high. >> Yeah, you know, I think a lot of people start to get numb to the whole thing. You know, it's almost like they're kind of throwing your hands up and say, Oh, well, I just kind of give up. I don't know what else to do, but I mean, obviously, there are a lot of different things that you can do to be able to make sure that you secure your cybersecurity program so at least you minimize the risk of these particular routes is happening. But with that said with the Threat Landscape report, what we typically dio is we start out with his overall threat index, and we started this last year. If we fast forward to where we are in this actual cue to report, it's been one year now, and the bad news is that the threats are continuing to increase their getting more sophisticated. The evasion techniques are getting more advanced, and we've seen an uptick of about 4% and threat volume over the year before. Now the silver lining is I think we expected the threat volume to be much higher. So I think you know, though it is continuing to increase. I think the good news is it's probably not increasing as fast as we thought it was going to. >> Well, you know, it's always You have to know what you have to look for. Blood. People talk about what you can't see, and there's a lot of a blind spot that's become a data problem. I just want to let people know that. Confined the report, go to Ford Nets, ah website. There's a block there for the details, all the threat index. But the notable point is is only up 4% from the position year of a year that the attempts are more sophisticated. Guys gotta ask you, Is there stuff that we're not seeing in there? Is there blind spots? What's the net net of the current situation? Because observe ability is a hot topic and cloud computing, which essentially monitoring two point. Oh, but you gotta be able to see everything. Are we seeing everything? What's what's out there? >> Well, I mean, I think us as Ford, a guard on Darcy, have cyber threat in challenges. I think we're seeing a good amount, but when you talk about visibility, if you go back down into the organizations. I think that's where there's There's definitely a gap there because a lot of the conversations that I have with organizations is they don't necessarily have all the visibility they need from cloud all the way down to the end point. So there are some times that you're not gonna be able to catch certain things now. With that said, if we go back to the report at the end of the day, the adversaries have some challenges to be able to break into an organization. And, of course, the obvious one is they have to be able to circumvent our security controls. And I think as a security community, we've gotten a lot better of being able to identify when the threat is coming into an organization. Now, on the flip side, Oh, if you refer back to the minor Attack knowledge base, you'll see a specific tactic category called defense evasions. There's about 60 plus techniques, evasion techniques the adversary has at their disposal, at least that we know may there may be others, but so they do have a lot of opportunity, a lot of different techniques to be able to leverage with that, said There's one technique. It's, ah, disabling security tools that we started seeing a bit of an increase in this last cue to threat landscape report. So a lot of different types of threats and mile where have the capability to be ableto one look at the different processes that may be running on a work station, identifying which one of those processes happen to be security tools and then disabling them whether they're no, maybe they might just be able to turn the no, the actual service off. Or maybe there's something in the registry that they can tweak. That'll disable the actual security control. Um, maybe they'll actually suppress the alerts whatever. They conduce you to make sure that that security control doesn't prevent them from doing that malicious activity. Now, with that said, on the flip side, you know, from an organization for perspective, you want to make sure that you're able to identify when someone's turning on and turning off those security control to any type of alert that might be coming out of that control also. And this is a big one because a lot of organizations and this certainly do this minimize who has the ability to turn those particular security controls on and off. In the worst cases, you don't wanna have all of your employees uh, the you don't want to give them the ability to be able to turn those controls on and off. You're never gonna be ableto baseline. You're never gonna be able to identify a, you know, anomalous activity in the environment, and you're basically gonna lose your visibility. >> I mean, this increase in male wearing exploit activity you guys were pointing out clearly challenge the other thing that the report kind of She's out. I want to get your opinion on this. Is that the The upping? The ante on the evasion tactics has been very big trend. The adversaries are out there. They're upping the ante. You guys, we're upping the guarantees. This game you continue this flight will continues. Talk about this. This feature of upping the ante on evasion tactics. >> Yes. So that's what I was that I was kind of ah, referring to before with all the different types of evasion techniques. But what I will say is most of the all the threats these days all have some type of evasion capabilities. A great example of this is every quarter. If you didn't know. We look at different types of actors and different types of threats, and we find one that's interesting for us to dig into and where create was called an actual playbook, where we want to be able to dissect that particular threat or those threat actor methodologies and be able to determine what other tactics and corresponding techniques, which sometimes of course, includes evasion techniques. Now, the one that we focused on for this quarter was called His Ego's Was Ego, says a specific threat that is an information stealer. So it's gathering information, really based on the mission goals off, whatever that particular campaign is, and it's been around for a while. I'm going all the way back to 2011. Now you might be asking yourself, Why did we actually choose this? Well, there's a couple different reasons. One happens to be the fact that we've seen an uptick in this activity. Usually when we see that it's something we want to dive into a little bit more. Number two. Though this is a tactic of the of the adversary, what they'll do is they'll have their threat there for a little while, and then local doorman. They'll stop using that particular malware. That's no specific sort of threat. They'll let the dust settle that things die down. Organizations will let their guard down a little bit on that specific threat. Security organizations Ah, vendors might actually do the same. Let that digital dust kind of settle, and then they'll come back. Bigger, faster, stronger. And that's exactly what Z ghosted is. Ah, we looked at a specific campaign in this new mall where the new and improved Mauer, where is they're adding in other capabilities for not just being able to siphon information from your machine, but they're also now can capture video from your webcam. Also, the evasion techniques since Iran that particular subject, what they're also able to do is they're looking at their application logs. Your system logs your security logs, the leading them making a lot more difficult from a forensic perspective. Bill, go back and figure out what happened, what that actual malware was doing on the machine. Another interesting one is Ah, there. We're looking at a specific J peg file, so they're looking for that hash. And if the hash was there the axle? Um, our wouldn't run. We didn't know what that was. So we researched a little bit more on What we found out was that J Peg file happened to be a desktop sort of picture for one of the sandboxes. So it knew if that particular J pick was present, it wasn't going to run because it knew it was being analyzed in a sandbox. So that was a second interesting thing. The 3rd 1 that really leaned us towards digging into this is a lot of the actual security community attribute this particular threat back to cyber criminals that are located in China. The specific campaign we were focused on was on a government agency, also in China, So that was kind of interesting. So you're continuing to see these. These mile wears of maybe sort of go dormant for a little bit, but they always seem to come back bigger, faster, stronger. >> And that's by design. This is that long, whole long view that these adversaries we're taking in there as he organized this economy's behind what they're doing. They're targeting this, not just hit and run. It's get in, have a campaign. This long game is very much active. Howto enterprises. Get on, get on top of this. I mean, is it Ah, is it Ah, people process Issue is it's, um, tech from four to guard labs or what? What's what's for the Nets view on this? Because, I mean, I can see that happening all the time. It has >> happened. Yeah, it's It's really it's a combination of everything on this combination. You kind of hit like some of it, its people, its processes and technology. Of course, we have a people shortage of skilled resource is, but that's a key part of it. You always need to have those skills. Resource is also making sure you have the right process. Is how you actually monitoring things. I know. Ah, you know, a lot of folks may not actually be monitoring all the things that they need to be monitoring from, Ah, what is really happening out there on the internet today? So making sure you have clear visibility into your environment and you can understand and maybe getting point in time what your situational awareness is. You you, for my technology perspective, you start to see and this is kind of a trend. We're starting the leverage artificial intelligence, automation. The threats are coming, and it's such a high volume. Once they hit the the environment, instead of taking hours for your incident response to be about, at least you know not necessarily mitigate, but isolate or contain the breach. It takes a while. So if you start to leverage some artificial intelligence and automatic response with the security controls are working together. That's a big that's a big part of it. >> Awesome. Thanks for coming. This is a huge problem. Think no one can let their guard down these days? Certainly with service, they're expanding. We're gonna get to that talk track in the second. I want to get quickly. Get your thoughts on ransom, where this continues to be, a drum that keeps on beating. From a tax standpoint, it's almost as if when when the attackers need money, they just get the same ransomware target again. You know, they get, they pay in. Bitcoin. This is This has been kind of a really lucrative but persistent problem with Ransomware. This what? Where what's going on with Ransomware? What's this state of the report and what's the state of the industry right now in solving that? >> Yeah. You know, we looked into this a little bit in last quarter and actually a few quarters, and this is a continuous sort of trend ransom, where typically is where you know, it's on the cyber crime ecosystem, and a lot of times the actual threat itself is being delivered through some type of ah, phishing email where you need a user to be able to click a langur clicking attachment is usually kind of a pray and spray thing. But what we're seeing is more of ah, no sort of ah, you know, more of a targeted approach. What they'll do is to look for do some reconnaissance on organizations that may not have the security posture that they really need. Tohave, it's not as mature, and they know that they might be able to get that particular ransomware payload in there undetected. So they do a little reconnaissance there, And some of the trend here that we're actually seeing is there looking at externally RTP sessions. There's a lot of RTP sessions, the remote desktop protocol sessions that organizations have externally so they can enter into their environment. But these RTP sessions are basically not a secure as they need to be either week username and passwords or they are vulnerable and haven't actually been passed. They're taking advantage of those they're entering and there and then once they have that initial access into the network, they spread their payload all throughout the environment and hold all those the those devices hostage for a specific ransom. Now, if you don't have the, you know, particular backup strategy to be able to get that ransom we're out of there and get your your information back on those machines again. Sometimes you actually may be forced to pay that ransom. Not that I'm recommending that you sort of do so, but you see, or organizations are decided to go ahead and pay that ransom. And the more they do that, the more the adversary is gonna say, Hey, I'm coming back, and I know I'm gonna be able to get more and more. >> Yeah, because they don't usually fix the problem or they come back in and it's like a bank. Open bank blank check for them. They come in and keep on hitting >> Yeah >> same target over and over again. We've seen that at hospitals. We've seen it kind of the the more anemic I t department where they don't have the full guard capabilities there. >> Yeah, and I would have gone was really becoming a big issue, you know? And I'll, uh, ask you a question here, John. I mean, what what does Microsoft s A N D. H s have in common for this last quarter? >> Um, Robin Hood? >> Yeah. That attacks a good guess. Way have in common is the fact that each one of them urged the public to patch a new vulnerability that was just released on the RTP sessions called Blue Keep. And the reason why they was so hyped about this, making sure that people get out there and patch because it was were mobile. You didn't really need tohave a user click a link or click and attachment. You know, basically, when you would actually exploit that vulnerability, it could spread like wildfire. And that's what were mobile is a great example of that is with wannacry. A couple years ago, it spread so quickly, so everybody was really focused on making sure that vulnerability actually gets patched. Adding onto that we did a little bit of research on our own and ransom Internet scans, and there's about 800,000 different devices that are vulnerable to that particular ah, new vulnerability that was announced. And, you know, I still think a lot of people haven't actually patched all of that, and that's a real big concern, especially because of the trend that we just talked about Ransomware payload. The threat actors are looking at are Rdp as the initial access into the environment. >> So on blue Keep. That's the one you were talking about, right? So what is the status of that? You said There's a lot of vulnerable is out. There are people patching it, is it Is it being moving down, the down the path in terms of our people on it? What's your take on that? What's the assessment? >> Yeah, so I think some people are starting to patch, but shoot, you know, the scans that we do, there's still a lot of unpacked systems out there, and I would also say we're not seeing what's inside the network. There may be other RTP sessions in the environment inside of an organization's environment, which really means Now, if Ransomware happens to get in there that has that capability than to be able to spread like the of some RTP vulnerability that's gonna be even a lot more difficult to be able to stop that once it's inside a network. I mean, some of the recommendations, obviously, for this one is you want to be able to patch your RTP sessions, you know, for one. Also, if you want to be able to enable network authentication, that's really gonna help us. Well, now I would also say, You know, maybe you want a hard in your user name and passwords, but if you can't do some of this stuff, at least put some mitigating controls in place. Maybe you can isolate some of those particular systems, limit the amount of AH access organizations have or their employees have to that, or maybe even just totally isolated. If it's possible, internal network segmentation is a big part of making sure you can. You're able to mitigate some of these put potential risks, or at least minimize the damage that they may cause. >> Tony G. I want to get your thoughts on your opinion and analysis expert opinion on um, the attack surface area with digital and then ultimately, what companies can do for Let's let's start with the surface area. What's your analysis there? Ah, lot of companies are recognizing. I'll see with Coyote and other digital devices. The surface area is just everywhere, right? So I got on the perimeter days. That's kind of well known. It's out there. What's the current digital surface area threats look like? What's your opinion? >> Sure, Yeah, it's Ah, now it's funny. These days, I say no, Jenna tell you everything that seems to be made as an I P address on it, which means it's actually able to access the Internet. And if they can access the Internet, the bad guys can probably reach out and touch it. And that's really the crux of the problem of these days. So anything that is being created is out on the Internet. And, yeah, like, we all know there's really not a really rigid security process to make sure that that particular device as secure is that secure as it actually needs to be Now. We talked earlier on about You know, I ot as relates to maybe home routers and how you need to be ableto hard in that because you were seeing a lot of io teapot nets that air taking over those home routers and creating these super large I ot botnets on the other side of it. You know, we've seen ah lot of skate of systems now that traditionally were in air gapped environments. Now they're being brought into the traditional network. They're being connected there. So there's an issue there, but one of the ones we haven't actually talked a lot about and we see you're starting to see the adversaries focus on these little bit more as devices in smart homes and smart buildings in this queue to threat landscape report. There was a vulnerability in one of these you motion business management systems. And, you know, we looked at all the different exploits out there, and the adversaries were actually looking at targeting that specific exploit on that. That's smart management building service device. We had about 1% of all of our exploit, uh, hits on that device. Now that might not seem like a lot, but in the grand scheme of things, when we're collecting billions and billions of events, it's a fairly substantial amount. What, now that we're Lee starts a kind of bring a whole another thought process into as a security professional as someone responds double for securing my cyber assets? What if I include in my cyber assets now widen include all the business management systems that my employees, Aaron, for my overall business. Now that that actually might be connected to my internal network, where all of my other cyber assets are. Maybe it actually should be. Maybe should be part of your vulnerability mentioned audibly patch management process. But what about all the devices in your smart home? Now? You know, all these different things are available, and you know what the trend is, John, right? I mean, the actual trend is to work from home. So you have a lot of your remote workers have, ah, great access into the environment. Now there's a great conduit for the obvious areas to be ableto break into some of those smart home devices and maybe that figure out from there there on the employees machine. And that kind of gets him into, you know, the other environment. So I would say, Start looking at maybe you don't wanna have those home devices as part of, ah, what you're responsible for protecting, but you definitely want to make sure your