[Music] okay welcome back everyone it's thecube's coverage here in monaco i'm john furrier host of thecube monaco crypto summit presented by digital bits uh media partners coin telegraph in the cube a lot of great stuff going on here digital bits and the ecosystem around the world come together to talk about the next generation uh nft environments metaverse uh blockchain all the innovations going up and down the stack of the decentralized world that will be soon a reality for everybody we have a great guest david lutzkach here who's the co-founder of aftermath islands metaverse which i got a little sneak preview of but david thanks for joining me thanks john great to be here uh we had dinner the other night at nobu it's great to know you get to know your background you've got a stellar uh pedigree um you've run public companies you've been involved in tech media across the board again this is a ship we're seeing like we've never before perfect storm technology change cultural change business model transformation all around deep decentralization crypto token economics decentralized applications metaverse i mean come on we haven't digital identity there was identity which you're involved in take us through what are you working on take a minute to explain what you're working on and then we'll get into it so aftermath islands is is really a culmination of three things uh digital identity the ability to prove who you are because we think the internet and i think everyone would agree the internet's broken you know um nefarious actors bad actors can be anywhere um hacks fake spots so by being able to prove that you're a real person not necessarily verifying your identity but prove that you're a real person um can add a lot of benefits to everyone in the ecosync system second thing is we combine that with avatars nfts and credentials because i'd like to represent myself as a little more buff than i am and maybe a little taller and then the third thing is we put it in a unreal engine so real realistic photo realistic game engine metaverse that requires no downloading it's all pixel streaming just like you'd stream netflix you can stream the game i want to ask because this is i know it's a hard problem because i've asked a lot of people the same question the unreal engine is really powerful and the imagery is amazing like gaming we all know what it looks like it's hard it's not everyone's getting it right what makes it so special how are you guys cracking the code well i think it's our experience i mean we've worked for major entertainment companies major technology companies major sports companies so um as i just use your word because it being i want to be humbled by this but we do have a great pedigree we've also brought great people to the table so having a platform isn't enough we've got great creators and uh we've got great storytellers so we've got the anisiasa brothers one mariano is is a illustrator and former special editor uh project center at marvel and his brother fabian is our storyteller who's the co-creator of deadpool so we've got great people and with unreal engine 5 we've really taken it from the ground up we've looked at it and and we've really combined it with new gpu cloud serving and pixel streaming so that you're so the individual that's that's involved engaged immersed is now really playing it without having to download a graphics package yeah and also you drop some names there and some and some brands i know there's a lot more at dinner we've talked a lot about them you you know all the top creators and again i love the creator culture i mean that's the new buzzwords around but ultimately it's artists people building stuff application developers in the software world movies and film art art and code is kind of coming together it's the same kind of thing media and coding it's like the same mindset you know creative exactly crazy good smart in a good way in the blockchain it's harder because you've got all this underlying infrastructure and stuff to provision and build often created say oh man it's like doing chores it's like i just want to build cool stuff i don't want to get in the weeds of all the tech right this is like whoever cracks the code can unleash that heavy lifting so the artist can like feel good about kicking ass well i'm i'm being a slot a little sly here because we've sort of broken it into three areas and we've used blockchain to book and the platform so we still think that that gaming in the interactive platform has to have centralization it has to have decision making we have a great community um between twitter and discord we have over 30 000 people and we have organizations that have already um spawned um themselves up or spun up to manage our landowner ownership and some of our guilds for some of our professions but at the same time they're allowing us to make decisions based on what the community wants i mean i've heard recently um i don't want to say it's a horror story but it's been difficult that consensus-based models for development have to get consensus and not everybody agrees you still need the leadership i mean you still need sort of a captain on a ship to make sure that the dictatorships are work and well and linux um tried that and they've worked for a while but when they moved over to we're going to make some decisions have an opinion right whether it's centralization it's faster yeah consensus systems can be diverse and time-consuming well they can be political as well i mean you can you can it can become problems so at the front end we've got digital identity and that's all blockchain based and at the back end we have over 20 services including dids and did com which is decentralized identifier communication and all our services are blockchain based but in the middle um connected to nft's blockchain and everything else and to our teacher identity we have a game or a game platform or a open world platform that is centralized built in unreal engine so that we can make those decisions that spur on individual development it's an architecture it is i mean this is essentially an operating environment exactly you can have the benefits of the decentralized all your data on your identity okay and then have the middle be the playground and built right now that has to get done faster and you're constantly iterating exactly so you need to have that exactly so what are people saying about this to me i think that makes a lot of sense people are very intrigued um we're getting a lot of traction first of all unreal engine in the middle um brands love it because it provides a realistic view of a brand brands have spent you know hundreds of millions of dollars building brand equity and they don't necessarily want a cartoon representation of their brand so brands love it um uh we showed a video here at the monaco crypto summit of some and our videos available online on youtube but we're showing realistic we can create realistic avatars so people are really excited about what we're doing you know david i think one of the things i've had controversy statements in the past that got all the purists going back to 2018 you know throwing tomatoes at me but other halfs like loving it because at that time there was dogma around block change got to be done you know it was slow and gas so why i can use a database now we use the blockchain for smart contracts right which you that's what you want to do you want to have that locked in you want immutability so again this opportunity is to advance faster and not have to get stuck in the dogma but maybe get it back to it later database is a great example i agreed i think i think over time the community will take over the entire platform but i think at the beginning you have to have again you have to have a rudder on a ship to make it go somewhere it's called product market fit exactly you got to get to the market exactly with a product you've got that i want that exactly i mean unreal engine is hard i know