>> Narrator: Live from Las Vegas, it's the Cube. Covering Interconnect 2017. Brought to you by IBM. >> OK, welcome back everyone. We're here live in Las Vegas. I'm wearing the Blockchain Revolution hat right here. Of course, I'm John Furrier with the Cube, and my co host Dave Vellante, we're excited to have celebrity author, thought leader, futurist and fill in the blank on the title Don Tapscott, who's the author of the Blockchain Revolution. Legend in the industry, thought leader, you and your son a compelling new book, but you've been on the fringe of all the game changing technologies going back with social media, we've been following your work, it's been great. Now we're at the front range of Blockchain, OK? Now it's becoming pretty clear to some of the innovators like IBM and others that it's not about Bitcoin alone, it's about the Blockchain Revolution, the Blockchain itself. Welcome to the Cube and what's going on? What is Blockchain? (laughing) >> Well, it's great to hear, be here. The one thing you didn't mention is I play keyboards in a rock band. So. >> The most interesting man on the Cube right now. >> We used to do a concert every year whether our public demanded it or not, but no, we're a charity event. We've raised a few million dollars for good causes. Anyway. I think, along with my son Alex, we figured this out a couple of years ago that this is the second era of the internet. For the first few decades, we've had the internet of information. And if I send you some information, PDF, PowerPoint, E-mail, even with the website, I keep the original. I'm sending you a copy. That doesn't work so great for assets. Like money, stocks, bonds. Identities, votes. Music, art. Loyalty points. If I send you $100, it's really important I don't still have the money, and I can't send it to you. So this has been called the double spend problem by cryptographers for a long time. And Blockchain solves this problem. We've had the internet of information, now we're getting the internet of value. Where anything of value, from money to votes to music can be exchanged peer to peer. And where we can transact, keep records, and trust each other without powerful intermediaries. Now that doesn't mean intermediaries are going to go away, but they're going to have to embrace this technology or they will be toast. >> I mean, this is clear, you see the distributive computing paradigm, I mean, we're all network guys and by training, you can follow this revolution. But now when you start thinking about trust and value and you talk about digitizing the world. So, if you go to digital transformation, that's the thesis, that we're in this digital transformation, you're digitizing money, you're digitizing transactions. Explain more on the value piece because now if everything's going digital, there now needs to be a new model around how to handle the transactions at scale, and with security problems, hackers. >> Yeah, OK. Well that gets to a couple of really good points. First of all, what is digital? You know, you think, "Well, I tap my card at Starbucks "and bits go through all these networks and different "companies with different computer systems and three "days later a settlement occurs." But that's actually a bunch of messages. It's not money. Money, cash, is a bare instrument. If you have cash in your pocket, you are the bearer of that instrument, which means that you own it. And what we're talking about is something very different here, of creating digital cash. That's stored on a global ledger. So, rather than there being a three day settlement period, there's no settlement period because you're just making a change in the database. And this is a very revolutionary concept. And as for security, I mean, think about, I don't know, you're right, it's not about Bitcoin. But if we took the case of the Bitcoin Blockchain. If I wanted to hack that, I'd have to hack that 10 minute block that has all those transactions, which is linked to the previous block and the previous block, I'd have to hack the entire history of commerce on that Blockchain, not just on one computer, but simultaneously across millions of computers, all using the highest level of cryptography, while the most powerful computing resource in the world, the minors are watching me to make sure I don't mess around. Now, I won't say it's impossible, just like I suppose it's not impossible to take a Chicken McNugget and turn it back into a chicken, but it's really hard to do. A lot, and so these systems are way more secure than our current systems. >> Yes, it fundamentally impossible, and you don't have a third party verification system that's also an exposure area, it's globally distributed, right, so let's go back to what is Blockchain? What's the Blockchain 101? >> Well, Blockchain is a distributed ledger where anything of value, from money to votes, and music can be stored, transacted, managed, in a secure and confidential way, and where trust between parties is established, not by a big intermediary, but by cryptography, by collaboration, and some clever code. >> So, talk about the premise of the book. Sort of why you wrote it and what the fundamental premise is. >> Well, three years ago, three years and five weeks ago, at a father son ski trip, over a large piece of beef, and a very nice bottle of wine, Alex and I started thinking about what all this means. And we decided to work together. And he wrote a very cogent paper about how this new ecosystem could govern itself and my publisher got wind of it and said, "That sounds like a book." So we launched a dozen projects, couple of years ago, on how this technology changes, not just financial services, how it changes the corporation and the deep structure and architecture of the firm. How it changes every industry. How it changes government. Democracy, there's an opportunity to end the crisis of legitimacy of our democratic institutions. But what it means for culture and so on. And then we wrote the book. And it was published in May 10th last year, it's been a big best seller, it's the best selling book on Blockchain. It's actually the only real book on Blockchain. In some countries it was ridiculous. For a while, in Canada, it was competing with Harry Potter and an adult coloring book, as the best selling book in the country. >> That's the state of our culture right there. (laughing) >> What is an adult coloring book, anyway? (laughing) >> That's the million dollar question right there. >> There are a lot of geeky books on Blockchain, but this-- >> Well, actually, there aren't, there are books on crypto currency, on Bitcoin. >> Yeah, absolutely. >> And but the only real book on Blockchain is Blockchain Revolution. >> So, but you're really focusing on the business impact, organizational impact, even societal impact, so explain the premise. >> Well, where do we start? Let's start with the firm. Corporation, foundation of capitalism, based on double entry accounting. That's what enabled capitalism. Well, with Blockchain, you get a third entry onto the ledger, so you have triple entry accounting, so you don't need, say, audits. Every year, because there's an annual audit. That's just the beginning. Because the reason that we have firms, according to the Nobel Prize winning economist Ronald Coase, is that the transaction costs in an open market, like the cost of search, finding all the right people and information, the cost of contracting, for every little activity we're contract prohibitive. The cost of coordination, getting all these people to work together, didn't know each other. The cost of establishing trust, all of that in an open market is prohibitive, so we bring that inside the boundaries of a firm. Well, Blockchain will devastate those transaction costs. So we're talking about a fundamental change in how we orchestrate capability, in our economy, to innovate, to create goods and services. And for that matter, to create public value. So this is not some interesting little technology. This is the second era of the internet. I think it's going to be bigger than the first era was. >> So the internet, I mean, the value creation side. So let's take that additional asset side. So assume everything's digitized, got IOTs out there, industrial IOT, wearables, smart cars, smart cities, smart everything, but now you've got to create value as a firm, so let's roll that forward, we have the now somewhat frictionless transactional environment in an open market, how do firms create value out of those digital assets? >> Well, they'll create value in some ways that are radically different than today. So let me give you an example. Who are the big digital value disrupters today? Well, you can start with the so called sharing economy. You know, Uber, Airbnb, Lyft. >> The Cube. >> Sorry? >> The Cube. (laughing) We're disrupting the world right now. >> Well, you're actually not a sharing economy company in the sense that I think. >> In the traditional sense. >> Actually, I don't think they are, either. I mean, the reason that Uber's successful is precisely because it doesn't share. It's a service aggregator. So, why do you need a $70,000,000,000 corporation to do what Uber does? It could be done by a distributed ledger with some smart contracts and autonomous agents. Everything that the corporation does could be done by software. Airbnb. You know, how about, we'll call it B Airbnb, Blockchain Airbnb. So, you go onto your mobile device, and you're looking for a place, and you're going to be in Vegas, and all the hotels are booked because of IBM, and then you find a place, you book it, and then you show up, you turn your key that starts a smart contract payment to the owner of the apartment or the room, and you check out, you turn your key, it's closed. The software has a payment system built into it. So the renter of the room gets paid. You enter a five star on your device. And that's immutable, and it's a five star rating on a Blockchain. Everything that Airbnb as a company does could actually be done by this software. So, Bob Dylan, there's something going on here and you don't know what it is, I mean, people are all locked in an old paradigm about what's disruption. Get ready for this. >> So what's the impact, I mean, not the impact, what's the inhibitor, so, obviously, any new technology you see all the naysayers, so obviously this is a great vision, what's going to be the impediment? >> Well, they are all kinds of impediments and inhibitors, and there are all kinds of ways that this can get messed up. A big one is that we're overcoming now is that people think, well this is about Bitcoin, well, it's not. The real pony here is the underlying technology of Blockchain, and that's the biggest innovation in computer science in a generation, I think. But also, you know, I wrote this 1992 in Paradigm Shift, I said, when you get a new paradigm, it's a new mental model, and these things cause dislocation and disruption and uncertainty, and they're nearly always received with coolness. I mean, you guys know what it's like to be received with coolness as you introduce a new idea as do I, going back to the '70s. But, and vested interests fight against change. And leaders of old paradigms have great difficulties embracing the new. So you think about a company like Western Union that can charge 10% for remittances that take four to seven days. Well, with new tools, they don't take four to seven days, they take minutes, and they charge, based on Blockchain, they charge a point and a half. So, it's the old-- >> The inhibitors, they got to get their solutions out there so that they could go after and eat some of the lunch of the older guys. >> Well, they have to eat their own lunch, that's-- >> Western Union could be disrupted by a new entrant, right? So you got a new entrant coming in, they got to cannibalize themselves-- >> And at that point, it tips, there are enough disruptive entrants, right? >> So, it's all those inhibitors to change and for the IT people that are at this event, this is an exciting opportunity, but you do need to learn a new kind of knowledge base to function in this distributed ledger environment. You need to learn about hyper ledger, for starters, because that's the real enterprise platform. >> All right, so folks watching, like my son who helps us out sometimes as well, you have a father son relationship, which is super inspirational. He's, say he wants to get involved in Blockchain. He wants to jump right in, he's kind of a hacker type, what does he do? How does he get involved? Obviously read the book, Blockchain Revolution, get the big picture. Is there other things you'd advise? >> Well, buying the book in massive volume is always a good first step, no. Seriously. Well, one thing I always say to people is personal use is a precondition for any kind of comprehension. So just go get yourself a wallet for some crypto currency and download it and you'll learn all about public key encryption and so on. But I think in a company there are a number of things that managers need to do. Need to start doing pilots, sandboxes, developing and understanding use cases, and our new Blockchain research institute is going to be a big help in that. But also, for an IT person, is your son an IT guy or he's more an entrepreneur? >> No, he's 21 years old. >> He's 21. >> He doesn't know anything about IT. >> He's a computer science guy. >> He's born in the cloud. IT, can't spell IT. >> Well. (laughing) >> IT's for old guys like us. (laughing) >> We're telling him what he should do, he should be here telling us what we should do. >> John: That's why we hired him, he's a little guinea pig. >> Digital natives, you know, we're digital immigrants, we had to learn the language. But, for the IT people, it's all about not just experimenting, but about moving towards operational systems and about architecture. Because our architectures are based on traditional computing environments and this is something from Paradigm Shift, you remember, I interviewed Max Hopper who invented the Sabre Reservation System for American Airlines, and he says, "The big problem, Don, "is that if I don't have a target architecture, "every time I spend a dollar, I'm building up my legacy "and making it worse by investing in IT." And so that's where I came up with this formulation, yeah, God may have created the world in six days, but he didn't have an installed base to start with. (laughing) So, what we need to do is to start to think about architectures that embrace Blockchain. And this is an historic new opportunity for anybody who cares about IT. >> Is the disruptive enabler for Blockchain the fact that we're now fully connected as a society, or is it something else that we don't see? What's your view on, what's the real wealth creating disruptive enabler? >> Well, you can sense that the rate of change is a lot faster for the second generation than the first. 1993, '94, when I wrote the Digital Economy, it was dial-up. Ebay. >> 14 four. >> Amazon didn't exist. >> Actually 98 I think it was. >> When I wrote that book. Google was five years away. Facebook was 10 years away, so but now we've got wireless, we've got IP everywhere. We've got mobility. We've got the cloud, we've got all the preconditions for this new innovation to happen a lot faster. And that's why, I mean, a year ago, there wasn't a lot of talk at this event about Blockchain. Today it's the big buzz. >> I wonder if you could talk about other applications. You talk about hyper ledger, it's a great place for a starting point, especially for IBM, but one of the areas I'm excited about is security. You know, like the MIT Enigma Project, and there are others, you know, security is such a problem. Every year we look back, John and I, we say, do we feel more secure? And no, we feel less secure. What about the application of Blockchain in security use cases? >> Well, Blockchains are more secure in a number of ways. One is they're harder to hack than traditional servers. And people say, "No, our company, we're bulletproof." Right, tell that to JP Morgan and Home Depot-- >> Target fidelity-- >> The Democratic National Convention, but also tell it to the CIA. I mean, if the CIA can be hacked, then any of these traditional server technologies can be hacked. So that, alone, is a huge case to move towards hyper ledger and these other type platforms. But you said, "I feel less secure these days." And that's a really interesting statement. Because I think that, in many ways, the security of the person has been undermined by the internet of information, as well. That, first of all, we don't own the data that we create. That's a crazy situation. We all create this massive new asset. It's a new asset class. Probably more important than industrial plant, in the industrial age. Maybe more important than land in the agrarian age. We create it, but these data frackers, you know, like-- >> Facebook. >> --Facebook. Own it and that's a big problem. The virtual you is not owned by you. So we need to get our identity back and to manage it responsibly, and people who say to me, "Well, Don, privacy's dead, get over it." This is foolishness. Privacy is the foundation of freedom. And all these things are happening in our world today that undermine our basic security. Our identity's being taken away from us. Or the fact that things happen in this digital world that we don't know, what are the underlying algorithms? If I take this, and I drop it, that's called gravity. I know what's going to happen. But if I go onto Facebook and I do certain things, I have no idea what are the algorithms that's determining what's happening with that and how the data is used. So-- >> Hello fake news. That's how fake news came about. >> Well, yeah, totally. >> People don't know what to trust and it's like, wait a minute. >> Exactly, and well, this has led, also, to a total fragmentation of public discourse, where we've all ended up in these little self reinforcing echo chambers where the purpose of information is not to inform us, it's to, I don't know, give us comfort. >> Divide people. >> Yeah. So, I'm not saying that Blockchains can fix everything, in fact, they can't fix anything, it's humans that fix things. But the key point that Alex and I make in the book is that once again the technology genie has escaped from the bottle, and it was summoned by this person that we don't even know who they are. At a very uncertain time in history. But it's