remote users have a hardened access into the environment. They're separated from all of those other smart, smart home devices and educate your employees on that and the user awareness training programs. Talk to them about what's happening out there, how the adversaries air starting to compromise, or at least focus on some of them smart devices in their home environment. >> These entry points are you point out, are just so pervasive. You have work at home totally right. That's a great trend that a lot of companies going to. And this is virtual first common, a world. We build this new new generation of workers. They wanna work anywhere. So no, you gotta think about all that. Those devices that your son or your daughter brought home your husband. Your wife installed a new light bulb with an I peed connection to it fully threaded processor. >> I know it. Gosh, this kind of concern me, it's safer. And what's hot these days is the webcam, right? Let's say you have an animal and you happen to go away. You always want to know what your animals doing, right? So you have these Webcams here. I bet you someone might be placing a webcam that might be near where they actually sit down and work on their computer. Someone compromises that webcam you may be. They can see some of the year's name and password that you're using a log in. Maybe they can see some information that might be sensitive on your computer. You know, it's the The options are endless here. >> Tony G. I want to get your thoughts on how companies protect themselves, because this is the real threat. A ni O t. Doesn't help either. Industrial I ot to just Internet of things, whether it's humans working at home, too, you know, sensors and light bulbs inside other factory floors or whatever means everywhere. Now the surface area is anything with a knife he address in power and connectivity. How do companies protect themselves? What's the playbook? What's coming out of Red hat? What's coming out of Fort Annette? What are you advising? What's the playbook? >> Yeah, you know I am. You know, when I get asked this question a lot, I really I sound like a broken record. Sometimes I try to find so many different ways to spin it. You know, maybe I could actually kind of say it like this, and it's always means the same thing. Work on the fundamentals and John you mentioned earlier from the very beginning. Visibility, visibility, visibility. If you can't understand all the assets that you're protecting within your environment, it's game over. From the beginning, I don't care what other whiz bang product you bring into the environment. If you're not aware of what you're actually protecting, there's just no way that you're gonna be able to understand what threats are happening out your network at a higher level. It's all about situational awareness. I want to make sure if I'm if I'm a C so I want my security operations team to have situational awareness at any given moment, all over the environment, right? So that's one thing. No grabbing that overall sort of visibility. And then once you can understand where all your assets are, what type of information's on those assets, you get a good idea of what your vulnerabilities are. You start monitoring that stuff. You can also start understanding some of different types of jabs. I know it's challenging because you've got everything in the cloud all the way down to the other end point. All these mobile devices. It's not easy, but I think if you focus on that a little bit more, it's gonna go a longer way. And I also mentioned we as humans. When something happens into the environment, we can only act so fast. And I kind of alluded to this earlier on in this interview where we need to make sure that we're leveraging automation, artificial in intelligence to help us be able to determine when threats happened. You know, it's actually be in the environment being able to determine some anomalous activity and taking action. It may not be able to re mediate, but at least it can take some initial action. The security controls can talk to each other, isolate the particular threat and let you fight to the attack, give you more time to figure out what's going on. If you can reduce the amount of time it takes you to identify the threat and isolate it, the better chances that you're gonna have to be able to minimize the overall impact of that particular Reno. >> Tony, just you jogging up a lot of memories from interviews I've had in the past. I've interviewed the four star generals, had an essay, had a cyber command. You get >> a lot of >> military kind of thinkers behind the security practice because there is a keeping eyes on the enemy on the target on the adversary kind of dialogue going on. They all talk about automation and augmenting the human piece of it, which is making sure that you have as much realty. I'm information as possible so you can keep your eyes on the targets and understand, to your point contextual awareness. This seems to be the biggest problem that Caesar's heir focused on. How to eliminate the tasks that take the eyes off the targets and keep the situational winners on on point. Your thoughts on that? >> Yeah, I have to. You know what, son I used to be? Oh, and I still do. And now I do a lot of presentations about situational awareness and being ableto build your you know, your security operations center to get that visibility. And, you know, I always start off with the question of you know, when your C so walks in and says, Hey, I saw something in the news about a specific threat. How are we able to deal with that? 95% of the responses are Well, I have to kind of go back and kind of like, you don't have to actually come dig in and, you know, see, and it takes them a while for the audio. >> So there's a classic. So let me get back to your boss. What? Patch patch? That, um Tony. Chief, Thank you so much for the insight. Great Congressional. The Holy Report. Keep up the good work. Um, quick, Quick story on black hat. What's the vibe in Vegas? Def con is right around the corner after it. Um, you seeing the security industry become much more broader? See, as the industry service area becomes from technical to business impact, you starting to see that the industry change Amazon Web service has had an event cloud security called reinforce. You starting to see a much broader scope to the industry? What's the big news coming out of black at? >> Yeah, you know, it's it's a lot of the same thing that actually kind of changes. There's just so many different vendors that are coming in with different types of security solutions, and that's awesome. That is really good with that, said, though, you know, we talked about the security shortage that we don't have a lot of security professionals with the right skill sets. What ends up happening is you know, these folks that may not have that particular skill, you know, needed. They're being placed in these higher level of security positions, and they're coming to these events and they're overwhelmed because they're all they'll have a saw slight. It's all over a similar message, but slightly different. So how did they determine which one is actually better than the others? So it's, um, I would say from that side, it gets to be a little bit kind of challenging, but at the same time, No, I mean, we continued to advance. I mean, from the, uh, no, from the actual technical controls, solutions perspective, you know, You know, we talked about it. They're going, we're getting better with automation, doing the things that the humans used to do, automating that a little bit more, letting technology do some of that mundane, everyday kind of grind activities that we would as humans would do it, take us a little bit longer. Push that off. Let the actual technology controls deal with that so that you can focus like you had mentioned before on those higher level you know, issues and also the overall sort of strategy on either howto actually not allow the officer to come in or haven't determined once they're in and how quickly will be able to get them out. >> You know, we talked. We have a panel of seashells that we talk to, and we were running a you know, surveys through them through the Cube insights Most see says, we talk Thio after they won't want to talk off the record. I don't want anyone know they work for. They all talked him. They say, Look, I'm bombarded with more and more security solutions. I'm actually trying to reduce the number of suppliers and increase the number of partners, and this is nuanced point. But to your what you're getting at is a tsunami of new things, new threats, new solutions that could be either features or platforms or tools, whatever. But most si SOS wanna build an engineering team. They wanna have full stack developers on site. They wanna have compliance team's investigative teams, situational awareness teams. And they want a partner with with suppliers where they went partners, not just suppliers. So reduce the number suppliers, increase the partners. What's your take on that year? A big partner. A lot of the biggest companies you >> get in that state spring. Yeah. I mean, that's that's actually really our whole strategy. Overall strategy for Ford. Annette is, and that's why we came up with this security fabric. We know that skills are really not as not as prevalent as that they actually need to be. And of course, you know there's not endless amounts of money as well, right? And you want to be able to get these particular security controls to talk to each other, and this is why we built this security fabric. We want to make sure that the controls that we're actually gonna build him, and we have quite a few different types of, you know, security controls that work together to give you the visibility that you're really looking for, and then years Ah, you know, trusted partner that you can actually kind of come to And we can work with you on one identifying the different types of ways the adversaries air moving into the environment and ensuring that we have security controls in place to be able to thwart the threat. Actor playbook. Making sure that we have a defensive playbook that aligns with those actual ttp is in the offensive playbook, and we can actually either detect or ultimately protect against that malicious activity. >> Tony G. Thanks for sharing your insights here on the cube conversation. We'll have to come back to you on some of these follow on conversations. Love to get your thoughts on Observe ability. Visibility on. Get into this. What kind of platforms are needed to go this next generation with cloud security and surface area being so massive? So thanks for spending the time. Appreciate it. >> Thanks a lot, Right. We only have >> a great time in Vegas. This is Cube conversation. I'm John for here in Palo Alto. Tony G with Fortinet in Las Vegas. Thanks for watching

[Music] when welcome to the special exclusive cube conversation here in Palo Alto in our studios I'm John for your host of the cube we have a very special guest speaking for the first time around some alleged alleged accusations and also innuendo around the Amazon Web Services Jedi contract and his firm c5 capital our guest as Andre Pienaar who's the founder of c5 capital Andre is here for the first time to talk about some of the hard conversations and questions surrounding his role his firm and the story from the BBC Andre thanks for a rat for meeting with me John great to have me thank you so you're at the center of a controversy and just for the folks who know the cube know we interviewed a lot of people I've interviewed you at Amazon web sources summit Teresa Carl's event and last year I met you and bought a rein the work you're doing there so I've met you a few times so I don't know your background but I want to drill into it because I was surprised to see the BBC story come out last week that was basically accusing you of many things including are you a spy are you infiltrating the US government through the Jedi contract through Amazon and knowing c-5 capital I saw no correlation when reading your article I was kind of disturbed but then I saw I said a follow-on stories it just didn't hang together so I wanted to press you on some questions and thanks for coming in and addressing them appreciate it John thanks for having me so first thing I want to ask you is you know it has you at the center this firm c5 capital that you the founder of at the center of what looks like to be the fight for the big ten billion dollar DoD contract which has been put out to multiple vendors so it's not a single source deal we've covered extensively on silicon angle calm and the cube and the government the government Accounting Office has ruled that there are six main benefits of going with a sole provider cloud this seems to be the war so Oracle IBM and others have been been involved we've been covering that so it kind of smells like something's going along with the story and I just didn't believe some of the things I read and I want to especially about you and see five capitals so I want to dig into what the first thing is it's c5 capital involved in the Jedi contract with AWS Sean not at all we have absolutely no involvement in the Jedi contract in any way we're not a bidder and we haven't done any lobbying as has been alleged by some of the people who've been making this allegation c5 has got no involvement in the general contract we're a venture capital firm with a British venture capital firm we have the privilege of investing here in the US as a foreign investor and our focus really is on the growth and the success of the startups that we are invested in so you have no business interest at all in the deal Department of Defense Jedi contract none whatsoever okay so to take a minute to explain c5 firm I read some of the stories there and some of the things were intricate structures of c5 cap made it sound like there was like a cloak-and-dagger situation I want to ask you some hard questions around that because there's a link to a Russian situation but before we get to there I want to ask you explain what is c5 capital your mission what are the things that you're doing c5 is a is a British venture capital firm and we are focused on investing into fast-growing technology companies in three areas cloud computing cyber security and artificial intelligence we have two parts our business c5 capital which invests into late stage companies so these are companies that typically already have revenue visibility and profitability but still very fast-growing and then we also have a very early stage startup platform that look at seed state investment and this we do through two accelerators to social impact accelerators one in Washington and one in Bahrain and it's just size of money involved just sort of order magnitude how many funds do you have how is it structure again just share some insight on that is it is there one firm is there multiple firms how is it knows it work well today the venture capital business has to be very transparent it's required by compliance we are a regulated regulated firm we are regulated in multiple markets we regulated here in the US the sec as a foreign investor in london by the financial conduct authority and in Luxembourg where Afonso based by the regulatory authorities there so in the venture capital industry today you can't afford to be an opaque business you have to be transparent at all levels and money in the Western world have become almost completely transparent so there's a very comprehensive and thorough due diligence when you onboard capital called know your client and the requirements standard requirement now is that whenever you're onboard capital from investor you're gonna take it right up to the level of the ultimate beneficial ownership so who actually owns this money and then every time you invest and you move your money around it gets diligence together different regulators and in terms of disclosure and the same applies often now with clients when our portfolio companies have important or significant clients they also want to know who's behind the products and the services they receive so often our boards our board directors and a shell team also get diligence by by important clients so explain this piece about the due diligence and the cross country vetting that goes on is I think it's important I want to get it out because how long has been operating how many deals have you done you mentioned foreign investor in the United States you're doing deals in the United States I know I've met one of your portfolio companies at an event iron iron on it iron net general Keith Alexander former head of the NSA you know get to just work with him without being vetted I guess so so how long a c5 capital been in business and where have you made your investments you mentioned cross jurisdiction across countries whatever it's called I don't know that so we've been and we've been in existence for about six years now our main focus is investing in Europe so we help European companies grow globally Europe historically has been underserved by venture capital we on an annual basis we invest about twenty seven billion dollars gets invested in venture capital in Europe as opposed to several multiples of that in the US so we have a very important part to play in Europe to how European enterprise software companies grow globally other important markets for us of course are Israel which is a major center of technology innovation and and the Middle East and then the u.s. the u.s. is still the world leader and venture capital both in terms of size but also in terms of the size of the market and of course the face and the excitement of the innovation here I want to get into me early career because again timing is key we're seeing this with you know whether it's a Supreme Court justice or anyone in their career their past comes back to haunt them it appears that has for you before we get there I want to ask you about you know when you look at the kind of scope of fraud and corruption that I've seen in just on the surface of government thing the government bit Beltway bandits in America is you got a nonprofit that feeds a for-profit and then what you know someone else runs a shell corporation so there's this intricate structures and that word was used which it kind of implies shell corporations a variety of backroom kind of smokey deals going on you mentioned transparency I do you have anything to hide John in in in our business we've got absolutely nothing to hide we have to be transparent we have to be open if you look at our social media profile you'll see we are communicating with the market almost on a daily basis every time we make an investment we press release that our website is very clear about who's involved enough who our partners are and the same applies to my own personal website and so in terms of the money movement around in terms of deploying investments we've seen Silicon Valley VCS move to China get their butts handed to them and then kind of adjust their scenes China money move around when you move money around you mentioned disclosure what do you mean there's filings to explain that piece it's just a little bit so every time we make an investment into a into a new portfolio company and we move the money to that market to make the investment we have to disclose who all the investors are who are involved in that investment so we have to disclose the ultimate beneficial ownership of all our limited partners to the law firms that are involved in the transactions and those law firms in turn have applications in terms of they own anti-money laundering laws in the local markets and this happens every time you move money around so I I think that the level of transparency in venture capital is just continue to rise exponentially and it's virtually impossible to conceal the identity of an investor this interesting this BBC article has a theme of national security