what are some of the people you worked with because i think i think what i like about what you're working on is that you are and i think a great poster child of in terms of the organization of a group of people that are pros that want to do great work in a new world with the kind of experience and tools that they had in their old world right faster cheaper better more control when we were there at web one we're there at web two and now with web three we have the ability to fix some of the things that we thought were wrong with web one and two so and move into the ownership economy and and really um for us we've got a great team of people you know around the world that we work with and we're starting to bring in larger organizations to support us i mean our digital identity we're really working with the backbone at ibm and digital identity is very different in blockchain than is crypto and we're working with great people in crypto now we announced today that we're minting our native token dubs with digital bits so we're really excited about that yeah yeah let me ask you a question because i love the fact that you brought multiple ways of innovation again i've mentioned on that with shared experience there different different ride for different waves what have you learned and shared to folks who are going to dip their toe and get on their surfboard so to speak use the california metaphor for both californians what is web3 wave like how's it different from two what's the learnings can you share scar tissue experience observation anything around what you're doing now so they can get insight into this wave well you know web 1 and web 2 were broken i mean you could never go in i think we had this discussion you could never go into an electronic store in the real world write your information down on a piece of paper and expect that you'd walk out of the store with the purchase but we can type in information that is non-verified until i could take my friend's credit card know where they live and use it by using digital identity at a front end we create one user one account that user can have thousands of verifiable credentials around them and hundreds of avatars so i think what we've really learned is the ability to progress in a way that that really puts data back in the hands of consumers and makes them the owner of their identity by starting there we have a world in front of us that is valuable to marketers valuable to brands and valuables to individuals and whether it's education whether it's government services whether it's retail everything can be built on that simple premise that i am myself it's interesting there's a constant technology we're called presence you know you're present at an event you're present at a store you're present and some reality physically and you have credentials around that presence contextually exactly you're saying you can have one nft one digital identity or identity and have multiple identities that have contacts all stored i'll store it in an avatar it's like changing your suit hey i'm going into the apple store i'm now my apple john and and think of it this way um brands can now connect with you and give you promos give you product based on the information that you're willing to share with them about your real person and your avatar becomes your intermediary so your payment information stored within your digital identity and your avatar not at the retail level so this is a concept we've been working on for a long time i think we're talking about dinner but i want to bring this up for you for you to come and get a reaction to is that if what you just said is true that means if i'm the user and i have power to control my data the script flips now i'm brokering my data to the brand exactly not the other way around exactly or some intermediary i'm in control exactly and i could demand based on what my contextual relevance is to the brand and the brand is willing to pay for that because if you think about it today um social media unfortunately is plagued by fake accounts you know and issues and and so brands are spending all this money and they're getting slippage and breakage and that's spent if they know your real person they're more likely to want to give you an incentive to engage with them because it's a one-to-one transaction that creates value that's a great point you mentioned twitter earlier look at elon musk uncovered all the bots on twitter um and if they ever did the facebook i'm sure there's a ton of different accounts on facebook but you know it's out there these walled gardens have nefarious bad actors man it's not truth isn't what's the truth i mean gaming has this right now it's like you're anonymous you can go down or you got to go real name so we've got a hybrid you can do anonymously verified so because we use biometrics to verify that you're a real person so you can stay anonymous but we know you're a real person because your biometrics belong to you well david great to have you on thecube you got a great insight and experience thanks for sharing thank you john uh what's next for you guys you want to put a plug in for what you're working on you're looking for people funding more action what are you guys doing right well we've we've self-funded to date and we're we're finally going to be releasing um opportunities for people to engage with us in tokenomics and that's why we've we're working with digital bits but we're also looking for great people and great partners we're creating an interoperable open um uh world where we want to bring partners to the table so anyone who's interested reach out to us all right david guys thanks for going on thecube all right more coverage here on thecube we're all over this area going back to 2018 we brought thecube to all the events been covered on siliconangle.com since 2010 and watching this wave just get better the reality is here it's a metaverse world it is a decentralized world happening to everyone monaco crypto summit here in monaco thanks for watching we'll be right back with more after this short break you

(upbeat sparkling music) >> Hello everyone and welcome back to our wall-to-wall coverage of AWS re:Invent. We are live from the show floor here in fabulous Las Vegas, Nevada. My name is Savannah Peterson, here with my cohost John Furrier on theCUBE. John, end of day three. You're smiling. >> Yeah. >> You're still radiating energy. Is it, is it the community that's keeping your, your level up? >> It's just all the action. We've got a great special guest joining us for the first time on theCUBE. It's going to be great and Serverless wave is hitting. More and more Serverless embedded into the like, things like analytics, are going to make things tightly integrated. You can see a lot more kind of tightly coupled but yet still cohesive elements together being kind of end-to-end, and again, the, the zero-ELT vision is soon to be here. That and security, major news here at Amazon. Of course, this next segment is going to be awesome, about the modernization journey. We're going to hear a lot about that. >> Yeah, we are, and our next guest is also an extraordinarily adventurous one. Please welcome Joe from Arc XP. Thank you so much for being here. >> Thanks for having me. >> Savannah: How this show going for you? >> It's been great and you know, it's the end of the day but there's so much great energy at the show this year. >> Savannah: There really is. >> It's great walking the halls, seeing the great engineers, the thought leaders, including this session. So, it's been really a stimulating time. >> What do you do at Arc, what do you, what's your role? >> So, I'm Vice President of Technology and Product Development. I recently joined Arc to lead all the product development teams. We're an experience platform, so, in that platform we have content tools, we have delivery tools, we have subscription tools. It's a really exciting time in all those spaces. >> John: And your customer base