giving us another kick at the can. To sort of fix these problems. To make a world where trust is embedded in everything and where things are trustworthy, and where people are trustworthy, and maybe we can rewrite the whole economic power grid and the old order of things for the better. And that's really important. >> My final question for you, and this is kind of a thought provoking question. Every major revolution, you see, big one, you've seen a counter culture, '60s, computer revolution, PC revolution, are we on the edge now of a new counter culture developing? Because the things you're kind of teasing out is this new generation, is it the '60s version of tech hippies or is there going to be a, because you're getting at radical reconfiguration, radical value creation, this is good evolution, and fast. So you can almost see the young generation, like my son, you're talking about, teaching us how to do it, that's a counter culture. Do you see that happening? >> Well, first of all, I see this change in culture profoundly, so artists can get fairly compensated for the work they create. Imogen Heap puts her song on a Blockchain platform, and the song's inside a smart contract that specifies the IP rights. And you want to listen to it, maybe it's free, you want to put it in your movie, it costs more. The way she describes it is the song acts as a business, and it has a bank account. So, we can profoundly change many aspects of culture, bringing more justice to our culture. But I'm not sure there'll be a counter culture in the traditional sense because you've got people embracing Blockchain that want to fix a bunch of problems, but also people who want to make large organizations more competitive and more effective. The smart banks are embracing this because they know they can cut their transaction costs in half, probably. And they know that if they don't do it, somebody else will. >> And IBM's embracing it because they write software and they service all those firms with technology. >> Well, IBM, the case of IBM is really interesting, and I'll end on that one. That if you think about it, and I go back, I mean, there were only main frames when I started, and IBM was the leader of the bunch, right? And then all the bunch died, but IBM somehow reinvented itself and it got into mini computers and then we saw the rise of the PC and IBM invented the IBM PC, and then we got into the internet, and once again, all these companies died off but somehow IBM was able to find within itself the leadership to transform itself. And I'm, I won't say I'm shocked, but I have to tell you, I'm really delighted that IBM has figured this one out and is driving hard to be a leader of this next generation of the internet. >> And they're driving open source, too, to give IBM a plug, Don Tapscott, great to have you on the Cube. Good luck with your speech today. A legend in the industry, great thinker, futurist. Amazing work. Blockchain is the next revolution, it will impact, it's an opportunity for entrepreneurs, this is a disruptive enabler, you can literally take down incumbent businesses. Changing the nature of the firm, radical economical change. Thanks so much for sharing the insight. >> Nice hat, too. >> I got a nice hat. I got a free bowl of soup with this hat, as they say-- >> Don: It's all about the Blockchain, baby. >> It's all about the Blockchain. >> It's all about the Blockchain. >> More Blockchain Cube analysis as we disrupt you with more coverage, I'm John Furrier, Dave Velante, stay with us. (musical sting)

>> Live from San Diego, California It's the queue covering Sisqo live US 2019 Tio by Cisco and its ecosystem barters >> Welcome back. We're here, Cisco Live San Diego. You're watching the Cubans to minimum. My co host is Dave Volante and happy to welcome to the program. First of all, I have to tell Valente, no relation was the vice president of product management who are Cloud Platform in Solutions group at Cisco. And joining us is also Santana Dasgupta, who's a distinguished systems engineer at Cisco. We're gonna be talking about service Friday. Gentlemen, thanks so much for joining us. Of course. Alright, so jail let let's start the service. Freida Group, Of course. You know, we've heard for a long time how important service fighters are out there. Everything from service writers were going to become the new channel. A Sze Yu know customers less unless they're building their own data centers. You know, service fighters become a bigger environment. Tell us a little bit about you know your organ the latest What's going on in your customers? >> Yeah, So you know what? Cisco Obviously they are trying to help Ray in the transformation to actually multi cloud leveraging. Actually, the cloud benefits not only for enterprises and public sectors, but also for the service providers so that they can also reaped the benefit off the new actually trans technologies coming out, including five g on in that context. Obviously, if you really want to take advantage of Far Gina proper way going forward, starting actually with an evolution of architectures, you really have to look at the clouds and specifically what we call the telco cloud. >> Yeah, so the Espy market is going through a mass killed transformation, transformation in the business model and architecture and how you take the services to the market on one key. And it blew up the transformation that we believe is virtual elation, adopting the whole notion of telco cloud very virtualized your core functions for enabling the delivery of services in a more agile fashion into the market. But also it's all about transforming the court services construct itself. How do we push on the services element into the age of the net for being closer to the proximity of the Indians so that it enables much? Lord didn't see a new monitor visible applications, which is where service order to have a lot of open right now. >> So if I could just dig in on that for 1st 2nd you talk about services. So we watched that wave of network functions virtual ization, NFI where before it was I just had lots of appliances and rolling out each service individually, as opposed to what people want is they want, you know, the basically, you know, at market for the enterprise. And, you know, I just want to be able to get my services. You know, when I'm a consumer and you know, I want to do things well, I've got the Internet and I get those things. I need a similar environment from the service fighters going out to the Enterprise. Do I have that kind of high level, right? >> Yes, actually, we had on that bath. I mean, they're completely years as an industry were on the journey to actually get there on go. We initially talked about most of the core functions, like think ofthe armory packet corner policy or some some value added engine at the back end. But the world is evolving faster. To actually also think through that how we can add more consumer facing applications and services on top of it, like augmented reality, virtual reality, cloud gaming and all that sort >> of stuff. Dale, this is a real imperative for telcos, and it's a complicated situation, right, because they've got decades and decades of infrastructure built up. Don Tapscott famously said one time that God may have created the world in six days, but he didn't have an install base. And so the telcos they have of kind of a fossilized, hard installed based built around making sure it's up and not necessarily agile. Now you got all these over the top players coming in, and all these value other services on top of dumb pipe, the price is air coming down. The demand for data is going up, so they gotta change. That's right, right? So what? What do they have to do and what role this Cisco play? >> So again, it told about that software defined transformation and win that is required. And they, you know, we talked already a bit more about the record, an example that was actually even showcase briefly this morning because certainly, obviously it's a greenfield operator, so it's a bit of difference, but We think that there is a lot off applique ability to brown field as well tow the legacy. You have to actually chuck into the different domains what, that service provider environment and really start looking at how you can offer both consumer services and business services at a price point at a level of automation and agility that makes sense. And that is pretty much comparable to a large extent to what the cloud providers of the week. Um, you know, there are advantages the service providers hive in terms ofthe. Obviously, the services they deliver today thie assets that they own, the proximity, the locations as well, that they have the relationships. But really, there is a, as we said earlier, Nassif transformation that start with the network, but also with those pockets where you need to Software eyes will turn to software many of those assets >> essentially talking about a specialized telco cloud, if you will. So how is that different from you know, the clouds that we know the private clouds, the hybrid clouds, the public clouds, one of the attributes that are different in how do people get on the company's getting telcos? Get in that journey. >> Yeah, well, I mean, if you look at, uh, the telco industry in general, including ourselves, like the vendors. I mean, I call myself for ourselves as, like, you know, coming back from the era of dinosaurs, right? So, I mean, if you look at the access technology for last three decades, what have changed? Nothing way have been moving from one G Tito Tito treaty to 40. Now we're talking a five g without talking off. A fundamentally destructive are differentiated architecture. So that's something which is actually being coming up all in the front front at the moment on, that's changing the way the networks can be built. How you can build on how you can break the monolithic supplication and adopt a more decomposed, desegregated our conjecture and also, at the same time, drive all the services and applications in a more distributed manner with a flexible placement capability, so that you can enable all sort of new applications and services. And again, I mean at the other. And given the fact that this is mostly a brown Fillon moment, it is largely all about culture transformation, given the fact that you know, unless the people process on, the culture revolves. This would be a very tough journey. Moving for >> one of the point back to your question is wellies. Though there are nuances big ones between a 90 cloud, uh, today in the cloud that are generally club general purpose Cloud that offered, you know, buy are obviously partners ws Microsoft, Google it and really a telco clan based on the nature ofthe those network functions. The workload on the nature of this were close. The traffic demand that they have the understanding or cliff There are how the hardware itself or the underpinning the infrastructure needs to have some specific attributes to make this work at scale. But we're trying to mimic as much as possible the scaling capabilities, the flexibility, agility, the elasticity of a cloud so that service providers can read the prophet off pretty much a general cloud >> involvement. Conceptually, there are a lot of similar out similarities. I presume that from a developer standpoint, there's a Dev ops analog, analog, maybe a cloud native, maybe serve earless. Something like server list functions absolutely in Telco cloud. >> Absolutely, absolutely. So what we see is the idea under Telco World are actually coming together because I need a lot ofthe telco expertise were also at the same time. I need a lot of expertise because that's what exact exactly right now happening. I mean, there's some fundamental differences between a standard righty private, our hybrid Claude and tell the cloud like I deploy our thousands or hundreds of locations are set a few locations. The applications are different. It's highly Io intensive. You're dealing with a lot of packets like millions of packets which are mostly are transiting function going in and out. But having said that while this initial deployment wave is being targeted for mostly for those delicate type of obligations, we're seeing a very clear demand on a journey towards a common goal of setting up our one unified cloud, right so that you can host it and telco all in the same cloud on that's exactly what they want sexually takes a reality. >> Well, in one of the things I'm surprised we haven't touched on yet is EJ Computing is, you know, critical for these environment. And I can't just have bespoke solutions for all of them. From my corrida edge toe, you know, Telco, there need to be communications amongst all of these because data is going to flow between them and therefore, it can't be. You know, Moz, in between them, I need to be able to pass data and have my applications access these various pieces. >> Absolutely. In fact, the way we have he'll concede some of the systems is a unified architecture that is distributed as a Delco plowed. So that actually from the new service managers or the new ways says B. S s. They see, actually, one unified cloud with placement capabilities based on constraints where you can actually put the workload where they need to be based on Soleil is based on the requirements in technical resources that are available, you know, from forage to a central DC and all the way to actually a public cloud because we're starting seeing some of the customers around the world. It's really a massive transformation that is global. Some of them are starting to look at how they can leverage the public cloud for bursting purposes, for disaster recovery, or even for other functions for specific applications that maybe less demanding, actually on the side. >> Well, since I know you were talking about how that one of the differences that hell cozier more distributed, you know, greater io intensity. My question is, can we learn from the telco clouds from a security model standpoint? Because normally if they go tell coz we're kind of behind traditional i t. But from a security model astounds maybe more challenging. And you always hear the traditional i t. So we it's going to the edge, the telcos already there. So is the security model actually more advanced than what can we learn from that? And how is it >> evolving? Yeah, the security model is still evolving. So in fact, I would say for the total cloud which is being done at the more Court Central Data Center location, the security model is pretty advanced. But when things go towards the edge, especially its computing, which is huge, the security model is actually evolving. And we see a lot of promises with things such as, you know, secure chain of trust, or even block Chinn actually coming there and trying to play a huge role. So I think that's one area which we expected you all over the next few years. It's a lot of challenge but also you know, it's very exciting in that particular space. >> And actually those. This is a very key point because that infrastructure from service providers is actually usually many of the country's part of the national assets the cyber securities. The agencies in those countries work actually with Cisco Security Trust officer letters to really make sure that we do have a level of security that goes beyond maybe even the boundaries of what we've seen on enterprise. So yes, to your point, there is a lot of advances in that area as well. >> All right, so jail, half the shows I've been to this year have had a breakout for Telco. There's there's no denying that there's a lot of growth and a lot of change happening in that environment. What differentiates Cisco's approach from the rest of the people looking at the multi cloud and software pieces >> so more people are murky? Pool area is first. Obviously we have these murky cloud or this hybrid cloud view in which we have worked with the best out there. The Web scale providers, the cloud providers. In fact, if I look at racket and others there are even mimicking this notion off a sorry the Google approach to, you know, really the reliability enginering the transformation off those class cloud in a very specific way. Theater aspect is we're doing it. We have a holistic view at the Telco Cloud. It's not just the infrastructure, it's the automation. The automation is absolutely critical that there is absolutely no touch from humans to be able actually to manage of that scale even more so if you deploy it in 1,000 of edge points, it has to be completely actually automated. So the aspect ofthe automation, the aspect of security, the aspect of people transformation, organizational as well is something that, between the service component to this other solution and the products is very unique. And what we do, it's Cisco. >> Yeah, if I may just add one thing on top of that, just chill said right. So if you look at our playing the Espy or telco market, we have a comprehensive solution. We are solutions right from routing Optical Jacinto Compute Telco, Claude Watch television automation, melodic or being gcm. Here's a bunch of stuff, right? But what becomes very interesting is if you look at 55 g and we all are talking up. The five G is going to be all about enterprise services now. Think about it for a while, right? Who is the number one dominant player in the market for a better price, with the deepest portfolio absolution and the farthest reaching there? No price market that Cisco. So that's what we believe, that we can actually really, you know, creator right confluence of border side of the technology to create the right offer for our customers and held them to take to the market. >> In fact, we've taken a number off our very large enterprise customers that journey to understand, from their point of view as well how they could leverage five g wife like six in the context off a mobile first cloud first type environment. And it's across permeates, actually, obviously what those service providers need to offer to grow again beyond customer services, which is not where, actually the you know, the hyper growth will be as faras Service school sir, >> Well, jail in Santa Ana. Thank you so much for sharing the updates. What happened? Tell Cho service provider space. Thanks so much for joining us. Everybody alright, We'll be back with lots more water wall coverage here at Cisco alive. San Diego 2019 for David Dante on stew Minimum. And thank you for what? Thank you.