risk kind of gloom and doom nuclear codes as mentioned it's like you want to scare someone you throw nuclear codes at it you want to get people's attention you play the Russian card I saw an article on the web that that said you know anything these days the me2 movement for governments just play the Russian card and you know instantly can discredit someone's kind of a desperation act so you got confident of interest in the government national security risk seems to be kind of a theme but before we get into the BBC news I noticed that there was a lot of conflated pieces kind of pulling together you know on one hand you know you're c5 you've done some things with your hat your past and then they just make basically associate that with running amazon's jedi project yes which i know is not to be true and you clarified that joan ends a problem joan so as a venture capital firm focused on investing in the space we have to work with all the Tier one cloud providers we are great believers in commercial cloud public cloud we believe that this is absolutely transformative not only for innovation but also for the way in which we do venture capital investment so we work with Amazon Web Services we work with Microsoft who work with Google and we believe that firstly that cloud has been made in America the first 15 companies in the world are all in cloud companies are all American and we believe that cloud like the internet and GPS are two great boons which the US economy the u.s. innovation economy have provided to the rest of the world cloud computing is reducing the cost of computing power with 50 percent every three years opening up innovation and opportunities for Entrepreneurship for health and well-being for the growth of economies on an unprecedented scale cloud computing is as important to the global economy today as the dollar ease as the world's reserve currency so we are great believers in cloud we great believers in American cloud computing companies as far as Amazon is concerned our relationship with Amazon Amazon is very Amazon Web Services is very clear and it's very defined we participate in a public Marcus program called AWS activate through which AWS supports hundreds of accelerators around the world with know-how with mentoring with teaching and with cloud credits to help entrepreneurs and startups grow their businesses and we have a very exciting focus for our two accelerators which is on in Washington we focus on peace technology we focus on taking entrepreneurs from conflict countries like Sudan Nigeria Pakistan to come to Washington to work on campus in the US government building the u.s. Institute for peace to scale these startups to learn all about cloud computing to learn how they can grow their businesses with cloud computing and to go back to their own countries to build peace and stability and prosperity their heaven so we're very proud of this mission in the Middle East and Bahrain our focus is on on female founders and female entrepreneurs we've got a program called nebula through which we empower female founders and female entrepreneurs interesting in the Middle East the statistics are the reverse from what we have in the West the majority of IT graduates in the Middle East are fimo and so there's a tremendous talent pool of of young dynamic female entrepreneurs coming out of not only the Gulf but the whole of the MENA region how about a relation with Amazon websites outside of their normal incubators they have incubators all over the place in the Amazon put out as Amazon Web Services put out a statement that said hey you know we have a lot of relationships with incubators this is normal course of business I know here in Silicon Valley at the startup loft this is this is their market filled market playbook so you fit into that is that correct as I'm I get that that's that's absolutely correct what we what is unusual about a table insists that this is a huge company that's focused on tiny startups a table started with startups it double uses first clients with startups and so here you have a huge business that has a deep understanding of startups and focus on startups and that's enormous the attractor for us and terrific for our accelerators department with them have you at c5 Capitol or individually have any formal or conversation with Amazon employees where you've had outside of giving feedback on products where you've tried to make change on their technology make change with their product management teams engineering you ever had at c5 capital whore have you personally been involved in influencing Amazon's product roadmap outside they're just giving normal feedback in the course of business that's way above my pay grade John firstly we don't have that kind of technical expertise in C 5 C 5 steam consists of a combination of entrepreneurs like myself people understand money really well and leaders we don't have that level of technical expertise and secondly that's what one our relationship with AWS is all about our relationship is entirely limited to the two startups and making sure that the two accelerators in making sure that the startups who pass through those accelerators succeed and make social impact and as a partner network component Amazon it's all put out there yes so in in a Barren accelerator we've we formed part of the Amazon partner network and the reason why we we did that was because we wanted to give some of the young people who come through the accelerator and know mastering cloud skills an opportunity to work on some real projects and real live projects so some of our young golf entrepreneurs female entrepreneurs have been working on building websites on Amazon Cloud and c5 capital has a relationship with former government officials you funded startups and cybersecurity that's kind of normal can you explain that positioning of it of how former government if it's whether it's US and abroad are involved in entrepreneurial activities and why that is may or may not be a problem certainly is a lot of kind of I would say smoke around this conversation around coffin of interest and you can you explain intelligence what that was it so I think the model for venture capital has been evolving and increasingly you get more and more differentiated models one of the key areas in which the venture capital model is changed is the fact that operating partners have become much more important to the success of venture capital firms so operating partners are people who bring real world experience to the investment experience of the investment team and in c-five we have the privilege of having a terrific group of operating partners people with both government and commercial backgrounds and they work very actively enough firm at all levels from our decision-making to the training and the mentoring of our team to helping us understand the way in which the world is exchanging to risk management to helping uh portfolio companies grow and Silicon Valley true with that to injuries in Horowitz two founders mr. friendly they bring in operating people that have entrepreneurial skills this is the new model understand order which has been a great source of inspiration to us for our model and and we built really believe this is a new model and it's really critical for the success of venture capitals to be going forward and the global impact is pretty significant one of things you mentioned I want to get your take on is as you operate a global transaction a lots happened a lot has to happen I mean we look at the ICO market on the cryptocurrency side its kind of you know plummeting obsoletes it's over now the mood security children's regulatory and transparency becomes critical you feel fully confident that you haven't you know from a regulatory standpoint c5 capital everything's out there absolutely risk management and regulated compliance and legal as the workstream have become absolutely critical for the success of venture capital firms and one of the reasons why this becomes so important John is because the venture capital world over the last few years have changed dramatically historically all the people involved in venture capital had very familiar names and came from very familiar places over the last few years with a diversification of global economic growth we've seen it's very significant amounts of money being invest invested in startups in China some people more money will invest in startups this year in China than in the US and we've seen countries like Saudi Arabia becoming a major source of venture capital funding some people say that as much as 70% of funding rounds this year in some way or another originated from the Gulf and we've seen places like Russia beginning to take an interest in technology innovation so the venture capital world is changing and for that reason compliance and regulation have become much more important but if Russians put 200 million dollars in face book and write out the check companies bright before that when the after 2008 we saw the rise of social networking I think global money certainly has something that I think a lot of people start getting used to and I want on trill down into that a little bit we talked about this BBC story that that hit and the the follow-on stories which actually didn't get picked up was mostly doing more regurgitation of the same story but one of the things that that they focus in on and the story was you and the trend now is your past is your enemy these days you know they try to drum up stuff in the past you've had a long career some of the stuff that they've been bringing in to paint you and the light that they did was from your past so I wanted to explore that with you I know you this is the first time you've talked about this and I appreciate you taking the time talk about your early career your background where you went to school because the way I'm reading this it sounds like you're a shady character I like like I interviewed on the queue but I didn't see that but you know I'm going to pressure here for that if you don't mind I'd like to to dig into that John thank you for that so I've had the I've had the privilege of a really amazingly interesting life and at the heart of at the heart of that great adventures been people and the privilege to work with really great people and good people I was born in South Africa I grew up in Africa went to school there qualified as a lawyer and then came to study in Britain when I studied international politics when I finished my studies international politics I got head hunted by a US consulting firm called crow which was a start of a 20 years career as an investigator first in crawl where I was a managing director in the London and then in building my own consulting firm which was called g3 and all of this led me to cybersecurity because as an investigator looking into organized crime looking into corruption looking into asset racing increasingly as the years went on everything became digital and I became very interested in finding evidence on electronic devices but starting my career and CRO was tremendous because Jules Kroll was a incredible mentor he could walk through an office and call everybody by their first name any Kroll office anywhere in the world and he always took a kindly interest in the people who work for him so it was a great school to go to and and I worked on some terrific cases including some very interesting Russian cases and Russian organized crime cases just this bag of Kroll was I've had a core competency in doing investigative work and also due diligence was that kind of focus yes although Kroll was the first company in the world to really have a strong digital practice led by Alan Brugler of New York Alan established the first computer forensics practice which was all focused about finding evidence on devices and everything I know about cyber security today started with me going to school with Alan Brolin crawl and they also focused on corruption uncovering this is from Wikipedia Kroll clients help Kroll helps clients improve operations by uncovering kickbacks fraud another form of corruptions other specialty areas is forensic accounting background screening drug testing electronic investigation data recovery SATA result Omar's McLennan in 2004 for 1.9 billion mark divested Kroll to another company I'll take credit risk management to diligence investigator in Falls Church Virginia over 150 countries call Kroll was the first CRO was the first household brand name in this field of of investigations and today's still is probably one of the strongest brand names and so it was a great firm to work in and was a great privilege to be part of it yeah high-end high-profile deals were there how many employees were in Kroll cuz I'd imagine that the alumni that that came out of Kroll probably have found places in other jobs similar to yes do an investigative work like you know they out them all over the world many many alumni from Kroll and many of them doing really well and doing great work ok great so now the next question want to ask you is when you in Kroll the South Africa connection came up so I got to ask you it says business side that you're a former South African spy are you a former South African spy no John I've never worked for any government agency and in developing my career my my whole focus has been on investigations out of the Kroll London office I did have the opportunity to work in South Africa out of the Kroll London office and this was really a seminal moment in my career when I went to South Africa on a case for a major international credit-card company immediately after the end of apartheid when democracy started to look into the scale and extent of credit card fraud at the request of this guy what year was there - how old were you this was in 1995 1996 I was 25 26 years old and one of the things which this credit card company asked me to do was to assess what was the capability of the new democratic government in South Africa under Nelson Mandela to deal with crime and so I had the privilege of meeting mr. Mandela as the president to discuss this issue with him and it was an extraordinary man the country's history because there was such an openness and a willingness to to address issues of this nature and to grapple with them so he was released from prison at that time I remember those days and he became president that's why he called you and you met with him face to face of a business conversation around working on what the future democracy is and trying to look at from a corruption standpoint or just kind of in general was that what was that conversation can you share so so that so the meeting involved President Mandela and and the relevant cabinet ministers the relevant secretaries and his cabinet - responsible for for these issues and the focus of our conversation really started with well how do you deal with credit card fraud and how do you deal with large-scale fraud that could be driven by organized crime and at the time this was an issue of great concern to the president because there was bombing in Kate of a Planet Hollywood cafe where a number of people got very severely injured and the president believed that this could have been the result of a protection racket in Cape Town and so he wanted to do something about it he was incredibly proactive and forward-leaning and in an extraordinary way he ended the conversation by by asking where the Kroll can help him and so he commissioned Kroll to build the capacity of all the black officers that came out of the ANC and have gone into key government positions on how to manage organized crime investigations it was the challenge at that time honestly I can imagine apartheid I remember you know I was just at a college that's not properly around the same age as you it was a dynamic time to say the least was his issue around lack of training old school techniques because you know that was right down post-cold-war and then did what were the concerns not enough people was it just out of control was it a corrupt I mean just I mean what was the core issue that Nelson wanted to hire Kroll and you could work his core issue was he wanted to ensure the stability of South Africa's democracy that was his core focus and he wanted to make South Africa an attractive place where international companies felt comfortable and confident in investing and that was his focus and he felt that at that time because so many of the key people in the ANC only had training in a cold war context that there wasn't a Nessy skill set to do complex financial or more modern investigations and it was very much focused he was always the innovator he was very much focused on bringing the best practices and the best investigative techniques to the country he was I felt in such a hurry that he doesn't want to do this by going to other governments and asking for the help he wanted to Commission it himself and so he gave he gave a crawl with me as the project leader a contract to do this and my namesake Francois Pienaar has become very well known because of the film Invictus and he's been he had the benefit of Mandela as a mentor and as a supporter and that changed his career the same thing happened to me so what did he actually asked you to do was it to train build a force because there's this talk that and was a despite corruption specifically it was it more both corruption and or stability because they kind of go hand in hand policy and it's a very close link between corruption and instability and and president Ellis instructions were very clear to Crowley said go out and find me the best people in the world the most experienced people in the world who can come to South Africa and train my people how to fight organized crime so I went out and I found some of the best people from the CIA from mi6 the British intelligence service from the Drug Enforcement Agency here in the US form officers from the Federal Bureau of Investigation's detectives from Scotland Yard prosecutors from the US Justice Department and all of them for a number of years traveled to South Africa to train black officers who were newly appointed in key roles in how to combat organized crime and this was you acting as an employee he had crow there's not some operative this is he this was me very much acting as a as an executive and crow I was the project leader Kroll was very well structured and organized and I reported to the chief executive officer in the London office nor Garret who was the former head of the CIA's Near East Division and Nelson Mandela was intimately involved in this with you at Krall President Mandela was the ultimate support of this project and he then designated several ministers to work on it and also senior officials in the stories that had been put out this past week they talked about this to try to make it sound like you're involved on two sides of the equation they bring up scorpions was this the scorpions project that they referred to so it was the scorpions scorpion sounds so dangerous and a movie well there's a movie a movie does feature this so at the end of the training project President Mandela and deputy president Thabo Mbeki who subsequently succeeded him as president put together a ministerial committee to look at what should they do with the capacity that's been built with this investment that they made because for a period of about three years we had all the leading people the most experienced people that have come out of some of the best law enforcement agencies and some of the best intelligence services come and trained in South Africa and this was quite this was quite something John because many of the senior officers in the ANC came from a background where they were trained by the opponents of the people came to treat trained them so so many of them were trained by the Stasi in East Germany some of them were trained by the Russian KGB some of them were trained by the Cubans so we not only had to train them