is? >> Our customers today started with publishers. So, Arc XP was built for the Washington Post's internal needs many years ago and word got out about how great it was, built on top of the AWS tech stack and other publishers came and started licensing the software. We've moved from there to B2C commerce as well as enterprise scenarios. >> I think that's really interesting and I want to touch on your background a little bit here. You just mentioned the Washington Post. You have a background in broadcast. What was it, since you, since you are fresh, what was it that attracted you to Arc? What made you say yes? >> Yeah, so I spent a little under 10 years building the Associated Press Broadcast Newsroom Tools, some of them that you have used for many years, and you know, one of the things that was really exciting about joining ARC, was they were cloud native and they were cloud native from the start and so that really gave them a leg up with how quickly they could innovate, and now we see developers here at re:Invent be able to do custom Lambdas and new extensibility points in a way that, really, no one else can do in the CMS space >> Which, which is very exciting. Let's talk a little bit about your team and the development cycle. We've touched a lot on the economic uncertainty right now. How are things internally? What's the culture pulse? >> Yeah, so the return to work has been a thing for us, just like- >> Savannah: Are you back in office? >> All of them. We actually have a globally distributed team, and so, if you happen to be lucky enough to be in Washington, DC or Chicago or some of our other centers, there's an opportunity to be in the office, but most of our engineers work remotely. One of the exciting things we did earlier this year was ARC week. We brought everyone to DC to see each other face-to-face, and that same energy you see at re:Invent, was there in person with our engineers. >> I believe that. So, I'm a marketer by trade. I love that you're all about the digital experience. Are you creating digital- I mean everyone needs some sort of digital experience. >> Joe: Yes. >> Every company is a technology company now. Do you work across verticals? You see more niche or industry specific? >> Yeah, so we began with a very large vertical of media and broadcast. >> Savannah: There's a couple companies in that category. >> There's a couple big ones out there. >> Savannah: Yeah, yeah, yeah. >> And actually their challenges are really high volume production of great digital storytelling, and so, solving their problems has enabled us to have a platform that works for anyone that needs to tell a story digitally, whether it's a commerce site, corporate HR department. >> Savannah: Which is everyone, right? >> Virtually everyone needs to get their story out today. >> Yeah. Yeah. >> And so we have gone to a bunch of other verticals and we've seen the benefits of having that strong, cloud-based platform offer the scale that all storytellers need. >> What are some of the challenges today that aren't, that weren't there a decade ago or even five years ago? We see a lot of media companies looking at the business model innovations, changing landscapes omnichannel distribution, different formats. What's some of the challenges that's going on in content? >> So, you know, content challenges include both production of content and delivery of that content through a great experience. So different parts of ARC focus on those problems and you got to monetize it as well, but what I'd say is unique to Arc and the challenge we talk to our customers about a lot is multi-format production. So, it's not just about one channel. >> Savannah: Right. It's about telling a story and having it go across multi-channels, multi-sites, and having the infrastructure both technically and in the workflow tools, is super critical for our customers and it is a challenge that we receive well. >> A lot of AI is coming into the conversation here. Data, AI, publishing, video, user generated content. It's all data. >> Absolutely, yep. >> It's all data. >> Joe: It's an immense amount of data. >> How do you look at the data plane or the data layer, the data aspect of the platform and what are some of the customers leaning into or are kicking the tires around? What are some of the trends, and what are some of the core issues you see? >> Yeah, so I've spent a lot of time in data ML and analytics looking at giant data sets, and you know, when you look at CMS systems and experience platforms, the first class that it's in, is really the, the documents themselves. What is the story you're saying? But where the rich data is that we can analyze is user behaviors, global distribution of content, how we optimize our CDN and really give a personal experience to the reader, but beyond that, we see a lot of advantages in our digital asset management platform, which is for video, audio, photos, all kinds of media formats, and applying AIML to do detection, suggest photos that might be appropriate based on what a journalist or a marketer is writing in their story. So, there's a lot of opportunities around that sort of data. >> What are some of the business model changes that you're seeing? 'Cause remember we're in digital, Page view advertising has gone down, subscription firewalls on blogs. You got things like Substack emerging. Journalists are kind of like changing. I've seen companies go out of business, some of the media companies or change, some of the small ones go out of business, the bigger ones are evolving. What are some of the business model enablements that you guys see coming, that a platform could deliver, so that a company can value their content, and their talent? >> For sure. I mean this is a perennial question in the media space, right? It's been going on for two decades. >> I was going to say we're- >> Right. >> So it's like- >> Joe: Right, and so we've seen that play out- >> John: Little softball for you. >> Really for almost every format. It's a softball, but- >> It's day three. >> How are we addressing that? You know what, first and foremost, you got to do great storytelling, so, we have tools for that, but then presenting that story, and a great experience no matter what device you're on, that's going to be critical no matter how you're monetizing it, and so, you know, we have customers that go very ad heavy. We also have a subscription platform that can do that built into our infrastructure. >> 50 million plus registered users, correct? >> Yeah, it's unbelievable to scale. Really, Arc is a growth story, and so we went from serving the Washington Post needs, to over 2000 sites today, across 25 countries. >> Very- >> How do we get to that? How do we get that audience if we want to? Can we join that network? Is it a network of people? >> I love that question. >> Of people that are using Arc XP? >> Yeah. >> Actually, we recently launched a new effort around our community, so I think they actually had a meeting yesterday, and so that's one way to get involved, but as you said, everyone needs to have a site and tell great stories. >> Yeah. >> So, we see a wide appeal for our platform, and what's unique about ARC, is it's truly a SaaS model. This is delivered via SaaS, where we take care of all of the services, over a hundred Amazon services, behind the scenes- >> Wow. >> Built into Arc. We manage all of that for our customers, including the CDN. So, it's not as though as our customers have to be making sure the site is up, we've got teams to take care of that 24/7 >> Great value proposition and a lot of need for this, people doing their own media systems themselves. What's the secret sauce to your success? If you had to kind of look at the technology? I see serverless is a big part of it on the EDB stack. What's the, what's the secret sauce? >> I think the secret sauce comes from the roots that Arc has in the Washington Post >> You understand it. >> And some of the most challenging content production workflows