from New York it's the cube covering blockchain week now here's John furries hello and welcome back I'm John Fourier we're here on the ground actually on the water on the majesty bow to New York City as decentral has their big unveiling Anthony do you Arielle cube alumni a good friend of the cube is having a massive event here in New York City celebrating the new releases of their new platform their new hardware product actually called the cube to talk about that with Anthony but moreover it's part of a big holistic blockchain week in New York City exciting new projects from new financial products that Kryptos enabling technology innovation a lot of personal people going doing deals so what's going on with you you look great we are at the party looking good people are going crazy out out there we're in a boat I think this kind of environment is very friendly to the kind of community that is created by blockchain naturally so I really commend decentral and Anthony and all of their efforts around this in that they're now creating an environment where I can't walk five feet down the hallway without seeing somebody else that I know and the important thing about that is that now we're really creating this big digital conglomerate we're creating a network of people where I was just speaking to someone outside and he said that it's amazing to see people sharing all kinds of information about their new projects they're they're they're recognizing that there really is enough pie for everyone there's not it is a competition game but really that we should really compete on the application layer and that we should collaborate on the codebase we should collaborate on security and we should collaborate on these really big issues like regulation and privacy so it's amazing to see all these people and that's important that's the open source ethos right there really work together on a project not product because there's a difference between a project and a product and open source is that's languish it's important yeah that's the ethos I love that what's going on in the bug will share some anecdotes what's happening here people who didn't make it couldn't make the boat they you know ate some cars Aston Martin bracelet here what's some of the hallway conversations on the bow what are you hearing here during blockchain week well first of all blockchain week has been has been an amazing opportunity for the blockchain Research Institute to really showcase the work that we are doing to express our interest in enterprise blockchain but really also to support the growing community that is happening in the world and more so in Canada we believe that Canada has an amazing opportunity to to be a leader in blockchain and they are already really a significant amount of the people here our Canadian you know Anthony is a proud Canadian lots of different companies are and one of the major initiatives that we had at consensus was the Canadian Pavilion so we gathered together 23 Canadian blockchain companies and by the way you need a bigger room we did because so many there was a lot yeah open your own conference but the key part with that is that we really wanted to showcase the amazing Canadian innovations that are happening so that people recognize that you know Canada and the more specifically the Toronto Waterloo corridor is is the next Silicon Valley the next hub of blockchain and of quantum computing and of AI and so if you take those three together really those are done taps got an Allen snaps got our two co-founders they authored a report for the World Economic Forum and they argued that that blockchain really is the third leg of the stool that we need to provide an atmosphere for innovation and this was a really good way for us to do that and certainly it's got money tied to its the applications now have a financial component token economics a real key enabler in this to us certainly blockchain check great we love it everyone loves blockchain but it's the token economics that kick in that are starting to see money things applications tying into tokens and coins and yeah I think but that really creates a lot of it creates a lot of confusion it creates a lot of noise suddenly you know in that in the first generation of the internet we we said you know government hands off we want to you know we want to regulate this ourselves this is our thing it's the age of information like like that Tapscott said you know we're entering the internet of value but in entering the internet of value we're now we're now no longer dealing with just information we're dealing with things that matter to people we're dealing with identity and privacy and physical assets and you know real estate and all kinds of different things that are really foundations of the economy and in this case we really need the community to come together and support a regulatory environment because if we don't then the regulator's will and it won't work in the in our messengers it's got to be open open always be proprietary I'm so convinced that open source software which I have lived that generation when it was we were fighting for you know UNIX versus Xenu copyright with AT&T and then was a tea or two citizen now it runs the world's Tier one source one and the model is proven it's coming to crypto and yeah you see that do you see that coming clearly or did that I think as as platforms like you know obviously aetherium but as platforms like hyper ledger and r3s Corte and the forum platform from JPMorgan as these platforms grow in size and grow in membership and grow in in collaboration people will see that the the way to collaborate it's all about this I don't know if you've seen the graphs about fad protocols yes now we're in trusting our payments and our identities and our you know the things that really matter to us we're not giving them to the application layer anymore we're giving them to the protocol layer and if we're giving them to the protocol layer then we really need to collaborate to ensure that all that information is correct all the time and the only way we're going to be able to do that is to be able to create open source platforms and open source activities where everyone is able to participate that's the only way we can create something and if you want to take the code and do something downstream for that liberation please so we have lots of enterprise clients like Procter & Gamble and ExxonMobil and and PepsiCo and others where they're very interested in in enterprise blockchain but at the same time they want to be able to leverage the security of the public chain right it's um Matt spoke at a a Onix had a really really interesting comment about two weeks ago he said I think and he apologized in advance like this might be controversial but but I really think he's right in that he said you know five ten twenty years down the road we won't know the difference between an enterprise blockchain and a public chain right like we're gonna be up we will be a choice right I do you think we'll be able to have it we'll get to a point where it will be dumb not to use the public chain it will be dumb not to be able to leverage the security of it because if you and I enter into you know if we build our own blockchain together I mean that's great one of interesting things too you missed the panel because you might have seen Jimmy song's debate with I did yes that was very provocative so he's got a point on it's just two sides of the coin you know no pun intended right one is what you're saying that enterprises can come in Jimmy was saying is that it's a waste to use the public chain now because some inefficiencies he's technically accurate but that's gonna get better so I wouldn't throw the baby out with the bathwater sometime no I agree but but I think there's a lot of solutions to come in the next year or two or three around interoperability and I think at the end of the day everyone should be able to use whatever blockchain that they think best fits their features but that they should integrate with it with a company like a on or icon or metronome or all these other interesting interoperability projects where you're able to to leverage the security of the public chain but also be able to continue to have your own ecosystem together yeah son of Don Tapscott about this one you interview them at an IBM event and and I'm old enough that I've seen a couple although some of these waves and I lived and I hear the same arguments all the time oh the performance is not there compared to this and easily but these are waves these are shifts right so PC oh no one's having anything with that you know Delta goes on on on web oh it's the so it's slow to dial-up and load a webpage but all of them who were shifts in growth growth was coming behind it yeah so that's the wrong conversations are happening the growth is coming so you guys really nail it with your analysis I think I had your team because it is the shift it is about not necessarily getting in the weeds over did this one thing is it good now yeah great work or well will something really move forward I think that so don actually said in 1992 i in paradigm shift he said that leaders of old paradigms often have trouble embracing the new and so for us at the blockchain research institute we really exist to bridge that knowledge gap between top-tier executives like fred smith and rob carter from FedEx like you know internally at PepsiCo we aim to bridge that knowledge gap so that they just better know how to flow funds within their own company just doing great one is doing great work well to get me to give a plug real quick love your work explaining some of the things you guys are doing you're on the right track I can say I love what you're doing I looked at it it's right on but you're open you're not like you know down on your fist on the table yeah you guys are cool with the work you guys are doing so we're doing 80 projects on the strategic applications of blockchain technology in a variety of industries so our research fits in three categories we have verticals where financial services is obviously our largest vertical but we're also looking into projects in in retail and manufacturing in supply chain in healthcare in government in media and telecommunications in resources and mining and you know you know pickaxe mining not real mining mining old-school mining yeah and then we're also looking at a lot of the management applications of blockchain so you know the first generation of the internet didn't really do a lot to change the structure of the corporation it allows that it allowed us to find people all over the world I can find people to do anything but I still have to negotiate a contract with them myself to enter into an agreement I sell to establish trust but if we now have this amazingly fluid technology that allows us to lower the cost of search the cost of negotiating contracts the cost of contracting and the cost of establishing trust then that blows the windows and the walls of the corporation wide open and in that we are really driving to help our member organizations understand the nature of the firm is changing economic theory of yesteryear being disrupted really fast way yeah vodka Jane thanks for coming up here one more question yes this week what did you hear in the out there in the city what's your observation for the people didn't make it to New York a lot of great face to face a lot of great engagement good networking good contacts growing ecosystem but still a tight-knit community people know each other they're sharing information what did you hear share some data some insights that that folks couldn't get if they didn't come I think for us a lot of the reason that we are here is that it's a you know peril if you don't show up it's being part of a community if if we are going to show a leadership role in this community then we need to show up for our colors we need to show up for companies that that you know may not be able to advocate for themselves I've met so many interesting companies this week that either do not have the resources or they're trying to raise money or they're trying to be investors and and the life of an entrepreneur obviously is is a tough one and for us we we have a growing pioneer membership at the blockchain Research Institute where we aim to connect large corporations who are looking for or looking to invest in different in different watching platforms but don't know where to start and so we run essentially a white listing service where we are partnered with lots of amazing companies like pay case and shift and Collider X and a on and all these different companies where they're they're really working to move the ball forward as well as make an impact so yeah it was for us it was it was looking for more innovative companies but also you know doing our part showing our role this was a one of the first times that I actually saw Don Tapscott a now except thought actively you know taking meanings and participating in the conversation and and being present and being there so so for us it was a lot of it was presence he was a lot of presidents we're some fun you having fun I am yes yes behind us is a boat we're on it we're in the front part we're in the anthony o diario private suite lounge here's where he can relax it gets kind of a green room behind us awesome DJ four stories of boat going down to your just past the Statue of Liberty a lot of action let's get back to the partying what are you saying alright I'm jump for it thanks for watching we're on the boat New York City thank you for watching

from New York it's the cube covering blockchain week now here's John furry hello everyone I'm John Frey here on the ground actually on the water in the majesty boat here in New York City part of blockchain week New York City I'm here at Maggie's ooh who's he whose abyss development a decentralized launched a huge party here we're on a four story boat it's like the Titanic but it's in New York you can see hopefully we won't hit me icebergs but no icebergs ahead in blockchain thanks for joining me here on the water thank you John it's actually really funny you mentioned Titanic first time we came and saw the bow we're like oh my gosh this boat look exactly like Titanic let's really do something about it because see Centro is really about technology both being forward and so yeah we I think we pulled a very crazy party right now so tell us about the event this is a really cool event how big is the book just give us the details you ran the event so I know it's hard to run these kinds of events a lot of moving parts you're giving away two aston martin cars on a bracelet that's gonna light up and turn off based upon if you want or not so is it how's it work okay so this boat has a thousand people on here right now plus our team member plus a boat people so we have about eleven hundred people here and this whole event was run in the last five weeks the team has been working so hard and right now this bracelet that you see it syncs with the music so beats per second it syncs the colors and everything with the music and 11:45 today we're going to be giving away to Aston Martin's the bracelet will dim down one by one and the five bracelets that remaining will go on the stage everyone's gonna cheer out the crowd we're really gonna get everyone you know cheered up and this is not just like you know us giving away Aston Martin's this is really about bring the whole blocking community together we want to be say hey this is a small community let's all get United the cars are just a way for us to thank our partners and everyone I found about you know and I get a little nervous when I see these kind of launch parties because it reminds me that comm bubble but what's different about what's going on with you central is you guys have a business that's up and running this is not an ICO there's no fundraising going on you guys are actually executing and this is important because you guys are doing this as a community take a minute to explain the role of the blockchain community for you guys how important that is right so if you think about a blocking community right now we have the different coins we have the different exchanges the community is very fragmented and that is unfortunate because you know someone like my mom doesn't really understand the term blockchain or cryptocurrency but at the same time it's kind of like Internet 2.0 where you know these technologies are so new there's a lot of people who are so passionate on one of them and just like we just want to spend every day trying to make this better so the central role is really a bell okay let's do all these partnerships so we have over a hundred partnerships almost 200 now all signed and these are the people that we work with like every single day and what kind of partnerships are they they code development together as an open source or they're using the Jax platform you guys made some significant announcements today yeah I'm the Jax Liberty cube ice cube for cold storage I like the cube name not be confused with the cube as in the media cube us but this is a unification strategy talk about the news what did you guys announce tonight all right so today we announced two things we announced at Jax Liberty renounced Jax unity and then we announced the other things but that are part of that whole essential project so the Jax Liberty is the platform it's kind of like an app store all of our partners are gonna be part of this app store and we're just gonna have over 200 partners and more going on onward and every single the apps and integration will be here and we'll make it kind of like a game for the new users what's the bet value proposition for people to join the network it's a free platform we're not charging anyone anything and you know we're probably gonna do that forever so for us the model here is really about bringing all of these different projects together whether it be exchanges whether it be cryptocurrency Wallis whether it be different new sites encrypted messaging all of these things that touch every part of our life we want to say hey we want to bring freedom and power back to you and freedom to us is really your ability to control the information you know I'm very impressed with anthea see I interviewed a couple times in the Bahamas and he's got a great vision and one of the things that he talked in the presentation was kind of not will say buried but I think is the most important notable thing is that he talked about a new Internet infrastructure okay and the wallet is central to this new Internet infrastructure you guys are doing something really pioneering where you're actually creating a unification around infrastructure in network effects with currency this is a super important thing do you guys is this part of your mission or is this part of a just part of the product in your mind our mission like I said is really about brain freedom back to everyone right now if you think about you know how Facebook has their social data how Google has our browsing data all these different entities have our data and we feel like that's really the only way so what descent who is doing is we're saying that we want to create a one platform where we can bring all these different partners together and in doing so we're able to allow people to you know just being able to take control of your life that that is our mission we want to empower people so your pitch basically is join dee central if you joined essentials platform you join the community that wants to unify that's pretty much sounds like the pitch yes we want to empower people and we want to unified whole block G and a world community now you talk about your background how did you get here I mean like you just wake up one day and say hey I'm gonna get in the blockchain I mean what's your background got a legal background how did you give so my background is in business and then business law so I practiced for two years as a business lawyer I may not look like one but you check my record and they were covering lawyers that's okay exactly recovery and then so what I really want to do is all about impact I went into law school because I wanted to do a lot of impact I realized a lot of it is one-on-one not really doing it going to technology and I saw I found my passion and then I found blockchain I was like oh my gosh like this is it does this really you know we are sitting at the forefront of a technology that might be able to just change millions or billions of people's life and a lot of it people are talking about it if we're not really explaining it properly or building things properly I fell decentral is really at a forefront to make sure that is being done that's awesome what are some of the partners you guys have that are notable can you share some of the names and what they're working with you guys on so we're from Toronto Canada proud Canadian and internal we have a all new Co you're a into probability blocking space we have poly mas they do security platform we also have Bri the blockchain Research Institute that's led by Tapscott you know he wrote a very famous book we also have a shift that's you know just doing the KYC AML we also have the big ones like hoeing base like just a lot like block that's the consulting firm we have a lot of different partners that are just like all to cure one ones because of Anthony's background because of our experience in the space for the last four years people trust us people trust our wallet people want to be part of our sea and be part of our mission while we're on the water gonna get you go back to all the partying and schmoozing that's going on great event thank you for putting it on and and I think the community is very very robust out there right now we're having a good time yes outside is like a zoo and I'm really excited that you're here and we're able to meet some of the really great people and you can interview them Maggie thank you for coming on the cube on the water okay with the new cube product with the central unified essential has a new offering on cube is here covering and I'm John Fourier your host thanks for watching [Music]