we also had to win their trust and when we started this that's a diverse set of potential dogma and or just habits a theory modernised if you will right is that what the there was there was a question of of learning new skills and there was a question about also about learning management capabilities there was also question of learning the importance of the media for when you do difficult and complex investigations there was a question about using digital resources but there was also fundamentally a question of just building trust and when we started this program none of the black officers wanted to be photographed with all these foreign trainers who were senior foreign intelligence officers when we finished that everyone wanted to be in the photograph and so this was a great South African success story but the President and the deputy president then reflected on what to do with his capacity and they appointed the ministerial task force to do this and we were asked to make recommendations to this Minister ministerial task force and one of the things which we did was we showed them a movie because you referenced the movie and the movie we showed them was the untouchables with Kevin Costner and Sean Connery which is still one of my favorite and and greatest movies and the story The Untouchables is about police corruption in Chicago and how in the Treasury Department a man called Eliot Ness put together a group of officers from which he selected from different places with clean hands to go after corruption during the Probie and this really captured the president's imagination and so he said that's what he want and Ella yeah okay so he said della one of the untouchables he wanted Eliot Ness exactly Al Capone's out there and and how many people were in that goodness so we asked that we we established the government then established decided to establish and this was passed as a law through Parliament the director of special operations the DSO which colloquy became known as the scorpions and it had a scorpion as a symbol for this unit and this became a standalone anti-corruption unit and the brilliant thing about it John was that the first intake of scorpion officers were all young black graduates many of them law graduates and at the time Janet Reno was the US Attorney General played a very crucial role she allowed half of the first intake of young cratchits to go to Quantico and to do the full FBI course in Quantico and this was the first group of foreign students who've ever been admitted to Quantico to do the full Quantico were you involved at what score's at that time yes sir and so you worked with President Mandela yes the set of the scorpions is untouchable skiing for the first time as a new democracy is emerging the landscape is certainly changing there's a transformation happening we all know the history laugh you don't watch Invictus probably great movie to do that you then worked with the Attorney General United States to cross-pollinate the folks in South Africa black officers law degrees Samar's fresh yes this unit with Quantico yes in the United States I had the privilege of attending the the graduation ceremony of the first of South African officers that completed the Quantico course and representing crow they on the day you had us relationships at that time to crawl across pollen I had the privilege of working with some of the best law enforcement officers and best intelligence officers that has come out of the u.s. services and they've been tremendous mentors in my career they've really shaped my thinking they've shaped my values and they've they've shaved my character so you're still under 30 at this time so give us a is that where this where are we in time now just about a 30 so you know around the nine late nineties still 90s yeah so client-server technologies there okay so also the story references Leonard McCarthy and these spy tapes what is this spy tape saga about it says you had a conversation with McCarthy me I'm thinking that a phone tap explain that spy tape saga what does it mean who's Lennon McCarthy explain yourself so so so Leonard McCarthy it's a US citizen today he served two terms as the vice president for institutional integrity at the World Bank which is the world's most important anti-corruption official he started his career as a prosecutor in South Africa many years ago and then became the head of the economic crimes division in the South African Justice Department and eventually became the head of the scorpions and many years after I've left Kroll and were no longer involved in in the work of the scorpions he texted me one evening expressing a concern and an anxiety that I had about the safety of his family and I replied to him with two text messages one was a Bible verse and the other one was a Latin saying and my advice name was follow the rule of law and put the safety of your family first and that was the advice I gave him so this is how I imagined the year I think of it the internet was just there this was him this was roundabout 2000 December 2007 okay so there was I phone just hit so text messaging Nokia phones all those big yeah probably more text message there so you sitting anywhere in London you get a text message from your friend yep later this past late tonight asking for help and advice and I gave him the best advice I can he unfortunately was being wiretapped and those wiretaps were subsequently published and became the subject of much controversy they've now been scrutinized by South Africa's highest court and the court has decided that those wiretaps are of no impact and of importance in the scheme of judicial decision-making and our unknown provenance and on and on unknown reliability they threw it out basically yeah they're basically that's the president he had some scandals priors and corruption but back to the tapes you the only involvement on the spy tapes was friend sending you a text message that says hey I'm running a corruption you know I'm afraid for my life my family what do I do and you give some advice general advice and that's it as there was there any more interactions with us no that's it that's it okay so you weren't like yeah working with it hey here's what we get strategy there was nothing that going on no other interactions just a friendly advice and that's what they put you I gave him my I gave him my best advice when you when you work in when you work as an investigator very much as and it's very similar in venture capital it's all about relationships and you want to preserve relationships for the long term and you develop deep royalties to its people particularly people with whom you've been through difficult situations as I have been with Leonard much earlier on when I was still involved in Kroll and giving advice to South African government on issues related to the scorpius so that that has a lot of holes and I did think that was kind of weird they actually can produce the actual tax I couldn't find that the spy tapes so there's a spy tape scandal out there your name is on out on one little transaction globbed on to you I mean how do you feel about that I mean you must've been pretty pissed when you saw that when you do it when when you do when you do investigative work you see really see everything and all kinds of things and the bigger the issues that you deal with the more frequently you see things that other people might find unusual I are you doing any work right now with c5 at South Africa and none whatsoever so I've I retired from my investigative Korea in 2014 I did terrific 20 years as an investigator during my time as investigator I came to understood the importance of digital and cyber and so at the end of it I saw an opportunity to serve a sector that historically have been underserved with capital which is cyber security and of course there are two areas very closely related to cyber security artificial intelligence and cloud and that's why I created c5 after I sold my investigator firm with five other families who equally believed in the importance of investing private capital to make a difference invest in private capital to help bring about innovation that can bring stability to the digital world and that's the mission of c-5 before I get to the heart news I want to drill in on the BBC stories I think that's really the focal point of you know why we're talking just you know from my standpoint I remember living as a young person in that time breaking into the business you know my 20s and 30s you had Live Aid in 1985 and you had 1995 the internet happened there was so much going on between those that decade 85 to 95 you were there I was an American so I didn't really have a lot exposure I did some work for IBM and Europe in 1980 says it's co-op student but you know I had some peak in the international world it must been pretty dynamic the cross-pollination the melting pot of countries you know the Berlin Wall goes down you had the cold war's ending you had apartheid a lot of things were going on around you yes so in that dynamic because if if the standard is you had links to someone you know talked about why how important it was that this melting pot and how it affected your relationships and how it looks now looking back because now you can almost tie anything to anything yes so I think the 90s was one of the most exciting periods of time because you had the birth of the internet and I started working on Internet related issues yet 20 million users today we have three and a half billion users and ten billion devices unthinkable at the time but in the wake of the internet also came a lot of changes as you say the Berlin Wall came down democracy in South Africa the Oslo peace process in the time that I worked in Kroll some of them made most important and damaging civil wars in Africa came to an end including the great war in the Congo peace came to Sudan and Angola the Ivory Coast so a lot of things happening and if you have a if you had a an international career at that time when globalization was accelerating you got to no a lot of people in different markets and both in crow and in my consulting business a key part of what it but we did was to keep us and Western corporations that were investing in emerging markets safe your credibility has been called in questions with this article and when I get to in a second what I want to ask you straight up is it possible to survive in the international theatre to the level that you're surviving if what they say is true if you if you're out scamming people or you're a bad actor pretty much over the the time as things get more transparent it's hard to survive right I mean talk about that dynamic because I just find it hard to believe that to be successful the way you are it's not a johnny-come-lately firms been multiple years operating vetted by the US government are people getting away in the shadows is it is is it hard because I almost imagine those are a lot of arbitrage I imagine ton of arbitrage that you that are happening there how hard or how easy it is to survive to be that shady and corrupt in this new era because with with with investigated with with intelligence communities with some terrific if you follow the money now Bitcoin that's a whole nother story but that's more today but to survive the eighties and nineties and to be where you are and what they're alleging I just what's your thoughts well to be able to attract capital and investors you have to have very high standards of governance and compliance because ultimately that's what investors are looking for and what investors will diligence when they make an investment with you so to carry the confidence of investors good standards of governance and compliance are of critical importance and raising venture capital and Europe is tough it's not like the US babe there's an abundance of venture capital available it's very hard Europe is under served by capital the venture capital invested in the US market is multiple of what we invest in Europe so you need to be even more focused on governance and compliance in Europe than you would be perhaps on other markets I think the second important point with Gmail John is that technology is brought about a lot of transparency and this is a major area of focus for our piece tech accelerator where we have startups who help to bring transparency to markets which previously did not have transparency for example one of the startups that came through our accelerator has brought complete transparency to the supply chain for subsistence farmers in Africa all the way to to the to the shelf of Walmart or a big grocery retailer in in the US or Europe and so I think technology is bringing a lot more more transparency we also have a global anti-corruption Innovation Challenge called shield in the cloud where we try and find and recognize the most innovative corporations governments and countries in the space so let's talk about the BBC story that hit 12 it says is a US military cloud the DoD Jedi contractor that's coming to award the eleventh hour safe from Russia fears over sensitive data so if this essentially the headline that's bolded says a technology company bidding for a Pentagon contract that's Amazon Web Services to store sensitive data has close partnerships with a firm linked to a sanctioned Russian oligarch the BBC has learned goes on to essentially put fear and tries to hang a story that says the national security of America is at risk because of c5u that's what we're talking about right now so so what's your take on this story I mean did you wake up and get an email said hey check out the BBC you're featured in and they're alleging that you have links to Russia and Amazon what Jon first I have to go I first have to do a disclosure I've worked for the BBC as an investigator when I was in Kroll and in fact I let the litigation support for the BBC in the biggest libel claim in British history which was post 9/11 when the BBC did a broadcast mistakenly accusing a mining company in Africa of laundering money for al-qaeda and so I represented the BBC in this case I was the manager hired you they hired me to delete this case for them and I'm I helped the BBC to reduce a libel claim of 25 million dollars to $750,000 so I'm very familiar with the BBC its integrity its standards and how it does things and I've always held the BBC in the highest regard and believed that the BBC makes a very important contribution to make people better informed about the world so when I heard about the story I was very disappointed because it seemed to me that the BBC have compromised the independence and the independence of the editorial control in broadcasting the story the reason why I say that is because the principal commentator in this story as a gentleman called John Wheeler who's familiar to me as a someone who's been trolling our firm on internet for the last year making all sorts of allegations the BBC did not disclose that mr. Weiler is a former Oracle executive the company that's protesting the Jedi bidding contract and secondly that he runs a lobbying firm with paid clients and that he himself often bid for government contracts in the US government context you're saying that John Wheeler who's sourced in the story has a quote expert and I did check him out I did look at what he was doing I checked out his Twitter he seems to be trying to socialise a story heavily first he needed eyes on LinkedIn he seems to be a consultant firm like a Beltway yes he runs a he runs a phone called in interoperability Clearing House and a related firm called the IT acquisition Advisory Council and these two organizations work very closely together the interoperability Clearing House or IC H is a consulting business where mr. Weiler acts for paying clients including competitors for this bidding contract and none of this was disclosed by the BBC in their program the second part of this program that I found very disappointing was the fact that the BBC in focusing on the Russian technology parks cocuwa did not disclose the list of skok of our partners that are a matter of public record on the Internet if you look at this list very closely you'll see c5 is not on there neither Amazon Web Services but the list of companies that are on there are very familiar names many of them competitors in this bidding process who acted as founding partners of skok about Oracle for example as recently as the 28th of November hosted what was described as the largest cloud computing conference in Russia's history at Skolkovo this is the this is the place which the BBC described as this notorious den of spies and at this event which Oracle hosted they had the Russian presidential administration on a big screen as one of their clients in Russia so some Oracle is doing business in Russia they have like legit real links to Russia well things you're saying if they suddenly have very close links with Skolkovo and so having a great many other Khayyam is there IBM Accenture cisco say Microsoft is saying Oracle is there so Skolkovo has a has a very distinguished roster of partners and if the BBC was fair and even-handed they would have disclosed us and they would have disclosed the fact that neither c5 nor Amazon feature as Corcovado you feel that the BBC has been duped the BBC clearly has been duped the program that they broadcasted is really a parlor game of six degrees of separation which they try to spun into a national security crisis all right so let's tell us John while ago you're saying John Wyler who's quoted in the story as an expert and by the way I read in the story my favorite line that I wanted to ask you on was there seems to be questions being raised but the question is being raised or referring to him so are you saying that he is not an expert but a plant for the story what's what's his role he's saying he works for Oracle or you think do you think he's being paid by Oracle like I can't comment on mr. Wireless motivation what strikes me is the fact that is a former Oracle executive what's striking is that he clearly on his website for the IC H identifies several competitors for the Jedi business clients and that all of this should have been disclosed by the BBC rather than to try and characterize and portray him as an independent expert on this story well AWS put out a press release or a blog post essentially hum this you know you guys had won it we're very clear and this I know it goes to the top because that's how Amazon works nothing goes out until it goes to the top which is Andy chassis and the senior people over there it says here's the relationship with c5 and ATS what school you use are the same page there but also they hinted the old guard manipulation distant I don't think they use the word disinformation campaign they kind of insinuate it and that's what I'm looking into I want to ask you are you part are you a victim of a disinformation campaign do you believe that you're not a victim being targeted with c5 as part of a disinformation campaign put on by a competitor to AWS I think what we've seen over the course of this last here is an enormous amount of disinformation around this contract and around this bidding process and they've a lot of the information that has been disseminated has not only not been factual but in some cases have been patently malicious well I have been covering Amazon for many many years this guy Tom Wyler is in seems to be circulating multiple reports invested in preparing for this interview I checked Vanity Fair he's quoted in Vanity Fair he's quoted in the BBC story and there's no real or original reporting other than those two there's some business side our article which is just regurgitating the Business Insider I mean the BBC story and a few other kind of blog stories but no real original yes no content don't so in every story that that's been written on this subject and as you say most serious publication have thrown this thrown these allegations out but