anywhere in the world, and I've spent a lot of time, in many newsrooms. So, I think that knowledge, the urgency of what it takes to get a story out, the zero tolerance for the site going down. That DNA really enables our engineers to do great solutions. >> Talk about understanding your user. I mean that that's, and drinking the Kool-Aid, but in a totally amazing way. One of the other things that stuck out to me in doing my research is not only are you a service used, now, by 50 million subscribers, but beyond that, you pride yourself on being a turnkey solution. Folks can get Arc up and running quite quickly. Correct? >> For sure. So, one of the things we built into Arc XP is something called Themes, which has a bunch of pre-built blocks, that our customers don't have to end up with a custom codebase when they've developed a new experience platform. That's not a good solution, of every site be a custom codebase. We're a product with extensibility hooks. >> Savannah: Right. >> That really enables someone to get started very quickly, and that also includes bringing in content from other platforms into Arc, itself. So that journey of migrating a site is really smooth with our toolset. >> What's the history of the company? Is it, did it come from the Washington Post or was that it's original customer? What's the DNA of the firm? >> Yeah, so it was originally built by the Washington Post for the Washington Post. So, designed by digital storytellers, for storytelling. >> Savannah: And one of the largest media outlets out there. >> So, that's that "DNA", the "special sauce". >> Yeah, yeah. >> So that's where that connection is. >> That really is where it comes through. >> John: Awesome. Congratulations on- >> Now today, you know, those roots are still apparent, but we've been very responsive to other needs in the markets around commerce. There's a whole other set of DNA we've brought in, experts in understanding different systems for inventory management, so we can do a great experience on top of some of those legacy platforms. >> My final question, before we go to the challenge- >> Savannah: To the challenge. >> Is, what's next? What's on the roadmap as you look at the technology and the teams that you're managing? What's some of the next milestone or priorities for your business? >> So, it is really about growth and that's the story of Arc XP, which has driven our technology decisions. So, our choice to go serverless was driven by growth and need to make sure we had exceptional experience but most importantly that our engineers could be focused on product development and responding to what the market needed. So, that's why I'd say next year is about, it's enabling our engineers to keep up with the scaling business but still provide great value on the roadmap. >> And it's not like there's ever going to be a shortage of content or stories that need to be told. So I suspect there's a lot of resilience in what you're doing. >> And we hope to be inspired with new ways of telling stories. >> Yeah. >> So if you're in the Washington Post or other media outlets. >> John: Or theCUBE. >> Joe: Or theCUBE. >> Savannah: I know, I was just- >> There's just great formats out there. >> Best dev meeting, let's chat after, for sure. >> Exactly, that's what I've been thinking the whole time. I'm sure the wheels are turning over on this side- >> So great to have you on. >> In a lot of different ways. So, we have a new tradition here at re:Invent, where we are providing you with an opportunity for quite a sizzle reel, Instagram video, 30 second, thought leadership soundbite. What is your hot take, key theme or most important thing that you are thinking about since we're here at this year's show? >> I would say it's the energy that's building in the industry, getting back together, the collaboration, and how that's resulting in us using new technologies. You know, the conversation's no longer about shifting to the cloud. We all have huge infrastructure, the conversation's about observability, how do we know what's going in? How do we make sure we're getting the most value for our customers with those, that technology set. So, I think the energy around that is super exciting. I've always loved building products. So, next year think it's going to be a great year with that, putting together these new technologies. >> I think you nailed it. The energy really is the story and the collaboration. Joe, thank you so much for being here and sharing your story. Arc is lucky to have you and we'll close with one personal anecdote. Favorite place to sail? >> Favorite place to sail. So, I lived in the Caribbean for many years, as we were talking about earlier >> None of us are jealous up here at all. >> And so my favorite place to sail would be in the British Virgin Islands, which was closed during Covid but is now back open, so, if any you've had a chance to go to the BVI, make some time, hop on Catamaran, there's some great spots. >> Well, I think you just gave us a catalyst for our next vacation, maybe a team off-site. >> Bucket list item, of course. >> Yeah, yeah. >> Yeah, Let's bring everyone together. >> Here we go. I love it. Well Joe, thanks so much again for being on the show. We hope to have you back on theCUBE again sometime soon, and thank all of you for tuning in to this scintillating coverage that we have here, live from the AWS re:Invent show floor in Las Vegas, Nevada with John Furrier. I'm Savannah Peterson. This is theCUBE, the leader in high tech coverage. (upbeat music)

>>Welcome back everyone to the cubes live coverage here in San Francisco for VMware Explorer. I'm John farer, Dave LAN two days of Wal three days of Wal Walker. Two sets live events got PERA, had Metabo, senior vice president and general manager of cloud management at VMware. I got it. Right. Thanks for coming on the queue. >>You got it right. Good to >>Be here. We're all smiles. Cause we were talking about your history. You once worked at loud cloud and we were reminiscent about how cloud was before cloud was even cloud. Exactly. And how, how hard it was. >>And >>It's still hard. Complexity is a big deal. And one of the segments we want to talk to you about is the announcement around aria and you see cloud manage a big part of this direction to multi-cloud yes. To tame the complexity. And you know, we were quoting Andy Grove on the cube, let chaos rain, and then rain in the chaos. Exactly. Okay. A very famous quote in tech and the theme here is cloud chaos. Yes. And so we're starting to see signs of raining in that chaos or solving complexity. And every major inflection point has this moment where yes, it gets so hard and then it kicks up to the right and grows and link gets solved. So we feel like we're in that moment. >>I couldn't agree more. And in fact, the way I say is our, our, our tagline is we make the complexity of managing cloud invisible so that you can focus on building your business apps. And you're right about the inflection point. Every time a new technology hits, you have some point of adoption and then it becomes insanely successful. And that's when the complexity hits, then you go and tame the complexity till the next technology hits. Right? That's what happens. It's happened with virtualization. Then it has happened with cloud then with containerization and now the next one will hit. And so with aria, we said, we have to fundamentally change the problem, right? We are constantly running a race of TAing, this complexity. So very excited about this announcement with which we're doing with aria. And we said, imagine if I could have a view of my environment and all the dependencies, I don't need to know everything, just the environment and its dependencies. Then I can now start solving problems and answering questions that I was unable to before. And newer technologies can keep coming and piling on, but I'll always be able to answer that, help >>Our audience understand Ari, a great name and, and what's new. Your