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

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

>> Narrator: Live from Washington, DC, It's The Cube, covering .NEXT Conference. Brought to you by Nutanix. >> Welcome back, everybody. This is day 2 of the Nutanix .NEXT Conference, #NEXTConf. This is The Cube, the leader in live tech coverage and my name is Dave Vellante, and I'm here with my co-host, Stu Miniman. As I said, this is day 2 and today, the keynotes were in the morning. Yesterday, they were in the afternoon. So, when we left you yesterday we went right in the keynotes with CEO Dheeraj Pandey, who gave a very, as he always does, Stu, a very philosophical deep discussion, a lot of commentary from thought leaders and some customers. Somewhat long, although shorter than last year, but that's Nutanix likes to do things. They want you to bake and savor what's going on in their community and their ecosystem. Today, it was all about product. Sunil Potti got up and he basically took us through the products, the new innovations, the strategies, and that's what we're going to unpack this morning in the next couple of minutes and then go deeper throughout the day. So, Stu, it's all about cloud. Two years ago, at the first, the inaugural .NEXT Conference, Nutanix laid out a strategy of moving beyond hyper-converged infrastructure. This is at a time when everybody was pivoting to hyper-converged from the traditional converged, or the legacy infrastructure. And they laid this long term, little bit fuzzy vision about supporting cloud and multi-cloud. At the time, it was really focused on migrating off of VMware onto other platforms, but they sort of teased us with a vision of cloud. Today, we saw that vision come into a little bit more clarity, but there's still a lot of questions. Give me your summary on the keynote today and specifically, this Nutanix strategy of being the cloud operating system. >> And Dave, I think vision is the right term because unlike previous announcements by Nutanix, a lot of what they laid out here are things that in development. The two big announcements that they talked about yesterday and went through a little bit more today, Calm, which was an acquisition that they had made last year really, to be able to help them try to be that management across multi-clouds. That's in process I believe, if I remember right, it's the second half of this year, it will be shipping. I got a note from a friend of mine, and they're like, okay this is the 687th product in the industry that's trying to solve this problem because everybody is trying to solve this problem. Microsoft wants to be the player here. Companies like CA want to be in the lead here. Of course, Amazon would like to manage everything because just put it on Amazon. So, why is Nutanix position to be the control playing layer of a multi-cloud world. Nutanix is a small player. They've got some good pieces. They're starting to touch some of the environment, but I'm not sure. In the second one, the zee or jee cloud services, that's not- >> Zee, Si, jee (laughs) ... >> It's spelled X-I and we've heard multiple pronunciations. We'll get Sunil on this and get him- >> X-I is, as you told me this morning, the last two letters of Nutanix flipped. >> Yeah, so, it's a DR service that they're going to deploy. It's in development right now. I don't think we know anything about pricing yet. It's not going to ship until the first half of next year, is the target for that. But really lays out, as to, I think we really want to get to the Google relationship and beyond. How does Nutanix get to be more than just an on premises infrastructure layer. They've already sold to service providers. I've talked to companies that not only build their infrastructure, but sell services based on using Nutanix as an infrastructure, but they're going to take that full Nutanix stack and make it available in Google data centers around the world, and we expect them to expand those partnerships and what Sunil was hitting on at the end of his keynote is, the terminology they used is your cloud native, your mode one applications, a lot of times those start in the public cloud, and sometimes those come back to an infrastructure like in Nutanix, where I can run it in a similar operational model. And then, do we take our mode two applications, the big legacy, the thousands of applications that we have, do we try to shove those in to the public cloud? And the challenge there is if it's not the same stack on both ends, it's not the same operating model, there's challenges and I know we wanted to use that out a little bit. >> So, Stu, I had a conversation with Paul Moritz in 2009, where he said to me, "The advantage that Amazon and Google and Facebook have is that they have homogeneity in their data centers." And he said, "For us to succeed in cloud, we have to have homogeneity in both on prim and in the cloud." And so he, at that point, indicated that the VMware strategy was going to be putting, essentially, VMware in these clouds and the cloud service providers, as we all know, that manifested itself in vCloud Air. We've heard the story before. How is this different? >> First of all, vCloud Air, most people would agree, a failed strategy. >> Who would not agree with that? (laughs) >> Right. The biggest challenges we saw on vCloud Air when I talked to the community is VMware said, "Wait, we're going to build it ourselves and run it," and customers were like well, I've got lots of partners, and they're like, well, we'll partner with Savvis. And Savvis made no margin on this. Couldn't do anything else. They tried to go to lots of other service providers, and they were, I don't know how I add services, I don't know how I add value. >> So, how is this different? >> You look at this and say okay, well, Nutanix is going to start with building it themselves because they want to understand it. I've talked to service providers here that say, "Hey Nutanix, we have experience and we know how to do this. We could advise you on this." Of course, Nutanix, they didn't come out and say this is the future, everybody run every service on this. They say, hey, we're working on a DR solution, we're a little bit measured. This is where we're going. I think there's time for it to mature, time for Nutanix to work with their partner Ecosystems. The Google announcement gives Nutanix credibility, but a lot of it is pressure leased slideware, if you will. You say, "Okay, great, I'm going to take Z and run it on GCP." Well, this is a product next year that, maybe, will probably run somewhere with Google. Where's the details? >> Okay, talk about lift and shifts, too. >> Thanks Dave. We talked yesterday to one of the doers, one of the practitioners of Nutanix, and they said, "Hey, I'm looking at containers." And we said, "Hey, are you looking at Nutanix for this?" They say, "Well, now that I hear they're working with Google, who's obviously a thought leader in driving that, that will drive them closer to us." So, question is, the Z cloud service is based on AHV. So, if I bought in, there are some customers who say "I want a virtualized environment that I can mirror," but most of us look at it and say virtualization is kind of heavy for taking something to more the public cloud. If I containerized, then I can use kubernetes, and I can move applications a little more. Debate we're having internally, Dave, often is how much of the stack do I have to have to complete hardware all the way through on both ends? Do I have something like kubernetes, which allows me to take containerized applications and move them, because lift and shift, I was at the Cloud Foundry Summit, and it said let me build my new applications on the platform, and then I'll start migrating some over so I have that shared management platform to hold the environment. But, it's challenging. The same thing we've had discussions. Amazon, there's certain applications we build there, Amazon would love you to take all of your applications, but it's not trivial. Porting something over is not easy, is one of the points that Nutanix was making, and we've heard from the community that Amazon really doesn't want you just to trying to lift the whole thing and shift it. You should be doing some refactoring, or start pulling apart your application- >> They want you to pull change the operating model. So, Stu, is this a blind spot for Nutanix? Let me back up. We asked Pat Gelsinger, when Docker and Core OS came on the scene, what does that mean for you? He said, "Hey, we've got the best container in the world. It's VMware." And we all kind of went, mm, I don't know. Is this a similar head wind potentially? Is this a threat that Nutanix is so VM focused versus containerize? Or can they just embrace containers? >> Great question. Something I want to pose to the Nutanix executives, Dave, because there's multiple paths forward. When we asked Amazon a similar question, they said to get from your legacy data centers to public cloud, here are the eight R's, as to refactor, re-platform, redo this, things like that. There's more than one solution. As we know, customers have lots of applications. There's some that you're going to leave them sitting on. That old hardware in the back corner and run it until that thing burns into the ground. >> Running on CMS. >> Absolutely, Dave. Many of those things got moved into VM environments and are going to stay there for awhile. So, unfortunately, everything in IT tends to be additive, and we've got all of the debt of ... >> Don Tapscott. God created the world in six days, but he didn't have an install base. The technical debt. >> Technical debt. >> All right, Stu, we got to wrap. This is day two of Nutanix. We're going all day long. Today, heavy executive, partner and customer day. We have Sunil coming on. We're going to go deep on products. Chad Sakac coming on from Dell-EMC. We got Dheeraj, of course, the CEO. Stay tuned, everybody. Stu Minima, Dave Vellante. We'll be right back after this short break.

>> Narrator: Live from Munich, Germany it's the CUBE, covering Dataworks Summit Europe 2017. Brought to you by Hortonworks. >> Okay, welcome back everyone here at day two coverage of the CUBE here in Munich, Germany for Dataworks 2017. I'm John Furrier, my co-host Dave Vellante. Two days of wall to wall coverage SiliconANGLE Media's the CUBE. Our next guest is Raj Verma, the president and COO of Hortonworks. First time on the CUBE, new to Hortonworks. Welcome to the CUBE. >> Thank you very much, John, appreciate it. >> Looking good with a three piece suit we were commenting when you were on stage. >> Raj: Thank you. >> Great scene here in Europe, again different show vis-a-vis North America, in San Jose. You got the show coming up there, it's the big show. Here, it's a little bit different. A lot of IOT in Germany. You got a lot of car manufacturers, but industrial nation here, smart city initiatives, a lot of big data. >> Uh-huh. >> What's your thoughts? >> Yeah no, firstly thanks for having me here. It's a pleasure and good chit chatting right before the show as well. We are very, very excited about the entire data space. Europe is leading many initiatives about how to use data as a sustainable, competitive differentiator. I just moderated a panel and you guys heard me talk to a retail bank, a retailer. And really, Centrica, which was nothing but British Gas, which is rather an organization steeped in history so as to speak and that institution is now, calls itself a technology company. And, it's a technology company or an IOT company based on them using data as the currency for innovation. So now, British Gas, or Centrica calls itself a data company, when would you have ever thought that? I was at dinner with a very large automotive manufacturers and the kind of stuff they are doing with data right from the driving habits, driver safety, real time insurance premium calculation, the autonomous drive. It's just fascinating no matter what industry you talk about. It's just very, very interesting. And, we are very glad to be here. International business is a big priority for me. >> We've been following Hortonworks since it's inception when it spun out of Yahoo years ago. I think we've been to every Hadoop World going back, except for the first one. We watched the transition. It's interesting, it's always been a learning environment at these shows. And certainly the customer testimonials speaks to the ecosystem, but I have to ask you, you're new to Hortonworks. You have interesting technology background. Why did you join Hortonworks? Because you certainly see the movies before and the cycles of innovation, but now we're living in a pretty epic, machine learning, data AI is on the horizon. What were the reasons why you joined Hortonworks? >> Yeah sure, I've had a really good run in technology, fortunately was associated with two great companies, Parametric Technology and TIBCO Software. I was 16 years at TIBCO, so I've been dealing with data for 16 years. But, over the course of the last couple of years whenever I spoke to a C level executive, or a CIO they were talking to us about the fact that structured data, which is really what we did for 16 years, was not good enough for innovation. Innovation and insights into unstructured data was the seminal challenge of most of the executives that I was talking to, senior level executives. And, when you're talking about unstructured data and making sense of it there isn't a better technology than the one that we are dealing with right now, undoubtedly. So, that was one. Dealing with data because data is really the currency of our times. Every company is a data company. Second was, I've been involved with proprietary software for 23 years. And, if there is a business model that's ready for disruption it's the proprietary software business model because I'm absolutely convinced that open source is what I call a green business model. It's good for planet Earth so as to speak. It's a community based, it's based on innovation and it puts the customer and the technology provider on the same page. The customer success drives the vendor success. Yeah, so the open source community, data-- >> It's sustainables, pun intended, in the sense that it's had a continuing run. And, it's interesting Tier One software is all open source now. >> 100%, and by the way not only that if you see large companies like IBM and Microsoft they have finally woken up to the fact that if they need to attract talent and if they want to be known as talk leaders they have to have some very meaningful open source initiatives. Microsoft loves Linux, when did we ever think that was going to happen, right? And, by the way-- >> I think Steve Bauman once said it was the cancer of the industry. Now, they're behind it. But, this is the Linux foundation has also grown. We saw a project this past week. Intel donated a big project to the Linux now it's taking over, so more projects. >> Raj: Yes. >> There's more action happening than ever before. >> You know absolutely, John. Five years ago when I would go an meet a CIO and I would ask them about open source and they would wink, they say "Of course, "we do open source. But, it's less than 5%, right? Now, when I talk to a CIO they first ask their teams to go evaluated open source as the first choice. And, if they can't they come kicking and screaming towards propriety software. Most organizations, and some organizations with a lot of historical gravity so as to speak have a 50/50 even split between proprietary and open source. And, that's happened in the last three years. And, I can make a bold statement, and I know it'll be true, but in the next three years most organizations the ratio of proprietary to open source would be 20 proprietary 80 open source. >> So, obviously you've made that bet on open source, joining Hortonworks, but open is a spectrum. And, on one end of the spectrum you have Hortonworks which is, as I see it, the purest. Now, even Larry Ellison, when he gets onstage at Oracle Open World will talk about how open Oracle is, I guess that's the other end of the spectrum. So, my question is won't the Microsofts and the Oracles and the IBM, they're like recovering alcoholics and they'll accommodate their platforms through open source, embracing open source. We'll see if AWS is the same, we know it's unidirectional there. How do you see that-- >> Well, not necessarily. >> Industry dynamic, we'll talk about that later. How do you see that industry dynamic shaking out? >> No, absolutely, I think I remember way back in I think the mid to late 90s I still loved that quote by Scott McNeely, who is a friend, Dell, not Dell, Digital came out with a marketing campaign saying open VMS. And, Scott said, "How can someone lie "so much with one word?" (laughs) So, it's the fact that Oracle calling itself open, well I'll just leave it at, it's a good joke. I think the definition of open source, to me, is when you acquire a software you have three real costs. One is the cost of initial procuring that software and the hardware and all the rest of it. The second is implementation and maintenance. However, most people miss the third dimension of cost when acquiring software, which is the cost to exit the technology. Our software and open source has very low exit barriers to our technology. If you don't like our technology, switch it off. You own the software anyways. Switch off our services and the barrier of exits are very, very low. Having worked in proprietary software, as I said, for 23 years I very often had conversations with my customers where I would say, "Look, you really "don't have a choice, because if you want to exit "our technology it's going to probably cost you "ten times more than what you've spent till date." So, it a lock in architecture and then you milk that customer through maintenance, correct? >> Switching costs really are the metric-- >> Raj: Switching costs, exactly. >> You gave the example of Blockbuster Camera, and the rental, the late charge fees. Okay, that's an example of lock in. So, as we look at the company you're most compared with, now that's it's going public, Cloudera, in a way I see more similarities than differences. I mean, you guys are sort of both birds of a feather. But, you are going for what I call the long game with a volume subscription model. And, Cloudera has chosen to build proprietary components on top. So, you have to make big bets on open. You have to support those open technologies. How do you see that affecting the long term distance model? >> Yeah, I think we are committed to open source. There's absolutely no doubt about it. I do feel that we are connected data platform, which is data at rest and data in motion across on prem and cloud is the business model the going to win. We clearly have momentum on our side. You've seen the same filings that I have seen. You're talking about a company that had a three year head start on us, and a billion dollars of funding, all right, at very high valuations. And yet, they're only one year ahead in terms of revenue. And, they have burnt probably three times more cash than we have. So clearly, and it's not my opinion, if you look at the numbers purely, the numbers actually give us the credibility that our business model and what we are doing is more efficient and is working better. One of the arguments that I often hear from analysts and press is how are your margins on open source? According to the filings, again, their margins are 82% on proprietary software, my margins on open source are 84%. So, from a health of the business perspective we are better. Now, the other is they've claimed to have been making a pivot to more machine learning and deep learning and all the rest of it. And, they actually'd like us to believe that their competition is going to be Amazon, IBM, and Google. Now, with a billion dollars of funding with the Intel ecosystem behind them they could effectively compete again Hortonworks. What do you think are their chances of competing against Google, Amazon, and IBM? I just leave that for you guys to decide, to be honest with you. And, we feel very good that they have virtually vacated the space and we've got the momentum. >> On the numbers, what jumps out at you on filing since obviously, I sure, everyone at Hortonworks was digging through the S1 because for the first time now Cloudera exposes some of the numbers. I noticed some striking things different, obviously, besides their multiple on revenue valuation. Pretty obvious it's going to be a haircut coming after the public offering. But, on the sales side, which is your wheelhouse there's a value proposition that you guys at Hortonworks, we've been watching, the cadence of getting new clients, servicing clients. With product evolution is challenging enough, but also expensive. It's not you guys, but it's getting better as Sean Connolly pointed out yesterday, you guys are looking at some profitability targets on the Ee-ba-dep coming up in Q four. Publicly stated on the earnings call. How's that different from Cloudera? Are they burning more cash because of their sales motions or sales costs, or is it the product mix? What's you thoughts on the filings around Cloudera versus the