in the in those few instances where they've managed to to publish these allegations and to leverage other people's credibility to their advantage and leverage other people's credibility for their competitive advantage John Wheeler has been the most important and prominent source of the allegations someone who clearly has vested commercial interests someone who clearly works for competitors as disclosed on his own website and none of this has ever been surfaced or addressed I have multiple sources have confirmed to me that there's a dossier that has been created and paid for by a firm or collection of firms to discredit AWS I've seen some of the summary documents of that and that is being peddled around to journalists we have not been approached yet I'm not sure they will because we actually know the cloud what cloud computing is so I'm sure we could debunk it by just looking at it and what they were putting fors was interesting is this an eleventh-hour a desperation attempt because I have the Geo a report here that was issued under Oracle's change it says there are six conditions why we're looking at one sole cloud although it's not a it's a multiple bid it's not an exclusive to amazon but so there's reasons why and they list six service levels highly specialized check more favorable terms and conditions with a single award expected cause of administration of multiple contracts outweighs the benefits of multiple awards the projected orders are so intricately related that only a single contractor can reasonably be perform the work meaning that Amazon has the only cloud that can do that work now I've reported on the cube and it's looking angle that it's true there's things that other clouds just don't have anyone has private they have the secret the secret clouds the total estimated value of the contract is less than the simplified acquisition threshold or multiple awards would not be in the best interest this is from them this is a government report so it seems like there's a conspiracy against Amazon where you are upon and in in this game collect you feel that collateral damage song do you do you believe that to be true collateral damage okay well okay so now the the John Wheeler guys so investigate you've been an investigator so you mean you're not you know you're not a retired into this a retired investigator you're retired investigated worked on things with Nelson Mandela Kroll Janet Reno Attorney General you've vetted by the United States government you have credibility you have relationships with people who have have top-secret clearance all kinds of stuff but I mean do you have where people have top-secret clearance or or former people who had done well we have we have the privilege of of working with a very distinguished group of senior national security leaders as operating partisan c5 and many of them have retained their clearances and have been only been able to do so because c5 had to pass through a very deep vetting process so for you to be smeared like this you've been in an investigative has you work at a lot of people this is pretty obvious to you this is like a oh is it like a deep state conspiracy you feel it's one vendor - what is your take and what does collateral damage mean to you well I recently spoke at the mahkum conference on a session on digital warfare and one of the key points I made there was that there are two things that are absolutely critical for business leaders and technology leaders at this point in time one we have to clearly say that our countries are worth defending we can't walk away from our countries because the innovation that we are able to build and scale we're only able to do because we live in democracies and then free societies that are governed by the rule of law the second thing that I think is absolutely crucial for business leaders in the technology community is to accept that there must be a point where national interest overrides competition it must be a point where we say the benefit and the growth and the success of our country is more important to us than making commercial profits and therefore there's a reason for us either to cooperate or to cease competition or to compete in a different way what might takes a little bit more simple than that's a good explanation is I find these smear campaigns and fake news and I was just talking with Kara Swisher on Twitter just pinging back and forth you know either journalists are chasing Twitter and not really doing the original courting or they're being fed stories if this is truly a smear campaign as being fed by a paid dossier then that hurts people when families and that puts corporate interests over the right thing so I think I a personal issue with that that's fake news that's just disinformation but it's also putting corporate inches over over families and people so I just find that to be kind of really weird when you say collateral damage earlier what did you mean by that just part of the campaign you personally what's what's your view okay I think competition which is not focused on on performance and on innovation and on price points that's competition that's hugely destructive its destructive to the fabric of innovation its destructive of course to the reputation of the people who fall in the line of sight of this kind of competition but it's also hugely destructive to national interest Andrae one of the key stories here with the BBC which has holes in it is that the Amazon link which we just talked about but there's one that they bring up that seems to be core in all this and just the connections to Russia can you talk about your career over the career from whether you when you were younger to now your relationship with Russia why is this Russian angle seems to be why they bring into the Russia angle into it they seem to say that c-5 Cable has connections they call deep links personal links into Russia so to see what that so c5 is a venture capital firm have no links to Russia c5 has had one individual who is originally of Russian origin but it's been a longtime Swiss resident and you national as a co investor into a enterprise software company we invested in in 2015 in Europe we've since sold that company but this individual Vladimir Kuznetsov who's became the focus of the BBC's story was a co investor with us and the way in which we structure our investment structures is that everything is transparent so the investment vehicle for this investment was a London registered company which was on the records of Companies House not an offshore entity and when Vladimir came into this company as a co investor for compliance and regulatory purposes we asked him to make his investment through this vehicle which we controlled and which was subject to our compliance standards and completely transparent and in this way he made this investment now when we take on both investors and Co investors we do that subject to very extensive due diligence and we have a very robust and rigorous due diligence regime which in which our operating partners who are leaders of great experience play an important role in which we use outside due diligence firms to augment our own judgment and to make sure we have all the facts and finally we also compare notes with other financial institutions and peers and having done that with Vladimir Kuznetsov when he made this one investment with us we reached the conclusion that he was acting in his own right as an independent angel investor that his left renova many years ago as a career executive and that he was completely acceptable as an investor so that you think that the BBC is making an inaccurate Association the way they describe your relationship with Russia absolutely the the whole this whole issue of the provenance of capital has become of growing importance to the venture capital industry as you and I discussed earlier with many more different sources of capital coming out of places like China like Russia Saudi Arabia other parts of the world and therefore going back again to you the earlier point we discussed compliance and due diligence our critical success factors and we have every confidence in due diligence conclusions that we reached about vladimir quits net source co-investment with us in 2015 so I did some digging on c5 razor bidco this was the the portion of the company in reference to the article I need to get your your take on this and they want to get you on the record on this because it's you mentioned I've been a law above board with all the compliance no offshore entities this is a personal investment that he made Co investment into an entity you guys set up for the transparency and compliance is that true that's correct no side didn't see didn't discover this would my my children could have found this this this company was in a transparent way on the records in Companies House and and Vladimir's role and investment in it was completely on the on the public record all of this was subject to financial conduct authority regulation and anti money laundering and no your client standards and compliance so there was no great big discovery this was all transparent all out in the open and we felt very confident in our due diligence findings and so you feel very confident Oh issue there at all special purpose none whatsoever is it this is classic this is international finance yes sir so in the venture capital industry creating a special purpose vehicle for a particular investment is a standard practice in c-five we focus on structuring those special-purpose vehicles in the most transparent way possible and that was his money from probably from Russia and you co invested into this for this purpose of doing these kinds of deals with Russia well we just right this is kind of the purpose of that no no no this so in 2015 we invested into a European enterprise software company that's a strategic partner of Microsoft in Scandinavian country and we invested in amount of 16 million pounds about at the time just more than 20 million dollars and subsequent in August of that year that Amir Kuznetsov having retired for nova and some time ago in his own right as an angel investor came in as a minority invest alongside us into this investment but we wanted to be sure that his investment was on our control and subject to our compliance standards so we requested him to make his investment through our special purpose vehicle c5 raised a bit co this investment has since been realized it's been a great success and this business is going on to do great things and serve great clients it c5 taking russian money no see if I was not taking Russian money since since the onset of sanctions onboarding Russian money is just impossible sanctions have introduced complexity and have introduced regulatory risk related to Russian capital and so we've taken a decision that we will not and we can't onboard Russian capital and sanctions have also impacted my investigative career sanctions have also completely changed because what the US have done very effectively is to make sanctions a truly global regime and in which ever country are based it doesn't really matter you have to comply with US sanctions this is not optional for anybody on any sanctions regime including the most recent sanctions on Iran so if there are sanctions in place you can't touch it have you ever managed Russian oligarchs money or interests at any time I've never managed a Russian oligarchs money at any point in time I served for a period of a year honest on the board of a South African mining company in which Renova is a minority invest alongside an Australian company called South 32 and the reason why I did this was because of my support for African entrepreneurship this was one of the first black owned mining companies in South Africa that was established with a British investment in 2004 this business have just grown to be a tremendous success and so for a period of a year I offered to help them on the board and to support them as they as they looked at how they can grow and scale the business I have a couple more questions Gabe so I don't know if you wanna take a break you want to keep let's take a break okay let's take a quick break do a quick break I think that's great that's the meat of it great job by the way fantastic lady here thanks for answering those questions the next section I want to do is compliment

[Music] hey welcome back everybody Jeff freek here with the cube we're in Reno Nevada at the inner bike show it's a big show all about bikes and mountain bikes but we're really to talk about ebike skuzzy bikes is this new class of really transportation not really new turns out that gazelles been making them since 2002 so we're at the Royal Dutch gazelle event that adjective in next to enter bike and we're excited to see they're releasing a bunch of new bikes and really dig into what are these e bikes all about we've been told that the United States a little bit behind you're starting to see them show up is it a last mile vehicle is it you know a primary vehicle what are the laws and regulations or we're really excited to have our first guest she's been dealing with this for years and years and years it's current wiener she is a co-owner of the new wheel Carn great to see you thanks thanks for having me absolutely so give us a little background on the new wheel where are you guys how long have been around what's your what's your focus yeah and the new wheel is located in San Francisco and Marin County and Larkspur we opened in 2010 so about eight years ago out of our excuse me out of our apartment because we realized that nobody was really seeing the opportunity in this transportation alternative right and so we were seeing what was happening in Europe which like you said has been happening for a while and we realized that gosh San Francisco is the perfect place it's it's an obvious match an electric bike which basically amplifies your pedaling power acts exactly like a bicycle except for you're always in your best shape and having your best day and having the most fun and so um we started with basically one bike who are three bikes and we had a mobile shop that we would ride from farmers market to farmers market then we opened our first store in 2012 and we're still in that location in Bernal Heights in San Francisco and we focus on curating high quality electric bikes that are going to work really well in San Francisco which as you know is a really rugged especially in terms of elevation gain environment right so what if you could talk about some things some miss or not miss so one thing is why we came here is we were really looking at e-bikes is really a last bio vehicle and that's kind of in the in the line of smart cities and in kind of multimodal transportation do you'd have a lime scooter to the Cal train maybe it's your car maybe you've got your own bike but what I'm hearing here is these things are a lot more than last mile vehicles these are actually substitution vehicles for a significant amount of car rides not just the two miles run down to the store to get some milk or to get some cereal or to get some coffee but a much heavier load on these things yeah it's very very interesting so if we look to Europe the ebike started as a replacement for bicycle trips in kind of urban environments for people who are maybe getting older or whatever and the Bison and any bike works really well for just in in turn inner-city transportation there's been an interesting kind of development in Europe in the last say four or five years which is the rise of the speed electric bike you can with a very small battery you can ride 40 to 60 miles 40 to 60 months yeah and that means that you can ride from one city to another so now what we're seeing is a clerk across the Netherlands actual bicycle super highways that cover maybe you know five to 20 miles and that becomes a reasonable bicycle ride on the daily basis and that's really exciting it's something that is unlike basically any other form of transportation it's not a motorcycle it's not that heavy-duty you don't need license or insurance or anything like that you're still getting exercise and you're getting where you need to get right so it's talked about the speed because the speed is interesting thing and I think the speed is what dictates some of the regulation so we see in San Francisco got inundated with the Lyme scooters and there's boosted boards and one wheels and all sorts of kind of contraptions with these great high-capacity batteries and these itty-bitty little little motors so the form factors are numerous but all of them seem to be gated around 20 miles an hour which I think is the regulation to keep them from being considered a scooter you know a internal-combustion scooter so you're talking about speed bikes so they've got bikes here today that goes like 28 miles an hour so how are the regulations keeping up with us a bike that goes 28 miles an hour so it's developing slowly it's developing based on models that have already been tested and used in Europe in California there was actually a model legislation passed I think three years ago which defined three types of electric bikes and defines them as bicycles so type 1 is a bicycle that goes to 20 miles an hour and basically it has to be you have to be pedaling type 2 is a bicycle it also goes to 20 miles an hour but can have a throttle now this is a very Asian type of electric bike it's not quite as polished but usually they're lower-cost okay and then type three is this 27 mile an hour type still a bicycle you're required to wear a helmet and there are some places that you're not allowed to ride them like on shared pedestrian paths right and so what's good about this is it's creating a model for different local and regional governments to create rules it's taking time from but what's exciting is that there is a model so the scooters and the one wheels are all operating under cut-ins this DMV law that is kind of this type of as you describe it is kind of type 1 but it's also kind of skirt like it seems really unclear right I think there's an opportunity and electric bikes for it to be very clear and I think we're on the way to that it's just going to take something right now in terms of the actual utility obviously this is a Dutch company they don't have great weather in Holland as we know San Francisco as you mentioned is a rugged place not to mention the fact it's about as rough as it gets for parked cars getting broken into so what do you see from your customers in terms of the actual utility carrying stuff home from the store survivability in the streets you know not getting stolen inexpensive pieces of gear so what's kind of the experience you've seen with your kind of long history in this space in the city so what I've seen is that what you use matters a lot so the type of bike that you choose out of the gate is going to dictate first of all how well it's going to last and second of all how well it's gonna work in the first place right the other thing is that the way it's not only the bicycle you also have to have the right lock and you have to have the right bag and the right set up to give you the actual full utility potential of the bicycle and that's where you know specialists and retailers really come in you also need service so most people have owned bicycles in their lifetime and it may be stretched one train stretching a chain takes about 2,000 miles on a bike okay an e bike rider usually stretches a train in a little under a year because suddenly your bicycle is your preferred mode of transportation for thousands of miles of errands and and urban duties and and pleasure right that you never had before on a bicycle so it's a switch in terms of how people understand the maintenance that they need on their bike but also what kind of tools they need like a great lock and it turns out that you actually can lock a bike safely not overnight on the street but at any time of day there are locks that work really really well through the bike safe so next day on touch bases kind of the evolving technology yeah so we're hearing over and over that really the the battery technology is getting this just huge boost from autonomous cars because now there's huge investments in battery you've probably seen tremendous developments both in the batteries and the propulsion systems and the technology and these bikes since you've been out that's four for eight years how is that kind of changing and how is that opening up you know maybe the opportunity to people that maybe didn't wanna a shorter range you know six a 10 a 12 a 15 wherever the older kind of range models were battery technology that that originated in laptops and I was being used in cars and autonomous vehicles totally changed the potential for electric bikes and it changes it will change so many things about your bicycle for example not too far down the road I believe that there will be anti-theft devices on every electric bicycle that you buy you're gonna be able to track your bicycle you're gonna be able to track your heart rate you're gonna be able to do all these things seamlessly just as part of your life so when you put a battery on a bike it changes everything about what it can do right now it's assist in the future will be many things there was this switch about eight years ago from old very heavy very polluting batteries to lithium-ion batteries and it it means that you can have a bicycle that is that you can lift you know that weighs between maybe 35 and 60 pounds that will take you anywhere from 25 to 100 miles right right and that's a game-changer right so last question for you what is like the biggest surprise when somebody comes in the store you know you sit him down so any bike and they come back for their first maintenance whatever that they say how this thing has really impacted their lives integrating activity into your life can change your life in all sorts of ways it can reduce stress the funniest one was this this guy came in they'd had this family that had a baby like six months ago guy comes in buys a bike and he comes back for his new tuna and he goes Karen my wife owes you a big one she's a much happier woman now people love their bikes what surprises them I think the most most often is just how many miles they're accruing on their odometer and that makes them excited from a health standpoint from an environmental standpoint and just from a joy in your daily life standpoint when we all live with a lot of stress at a lot of multitasking and taking 20 minutes on your bike and just having a great relaxing time is unbeatable right well thanks for a card take it a few minutes and and sharing the story and nothing but success for the store alright cheese Caron I'm Jeff you're watching the cube we're at the Royal Dutch gazelle bike event outside of Interbike in Reno Nevada thanks for watching [Music]