Heka what's new from, you know, it's not just V V realize with a new name what's what's new specifically. >>Yeah. Please. No. >>Explain some people. Well, >>There's some commentary on snarky comments, but it's a product it's not a rebrand of something >>Else. It's right. It's not explain that. It's not a, yeah. So what we did is let, let me start off. Why, why we started aria? So we said, okay, native public managing environments, native public cloud environments and cloud native applications is a different ballgame, more Emeral workloads, very large scale, highly fragmented data. So we looked at that problem rounds up and said, we need to have a management solution that solves that problem focused on native public cloud and cloud native apps and the core to solving that problem was you can't just solve it for one cloud or you can't solve it for one discipline. When I say discipline, when you think about management, what do you manage? You're managing to optimize cost. You're managing to optimize performance. You're managing to optimize your security and you're managing to speed up the delivery. That is it. And so we said, we'll have a new look to this management. And what we have done with aria is we have introduced a brand new platform, which we call aria hub powered by aria graph, which allows you to deliver this man on this management challenges, by creating a map of your environment, a near real time map of your environment. And then we are able to, once we know what an application looks like and how it maps to the infrastructure, we can go and query other subsystems to tell you, what is the cost of an application? What is the performance of an application? Creating a common understanding >>This now it's a new architecture. >>I just wanted to get that out there. It's federated >>New graph database. >>Yes. It's a new architecture federated, a platform that not only gives you a map of your environment, but it federates into other sources to pull that data together. Right now, one of the data sources that it federates into is of course also we realize, yeah, yeah. Cloud health, >>You plug and >>Cloud observability. You plug everything into it. Yeah. And as part of the announcement, we didn't just announce a platform. We also announced a set of crosscutting solutions cuz we said, okay, what is the power of the platform? The big thing is it removes the swivel share management. It allows you to answer questions you couldn't answer before. And so >>Swivel share meaning going from one app to another one app logging in exactly >>Credentials in credentials. And you don't have a common understanding of app across those. So now you hire people who do integration buses, right? All kinds of cloud. So the three new end to end solutions we are announcing also in, along with the platform, these are brand new. One is something called aria guardrails. So when I have development environments today, for example, my, I do development on public cloud as well as private cloud. I have thousands of accounts, each one with its own security rules, each one with its own policies. After I initially deploy the account, it becomes a nightmare to manage that. So what aria guardrails allows you to do is set up these multi-cloud environments with the right policies. And not only is it about one time provisioning, but it is maintaining them on >>A run basis. And those credentials are also risk. Cuz you have a password on the dark web, that's exposed on one and you've got to change it. And, and there's so many things going on exactly on security, which brings me up to the point of, you know, we were talking, we're gonna see Tom later on security. We heard earlier, why wasn't security in the keynote? Oh, it's table stakes. That's what Z has said. But we're like, okay, I get that. So let's just say that security is table stakes. There's a big trend towards security as a state of something at a, at a given time. And that CSOs and CSOs are going to defensible. Yes. Meaning being defensible all the time. Yes. As an ongoing thing, which is not just running a pen test once a week. Yes. Like multiple testing, real testing. Not simulation. Yes. To be secure. Yes. So it's not about being secure. It's about having security, but defense ability is the action now not yeah. Yeah. >>Can >>You does that, how does that fit into this? Because this seems to like be in this wheelhouse of management. >>No, I think you're bringing a very important point, which is the security as a post. The fact item is no longer. Right? Right. You want to bake in security. This is a shift left of security that we talk about when you're building an application and you are deploying code in your test, you wanna say, Hey, what is the security? Is it secure? Is it meeting my guardrail? Then when you deploy it from an operations perspective, also it is a security concern. It's not just a security team's concern now. So is my configuration right? Is my configuration secure? Has, is it drifting? It's never a snapshot in time. It's constantly, you have to look at it. Is it drifting? And that is exactly what we are doing also with aria. So >>That's part of the solution you're talking about in the guardrails within being >>Able to maintain the secure configuration right now, as I said, there's always a security discipline. Yeah. Which is you are done by security teams, but you also want operations teams and development teams to enforce security in their respective practices. And that's what Ari allows you to do. >>So the question on multi-cloud comes in, okay. So this is all good. By the way, we love that shift left again, very developer. And I would argue actually we are argue on the cube. That dev ops is the development environment for cloud native. So the it operational once called ops is now in dev just saying he is, and then data ops and security ops are now the new it because that's where the hard problems are. So how do you look at the data side of it as well as security in your view of multi-cloud because you know, hybrid cloud, I can see the steady state between, you know, on premises and cloud, if it's operating cloudlike but now you're starting to look at spanning clouds. Yes. Yes. Not full spanning workloads. That's not there yet, but certainly people have multiple clouds. Yeah. But when you data seems to be the first thing spanning not necessarily the app itself, but how do you guys view that multi-cloud aspect of what you're managing? I mean, how you look at that? >>I think there are different angles to it. Right? You can look at it from the data angle and you look at it on how the, how protected a data is for us. When you look at management discipline, it is all from the perspective of configurations. Okay. If I have configured my environment correctly, then you should not be able to do something that destroys or the data. Right. So getting the configuration right. When you're developing that, getting the configuration right. When you're provisioning the app and then getting the configuration, right. Even when you're doing day two and ongoing operations, that is what we bring to the table. And to some extent, that aria visibility, that I was talking about an Ary graph, a near real time view of the configuration state and its dependencies is very critical. So now I can ask questions. Is there a misconfiguration, by the way, the answer is yes, they, yeah. >>That is a lot by the way, too, right? Yeah. >>Which, which exposes me. And then you can say, Hey, is there user activity associated with that misconfigured? Good object. Now suddenly you have go, go to a red alert. So not only something misconfigured, but there is user activity associated with the misconfigured data. You know, this is something that I have. This >>Is where AI sings beautifully because beautifully, once you have the configuration baseline done, yes. It's like securing the S3 bucket, which is like a knee has to be a like brushing your teeth. It's gotta be a