Hortonworks? >> Well, look I just feel that, I can talk more about my business than theirs. Clearly, you've seen the same filings that I have and you've see the same cash burn rates that we have seen. And, we clearly are ore efficient, although we can still get better. But, because of being public for a little more than two years now we've had a thousand watt bulb being shown at us and we have been forced to be more efficient because we were in the limelight. >> John: You're open. >> In the open, right? So, people knew what our figures are, what our efficiency ratios were. So, we've been working diligently at improving them and we've gotten better, and there's still scope for improvement. However, being private did not have the same scrutiny on Cloudera. And, some would say that they were actually spending money like drunken sailors if you really read their S1 filing. So, they will come under a lot of scrutiny as well. I'm sure they'll get more efficient. But right now, clearly, you've seen the same numbers that I have, their numbers don't talk about efficiency either in the R and D side or the sales and marketing side. So, yeah we feel very good about where we are in that space. >> And, open source is this two edged sword. Like, take Yarn for example, at least from my perspective Hortonworks really led the charge to Yarn and then well before Doctor and Kubernetes ascendancy and then all of a sudden that happens and of course you've got to embrace those open source trends. So, you have the unique challenge of having to support sort of all the open source platforms. And, so that's why I call it the long game. In order for you guys to thrive you've got to both put resources into those multiple projects and you've got to get the volume of your subscription model, which you pointed out the marginal economics are just as good as most, if not any software business. So, how do you manage that resource allocation? Yes, so I think a lot of that is the fact that we've got plenty of contributors and committers to the open source community. We are seen as the angel child in open source because we are just pure, kosher open source. We just don't have a single line of proprietary code. So, we are committed to that community. We have over the last six or seven years developed models of our software development which helps us manage the collective bargaining power, so as to speak, of the community to allocate resources and prioritize the allocation of resources. It continues to be a challenge given the breadth of the open source community and what we have to handle, but fortunately I'm blessed that we've got a very, very capable engineering organization that keeps us very efficient and on the cutting edge. >> We're here with Raj Verma, With the new president and COO of Hortonworks, Chief Operating Officer. I've got to ask you because it's interesting. You're coming in with a fresh set of eyes, coming in as you mentioned, from TIBCO, interesting, which was very successful in the generation of it's time and history of TIBCO where it came from and what it did was pretty fantastic. I mean, everyone knows connecting data together was very hard in the enterprise world. TIBCO has some challenges today, as you're seeing, with being disrupted by open source, but I got to ask you. As a perspective, new executive you got, looking at the battlefield, an opportunity with open source there's some significant things happening and what are you excited about because Hortonworks has actually done some interesting things. Some, I would say, the world spun in their direction, their relationship with Microsoft, for instance, and their growth in cloud has been fantastic. I mean, Microsoft stock price when they first started working with Hortonworks I think was like 26, and obviously with Scott Di-na-tell-a on board Azure, more open source, on Open Compute to Kubernetes and Micro Services, Azure doing very, very well. You also have a partnership with Amazon Web Services so you already are living in this cloud era, okay? And so, you have a cloud dynamic going on. Are you excited by that? You bring some partnership expertise in from TIBCO. How do you look at partners? Because, you guys don't really compete with anybody, but you're partners with everybody. So, you're kind of like Switzerland, but you're also doing a lot of partnerships. What are you excited about vis-a-vis the cloud and some of the other partnerships that are happening. >> Yeah, absolutely, I think having a robust partner ecosystem is probably my number one priority, maybe number two after being profitable in a short span of time, which is, again, publicly stated. Now, our partnership with Microsoft is very, very special to us. Being available in Azure we are seeing some fantastic growth rates coming in from Azure. We are also seeing remarkable amount of traction from the market to be able to go and test out our platform with very, very low barriers of entry and, of course, almost zero barriers of exit. So, from a partnership platform cloud providers like Amazon, Microsoft, are very, very important to us. We are also getting a lot of interest from carriers in Europe, for example. Some of the biggest carriers want to offer business services around big data and almost 100%, actually not almost, 100% of the carriers that we have spoken to thus far want to partner with us and offer our platform as a cloud service. So, cloud for us is a big initiative. It gives us the entire capability to reach audiences that we might not be able to reach ringing one door bell at a time. So, it's, as I said, we've got a very robust, integrated cloud strategy. Our customers find that very, very interesting. And, building that with a very robust partner channel, high priority for us. Second, is using our platform as a development platform for application on big data is, again, a priority. And that's, again, building a partner ecosystem. The third is relationships with global SIs, Extensia, Deloitte, KPMG. The Indian SIs of In-flu-ces, and Rip-ro, and HCL and the rest. We have some work to do. We've done some good work there, but there's some work to be done there. And, not only that I think some of the initiatives that we are launching in terms of training as a service, free certification, they are all things which are aimed at reaching out to the partners and building, as I said, a robust partner ecosystem. >> There's a lot of talk a conferences like this about, especially in Hadoop, about complexity, complexity of the ecosystem, new projects, and the difficulties of understanding that. But, in reality it seems as though today anyway the technology's pretty well understood. We talked about Millennials off camera coming out today with social savvy and tooling and understanding gaming and things like that. Technology, getting it to work seems to not be the challenge anymore. It's really understanding how to apply it, how to value data, we heard in your panel today. The business process, which used to be very well known, it's counting, it's payroll, simple. Now, it's kind of ever changing daily. What do you make of that? How do you think that will effect the future of work? Yeah, I think there's some very interesting questions that you've asked in that the first, of course, is what does it take to have a very successful big data, or Hadoop project. And, I think we always talk about the fact that if you have a very robust business case backing a Hadoop project that is the number one key ingredient to delivering a Hadoop project. Otherwise, you can tend to boil the ocean, all right, or try and eat an elephant in one bite as I like to say. So, that's one and I think you're right. It's not the technology, it's not the complexity, it's not the availability of the resources. It is a leadership issue in organizations where the leader demands certain outcomes, business outcomes from the Hadoop project team and we've seen whenever that happens the projects seem to be very, very successful. Now, the second part of the question about future of work, which is a very, very interesting topic and a topic which is very, very close to my heart. There are going to be more people than jobs in the next 20, 25 years. I think that any job that can be automated will be automated, or has been automated, right? So, this is going to have a societal impact on how we live. I've been lucky enough that I joined this industry 25 years ago and I've never had to change or switch industries. But, I can assure you that our kids, and we were talking about kids off camera as well, our kids will have to probably learn a new skill every five years. So, how does that impact education? We, in our generation, were testing champions. We were educated to score well on tests. But, the new form of education, which you and I were talking about, again in California where we live, and where my daughter goes to high school and in her school the number one, the number one priority is to instill a sense of learning and joy of learning in students because that is what is going to contribute to a robust future. >> That's a good point, I want to just interject here because I think that the trend we're seeing in the higher Ed side too also point to the impact of data science, to curriculum and learning. It's not just putting catalogs online. There's now kind of an iterative kind of non-linear discovery to proficiency. But, there's also the emotional quotient aspect. You mentioned the love of learning. The immersion of tech and digital is creating an interdisciplinary requirement. So, all the folks say that, what the statistic's like half the jobs that are going to be available haven't even been figured out yet. There's a value creation around interdisciplinary skill sets and emotional quotient. >> Absolutely. >> Social, emotional because of the human social community connectedness. This is also a big data challenge opportunity. >> Oh, 100% and I think one of the things that we believe is in the future, jobs that require a greater amount of empathy are least susceptible to automation. So, things like caring for old age people in the world, and nursing, and teaching, and artists, and all the rest will be professions which will be highly paid and numerous. I also believe that the entire big data challenge about how you use data to impact communities is going to come into play. And also, I think John, you and I were again talking about it, the entire concept of corporations is only 200 years old, really, 200, 300 years old. Before that, our forefathers were individual contributors who contributed a certain part in a community, barbers, tailors, farmers, what have you. We are going to go back to the future where all of us will go back to being individual contributors. And, I think, and again I'm bringing it back to open source, open source is the start of that community which will allow the community to go back to its roots of being individual contributors rather than being part of a organization or a corporation to be successful and to contribute. >> Yeah, the Coase's Penguin has been a very famous seminal piece of work. Obviously, Ronald Coase who's wrote the book The Nature of the Firm is interesting, but that's been a kind of historical document. You look at blockchain for instance. Blockchain actually has the opportunity to disrupt what the Nature of the Firm is about because of smart contracts, supply chain, and what not. And, we have this debate on the CUBE all the time, there's some naysayers, Tim Conner's a VC and I were talking on our Friday show, Silicon Valley Friday show. He's actually a naysayer on blockchain. I'm actually pro blockchain because I think there's some skeptics that say blockchain is really hard to because it requires an ecosystem. However, we're living in an ecosystem, a world of community. So, I think The Nature of the Firm will be disrupted by people organizing in a new way vis-a-vis blockchain 'cause that's an open source paradigm. >> Yeah, no I concur. So, I'm a believer in that entire concept. I 100%-- >> I want to come back to something you talked about, about individual contributors and the relationship in link to open source and collaboration. I personally, I think we have to have a frank conversation about, I mean machines have always replaced humans, but for the first time in our history it's replacing cognitive functions. To your point about empathy, what are the things that humans can do that machines can't? And, they become fewer and fewer every year. And, a lot of these conferences people don't like to talk about that, but it's a reality that we have to talk about. And, your point is right on, we're going back to individual contribution, open source collaboration. The other point is data, is it going to be at the center of that innovation because it seems like value creation and maybe job creation, in the future, is going to be a result of the combinatorial effects of data, open source, collaboration, other. It's not going to because of Moore's Law, all right. >> 100%, and I think one of the aspects that we didn't touch upon is the new societal model that automation is going to create would need data driven governance. So, a data driven government is going to be a necessity because, remember, in those times, and I think in 25, 30 years countries will have to explore the impact of negative taxation, right? Because of all the automation that actually happens around citizen security, about citizen welfare, about cost of healthcare, cost of providing healthcare. All of that is going to be fueled by data, right? So, it's just, as the Chinese proverb says, "May you live in interesting times." We definitely are living in very interesting times. >> And, the public policy implications are, your friend and one of my business heroes, Scott McNeally says, "There's no privacy in "the internet, get over it." We interviewed John Tapscott last week he said "That's unacceptable, "we have to solve that problem." So, it brings up a lot of public policy issues. >> Well, the social economic impact, right now there's a trend we're seeing where the younger generation, we're talking about the post 9/11 generation that's entering the workforce, they have a social conscience, right? So, there's an emphasis you're seeing on social good. AI for social good is one of the hottest trends out there. But, the changing landscape around data is interesting. So, the word democratization has been used whether you're looking at the early days of blogging and podcasting which we were involved in and research to now in media this notion of data and transparency and open source is probably at a tipping point, an all time high in terms of value creation. So, I want to hear your thoughts on this because as someone who's been in the proprietary world the mode of operation was get something proprietary, lock it dowm, build a fence and a wall, protect it with folks with machine guns and fight for the competitive advantage, right? Now, the competitive advantage is open. Okay, so you're looking at pure open source model with Hortonworks. It changes how companies are competing. What is the competitive advantage of Hortonworks? Actually, to be more open. >> 100%. >> How do you manage that? >> No absolutely, I just think the proprietary nature of software, like software has disrupted a lot of businesses, all right? And, it's not a resistance to disruption itself. I mean, there has never been a business model in the history of time where you charge a lot of money to build a software, or sell a software that you built and then whatever are the defects in that software you get paid more money to fix them, all right? That's the entire perpetual and maintenance model. That model is going to get disrupted. Now, there are hundreds of billions of dollars involved in it so people are going to come kicking and screaming to the open source world, but they will have to come to the open source world. Our advantage that we're seeing is innovation now in a closed loop environment, no matter what size of a company you are, cannot keep up with the changing landscape around you from a data perspective. So, without the collective innovation of the community I don't really think a technology can stay at par with the changes around them. >> This is what I say about, this is what I think is such an important point that you're getting at because we were started SiliconANGLE actually in the Cloudera office, so we have a lot of friends that work there. We have a great admiration for them, but one of the things that Cloudera has done through their execution is they have been very profit oriented, go public at all costs kind of thing that they're doing now. You've seen that happen. Is the competitive advantage that you're pointing out is something we're seeing that similar that Andy Jasseys doing at AWS, which is it's not so much to build something proprietary per se, it's just to ship something faster. So, if you look at Amazon's competitive advantage is that they just continue to ship product faster and faster and faster than companies can build themselves. And also, the scale that they're getting with these economies is increasing the quality. So, open source has also hit the naysayers on security, right? Everyone said, "Oh, open source is not secure." As it turns out, it's more secure. Amazon at scale is actually becoming more secure. So, you're starting to see the new competitive advantage be ship more, be more open as the way to do business. What do you think the impact will be to traditional companies whether it's a startup competing or an existing bank? This is a paradigm shift, what's the impact going to be for a CIO or CEO of a big company? How do they incorporate that competitive advantage? Yeah, I think the proprietary software world is not going to go away tomorrow, John, you know that. There so much of installed software and there's a saying from where I come from that "Even a dead elephant is worth a million dollars," right? So, even that business model even though it is sort of dying it'll still be a good investment for the next ten years because of the locked in business model where customers cannot get out. Now, from a perspective of openness and what that brings as a competitive differentiators to our customer just the very base at which, as I've said I've lived in a proprietary world, you would be lucky if you were getting the next version of our software every 18 months, you'd be lucky. In the open source community you get a few versions in 18 months. So, the cadence at which releases come out have just completely disrupted the proprietary model. It is just the collective, as I said, innovative or innovation ability of the community has allowed us to release, to increase the release cadence to a few months now, all right? And, if our engineering team had it's way it'll further be cut short, right? So, the ability of customers, and what does that allow the customer to do? Ten years ago if you looked for a capability from your proprietary vendor they would say you have to wait 18 months. So, what do you do, you build it yourself, all right? So, that is what the spaghetti architecture was all about. In the new open source model you ask the community and if enough people in the community think that that's important the community builds it for you and gives it to you. >> And, the good news is the business model of open source is working. So, you got you guys have been public, you got Cloudera going public, you have MuleSoft out there, a lot of companies out there now that are public companies are open source companies, a phenomenal change over. But, the other thing that's interesting is that the hiring factor for the large enterprise to the point of, your point about so proprietary not updating, it's the same is true for the enterprise. So, just hiring candidates out of open source is now increased, the talent pool for a large enterprise. >> 100%, 100%. >> Well, I wonder if I could challenge this love fest for a minute. (laughs) So, there's another saying, I didn't grow up there, but a dying snake can still bite you. So, I bring that up because there is this hybrid model that's emerging because these elephants eventually they figure it out. And so, an example would be, we talked about Cloudera and so forth, but the better example, I think, is IBM. What IBM has done to embrace open source with investing years ago a billion dollars into Linux, what it's doing with Spark, essentially trying to elbow its way in and say, "Okay, "now we're going to co-opt the ecosystem. "And then, build our proprietary pieces on top of it." That, to me, that's a viable business model, is it not? >> Yes, I'm sure it is and to John's point with the Mule going IPO and with Cloudera having successfully built a $250 million, $261 million business is testimony, yeah, it's a testimony to the fact that companies can be built. Now, can they be more efficient, sure they can be more efficient. However, my entire comment on this is why are you doing open source? What is your intent of doing open source, to be seen as open, or to be truly open? Because, in our philosophy if you a add a slim layer of proprietariness, why are you doing that? And, as a businessman I'll tell you why you increase the stickiness factor by locking in your customer, right? So, let's not, again, we're having a frank conversation, proprietary code equals customer lock in, period. >> Agreed. And, as a business model-- >> I'm not sure I agree with that. >> As a business model. >> Please. (laughs) We'll come back to that. >> So, it's a customer lock in. Now, as a business model it is, if you were to go with the business models of the past, yes I believe most of the analysts will say it