(techno music) >> Hey, welcome back everybody, Jeff Frick here with theCUBE. We're in Reno, Nevada at the Reno Convention Center. It's InterBike 2018, I think it's like 20,000 people, haven't got the official count yet, but this is an amazing show, it's all about bicycles. We came because we want to learn more about eBikes, and really, this kind of last mile thing that's goin' on, mobility, and right at the center of the eBike revolution is a company that's been around forever, and that's Bosch, and we're happy to have Jonathan Weinert. He's a sales and marketing manager for the Bosch eBikes. Jonathan, great to see you. >> Great to see you, Jeff. >> So, I don't know if everybody knows, you guys power like half of all the eBikes that are out there. You guys are completely in bed with all these manufacturers with really, the industry leading system. >> Thank you, yes, the Bosch eBike system, you'll find it world wide on about 70 different bike brands throughout the world. Here in North America, we're on about 30 different brands, from Trek to Electra to Cannondale. And they power all types of bikes, so commuter bikes, cargo bikes, fat bikes, mountain bikes, any type of bike that you can think of can use the Bosch eBike system to amplify the rider's power and help you go further, higher, farther, less sweat or sweat it out, whatever you want. >> Right, it's like the magic power. >> Exactly, magic carpet ride. >> The main components are you got the drive unit, which is really the heart of the system. >> Yes. >> The battery obviously to provide the power, then the control unit that's up on top of the handlebars, so you can control it. >> Exactly. >> So we were talking before we turned the cameras on, of kind of the history, you guys have been at this for like nine years, I believe you said? >> Exactly, yeah, we invented this system nine years ago, it was a combination of technology from our automotive business. So an electric power steering motor, married with technology from our power tools business, the lithium iron battery pack. And we also had some sensors, torque sensors and electronics and we put these technologies together, and the engineers back then, what they wanted to do is create something to make cycling still feel like cycling but help you conquer hills. >> Right. >> And go farther and use the bike more. >> Right, it's pretty interesting cause there's a whole lot of data that's feeding that software and the algorithms to make those feedback loops smooth, make 'em feel like bicycling, so it's really you're riding on software. >> Exactly, you're riding on software and we have three sensors that are capturing your input. Torque sensor from the pedals, how fast you're pedaling, and wheel speed. And those three sensor measurements go into the electronics and tell the motor how much extra oomph to give you. >> Right, but you have to be pedaling right? >> You always have to be pedaling, yeah. >> That's one of the data inputs. >> Exactly, these are all pedal assist eBikes, and they only assist you when you pedal, no throttle, and they can assist you up to 20 miles per hour, or 28 miles per hour for our speed system. >> Right, we saw that last night in the gazelle, they had one of the 28 mile an hour bikes. >> Yeah, which is great for people that have long distance commutes or they want to do these huge adventure rides, so yeah, both are great. >> Now, what about the maintenance for these types of systems I mean it looks like a pretty closed system. >> It is totally closed, yeah. >> It's totally closed. >> Yeah, the maintenance, they last a long time, they're warrantied for two years, but if you have a problem with anything, you take it to the dealer, the dealer takes the component off, sends it to Bosch and gives you a new one. You don't have to open anything or solder anything. >> Right, right. >> Yeah, no. It's automotive grade, sort of service and diagnostics. >> Right, so the other thing we're seeing all over the show floor here again is all about the data. There's so much more data available to the riders. We were just at the Garmin booth and I don't know how many different data sets that they can track, in terms of your pedal pressure. >> Yes. >> Whether you're tipping back and forth, whether you're even, and you guys are actually pulling some of that external data back into your systems, right? For a unified experience for the rider. I think you said, a heart rate sensor for instance? >> Exactly, that's the newest feature that we're showcasing at InterBike today, the Kiox display. Which connects man and machine, or woman and machine. You can wear a heart rate monitor and as you're riding, you can see your heart rate on your device. Which is great if you want to train on an e-mountain bike. Sometimes you want to keep your heart rate in a certain range. Sometimes you want to make sure it doesn't go above a certain limit. >> Right. Yeah, so it's our first step into connectivity. Many more connectivity features will follow. >> Right, so I'm just curious from your perspective on the bike industry, cause you sit in kind of this, cat bird seat, since you deal with so many different kinds of bikes. And I was amazed at how much of the mountain bike adoption of the eBikes is happening here. Have you seen within your dealers, kind of this new opportunity to leverage electronics and a motor to kind of reinvigorate the brands, reinvigorate the models, and reinvigorate, you know, many of the, just a wide range of cool form factors that we're seeing all over the floor? >> Yeah, so nine years ago, Bosch coupled with Haibike. Haibike sort of created this segment of e-mountain biking by putting the motor in a unique way into the bike, and since then this e-mountain bike trend has really taken off, it's huge in Europe. You'll see e-mountain bikes all over the ski resorts there. They're allowing families to e-mountain bike together, to bike together, just like they ski together in the winter. So it's reinvigorating ski resorts and we see ski resorts here in the US, also embracing e-mountain bikes. Mammoth Mountain just allowed class one e-mountain bikes on all their bike park trails. So e-mountain biking is really spreading through this resort and other resorts, North Star, right up the road. >> Right and I wonder on the city side, again, lessons we can learn from Europe, cause it seems like the regulations are, you know, they're always a little bit behind the technology in terms of, you know, how are eBikes treated. Are they a bike, are they a motor vehicle? And I know there's some laws but it still seems a little bit confused and cities aren't quite ready to realize that an eBike is better than a car, in terms of so many things happening in the city. Are you guys involved in that, kind of industry consortium and how do you see that evolving? >> So we've been involved with several other bike companies and PeopleForBikes to create a framework, how to regulate eBikes. And we've divided eBikes into three classes. Class one, two and three, pedal assist, throttle, anyway. Setting up this definition of the three classes of eBikes, we've created this eBike law in California and nine other states throughout the country. So now they know how to regulate eBikes and these three classes and they can limit where each class can go on the roads. And with this regulation, we're seeing the eBike adoption in these states really start to pick up, now that they're easier to regulate. >> Right, well Jonathan, really a cool story and it's been really fun to watch Bosch, especially as you guys have gone from your long history in the auto parts world to this new exciting space. So thanks for taking a few minutes and congrats. >> Oh, my pleasure, Jeff, thank you. >> Alright, he's Jonathan, I'm Jeff, you're watching theCUBE, we're at InterBike in Reno, Nevada. Thanks for watching, see you next time. (techno music)

. >>Hey, welcome back everybody. Jeffrey here with the cube. We're in Reno, Nevada at the Interbike show. It's a big industry gathering, talking all about bikes, but today we're at a, a little side event is put on by the Royal Dutch, a gazelle bike company, 125 year old bike company that's all in on eBikes. And when we wanted to come check it out, really learn how the bike phenomenon is impacting smart cities and last bile. And there's so much cool stuff going on with big batteries and small motors, but it's really a lot more than that. And we're excited to be here with someone who's been writing about the industry for over 25 years as Patrick Brady, the publisher of the red kite prayer. Great to see you. Thanks. Nice to be here. Yeah. So you've been doing this for a long time and I just love to get your perspective on this e-bike phenomenon because you know, used to be, it's cheating and you know, these are not real bikes and you know, we're tough and we climbed the mountain and these things, that upset bubble, but they're, they're getting a ton of adoption. We just heard from the, the teammate goes up, they're going to sell a third of the bikes they sell this year or e-bike. >>That's amazing to me. Yay. I'm glad. I mean, this thing where, yeah, it's cheating. It's like, no, a good time is never cheating. Why? This is a problem for people. I don't understand. The thing is the very first time I ever got on an E bike, I grinned so hard. My cheeks hurt. It's a good time. And you know, the thing is, it's so effective for transportation. I'm cyclophilin. Okay. I love rode bikes. I love mountain bikes, but I just like bikes. And so if I can keep my car parked and use a bike to get around, I bought an I-CAR go bike, different company. But I love these. They're stylish, you know, and it's such a great way to get around. It's easy to park, easy to lock. They've got an integrated lock on them. You know, why wouldn't you use that as a way to get around, you know, gas guzzling cars. >>This is not what our future will be. We've got to be intelligent about what the future is. Another problem that we face as cyclists is that we're getting run over. People are on the smart phones and every time somebody gets out of an SUV and starts riding a bike, what happens? It's in the brain. We recognize that which we are. And so a chance to cause someone to recognize us out on the road. Oh look, somebody on a bike like I have. Right, right. Maybe they're not going to run us over. Right. So it's a, it's a way to decrease congestion on our roads. It's a nice way to see the world. I mean I don't care what bike you're on, if you're on a bike, it's a better way to see the world. Right? >>Well, 15 miles an hour. That's going to be a my blogger 14 cause it is. It's nice to be outside. You know, you're, you're in the fresh air. What's amazing to me though is I really came into this with a hypothesis around last mile. This is not last mile at all. These things are just substituting out for people's car. I just heard about a ride that people are doing, the Googlers are doing from San Francisco to mountain view every day. That's not an insignificant ride. Yeah. So it's really a game >>changer. Oh yeah. I take my kids to school on my e-bike pick them up in the afternoon, we'll go to the grocery store, pick up a pizza. No, it's so nice and it's easy to get my boys out the door. Can we take the green bike? You know, they get excited about it. Right. So it's, it's a big difference. Let's talk a little bit about regulations. So it's pretty interesting to see kind of, you know, regulation is usually always behind the technology. You know, how do we treat these things? Are they, are they scooters? Are they like a motor vehicle, but as defined by DMV, are they, are they bikes? And, and, and obviously the danger comes on yet, disparity of speeds. So you know, we're seeing on, I see it a lot of bike paths, no heat, no motor vehicles, which I think they mean scooters and then no eBikes. >>So how do you see kind of the regulation gonna change cause to your bed, to your point, it's always better to have somebody on a bike in a car in general in terms of space and congestion and all the reasons that you went through. So what is it going to take for the legislation and kind of the laws to kinda catch up to what these really represent and transforming really cities well, things have evolved a lot already. There's been a working group within the industry that helped define the three different classifications that are being used. Uh, not being able to use them on a bike path I don't think is a really big deal. You know, as, as the infrastructure improves for cycling, uh, out on roads, you know, bike lanes, that sort of thing. I think that's gonna help. But you know, one of the great things about an e-bike is you roll up to a red light and you pop it and turbo, you know, and the moment the light turns green, you're through the intersection instantly. >>So being out on the road where I live in Santa Rosa, I don't have any problems. And because the bike's big, I've got two other people with bright helmets on, people are cheering me, you know, I get waved at people like, you know, they're not pedaling, cracking jokes. So it's, it's become a very different way to present cycling to people who aren't on bikes and they look at it and they get excited. But you know, back to the legislation, I don't see that we're really having a big problem. There've been issues in some other places where, you know, they're just flat out not legal and it's like, well, you know, they're going to, they're going to see the light on that sooner or later. Right, right. We need to provide other options to get people around and it's just too intelligent and really all it takes for anybody to see. >>The light usually is one ride. Give them a half a mile, they'll get it. Right. It's funny because right at the end of the day we all like to be like that eight year old, they got their first thing Ray and you get out on the road and there's really just nothing like that. But now we're a little older, a little heavier and don't quite have that agility that we had as an eight year old. So you can see it bring it back. Yeah, it's crazy. So I'm just curious to your perspective, even within the bike industry, how it's evolved over the years. You know, there's so much stuff going on with batteries and motors. I think they could sell bikes. Are you using a Bosch system? Obviously Bosch is a huge car components company with giant, giant scale. >>Um, so as you've seen that evolve, you know, kind of what are some of your takes in terms of the longer capacity, the longer batteries, the better. >>Oh, you know, the biggest single thing. Sure. The batteries last longer. The motors provide torque on a more even basis. So they don't just take off or do anything crazy, but the units themselves, the biggest single thing that I see, because a motor is a motor at a certain level, the reliability has gone through the roof. You know, BOSH, yet they understand what reliability is. All the companies doing this now are so much better. I remember being at a magazine in 1998 and a guy just begging me to cover his bike and his Lake. It looked like a piece of junk and I had to communicate to them, but well, our reader is it who you're trying to sell to. Our reader. We actually liked going home. We liked the whole sweaty thing. Uh, and so that was, that was an issue, but I remember what that bike was and yeah, they're just so much more reliable. There's so much easier to use. The batteries lasts so much longer. Everything is, you know, it's ready for you. >>Right, right. It's funny, a lot of, a lot of the conversations earlier today, we're, we're talking about kind of those early days and it's fascinates me, all the Kickstarter projects around all these kinds of alternative vehicles, whether they're scooters or skateboards or one wheels and all these different variations of, of personal mobility. Um, but this is an old company. These guys have been added for awhile and I cannot believe that a third of their sales this year are going to be e-bike. So when a big, the big traditional powerhouses come into the market, that changes everything. >>Yeah. Well, when you look at the population of cyclists in the world, and then you look at the population of the world, who do you want to sell to? If you want to grow your company? I don't, let's sell to all the people who aren't currently riding bikes, you know, and think about what that's gonna do for the world. Fewer emissions, happier people. Holy cow. You know, that's crazy talk. >>Right, right, right. All right, Pat. Well, thanks for, uh, for sharing your perspective. It's, it's a really exciting time. We're happy to be here and, uh, I'm sure it's a whole breath of fresh air in your coverage area to be able to get into this space. Yeah, I really welcome it. I love it. I love it. Oh, I love these, said I'm over the, I'm over the cheating. All right. Well, he's Patrick. I'm Jeff. You're watching the cube. We're at Interbike and actually a little side event here with Royal Dutch gazelle. Thanks for watching.