habit. Exactly. It's like, you just don't even think about, you just don't leave an S3 bucket. >>It's gotta be simplified because you're, we're asking the devs now to be security pros, correct. Secure the run time, secure the paths, you know, secure the containers. And so they need help. This is not what they wake up in the morning passionate about. Right. >>But that is where the guardrails comes in. Totally. Yeah. So a a developer, why should they care? They should just say, look, I'm developing for the credit card industry. I need a PCI compliant environment. And then let us take care of defining that environment, deploying that environment, managing that environment on an ongoing basis, they should be building code. Yeah. Right. But there is a change also, which is in the past, these were like two different islands and two different views with aria graft. We also have created this unified API that a developer could query or an ops could query to create a common understanding of the environment. So you're not looking at, you know, the elephant won the trunk and the other one, the tail you're looking at it in a common way. >>Can you talk about the collaboration between tan zoo and aria portfolios? Because obviously the VMware customers are investing in tan zoo. A lot of stuff's coming outta the oven. We heard some Dave heard some stuff from Chris Wolf and he's gonna come on tomorrow. And Raghu was hinting at some other stuff. That's not yet public, but you know, this things happening, >>Things happening, lot of >>Things, you know, you know, announcements happened years ago last year. Now some fruit's coming off the tree, this is a hot product aria. It makes a lot of sense for the customers. Where's the cloud native stuff, kicking, connecting in. What's the give us the overview what's connection >>Is lots and lots of connections. So you have a beautiful Kubernetes environment and a cloud native platform. You have accelerated app development. Now you're building more apps, more microservices based apps, more fragmented data, more information. So think of aria as an envelope around all of this. So wherever you are, whether you are building an application, deploying an application, managing an application, retiring an application through that life cycle, we can bring that management. So what we are doing with Tansu is with the platform, develop and platform. Now we can hook in management with a common perspective earlier in the life cycle. I don't have to wait for it to go to production to start saying, is it secure? Is it configured? How is it performing? What is my cost trade off as a developer, I've decided to, to fix a latency issue, I'm gonna add a new region or I'm gonna scale out a particular tier. Do I know how much it'll cost me? Can I give you that right at your fingertips, potentially even within the development platform and within the ID, that's the power, right? So bringing Ary, >>Not a lot of heavy lifting on the develop. So it's pretty much almost like a query to a database or >>As simple API that they can just query as part of their development process. Yeah. So by bringing aria and Tansu and really aria en developing Tansu right. You're able to bring that power >>Developer. I just always smile because you, I remember we, we have a group called the cloud. AATI the early OG found cloud. >>AATI >>The early days of cloud. When we were talking about infrastructure as code yes. Way back when, and finally it's actually happening. So what you're describing is infrastructure's code because now there's more complexity happening under the hard and top and you know, service are being turned on and off automatically. Yes. And sometimes you might not even know what's going on. Exactly. If you have guard rail, >>But you have to discover the state, know something has turned on, understand the implication and then synthesize, synthesize it down to the insight for the user. >>You know, a lot of people have been complaining about other older companies. Like Splunks the world who have great logging technology for gen one cloud, but now these new logging logging becomes a problem. Can you talk about how you guys are handling that? Give confidence or yeah. Explain that there's everything's gonna be logged properly. Yeah. >>So, so really look, there are three disciplines that we have management. Discipl like, ultimately there are thousands of names, but it boils down to you're managing the cost. You're managing the security, you're managing the performance of your applications. That is it. Right. So what we found is when you think of these disciplines as siloed load solutions, you can't ask a simple question as what is my cost performance trade off. You can't ask a simple question as, Hey, I'm improving performance. How, what is the implication of security? And that's when you start building complex solutions that say, okay, let me collect log from here. Let me collect this from here. Then let me correlate and normalize an application definition and tell you something and then put it in a spreadsheet and put it in a spreadsheet finally for manual work. Exactly. So one of the pillars is about managing performance. >>We have very powerful capabilities today in our portfolio. Tansu observability, which is part of aria portfolio. We realize log, which is part of aria portfolio, networks, insights, and operations. So with the common, when you, when you have a common language, we have a common language. We understand each other. Similarly with Ary graph and aria hub, we have creating this common language. So once we create a common language, all the various observability and log solutions have a meaning. They have relevance. And so we are able to take the noise from all these systems and synthesize it down to what we call business insights. And that's what is one of the big announcement as part of aria, awesome take data, which we have lots of and convert it to information. >>Give us the bumper sticker on why VMware. >>Well, I I'll tell you, when you talk about various public clouds, each public cloud has their native solutions. I've got control tower, I've got cloud wash, cloud trail, different solutions, and some of the hyperscalers are also expanding their solutions to other cloud. I think VMware in a way, from a multi-cloud perspective, we are in a wonderfully neutral position. Not only do we have a wealth of technology and assets that we can bring to the game, but we can also do it evenly across all clouds. So, so look at something like cost. Do you trust one of the hyperscalers to tell you that what is the cost comparison between them and another hyperscaler? That is where the VMware value comes in? >>I think people just try to hear what the cost of one cloud. Exactly, exactly. That is often people make money doing that is a job. No, >>No, definitely. Even a single cloud. What is the cost? >>It's a cloud economist out there and we know who he is. Corey Corey, a friend of the cube. He does it for his living. So help people figure out their bill. Exactly. Just on one cloud. >>Exactly. It's one cloud. So being able, we have the unique position where, and the right sets of technologies and experiences to bring that solution to bear across multicloud. Right. Great. >>What's your vision real quick. One minute left. What's your vision for the group? What are you investing in? What's your goals? What are you trying to do? Ask you the products. New. Gonna roll that out. What's what's the plan. I >>Really, again, the biggest one, the, the, the tagline I talked about, right. I, I, I want to, you know, I'm telling customers, managing stuff is boring. Don't waste your time on it. Let us take care of it. Right? So make the cloud complexity invisible so that you can focus on building your applications and everything that we do in the business unit is targeted towards that one goal. It is not about doing more features, more capabilities. It's are you solving customers questions? And we start from question down, >>Be thank you for spending your valuable time here in the cube, explaining the new news. Appreciate it. All right. Get lunch. After the short breaks, stay more with the cube live here in San Francisco for VMware Explorer, 22. I'm John that's. Dave. >>Thank you.