a stickier, better business model, but then we would like to prove them wrong. And, that's our mission as open source purely. >> I would caution though, Amazon's the mother of all lock in's. You kind of bristled at that before. >> They're not, I mean they use a lot of open source. I mean, did they open source it? Getting back to the lock in, the lock in is a function of stickiness, right? So, stickiness can be open source. Now, you could argue that Horonworks through they're relationship with partnering is a lock in spec with their stickiness of being open. Right, so I come back down to the proprietary-- >> Dave: My search engine I like Google. >> I mean Google's certainly got-- >> It's got to be locked in 'cause I like it? >> Well, there's a lot of do you care with proprietary technology that Google's built. >> Switching costs, as we talked about before. >> But, you're not paying for Si-tch >> If the value exceeds the price of the lock in then it's an opportunity. So, Palma Richie's talking about the hardened top, the hardened top. Do you care what's in an Intel processor? Well, Intel is a proprietary platform that provides processing power, but it enables a lot of other value. So, I think the stickiness factor of say IBM is interesting and they've done a lot open source stuff to defend them on Linux, for example they do a (mumbles) blockchain. But, they're priming the pump for their own business, that's clear for their lock In. >> Raj wasn't saying there's not value there. He's saying it's lock in, and it is. >> Well, some customers will pay for convenience. >> Your point is if the value exceeds the lock in risk than it's worth it. >> Yeah, that's my point, yeah. >> 1005, 100%. >> And, that's where the opportunity is. So, you can use open source to get to a value projectory. That's the barriers to entry, we seen 'em on the entrepreneurship side, right? It's easier to start a company now than ever before. Why? Because of open source and cloud, right? So, does that mean that every startup's going to be super successful and beat IBM? No, not really. >> Do you thinK there will be a red hat of big data and will you be it? >> We hope so. (laughs) If I had my that's definitely. That's really why I am here. >> Just an example, right? >> And, the one thing that excites us about this this year is as my former boss used to say you could be as good as you think you are or the best in the world but if you're in the landline business right now you're not going to have a very bright future. However, the business that we are in we pull from the market that we get, and you're seeing here, right? And, these are days that we have very often where customer pool is remarkable. I mean, this industry is growing at, depending on which analyst you're talking to somewhere between 50 to 80% ear on ear. All right, every customer is a prospect for us. There isn't a single conversation that we have with any organization almost of any size where they don't think that they can use their data better, or they can enhance and improve their data strategy. So, if that is in place and I am confident about our execution, very, very happy with the technology platform, the support that we get from out customers. So, all things seem to be lining up. >> Raj, thanks so much for coming on, we appreciate your time. We went a little bit over, I think, the allotted time, but wanted to get your insight as the new President and Chief Operating Officer for Hortonworks. Congratulations on the new role, and looking forward to seeing the results. Since you're a public company we'll be actually able to see the scoreboard. >> Raj: Yes. >> Congratulations, and thanks for coming on the CUBE. There's more coverage here live at Dataworks 2017. I John Furrier, stay with us more great interviews, day two coverage. We'll be right back. (jaunty music)

>> Announcer: Live from Las Vegas, it's theCUBE. Covering InterConnect 2017. Brought to you by, IBM. >> Hey, welcome back everyone. Live in Las Vegas, the Mandalay Bay. We're at the IBM Interconnect 2017. This is CUBE's exclusive coverage of three days of wall to wall. Day three winding down here at the event. Great show about cloud, data, and blockchain. Our next guest is Marie Wieck, who's the general manager of the Blockchain group within IBM, and Greg Wolfond, who's the chairman and CEO of SecureKey Technologies, announced a partnership with IBM. A lot of great success of blockchain. It's now a business unit in IBM. Marie, great to see you. Congratulations on the new role. >> Absolutely, we're really excited. We've seen so much momentum in blockchain that we really are investing heavily, created a new division, part of our Industry Platforms team, and we're off to the races. >> Exciting. >> So six weeks in the role now. >> Six weeks, I guess the business model is keeping running hard, (laughter) 'cause you guys have made great success. We had Ramesh, one of your workers in your division, on early, he came from the labs, or the research team, >> Marie: Right, research. >> and now he's in Solutions. The traction has been pretty amazing, so take us through, from a business standpoint, obviously you're now got the P&L applet running, you're going, engaging customers on use cases. Where'd this progress come from? Was it just, the internal coalesce of IBMers and customers coming together, give us why this is at its point today. >> I mean I think the most important point about blockchain, is that it really is a network effect. The whole idea of a shared distributed ledger, where everybody has visibility to the appropriate parts of data that they want, gives you some really interesting new business models, but you can't have a network effect, you can't have a community and an ecosystem if you don't have a common set of standards, and a way to drive interoperability. So just 15 months ago, we launched with 30 other people, the Hyperledger Project, in the Linux Foundation. It's been the fastest growing open source project since the Linux Foundation started, so really impressive momentum, and, you know if you think back just a year, at InterConnect last year in February, we had this little demo of trading marbles. This year, fast forward a year, we have a new division, we have 400 clients that we're working with on real production level use cases. We have eight networks in production. We've got now version one of the standard, which really brings a lot of the enterprise requirements, and we're seeing all kinds of new use cases. Supply chain, health care, government, financial services, all where we're really talking about being real now and trusted for business. >> And I would add that Ginni Rometty on stage, hammering home the focus, >> Exactly. >> like big time, at a Watsonesque level, >> Marie: Absolutely. >> so that must to mobilizing the IBMers new division. What's the buzz internally? (laughter) People want to come work for your division now, I mean what's happening? >> I do get an awful lot of emails from a lot of people who are very interested, but I always know when there's real momentum, when there are people who are doing it that we didn't tell to do it, you know, so we're starting with a pretty small team internally, my group itself Direct Line, is about 200 people. There's about 600 people in the extended team across the different functions across IBM, but when I do a search on our internal directory and search for blockchain, there's over a thousand people who have that name already in their title or in their description because they're working on it, and they see the power of it. >> Innovative people get intoxicated by blockchain, because they can just see the disruption elements. Greg, I want to ask you, because you're actually doing it, not only is it intoxicating to kind of grok what blockchain can be, this some real use cases right now, really jamming hard on blockchain with the ledger, can you just share quickly how that's playing out in context IBM and in the marketplace. >> Yeah, so SecureKey's a digital ID company. So we started in Canada years ago doing this login service for government. You show up, you want to see your taxes, your unemployment, your pension, any of 80 different departments, we made it easy for citizens to go there. You can redirect into a federated login with your TD login, or your Royal Bank login. We have millions of Canadians who use that, and we had hundreds of thousands a month, but it's really a login service, and it saved the federal government I think eight hundred million dollars to get that done, but we wanted to move to the next step, which is sharing identity, so digital identity and how do I share my attributes from TD Bank or Royal Bank or my data from Equifax or TransUnion in a trusted way with parties I want to, and not share it in other ways. And we couldn't do that without Hyperledger. So we can talk a little bit about why we went to it, but we have a network in Canada, we tested already phase one, we're launching later this year with Royal Bank, TD Bank, Bank of Montreal, Scotia. Where a citizen can show up at a Telco to create a new account. Is it okay to share my name and address and my credit score? Yes, done, account's open in seconds. FINTRAC changed the rules in Canada so you can open a bank account. Can I show up at a bank and share my attributes from the province and from a credit agency, and create my bank account in seconds. And we've all had this problem, right? I talk to my wife... >> I mean we live it everyday, I mean identity theft is I think front and center in mainstream life. Everyone has either someone close to them or themselves get the phone call, the credit score's dropping, or hey, someone's had my identity for a couple weeks, this is brutal, even the credit cards are gettin'... >> It's funny, when I started this business two of my friends had their identity taken over and someone put mortgages on their homes, and I said there had to be a better way to do it. With blockchain if we can take data from different sources, that the bank knows it's me and I can log in right now, that I possess this phone, that the province knows it's me and I can turn on the camera and check it's me, we can raise the ID validation score for everyone in the whole industry. For healthcare, to government, to banking, and we not only raise the ID validation we also raise the AuthScore, because I'm not just logging in with my bank, I must have this phone, with this SIM in it, and if it's canceled it's not me. And normally people would put that through brokers in the middle, but NIST in the U.S. said, we don't want brokers in the middle. They could peek, they could see your data. I have single points of failure. If this is identity for health here's how it goes down. I have honeypots of data. People are collecting all of my stuff in one place, it's encrypted, but the bad guy's going to get that, right? They could go after the person, and say I need the keys, I have a member of your family... >> I mean we're living in a world, in cloud, Marie knows, there's no perimeter anymore. >> Marie: Right right. The security experts that are state of the art right now, are saying, even saying theCUBE in day one here, data is the new perimeter. So there it is, right, this is fundamental, what you're saying, this is the new perimeter, the data, and you distribute it. >> So no broker right, means less of a threat matrix for people to hack. You don't need a trusted third party to arbitrate. >> You shouldn't have to get other credentials and things to go right, if I can login at my bank right now` and prove I've got the mobile device, can I release data from different sources? Ten percent of Americans move every year, if I show up at an apartment, can I share that I'm Greg and my bank says I'm me, that I have this device from my mobile company, can I share a background check to say that it's me? We're going to do that in about eight seconds, compared to the landlord having to go and pay a real estate agent one month's rent to vet you. And then when you do that, imagine the power now right? Would you like to sign up for internet? Share your data, yes, click. Would you like contents insurance, click. Totally taking friction out for consumers, but making sure that the parties who provide that data, whether it's my bank, whether it's my government, they can't track me. I don't want my government or my bank knowing if I go to mental health, or if I go to a cancer clinic. Really important that they don't know, right? >> Yeah, healthcare here, I don't know what it's like in Canada, but certainly in the United States you can't get information about yourself (laughter). >> And it's a perfect connection to blockchain, 'cause the whole notion of blockchain in our mind is about a trusted network, and how do you get trust if you don't know who the people are who are participating. So, we signed an agreement with the Food and Drug Administration in the United States, to focus on leveraging blockchain for exchange of information around patients, privately and securely for clinical drug trials. You know, it's just one example of now, you bring that trust element, that's built on a blockchain already, as a new interoperable component of these new supply chain networks. Whether it's around supply chain in global sourcing, whether it's the providence of food or diamonds, there's some really interesting aspects that you can now add on top. And we're now even connecting, you mentioned Cognitive, you know, now apply Watson on top of that. How do you increase the trust level in our new version one delivery of Hyperledger on the IBM cloud, we actually provide a trust score for the network, scale, a one to a hundred. What if Watson could actually look at your use case and hear the recommendations and suggestions for how to improve the trust level? Improving it means getting more members, so it's more distributed, and there's more sharing of information. But they're not going to want to share that information if there isn't a trust model. >> So give us a glimpse as to, sort of, your business. You got 200 people, but you've got thousands of people within IBM that you can tap, in addition to the huge portfolio of things like Cognitive. So you've got this startup (laughs), >> Marie: Right. >> inside of IBM. >> Marie: A startup in IBM. >> And you said it's inside the Industry Platform's team, so what is that, and what are you actually building out? >> So, we are building, we're taking, and contributing, we're investing really, in the Hyperledger project ourselves. We are one of now 122 members of the open source and open community project, and we're actually developing and contributing content there. >> Dave: Big committer there. >> Big committer, and we provide a support model for anybody who wants to use just Hyperledger, but we take Hyperledger back, and now we're delivering it as a secure platform on our high security network, that is production grade, you know enterprise strong, would be Ginni's word for that, right, and delivering that on our cloud, or letting you take a container and put it on your own enterprise if you really want your own private cloud. But we're also building industry solutions on top of that. So we announced a partnership with Maersk, for global shipping on global trade digitization to provide greater visibility. >> But on that deal, just to interrupt, that Ramesh was put in, that wasn't a solution specifically for them, that was an industry scope solution. >> Correct. So it's really a partnership. So in this case again, it's that network effect, it's that ecosystem, it's not Maersk, the customer, it's Maersk and IBM the partners, who are now bringing forward as the anchor tenants in this new network, the rest of our ecosystems, and we were interested 'cause we have a big supply chain business for all our hardware as well. >> And you're selling a SAS product, is that right? >> Correct. >> So it's a subscription based model? >> Correct. >> And then services on top of that? >> And services both to develop new blockchain applications, we've had a number of our clients here from the 20 thousand at InterConnect, that've come up with new ideas. We're going to help them build that, in a services kind of model, but many of these are going to be essentially SAS networks where either they're going to pay a membership fee or they're going to pay per transaction, a percentage of the price, or they're going to participate in the savings, because this is actually going to streamline the opportunity. In the case of SecureKey, the model we see customers willing to buy, the validation of an identity for an individual if they're participating in a critical transaction. A bank would certainly be willing to pay to increase the confidence that Greg is Greg, if he was applying for a mortgage online. >> And the consumption is through the IBM cloud, correct? >> Yeah, so there's a toolkit, we're big believers in open source. It's open at the ends, really easy using things like Bluemix to connect to the endpoints. And for us, it's just a magnificent coming together, because things like the high security network to turn banks on quickly, where they trust it, and they can put their data in a secure and trusted way, make this all go faster. >> Dave: But that's the only place in the world I can get this, correct? >> Marie: It is certainly the only place that you can get that level of security in a blockchain network. >> But from a competitive standpoint, somebody else has to build this out, and create as a competitive product as IBM has, and run it on somebody else's cloud, for them to compete, correct? >> That is correct. >> The strategy is not to spam the world's clouds, it's to say hey, we've got this solution, here's how you get it, here's how you consume it. >> And we really firmly believe that if this is an interoperable set of standards, there will be other networks, there will be other participants. We want them all to be interoperable. We want a global identity standard for interlocking networks, because that is actually the tide that raises all boats. So if they want to take Hyperledger and put it on their own private cloud or somebody else's cloud, we support that thoroughly. We think that the most enterprise grade cloud though, is with IBM. >> You just got thousands of people doing it, and you say, go for it. >> Exactly. >> Dave: Bring it on baby! >> First of all, you had me at blockchain beginning the interview. I love blockchain, and I think it's very intoxicating from a disruption standpoint. Any entrepreneur, any innovator... This is a bulldozer on existing business models, and of how people do things. So, I'm sure the organic growth that you guys see is proving it, internal IBM and external. How do people get involved? What's your plans on building the ecosystem now, because you got a tiger by the tail here as the GM of this division now. You got to run hard, you got to embrace people, you got to have events, what's your plan, and how do I get involved if I'm someone watching and we want to get involved? >> So, great simple ways to get involved, the developers, we want 'em to be involved directly through the cloud and through developerWorks. You get free access, you can get started quickly. In three clicks you can have a four peer Hyperledger network up and running on Bluemix, and you can start your own services and create. If you are a customer, what we're really suggesting is come and bring us your use case. Bring the participants in your network as well. Come into one of our IBM garages, and we'll work that out for you. And I think it's important that, we think blockchain has a huge potential or I wouldn't be in this new role, but we also think it's not for everything. It's not the panacea for every business problem. We want to make sure the people are using it in the right way for areas where it really makes the most impact, and then we'll help you implement that and develop it. And then we really see the whole ecosystem around our partners, you're going to onboard people into a blockchain network. You're going to have to integrate with your back ends. You're going to extend your mobile devices to provide these new services through apps. So our GSI community is really helping with the integration and the onboarding. Our ISVs are developing new services that run on those blockchain networks, and we just launched our new IBM Cloud for Financial Services, has a blockchain zone, for all those fintech startups to get access and reuse components, so that we can accelerate the effect. >> Alright, well, congratulations Marie, great to see you in the new role, congratulations, >> Marie: Thank you. >> We're super excited for you, and looking forward to getting the update soon at our new studio. We'll try to rope you into our new Palo Alto studio. Greg, great to hear your success. This is the nirvana, I mean, secure ID is like, the big, I mean easily, not like with some either token or engineered identity system, and this is a home run. >> It's privacy, and it's as we talked about before the broadcast. Facebook, would you trust Facebook to go see your medical records? Would you unlock your title using Facebook? You want things that are private, where people aren't tracking you and are more secure than that, so this is really... >> Don Tapscott called Facebook data fracker. (laughing) We provide all our data for Facebook, they've got billionaires on it. Thanks so much for spending the time. >> Thank you. >> Blockchain revolution here inside theCUBE, bringing you really trusted content here on theCUBE. Distribute it out around the world, I'm John Furrier, Dave Vellante, thanks for watching. More great coverage coming up here, stay with us.