. >>Hey, welcome back everybody. Jeff Frick here with the cube. We're in Reno, Nevada. Interbike is happening uh, this week in Reno. It's a big huge bike show. They have stuff up at the mountains. They've got stuff at the convention center. This is a small side of it put on by Royal Dutch gazelle, a bikes, 125 year old bike company that is all in on electric bikes. We came because this e-bikes story and part of the big motors, or excuse me, a little motors, big battery kind of last mile thing has really taken off. So we want to come get a better feel for what's going on and we're excited to have a dealer from Portland, one of the most bike friendly towns in all the U S he's wait, Greg. And he runs e-bike store weight. Great to see you. Thank you very much. It's great to be here. Thanks for having me. >>So you said you've had your store open for 10 years. 10 years. We were the first all I looked at short store to open in Portland. Actually it was part of an MBA project. I was in China taking a class, saw electric bikes for the first time, gas had just spiked and realize these are the most efficient form of motorized transportation known. Right. And nobody was doing it. And so next class I had wrote a business plan, launched it 10 years ago by putting 25,000 on a credit card and borrowed 10,000 from a friend and 10 years later we're still here. Love it, love the story. It's been, it's been a fun ride. So it's just, you know, you're the second retailer we've had on and they were also exclusive e-bikes in the Bay area. So you know, was the kind of existing bike infrastructure attitude, you know, industry just looking down to these only things where they just too weird to new Y, you know, kind of the early ones are e-bikes only. >>What's interesting, if you come to the market right now, what you see is you see some of the largest companies in the world putting a lot of resources, engineering resources, manufacturing resources, testing resources behind e-bikes. Back in the day, it wasn't such you, these manufacturers make them in the kind of, the customer was a test person. Right. And so it's been a very bumpy road to get to this point. But at this point they're very reliable. And so at first when caught, when shops were brought these things, they said, why would I ever carry that? Who can keep it running? You know? And now it's at the point where they're very easy to keep her on. They have log files, you plug it into the computer if you have a problem with it and it tells you, Oh error code, fix this one thing and off you're going again. >>But it hasn't always been such. And so the Rick older bike shops in particular avoided them because you make your money in a bike shop by having a customer for life and they couldn't keep them running. So they were nervous. They would not be able to keep the customer. Right. And there was a, it was wise, you know, now it's at the point where all the IBDs are coming in in Portland right now we have seven electrical only bike shops. All the big IBDs are carrying it with IBD, independent bike dealers. Okay. And on top of that, half the people that are looking for any bike will not buy from a traditional bike shop. It only come to an e-bike specialist. And so that's kind of our niche is the people and we really focus on that. So we try to have all of our, how we explain things, not to use big bike terms. >>We talk about how it would value the customer and use a whole different lingo than a traditional shop. Right. So it is a lot of different things going on with bikes. So one of them, right, is the speed, um, and then, and how it's classified. So yes, you know, there's the kind of the 20 mile an hour limit and we see that in the scooters and all these electric vehicles that keep it not a motor vehicle. And then they've got one here. I think it was 27 or 28 miles across three class three. So the laws seem to be kind of trying to catch up, like how do we classify these things? Are they bikes? Are they allowed on the bike path? Are they not allowed on the bike? Pass the hop. It's funny you bring that up tonight. Evolve. Well, it's funny you bring that up today because just today by Portland, which is one of the biggest bike blogs in the nation, um, came out with an article saying they were relatively in the fine print of or Portland code, my city's code and found out you can't ride your bike on the city paths and the city parks, and I didn't know this, I've been in business 10 years, but the very fine print and under dissertation you can't do it. >>Um, so it is, it's a gray space. Um, the 20th mile an hour bikes. Well it seems crazy fast when you and I are standing here. When you're on a road and there is a backup of cars behind you, where's the 20 mile an hour speed limit and they're driving 25 right. You know, it feels kind of safer to be able to go 25 with them and not hold them up and be able to get away from the door and, and zone. We're in a car doesn't go over to the store and you by taking the lane it feels much safer. So I actually, you know, I ride a class one most of the time but I, I do like riding class three bikes. Right. Just curious in terms of of the change of experience on an E bike versus a regular bike, some of the customers that you have, how is it fundamentally different? >>Cause I, you know I came to here today thing and this was really a last mile play. It's not a last mile play at all. For us, about 35% of our customers, their e-bike is their main mode of transportation. It is their car. It is how they get around and about 20% historically from our shop having people with physical disabilities or limitations in some way, shape or form 20%, 20%. So it's people who can no longer make it up the Hill to their house. It's people who can't arrive at work sweaty. It's people with ms, people who are missing along, people who have CLPD, um, you name it. These are people who now can ride again and getting them active again. And so it's a whole different mindset. Um, historically the bike industry has really gone after kinda the elite athlete, right? And this is something different. >>It's people who have, may haven't written a bike for oftentimes 20 plus years, right. Are now able to get out and go on a Hill. And the most interesting thing, they did a study in Australia where they put on, they worked with psycho stupid, been injured and they hooked him up to exercise bikes in front of a video screen showing them as they're paddling down the road essentially. And they change the video to climb a Hill, but they didn't change the settings on the exercise bike. They're sitting on the cyclist reported a higher level of pain when the visual show them climbing the Hill. So e-bikes do the exact reverse of that. And you're actually rewiring your brain so that bikes don't add pain and you can get where you need to go easily and efficiently. Right. So it's their primary, their primary methods. So you talked about the connectivity, um, you know, an app, integrated experience with all these devices we see over and over. >>So how has that changed your experience? Are you, is it, is it app for the consumer in terms of they're keeping track of their miles? Is it just for you and the maintenance or how's the integration of an app working through different ways for the app? So there's a mechanics app, we can plug it in and see the error codes. And that's important because being back in the day, someone will come in and say, I wrote this thing at mile 25 it cut out and stopped working. So after work, you know, or we go out and ride 25 miles and try to see if we could recreate the issue. And it was a pain. Now wait, you just told me it wasn't a pain to ride 25 buses. This is back in the day. It was a pain to try falls off. Intermittent issues are the bane of our existence. >>Yes, yes. But the uh, having a log file, we just plug it in and says, Oh, it cut out because of this error code, you know, and boom. Okay. Replaced the speed sensor. Good. You're back up and rolling. Right. Especially with people who commute. They don't want to leave their bike in the shop. They want ready within 24 hours or less. And so it's gotta be turned right. And so it's a whole different form of mechanics and a whole different level of support from the bike dealer. And that's why we choose the bike lines we choose like gazelle. Right. Who support their products very well. So it's pretty interesting that you said, you know, we talked about the scooter space and one wheels and all that fun stuff. So many deals, companies were started with Kickstarter. It's amazing to me how many kind of Kickstarter projects actually turned into real companies. >>Boosted future motion being a couple of my favorites. Future motion. Actually the design behind it was the guy who first invented the cell and unicycle unicycles Daniel Wood, he's actually from clock, I remember from Clackamas right across the river from Portland. And so I tried as original version of the self-balancing unicycle, which they made their first one wheels from and that, you know, it's come a long way and there's the one wheel, but it's been fascinating progression to watch him write and bring that out too. But that's very different than 125 year old Dutch company that's been making Mike making these bikes for a hundred plus years. Really? It's funny, we have, I think there's seven models here that they're showing today. I asked the exact guys how many regular bikes models they have and they're like one. Yeah. So, so they're all in. I mean this is significant. >>You think about some of the biggest companies in the world market cap. Bosch has always worn the top five or 10 market companies in the world. They make the largest set of best selling system in the United States and in Europe. Right? And they're behind it. They have millions of lithium batteries and people's homes already through their power tool division. They're the kind of engineering they're bringing is staggering and it's been really fun to be part of an industry that has been so nascent and yet just boom. Right. You just comes up with fright before you write for your eyes. Okay, so I got to ask you about the, whether you're from Portland, Portland rains a lot in, in, in Holland. How does the rain impact these things? Obviously you just send us their primary vehicle. Is it, is it more dangerous? Is there more spray? >>Is it, is it a factor? Not a factor. This is where the lines you carry make a huge difference. So when you, if you carry it, if you buy one off the internet that hasn't been product tested, you are the product tester. If you buy one like this, they literally have like a saltwater steam bath. They put the bikes in for weeks to stimulate Marine corrosion. They have hydraulic machines that the tar out of them. And so when you get a product, it just works. Um, and so we've had a, we had a Bosch system go completely underwater. Now, I'm not saying this is going to happen for everybody's experience. We had a guy literally put the bike in a river. He went one way. The bike went another, not on purpose, not on purpose. It was underwater for a few minutes. Right? Right. At work and rode home. >>And about a week later it made some noises and we told Bosch what happened, it was not a warranty issue with it was a collision. And Bosch said, you know, we haven't had enough warranty claims. You have some extra motors, we're going to send you a new one. And the guy said, it uses daily commuter. Right? Um, and it works great. Right? So, so w rain does not affect them, but it really depends on the model you have and how much product testing and how much engineering has gone in behind it to make sure you have the experience. Cause lithium and water are not generally friends. No. So, so just, I'll give you the last word. When you talk to people that are new to the space, maybe they just stumbled into the store, they heard about these e-bike things. What's kind of the biggest surprise that you see time and time again when people get one of these things and bring it home. >>Number one is that it rides like a bike. You can just go further. Um, th how well integrated they are. Um, on average the Baker's written 75% more than a traditional bike, 75% more, 75% more. Um, on average you can go about, well, the average speed wise on it. Um, I just study on this today. You know, you can increase your time by an average cycles average 11 miles an hour average e-bike average is about 13 to 1415 around there. And I forget the exact number. So I'm giving a bit of a gray area there. A little bit faster. Yeah. And so it gets you where you're going faster with less sweat. Right. We'll wake. Thanks for, uh, for taking a minute. What a, it's a, it's a cool story. And you know, Portland obviously is leading the charge in this, in this whole transformation. It's been a fun place to be and our customers are just awesome and no two ways about it. Super. Well, thanks again. He's waking. Jeff, you're watching the cube. We're at the Royal Dutch gazelle bike event at Interbike. Thanks for watching. Thank you.