>>Okay, welcome back everyone. There's the cubes coverage of VMware Explorer, 22 formerly world. We've been here since 2010 and world 2010 to now it's 2022. And it's VMware Explorer. We're here at the CEO, regular writer. Welcome back to the cube. Great to see you in person. >>Yeah. Great to be here in person, >>Dave and I are, are proud to say that we've been to 12 straight years of covering VMware's annual conference. And thank you. We've seen the change in the growth over time and you know, it's kind of, I won't say pinch me moment, but it's more of a moment of there's the VMware that's grown into the cloud after your famous deal with Andy jazzy in 2016, we've been watching what has been a real sea change and VMware since taking that legacy core business and straightening out the cloud strategy in 2016, and then since then an acceleration of, of cloud native, like direction under your leadership at VMware. Now you're the CEO take us through that because this is where we are right now. We are here at the pinnacle of VMware 2.0 or cloud native VMware, as you point out on your keynote, take us through that history real quick. Cuz I think it's important to know that you've been the architect of a lot of this change and it's it's working. >>Yeah, definitely. We are super excited because like I said, it's working, the history is pretty simple. I mean we tried running our own cloud cloud air. We cloud air didn't work so well. Right. And then at that time, customers really gave us strong feedback that the hybrid they wanted was a Amazon together. Right. And so that's what we went back and did and the andjay announcement, et cetera. And then subsequently as we were continue to build it out, I mean, once that happened, we were able to go work with the Satia and Microsoft and others to get the thing built out all over. Then the next question was okay, Hey, that's great for the workloads that are running on vSphere. What's the story for workloads that are gonna be cloud native and benefit a lot from being cloud native. So that's when we went the Tansu route and the Kubernetes route, we did a couple of acquisitions and then we started that started paying off now with the Tansu portfolio. And last but not the least is once customers have this distributed portfolio now, right. Increasingly everything is becoming multi-cloud. How do you manage and connect and secure. So that's what you start seeing that you saw the management announcement, networking and security and everything else is cooking. And you'll see more stuff there. >>Yeah know, we've been talking about super cloud. It's kinda like a multi-cloud on steroids kind a little bit different pivot of it. And we're seeing some use cases. >>No, no, it's, it's a very great, it's a, it's pretty close to what we talk about. >>Awesome. I mean, and we're seeing this kind of alignment in the industry. It's kind of open, but I have to ask you, when did you, you have the moment where you said multicloud is the game changer moment. When did you have, because you guys had hybrid, which is really early as well. When was the Raghu? When did you have the moment where you said, Hey, multicloud is what's happening. That's we're doubling down on that go. >>I mean, if you think about the evolution of the cloud players, right. Microsoft really started picking up around the 2018 timeframe. I mean, I'm talking about Azure, right? >>In a big way. >>Yeah. In a big way. Right. When that happened and then Google got really serious, it became pretty clear that this was gonna be looking more like the old database market than it looked like a single player cloud market. Right. Equally sticky, but very strong players all with lots of IP creation capability. So that's when we said, okay, from a supplier side, this is gonna become multi. And from a customer side that has always been their desire. Right. Which is, Hey, I don't want to get locked into anybody. I want to do multiple things. And the cloud vendors also started leveraging that OnPrem. Microsoft said, Hey, if you're a windows customer, your licensing is gonna be better off if you go to Azure. Right. Oracle did the same thing. So it just became very clear. >>I am, I have gone make you laugh. I always go back to the software mainframe because I, I think you were here. Right. I mean, you're, you're almost 20 years in. Yeah. And I, the reason I appreciate that is because, well, that's technically very challenging. How do you make virtualization overhead virtually non-existent how do you run any workload? Yeah. How do you recover from, I mean, that's was not trivial. Yeah. Okay. So what's the technical, you know, analog today, the real technical challenge. When you think about cross cloud services. >>Yeah. I mean, I think it's different for each of these layers, right? So as I was alluding to for management, I mean, you can go each one of them by themselves, there is one way of Mo doing multi-cloud, which is multiple clouds. Right. You could say, look, I'm gonna build a great product for AWS. And then I'm gonna build a great product for Azure. I'm gonna build a great product for Google. That's not what aria is. Aria is a true multi-cloud, which means it pulls data in from multiple places. Right? So there are two or three, there are three things that aria has done. That's I think is super interesting. One is they're not trying to take all the data and bring it in. They're trying to federate the data sources. And secondly, they're doing it in real time and they're able to construct this graph of a customer's cloud resources. >>Right. So to keep the graph constructed and pulling data, federating data, I think that's a very interesting concept. The second thing that, like I said is it's a real time because in the cloud, a container might come and go like that. Like that is a second technical challenge. The third it's not as much a technical challenge, but I really like what they have done for the interface they've used GraphQL. Right? So it's not about if you remember in the old world, people talk about single pan or glass, et cetera. No, this is nothing to do with pan or glass. This is a data model. That's a graph and a query language that's suited for that. So you can literally think of whatever you wanna write. You can write and express it in GraphQL and pull all sorts of management applications. You can say, Hey, I can look at cost. I can look at metrics. I can look at whatever it is. It's not five different types of applications. It's one, that's what I think had to do it at scale is the other problem. And, and >>The, the technical enable there is just it's good software. It's a protocol. It's >>No, no, it's, it's, it's it's software. It's a data model. And it's the Federation architecture that they've got, which is open. Right. You can pull in data from Datadog, just as well as from >>Pretty >>Much anything data from VR op we don't care. Right? >>Yeah. Yeah. So rego, I have to ask you, I'm glad you like the Supercloud cuz you know, we, we think multi-cloud still early, but coming fast. I mean, everyone has multiple clouds, but spanning this idea of spanning across has interesting sequences. Do you data, do you do computer both and a lot of good things happening. Kubernetes been containers, all that good stuff. Okay. How do you see the first rev of multi-cloud evolving? Like is it what happens? What's the sequence, what's the order of operations for a client standpoint? Customer standpoint of, of multicloud or Supercloud because we think we're seeing it as a refactoring of something like snowflake, they're a data base, they're a data warehouse on the cloud. They, they say data cloud they'd they like they'll tell us no, you, we're not