>> Announcer: Live, from Las Vegas, it's The Cube covering Interconnect, 2017. Brought to you by, IBM. >> Hey welcome back everybody, live here in Las Vegas at the Mandalay Bay IMB Interconnect 2017, it's The Cube's exclusive coverage, I'm Jon Furrier, my co-host Dave Vellante, our next guest is Ramesh Gopinath who's the VP of Block Chain Solutions and Research, welcome to The Cube. >> Thank you. >> Block chain front and center, super exciting, it's been trending pretty much throughout the conference, really is an amazing story, big props from the CEO and (mumbles) and a variety of the executives. Watching is instrumental in the future of business, we had Don Tapscott on yesterday really talking about the revolution of what this is all about and he's the author of the book, The Blockchain Revolution, but if blockchain is a game changer shift to how the business will be operating in the future, so just to level step, just give us the one on one blochchain, versus bitcoin, and why IBM is going in this direction and where it came from. >> So blockchain is all about increasing a trust in business transactions. This is something we recognize about a couple of years ago when a small team of us started playing around with, you know, the technology behind bitcoin, right. And we look at it and said hey look, here's an opportunity for the first time for companies to share some information in a secure fashion with each other and, in addition, run some workflows or business processes on top. That was an eye opener for us, it immediately told us this could have applications in all industries, right. And so what do we do first? So we said let's play around with this a little bit. We looked at existing technologies out there for blockchain and to pick the platform you tried a few use cases and realize, oh my god, there is a whole lot to be done to get a blockchain for business, right. And that's how we started this journey, almost a year and a half, two years ago. And we decided to explore that. >> And the key distinction Ramesh, and we know from just highlighting it here for the folks, is bitcoin is a currency that has a blockchain, so it's powering bitcoin. You're talking about something more fundamental for business which is using the blockchain technology for businesses and what bitcoin is to blockchain, business is to blockchain from your standpoint. >> That's right, and also I think the blockchain is really, the inspiration for it comes from bitcoin perhaps, that's a good way of thinking about it. But today for example, the hyperledger version one that was announced earlier this week at this conference is dramatically different from the underlying blockchain and bitcoin in other platforms out there, right. Because it's really built primarily based on requirements that we have gathered by working with hundreds of clients in financial services and supply chain, in public sector, et cetera, and realizing what levels of confidentiality, what levels of privacy, what level of permissioning, you know, who participates in the transaction. All of that is what has led to, what we call the (mumbles)- >> John: Okay somebody's got a question. >> John: I got a follow up on that, but go ahead. >> Uh, just one more point on this but you can follow up on my point. Give us the status of blockchain today for IBM. Lay out the solution because you move from research now to the exclusions group, you have customer action going on, sales motions, solutions motions. What is the architecture, what does it look like, what is the solution today from a blockchain standpoint? >> So, just, you asked what are you doing at a high level, essentially we have three broad, big investments. One is everything to do with you know, opensource in a hyperledger project, I mentioned that. Then there is you package that into a platform, IBM blockchain, high security business network, that was also announced earlier this week. And the third layer is again what you asked about solutions. What we have been doing over the last year, year plus is, in fact, it's an interesting journey, we started out with what I call blockchain tourism, there were a whole bunch of POC's if you want to call it that, starting with financial services initially, but in gradually other areas, like supply chain, in healthcare, et cetera. Towards the middle of 2016 we saw a transition, at least on the financial service side people were started to talk about, hey now I understand this technology and what it's capable of, let's talk about production deployments, right now I'll give you a few examples as we go along. >> Dave: So, I want to go back if I can a little bit and just get somewhat didactic for a moment. My understanding is there's three attributes, I'm sure there are many more of blockchain which are really relevant, and especially as it relates to the security if I may, it's distributed obviously, and it's been said it's virtually unhackable unless 50% of the stakeholders agree to collude, and then there's no need for a trusted third party so it reduces the threat space. Are those sort of accurate statements and when somebody says, well it's virtually unhackable, you know you tweet that and somebody says, well everything's hackable, help us understand sort of those fundaments of blockchain and why they're relevant. >> That's right, so the way I think about it is a blockchain is a trusted database. Now why is it trusted? There are three properties, I'll get to it, kind of overlaps with what you mentioned. The first one is, any transaction you do onto the database, anything that goes in it basically is done in a nonreputiable fashion. If I do something I can't say, "I didn't do that," so that helps. What goes in, you know you have that property. The second piece is, whatever goes in goes in through a vetting process, we will call it the consensus. There is some sort of a chat between parties before something goes in. Therefore, I can't unilaterally do something onto the blockchain, right, I can't, somebody else vetted what I did, that increases trust. And the third piece is, once it gets in there it cannot be tampered with. We say it's immutable sometimes, and what is that based on? There's a whole lot of topographic math behind it, but at a high level there are two aspects to it. One is, there are multiple copies. So if I change something, if I hack into mine, I'm inconsistent with what others have, so that's one. The second is, the transactions are chained together, blocks of transactions are chained together where a fingerprint of one block is put into the next. What that means is, if I tamper with the block say 15, a long blockchain, all transactions after that are invalid, I have to do a lot of work to fix it, so it's very very hard to tamper with. Of course, as with security, there's no such thing as nothing that is hackable, right, so collusions et cetera, potentially can happen. But the key is, significant increase in the level of trust is the way I would put it. >> Dave: Great, okay, and so now if we can get into sort of how people are specifically applying this technology, you guys started with the hyperledger, you know, open project, but can we get more specific in terms of how say organizations are actually deploying blockchain? >> Ramesh: So we are still running a blockchain in productions since September 6th, right, so it's been only four months. In fact that blockchain is more than a half a million blocks today, so let me tell you what that solution is so you get a sense of, and it's very prototypical in terms of, you know, all solutions that I've dealt with so far across industries. The use case is a following, so you have a buyer, you have a seller and you have a financer, that's IBM. We basically finance, shotgun financing of, think of it as channel financing or inventory finance. What happens typically is, the buyer basically orders something and the seller essentially gets approval from us to say, okay, yeah we can basically send it to the buyer. A few days go by, IBM has already paid the seller basically, just like credit cards (mumbles) consumers. A month later basically we go in, say hey look, guys, time for you to pay up and they say, look, we didn't even receive the goods. So this entire process, what I just described you can think of as a workflow where these three parties are sending messages back and forth. The way we do it in a blockchain is, this entire workflow is captured as a sequence of transactions that are registered on the blockchain. Now how does this help us? Take the example I gave, proof of delivery. If when the logistics company delivers it at the buyer's site, it's recorded on the blockchain. There is no need for a dispute. And typically disputes, basically puts a lot of capital, you know, it holds up a lot of capital right. Capital inefficiency is the problem we're after. In fact, after six months of deployment I can tell you essentially a significant improvement in terms of the time savings as well as elimination of disputes. >> John: That's a great efficiency. Who's buying, who's actually implementing it customers-wise. Can you name names? >> Ramesh: Yeah, so, examples are the, let me give you a few in financial services. So we are working with Salus Bank which does, you now, five trillion dollars worth of foreign transactions every day. They are building a netting engine called Salusnet a solution called Salusnet, and we're working with them on that. Another example is the work that we are doing with Northern Trust, where basically they have a private equity administration blockchain. In fact, it's a very interesting one because it also involves the regulator as a part of the blockchain, so that's a second example. A third one is the one we announced in January with the Depository, Trading and Clearing Corporation DTCC, and that one is for credit debitors, life cycle management, in fact all the examples if you notice, there is a life cycle like I gave in that example earlier of buying till all your goods are delivered, payment is made, those life cycles, those processes are captured as trusted processes on a trusted data store. That's basically blockchain for you, right, that's financial services. Maybe I'll touch upon two more examples to complete the story. Supply chain. I walk into a store and buy some sliced mangos at Walmart, is it safe to eat? To answer that question you need to know the provinence. Which farm in Mexico did it come from, who all touched it, who washed it, who processed it, et cetera, all the way till it got to the store. That sort of information sharing does not happen today in the supply chain. We believe with the block chain that is possible, that allow us to get a good sense of where things came from, making consumers more comfortable. Similar story can deal with pharma too. I pop a pill, I want to be sure that it's safe to have. In fact, as you know the World Health Organization says in Africa, every year a hundred thousand kids die of counterfeit malaria drugs alone, right, so imagine if you could capture these sorts of supply chain flows on a blockchain you could make dramatic improvements. >> Dave: Diamonds provenience is another one, and it's not just blood diamonds. >> Ramesh: I'm more excited by the providence of food and pharma, but diamonds- >> But there's tons of fraud in the diamond supply chain. >> Ramesh: Absolutely. >> And that's really where they're, you know- >> John: Well this brings up the whole business model disruptions, so, what are you guys seeing for the kids of conversations? Because you're getting at the business model impact significantly one, you're reducing costs of transactional costs for new measurement systems, aka blockchain, and you have all the methodology behind it, but everything from music to art to content, I mean, payments, this is like a game changer. >> Absolutely, and I think from the point of view, you know, in all of the use cases I've seen, the sort of value to the ecosystem is clean and obvious, and so you can immediately say, aha, this is going to happen overnight. But the reality is basically, it's a complex ecosystem play though. So, for example, in the supply chain use case, food safety, you need to have the farmers, the entire value chain involved, participating in some fashion on the blockchain. That is not easy to do. So there is, how do you sort of set up ecosystems is a key part of- >> John: What's your strategy there? I'm going to ask Marie when she comes on, but what's the strategy with ecosystem? Because you want to jump start this, you got to prime the pump big time. >> Ramesh: Absolutely, so there are many ways to solve this, but one approach we have taken so far, and it's obvious in all the sort of partnerships that we're working on. Take for example food safety. One way to start with it is to start with a big retailer, like a Walmart. They bring in the suppliers, and the suppliers bring in the farmers. Take the case of what we are doing in container shipping. So basically, movement of containers from point A to point B, we're trying to completely digitize that process, this is a project that we're doing with Maersk. Why Maersk? They are 20% of the container shipping market, right? But in all of these cases I got to be very clear, we are not building a solution for Maersk or for Walmart. We're really building something for the industry, because food safety, you want to solve it for the industry. Just by helping Walmart along. >> John: That's why the open source thing is critical here. >> That's right. >> John: And the update on that, it's all open source on which components, or is it all open source? >> Ramesh: So the open source is all about at the platform layer. The solution itself, you know not everything in the solution is going to be open source. But the key point I was trying to make is that you go off the sort of significant anchor tenants in the ecosystem that draws others into the picture, but that's still not enough, you need to make sure there are economic incentives for others to join in. >> John: So to put it together, tie it together, the ecosystem strategy is, take an industry scope and try the rising tides floats all boats kind of approach. So adoption's critical. >> Absolutely correct, absolutely correct, and I think again I can use food safety to make that point. Think about it, right? So there is, let's say, a spinach problem, we had it in 2006. So you find a problem, you trace it back to a source. Let's say Walmart is the store in which somebody bought it and it was traced from there. That's not good enough. From the source it went to many other retailers. So you need to be able to track down and pull all of them off the shelves. Therefore you have to go for an industry solution. >> John: I can imagine the healthcare thing would be even more impactful too, I mean, financial services pretty obvious, transactional stuff there, but healthcare, so many different variations of supply chain and transactions. >> Ramesh: Absolutely, so in a way, the way I think about it is in a financial service everybody had a hunch this could be big, but supply chain, we've come a really long way, I think this is going to be the space which will have the most destruction, and its interesting considering when we started my first conversation with folks, whether it be a Walmart or Maersk, first question is, "what is blockchain?" We've come a long way in the last say eight, nine months. >> John: You guys get so excited where you're kind of pinching yourselves because you can get kind of euphoric about some of the disruption impact. It's just mind blowing to think when you're talking about food, the food industry and healthcare. You got to get tampered down a little bit in some realism, is there that IBM excitement internally share some color internally within IBM the excitement, and then you got to be getting realistic, a lot of the clients rolling it out to kind of got to walk before they can run. >> Ramesh: Yeah, so, the way I would state it is if you had asked me a year ago do you expect to be in the shape we are in today, I would have said no way. I've been shocked at the pace at which this has been moving both from the point of view of the technology itself, maturing of the technology, and in fact when we say blockchain is here now, so that's at the technology layer level, but in terms of use cases, think about it, there are a number of financial services institutions that are talking about production deployments late this year, early next year. In fact, when we did our own IBM Institute for Business Values survey, came back with fully 15% of those who were surveyed, there were like 400-odd banks plus capital market institutions are going to be in production by end of this year. When I heard that in September I still didn't believe it, but I am beginning to believe it now. >> Well it's interesting I think, the cultural shift is that technologists from computer scientists to practitioners that are technologists, they get it. They can see what blockchain does, so I think as people get more and more momentum, that's the fly wheel that you guys are open for and it's happening. >> That's right, in fact I'm also a techie at heart, but in terms of conversation (mumbles) I never talk about technology anymore because the thing is, there are only two concepts in blockchain. It's trusted data across companies, trusted business process. Everything else is detail. >> John: Got it, Ramesh, thanks so much for sharing, great conversation, formerly with IBM research, now Vice-President of Blockchain Solutions at IBM, great to interview, great insight, blockchain revolution is here, check out our interview yesterday with Dom Tapscott yesterday on YouTube, The Blockchain Revolution, his book really kind of lays out some of the big disruptive game changers. This is The Cube, doing our share of blockchain right now, bringing content in blocks and chunks, not yet blockchain enabled. I'm John Furrier, Dave Vellante, be back with more after this short break. (synthesized music)