. >>Hey, welcome back everybody. Jeff, Rick here with the cube Worthen Nevada museum of art in Reno, Nevada for the Interbike show. Just happening down the street at the convention center. But we're actually at a side of it put on by Royal Dutch, a gazelle bikes, 125 year old, a bike company who is all in on electric bikes. We wanted to come in, see what's going on, really how the e-bike phenomenon is kind of intermingling with all these alternative scooters and, and all these alternative ways of getting around cities especially and, and get a feel for it. So we're excited to have a retailer who's been in the business for a long time. He's Davey oil. He is a founder a and, and cone or of GNO family. Cyclery David. Great. See you. Thanks. It's really happy to be here. Yeah. So first off, uh, just impressions of this event tonight. Um, cause I was rolling eyes. There's six or seven new bikes out here tonight. What do you think? >>It's very exciting because that was an extremely high quality brand of electric bicycle. And like you said, they have a uh, like a very long history in, in bicycle design. Right. And what they're doing now is they're, they're riding this wave of new technology that's coming through e-bikes and it's phenomenal. It's so funny cause >>some of these things I was talking about earlier, you know, so many Kickstarters, right, that have started and actually a lot of the companies have been pretty successful on the Kickstarter basis, but this is an old line company. They'd been making these things, I think I heard earlier, they're still making them at the same factory that they've been making them for 125 years. And surprisingly to me a third of this year's bike sales will be eBikes. So clearly there's something going on here. Yeah, there is that. What do you think in terms of the adoption Seattle, cause what I've heard as well is that the U S is about 10 years behind >>and Kennedy bike adoption. Yeah. I think that's probably the case in Seattle. We're very fortunate that there are a lot of factors at play that are, that are driving your bike adoption a happening a little faster than it is in some other parts of the country. But I think that all around the country and in cities and suburbs and also in rural areas, people are gonna find that adding an electric mobility to your bicycle, it takes away the barriers to cycling that so many people experienced that are totally rational. Like when I arrived at my destination, I don't want to be sweaty or I want to be able to use a bicycle, but I want to be able to carry more things or my children. Right. And when you add the mobility to your bicycle, those kind of barriers are just eliminated. You can see you're still getting exercise, but you can choose to make the bicycle ride more of what you'd expect from other forms of transportation, which is convenient and not sweaty and difficult. >>So how many of your customers aren't really bicyclists that that they're coming at this as a, as kind of a new opportunity? Maybe they just, they cycled before, but they're not kind of hardcore cyclists. You see this as the right foot. What's amazing to me is you have all these form factors, but this is a form factor that people are very familiar with and that's where I think there's a real opportunity bike that's not the same as scooters and some of these other things. Yeah, that's a really good question. Um, what we experience is that probably two thirds of our customers don't previously identified themselves as bicyclists. Um, they're probably somewhat friendly with the idea bicycles so they wouldn't have walked into a bicycle store. But what we see is that that transformation that happens to people when they adopt cycling as a, as a major part of their life and a major part of their transportation that still occurs, but it occurs all at once when they leapfrog over so many of these barriers and just have the opportunity to use a bicycle so much more than they would have otherwise. And the same thing happens to people who are already interested in cycling. People who only ride recreationally often find that with the addition of any bike into their life, they can use a bicycle for many, many, or most of their transportation needs, uh, over the course of their life. And that's profound, right. Transforms people. >>So there's a lot of special kind of characteristics of Seattle. Yeah. Obviously the weather is not great. Of course it's not great in, in Holland either. And they got a lot of bikes. They're got Hills and bridges and some nasty traffic. Not that everybody else does them, Massey traveling, but Seattle's got some crazy traffic. So you guys are seeing not only the adoption of the bikes for commuting and for fun and all those things, but you're selling a lot of cargo bikes for commercial purposes in this tight urban center. So I wonder if you can give us a little bit more color on how you're seeing the penetration in cargo bikes. Sure. >>Well, I think that cargo bikes when used for like freight purposes and delivery purposes and enterprise purposes in general, they benefit from the same things that bicyclists benefit from in urban environments in general, which is just greater mobility, freedom from the restrictions of traffic. I'm not trying to say that bicycles aren't on the road and that they don't sometimes find themselves behind a long line of stopped cars, but we have so much more flexibility in those situations and we can park safely and reasonably on a sidewalk. And so, so many things that happen, uh, that people suffer through due to congestion or alleviated when they're riding a bicycle in general. And business has experienced that when they use them for freight for sure. >>And it's not just a cargo bike, it's any cargo bikes. So now I've got the superhuman skills so I can, I can carry that load. I can replace a truck. I mean we have, we have bicycles in operation in Seattle for some, some of our customers use that. Our daily carrying 400 500 pounds of weight in there and they're traveling, you know, 60 70 miles in a day. Right. So how are you seeing the integration of the eBikes with the regular bikes, the hardcore bikers, the recreational bikers, and then of course you've got the slow move in pedestrians, right? And the, the dangerous stuff occurs when you've got all these disparity in, in, in velocity. And it's going to be interesting to see kind of how the regs kind of catch up and eventually probably, you know, discriminate. So these PO, these paths are for, you know, 20 miles or more of these paths are for, you know, 10 miles an hour or less. So how are you seeing that kind of work itself out in the streets of the city? Cause absolutely get a little rough sometimes out there. I think it has the potential to get a little rough. I think that honestly, um, yeah, >>the situation, the opportunities for conflict between pedestrians and electric bicyclists is not an issue or not any more significant than the opportunities for conflict between pedestrians and conventional bicyclists. I think that while an electric bicycle can travel up to 20 miles an hour or in some cases faster, they don't ordinarily travel that fast. That's a peak speed. Um, and so I don't really think that sidewalks are being menaced by electric bicyclists. I don't think that's really occurring, although I do think that the kind of regulations that you're talking about that classify type II bikes into types so that we can then, um, uh, empower people who have jurisdiction over different pieces of infrastructure to, um, to determine for themselves and for their users what bikes are allowed in which ones are, are, are forbidden, um, or restricted. I think that's really positive. Right? I think it's extremely important that we define what these vehicle types are because of course there are some vehicles which are more appropriate for some environments than others. >>Right. But I think the real thing is that bicyclists and III bicyclists are not the enemy of pedestrians. I think that together we're all making smart choices and we're in the safe spot. And I think that if it feels like there's too many bicycles on the sidewalk in your town, it's probably because you haven't made any room for bicyclists in the streets of your town. Right. And I think we all need to work together to make cycling a safe and viable option across all of our communities that will help congestion when we remove people from cars, we improve traffic for everybody. >>Right, right. And bikes should not be on sidewalks, period. Right. That's not really not the bike, not the bike place unless the, the street is just so, so tragic. >>I think. I think that if you're talking about it in a situational like daily life active, uh, situation, I think, um, there are a lot of conditions where bicycles are going to be on the sidewalk and there are many of them that I think are reasonable. I think it's totally reasonable to decide as a city we don't want bicycles, bicycles to primarily ride on sidewalks or when bicycles are on sidewalks. I don't think there's any city in the country that allows bicycles on sidewalks. It doesn't also stipulate as long as they're traveling safely. So if somebody has a problem with how somebody is behaving, that's still a problem either way. >>Right, right, right. So I'm just curious to get your take as, as you've seen this market evolved. Again, we've got big players involved. Bosch is doing all the, all the electronics on these bikes. Yeah. Capacity's got bigger on the battery speeds have gotten better. Dependability. Yeah. So how are you seeing kind of the evolution of the eBikes impacting the total market for bikes? Again, I can't believe that that gives out. Guys said they're going to sell a third of their bikes. Are e-bikes. Yeah. You see in the same thing in your business. >>Yeah. Well, I mean my business is focused on eBikes. Um, but what I will say is that I think that um, one of the challenges for bicycle advocacy and bicycle marketing and retail has always been a how to appeal to people who are somewhat friendly towards bicycling but aren't doing it that called interested but concerned. And it, I think it turns out that e-bikes are the key here, that we can help transform people from someone who is friendly towards bicycling to somebody who uses a bicycle as a big part of their life simply by making bicycles easier. And as you identified right now, finally, we're at a point in the development of this technology where the bikes really are reliable as a vehicle. And that's significant, right? It's not just a hobbyist activity at this point. These are, these are legitimate, uh, reliable vehicles >>in transportation. I mean, legitimate trans, it's not just your last mile vehicle anyway. >>Yeah, absolutely. I mean, at our shop at least we're talking about people who are, who have given up a car. Um, almost almost every one of our customers who's getting an electric cargo bag is doing this as part of their family transportation budget. And that includes driving less or removing a car from their life, right? And that could only work if the e-bike was at least as reliable as driving lists. And so maybe a flat tire is still a pretty annoying problem, but that should be the worst problem. Right? And I think we're finally there in terms of the quality of technology that's out >>and now it's only upward. We're like at year zero now. Right. Amazing. Even with the weather and the Hills and everything else, it's profound, man. It's really, and then it's a, it's a cultural shift, so it's just, it's just spreads across our community. Right. One person who inspires somebody else and inspires somebody else. Well, David, thanks for taking a few minutes and sharing your story. Really appreciate it. Thank you very much. All right. He's Dave young. Jeff. We are at Interbike Reno, but we're actually at the gazelle, uh, event looking at their e-bikes and they're really, really cool. Thanks for watching. Catch you next time.

(upbeat electronic music) >> Hey, welcome back everybody, Jeff Frick here with theCUBE. We're in Reno, Nevada at Interbike 2018. I think it's like 20,000 people. I'm trying to get the official number. I haven't been able to run it down yet. >> It feels big. >> It feels big, a lot of stuff going on here. We came up because really the last mile vehicles, this amazing kind of revolution in small motors and big batteries and reliability and smart cities and it's really going to play an important part in travel going forward. And we're excited to be here on the floor and the first company we came across, I'm obviously a big fan if you follow me on social, is Future Motion, they make the Onewheel. It's a crazy cool device and we have Orion O'Neill, the sales manager from Future Motion. Orion, great to see you. >> Thanks for having me. >> Absolutely, so you said it's your first year at the show. We were kind of wondering kind of where, you know, your class of vehicles fits within this whole bicycle world. >> Yeah absolutely, so generally speaking, we generally exhibit in kind of more like outdoor retailer and outdoor apparel shows but really the cool thing about Interbike is, at the end of the day, bikes are like transportation, you know? And really our product, the Onewheel Plus, is really a last mile transportation tool. So we decided to come to Interbike and see what's going on in the industry and see how we can kind of fit into the new last mile transportation. >> Right, and how's it been going? >> It's been awesome, the response has been really cool. Surprisingly, not a lot of people here know about us, so it's always cool to see people who have never seen our product, you know. >> Right, right, but what's interesting in terms of the bikes and the E part of it is, what we're seeing a lot of here is the outdoors so now the e-bike has gone beyond just kind of the road bike or the city bike, the commuter bike, and they're running 'em up and down the mountains out there. >> Yeah absolutely, and you know I talk with a fair amount of people in the bike industry and my understanding is that lots of the growth in mountain biking is coming from the e-bike, you know, and that's because it just lowers the barriers to entry. It's all about getting more people out there and able to enjoy the outdoors. >> Right. >> And we think with our board its kind of similar, you know, it has the utility to do commuting within the city, but the big tire also allows for us to kind of go out and explore trails, you know, beach, grass, gravel, all that stuff. >> Right, so I wonder if you guys are doing any work or you see anything on kind of the regulations? 'Cause, you know, the regs are always kind of behind the technology and it's interesting, you go on a lot of trails, which are perfect for bikes, they're perfect for Onewheels, they're perfect for e-bikes, but you see this sign, right, no motor vehicles, and I think, most of the time, they're thinking motorcycles, they're thinking kind of traditional internal combustion motor vehicles, not necessarily this new class. So I wonder kind of from your point of view, are you guys working on that? What do you kind of see in terms of the acceptance of having these new age vehicles in space? >> Totally. Yeah, I mean, generally speaking, you know, legislation is always very far behind, kind of, you know, where the industry and innovation is going. But we really think that slowly but surely we're seeing more acceptance on, you know, generally what we need to work on is the forest service and BLM. And they're starting to open dialogues with e-bike communities and we were actually talking with a few people in Tahoe and just having a more, you know, tailored legislation towards kind of last mile commutes and electric transportation that's not like a dirt bike or something like that. >> Right, right, because it's really about disparity of speed, that's where dangerous things happen. >> Exactly. >> But, if you're on a mountain trail or, you know, you're running around, it shouldn't be a big issue. And actually, Onewheels are unique because they work very well slow. >> I know. >> Which a lot of vehicles don't. >> And the cool thing about Onewheels on trails, that lots of people don't know is, the big tire actually packs the trails so it actually can like repair some of the ruts that bikes put in. >> Alright, that's a good reach. (Orion laughing) I like that. Thinking ahead, you're giving us a gift for a get, we're helping you do trail maintenance if you ride your Onewheel, I like it. So you guys just released this version a couple years ago, Kickstarter company, just kind of give us a quick overview of what's happening with the company now. I think you said you caught up with your back orders, you're getting into more retail locations. What's up with Future Motion? >> Yeah, so, minute overview, you know, we Kickstarted back in early 2014, first product came to market basically a year after that which was the original Onewheel. Then we had the Onewheel Plus two years ago and we just introduced the Onewheel Plus XR at CES this past January and, yeah, the growth has been pretty amazing. We're now up to basically 400 retailers worldwide. We have Europe, Australia, and North America. And the response to the product has just been amazing. >> Yeah, pretty cool, and the thing a lot of people don't know is you're actually riding on software which is what I think is part of the unique attributes of this vehicle. >> Right, I'm not an engineer, let me preface that, but my understanding is the hardest part in what makes our boards so amazing is the actual programming. The firmware that tells the motor how to respond to those inputs, you know >> Right, right >> That's the bread and butter. >> Right. >> Yeah. >> Very cool, well Orion thanks for spending a few minutes and congrats on the success. >> Absolutely, thanks for having me. >> Alright, he's Orion, I'm Jeff, you're watching theCUBE. We're at Interbike 2018 in Reno, Nevada. Thanks for watching. (upbeat techno music)