(upbeat music) >> Covering InterConnect 2017, brought to you by IBM. >> Welcome back. We're here live in Las Vegas from Mandalay Bay for the IBM InterConnect 2017, this is Cube's exclusive coverage with SiliconANGLE media. I'm John Furrier, my co-host Dave Vellante here all week. We missed our kickoff this morning on day two and, because the keynotes went long with Ginni Rometty. Great star line up, you had Marc Benioff, the CEO of AT&T, and CEO of H&R Block, which I love their ad with Mad Men's guy in there. Dave let's wrap up day two. Big day, I mean traffic on the digital site, ibmgo.com was off the charts and the site just performed extremely well, excited about that. Also the keynote from the CEO of IBM, Ginni, really kind of brings us themes we've been talking about on theCUBE. I want to get your reaction to that, which is social good is now a purpose that's now becoming a generational theme, and it's not just social good in terms of equality of pay for women, which is great and of course more STEM, it's everything, it's society's global impact but also the tagline is very tight. Enterprise strong, has a Boston strong feeling to it. Enterprise strong, data first, cognitive to the core, pretty much hits their sweet spot. What did you think of her keynote presentation? >> I thought Ginni Rometty nailed it. I've always been a huge fan of hers, I first met her when she was running strategy, and you know the question you used to always get because IBM 19 quarters of straight declining revenue, how long is Ginni going to get? How long is Ginni going to get? You know when is her tenure going to be up? My answer's always been the same. (laughs) Long enough to prove that she was right. And I think, I just love her presentation today, I thought she was on, she was engaging, she's a real pro and she stressed the innovation that IBM is going through. And this was the strategy that she laid out, you know, five, six years ago and it's really coming to fruition and it was always interesting to me that she never spoke at these conferences and she didn't speak at these conferences 'cause the story was not great you know, it was coming together the big data piece or the analyst piece was not formed yet. >> So you think she didn't come to these events because the story wasn't done? >> Yeah, I think she was not-- >> That is not a fact, you believe that. >> No, this is my belief. She was not ready to showcase you know, the greatness of IBM and I said about a year ago, I said you watch this whole strategy is coming together. You are going to see a lot more of Ginni Rometty than you've seen in the past. You started to see her on CNBC much more, we saw her at the Women in Tech Conference, at the Grace Hopper Conference, we saw her at World of Watson and now we see her here at InterConnect and she's very good on stage. She's extremely engaging, I thought she was good at World of Watson, I thought she was even better today. And a couple of notable things, took a swipe at both AWS and maybe a little bit at HPE, I'm not so sure that they worry about HPE. Sam Palmisano, before he left on a Wall Street Journal interview, said "I don't worry about HPE, they don't invest in RND. "I worry about Oracle." But nonetheless, she said, it's not just a new way, cloud is not just a new way to deliver IT. Right that's the Amazon you know. >> HP. >> And certainly new way of you style by IT. >> You style by IT. >> Is Meg's line. She also took a swipe at Google basically saying, look we're not taking your data to inform some knowledge draft that we're going to take your IP and give it to the rest of the world. We're going to protect your data, we're going to protect your models. They're really making a strong statement in that regard which I think is really important for CIOs and CDOs and CEOs today. Thoughts? >> I agree. I first of all am a big fan of Ginni, I always kind of question whether she came in, I never put it together like you intuitively around her not seeing the story but you go to all the analyists thing, so I think that's legit I would say that I would buy that argument. Here's what I like. Her soundbite is enterprise strong, data first, cognitive to the core. It's kind of gimmicky, but it hits all their points. Enterprise strong is core in the conversations with customers right now. We see it in theCUBE all the time. Certainly Google Nexus was one event we saw this clearly. Having enterprise readiness is not easy and so that's a really tough code to crack. Oracle and Microsoft have cracked that code. So has IBM of the history. Amazon is getting faster to the Enterprise, some of the things they are doing. Google has no clue on the Enterprise, they're trying to do it their way. So you have kind of different dimensions. So that's the Enterprise, very hard to do, table stakes are different than having pure cloud native all the time 100%, lift and shift, rip and replace, whatever you want to call it. Data First is compelling because they have a core data strategy analytics but I thought it was interesting that they had this notion of you own your own data, which implies you're renting everything else, so if you're renting everything else, infrastructure (laughs) and facilities and reducing the cost of doing business, the only thing you really got is data, highlighted by Blockchain. So Blockchain becomes a critical announcement there. Again, that was the key announcement here at the show is Blockchain. IOT kind of a sub-text to the whole show but it's supported through the Data First. And finally Cognitive to the Core is where the AI is going to kind of be the shiny, silly marketing piece with I am Watson, I'm going to solve all your health problems. Kind of showing the futuristic aspect of that but under the hood there is machine learning, under that is a real analytics algorithms that they're going to integrate across their business whether it's a line of business in verticals, and they're going to cross pollinate data. So I think those three pillars, she is a genius (laughs) in strategy 'cause she can hit all three. What I just said is a chockfull of strategy and a chockfull execution. If they can do that then they will have a great run. >> So I go back to Palmisano's statement before Ginni took over and it was a very candid interview that he gave. And as they say, you look at when he left IBM, it was this next wave was coming like a freight train that was going to completely disrupt IBM's business, so it was, it's been a long turn around and they've done it with sort of tax rates, (laughs) stock buybacks, and all kinds of financial engineering that have held the company's stock price up, (laughs) and cash flow has been very strong and so now I really believe they're in a good position. You know to get critical for just a second, yes there's no growth but look who else isn't growing. HPE's not growing, Oracle's not growing, Tennsco's not growing, Cisco's not growing, Microsoft's not growing. The only two companies really in the cartel that are growing showing any growth really are Intel a little bit and SAP. The rest of the cartel is flat (laughs) to down. >> Well they got to get on new markets and I mean the thing is new market penetration is interesting so Blockchain could be an enabler. I think it's going to be some resistance to Blockchain, my gut tells me that but the innovative entrepreneur side of me says I love Blockchain. I would be all over Blockchain if I was an entrepreneur because that really would change the game on identity and value and all that great stuff. That's a good opportunity to take the data in. >> Well the thing I like is IBM's making bets, big bets, Blockchain, quantum computing, we'll see where that goes, cloud, clearly we could talk about, you know you said it (laughs) InterConnect two or three years ago you know SoftLayer's kind of hosting. True, but Blu makes the investments hoping-- >> SoftLayer's is not all Blu makes. >> That's right, well yeah so but any rate, the two billion dollar bet that they made on SoftLayer has allowed them to go to clients and say we have cloud. Watson, NAI, Analytics, IOT these are big bets which I think are going to pay off. You know, we'll see if quantum pays off in the year term, we'll see about Blockchain, I think a lot of the bets they've been making are going to pay off, Stark, et cetera. >> So let's talk about theCUBE interviews Dave, what got your attention? I'll start while you dig up something good from your notes. I loved Willie Tejada talked about this, they're putting in these clouds journey pieces which is not a best practice it's not a reference architecture but it's actually showing the use cases of people who are taking a cross functional journey of architecture and cloud solutions. I love the quantum computing conversation we had with believe it or not the tape person. And so from the tape whatever it was, GS. >> GS8000. >> GS8000. >> It's a storage engineering team. >> But in terms of key points, modernizing IOT relevance was a theme that popped out at me. It didn't come out directly. You start to see IOT be a proof point of operationalizing data. Let me explain, IOT right now is out there. People are focused on it because it's got real business impact, because it's either facilities, it's industrial or customer connected in some sort. That puts the pressure to operationalize that data, and I think that flushes out all the cloud washing and all the data washing, people who don't have any solutions there. So I think the operationalizing of the data with IOT is going to force people to come out with real solutions. And if you don't, you're gone, so that's, you're dead. The cultural issue is interesting. Trust as now table stakes in the equation of whether it's product trusts, operational trusts, and process trusts. That's something I saw very clearly. And of course I always get excited about DevOps and cloud native, as you know. And some of the stuff we did with data as an asset from the chief data architect. >> A couple I would add from yesterday, Indiegogo who I thought had a great case study, and then Mohammed Farooq, talking about cloud brokering. 60% of IBM's business is still services. Services is very very important. And I think that when I look at IBM's big challenge, to me, John, it's when you take that deep industry expertise that they have that competes with Accenture and ENY and Deloitte and PWC. Can you take that deep industry expertise and codify it in software and transform into a more software-oriented company? That's what IBM's doing, trying to do anyway, and challenging. To me it's all about differentiation. IBM has a substantially differentiated cloud strategy that allows them not to have to go head to head with Amazon, even though Amazon is a huge factor. And the last thing I want to say is, it's what IBM calls the clients. It's the customers. They have a logo slide, they bring up the CEOs of these companies, and it's very very impressive, almost in the same way that Amazon does at its conferences. They bring up great customers. IBM brings in the C-Suite. They're hugging Ginni. You know, it was a hug fest today. Betty up on stage. It was a pretty impressive lineup of partners and customers. >> I didn't know AT&T and IBM were that close. That was a surprise for me. And seeing the CEO of AT&T up there really tees it out. And I think AT&T's interesting, and Mobile World Congress, one of the things that we covered at that event was the over the top Telco guys got to get their act together, and that's clear that 5G and wireless over the top is going to power the sensors everywhere. So the IOT on cars, for instance, and life, is going to be a great opportunity for, but Telco has to finally get a business model. So it's interesting to see his view of digital services from a Telco standpoint. The question I have for AT&T is, are they going to be dumped pipes or are they actually going to move up the stand and add value? Interesting to see who's the master in that relationship. IBM with cognitive, or AT&T with the pipes. >> And, you know, you're in Silicon Valley so you hear all the talk from the Silicon Valley elites. "Oh well, Apple and Amazon "and Google and Facebook, "much better AI than Watson." I don't know, maybe. But IBM's messaging-- >> Yes. >> Okay, so yes, fine. But IBM's messaging and positioning in the enterprise to apply their deep industry knowledge and bring services to bear and solve real problems, and protect the data and protect the models. That is so differentiable, and that is a winning strategy. >> Yeah but Dave, everyone who's doing-- >> Despite the technical. >> Anyone who's doing serious AI attempts, first of all, this whole bastardized definition. It's really machine learning that's driving it and data. Anyone who's doing any serious direction to AI is using machine learning and writing their own code. They're doing it on their own before they go to Watson. So Watson is not super baked when it comes to AI. So what I would say is, Watson has libraries and things that could augment traditional custom-built AI as a kernel. Our 13-year-old guest Tanmay was on. He's doing his own customizing, then bring it to Watson. So I don't see Watson being a mutually exclusive, Watson or nothing else. Watson right now has a lot of things that adds to the value but it's not the Holy Grail for all things AI, in my opinion. The innovation's going to come from the outside and meet up with Watson. That to me is the formula. >> Going back to Mohammed Farooq yesterday, he made the statement, roughly, don't quote me on these numbers, I'll quote myself, for every dollar spent on technology, 10 dollars are going to be spent on services. That's a huge opportunity for IBM, and that's where they're going to make Watson work. >> If I'm IBM and Watson team, and I'm an executive there and engineering lead, I'm like, look it, what I would do is target the fusion aspect of connecting with their customers data. And I think that's what they're kind of teasing out. I don't know if they're completely saying that, but I want to bring my own machine learning to the table, or my own custom stuff, 'cause it's my solution. If Watson can connect with that and handshake with the data, then you got the governance problem solved. So I think Seth, the CDO, is kind of connecting the dots there, and I think that's still unknown, but that's the direction that I see. >> And services, it remains critical because of the complexity of IBM's portfolio, but complexity has always been the friend of services. But at the same time, IBM's going to transform its services business and become more software-like, and that is the winning formula. At the end of the day, from a financial perspective, to me it's cash flow, cash flow, cash flow. And this company is still a cash flow cow. >> So the other thing that surprised me, and this is something we can kind of end the segment on is, IBM just reorganized. So that's been reported. The games, people shift it a little bit, but it's still the same game. They kind of consolidated the messaging a little bit, but I think the proof point is that the traffic for on the digital side, for this show, is 2X World of Watson. The lines to get into keynotes yesterday and today were massive. So there's more interest in InterConnect than World of Watson. >> Well we just did. >> Amazing, isn't it? >> Well then that was a huge show, so what that means is, this is hitting an interest point. Cloud and data coming together. And again, I said it on the intro yesterday. IOT is the forcing function. That to me is bringing the big data world. We just had Strata Hadoop and R event at BigDataSV. That's not Hadoop anymore, it's data and cloud coming together. And that's going to be hitting IOT and this cognitive piece. So I think certainly it's going to accelerate at IBM. >> And IBM's bringing some outside talent. Look at Harry Green who came from Thomas Cook, Michelle Peluso. Marketing chops. They sort of shuffled the deck with some of their larger businesses. Put Arvind Krishna in charge. Brought in David Kenny from the Weather Company. Moved Bob Picciano to the cognitive systems business. So as you say, shuffle things around. Still a lot of the same players, but sometimes the organization-- >> By the way, we forgot to talk about Don Tapscott who came on, my favorite of the day. >> Another highlight. >> Blockchain Revolution, but we interviewed him. Check out his book, Blockchain can be great. Tomorrow we got a big lineup as well. We're going to have some great interviews all day, going right up to 5:30 tomorrow for day three coverage. This is theCUBE, here at the Mandalay Bay for IBM InterConnect 2017. I'm John Furrier and Dave Vellante. Stay with us, join us tomorrow, Wednesday, for our third day of exclusive coverage of IBM InterConnect 2017, thanks for watching.