a data. We're not a data warehouse. We're data cloud. Okay. You're a data warehouse refactored for the CapEx from Amazon and cooler, newer things. Yeah, yeah, yeah. That's a behavior change. Yeah. But it's still a data warehouse. Yeah. How do you see this multi-cloud environment? Refactoring? Is there something that you see that might be different? That's the same if you know what I'm saying? Like what's what, what's the ne the new thing that's happening with multi-cloud, that's different than just saying I'm I'm doing SAS on the cloud. >>Yeah. So I would say, I would point to a, a couple of things that are different. Firstly, my, the answer depends on which category you are in. Like the category that snowflake is in is very different than Kubernetes or >>Something or Mongo DB, right? >>Yeah. Or Mongo DB. So, so it is not appropriate to talk about one multi-cloud approach across data and compute and so, so on and so forth. So I'll talk about the spaces that we play. Right. So step one, for most customers is two application architectures, right? The cloud native architecture and an enterprise native architecture and tying that together either through data or through networks or through et cetera. So that's where most of the customers are. Right. And then I would say step two is to bring these things together in a more, in a closer fashion and that's where we are going. And that is why you saw the cloud universal announcement and that's already, you've seen the Tansu announcement, et cetera. So it's really, the step one was two distinct clouds. That is just two separate islands. >>So the other thing that we did, that's really what my, the other thing that I'd like to get to your reaction on, cause this is great. You're like a masterclass in the cube here. Yeah, totally is. We see customers becoming super clouds because they're getting the benefit of, of VMware, AWS. And so if I'm like a media company or insurance company, if I have scale, if I continue to invest in, in cloud native development, I do all these things. I'm gonna have a da data scale advantage, possibly agile, which means I can build apps and functionality very quick for customers. I might become my own cloud within the vertical. Exactly. And so I could then service other people in the insurance vertical if I'm the insurance company with my technology and create a separate power curve that never existed before. Cause the CapEx is off the table, it's operating expense. Yep. That runs into the income statement. Yep. This is a fundamental business model shift and an advantage of this kind of scenario. >>And that's why I don't think snowflakes, >>What's your reaction to that? Cuz that's something that, that is not really, talk's highly nuanced and situational. But if Goldman Sachs builds the biggest cloud on the planet for financial service for their own benefit, why wouldn't they >>Exactly. >>And they're >>Gonna build it. They sort of hinted at it that when they were up on stage on AWS, right. That is just their first big step. I'm pretty sure over time they would be using other clouds. Think >>They already are on >>Prem. Yeah. On prem. Exactly. They're using VMware technology there. Right? I mean think about it, AWS. I don't know how many billions of dollars they're spending on AWS R and D Microsoft is doing the same thing. Google's doing the same thing we are doing. Not as much as them that you're doing oral chair. Yeah. If you are a CIO, you would be insane not to take advantage of all of this IP that's getting created and say, look, I'm just gonna bet on one. Doesn't make any sense. Right. So that's what you're seeing. And then >>I think >>The really smart companies, like you talked about would say, look, I will do something for my industry that uses these underlying clouds as the substrate, but encapsulates my IP and my operating model that I then offer to other >>Partners. Yeah. And their incentive for differentiation is scale. Yeah. And capability. And that's a super cloud. That's a, or would be say it environment. >>Yeah. But this is why this, >>It seems like the same >>Game, but >>This, I mean, I think it environment is different than >>Well, I mean it advantage to help the business, the old day service, you >>Said snowflake guys out the marketing guys. So you, >>You said snowflake data warehouse. See, I don't think it's in data warehouse. It's not, that's like saying, you >>Know, I, over >>VMware is a virtualization company or service now is a help desk tool. I, this is the change. Yes. That's occurring. Yes. And that you're enabling. So take the Goldman Sachs example. They're gonna run OnPrem. They're gonna use your infrastructure to do selfer. They're gonna build on AWS CapEx. They're gonna go across clouds and they're gonna need some multi-cloud services. And that's your opportunity. >>Exactly. That's that's really, when you, in the keynote, I talked about cloud universal. Right? So think of a future where we can go to a customer and say, Mr. Customer buy thousand scores, a hundred thousand cores, whatever capacity you can use it, any which way you want on any application platform. Right. And it could be OnPrem. It could be in the cloud, in the cloud of their choice in multiple clouds. And this thing can be fungible and they can tie it to the right services. If they like SageMaker they could tie it to Sage or Aurora. They could tie it to Aurora, cetera, et cetera. So I think that's really the foundation that we are setting. Well, I think, I >>Mean, you're building a cloud across clouds. I mean, that's the way I look at it. And, and that's why it's, to me, the, the DPU announcement, the project Monterey coming to fruition is so important. Yeah. Because if you don't have that, if you're not on that new Silicon curve yep. You're gonna be left behind. Oh, >>Absolutely. It allows us to build things that you would not otherwise be able to do, >>Not to pat ourselves on the back Ragu. But we, in what, 2013 day we said, feel >>Free. >>We, we said with Lou Tucker when OpenStack was crashing. Yeah. Yeah. And then Kubernetes was just a paper. We said, this could be the interoperability layer. Yeah. You got it. And you could have inter clouding cuz there was no clouding. I was gonna riff on inter networking. But if you remember inter networking during the OSI model, TCP and IP were hardened after the physical data link layer was taken care of. So that enabled an entire new industry that was open, open interconnect. Right. So we were saying inter clouding. So what you're kind of getting at with cross cloud is you're kind of creating this routing model if you will. Not necessarily routing, but like connection inter clouding, we called it. I think it's kinda a terrible name. >>What you said about Kubernetes is super critical. It is turning out to be the infrastructure API so long. It has been an infrastructure API for a certain cluster. Right. But if you think about what we said about VSE eight with VSE eight Kubernetes becomes the data center API. Now we sort of glossed over the point of the keynote, but you could do operations storage, anything that you can do on vSphere, you can do using a Kubernetes API. Yeah. And of course you can do all the containers in the Kubernetes clusters and et cetera, is what you could always do. Now you could do that on a VMware environment. OnPrem, you could do that on EKS. Now Kubernetes has become the standard programming model for infrastructure across. It >>Was the great equalizer. Yeah. You, we used to say Amazon turned the data center through an API. It turns, turns of like a lot of APIs and a lot of complexity. Right. And Kubernetes changed. >>Well, the role, the role of defacto standards played a lot into the T C P I P revolution before it became a standard standard. What the question Raghu, as you look at, we had submit on earlier, we had tutorial on as well. What's the disruptive enabler from a defacto. What in your mind, what should, because Kubernetes became kind of defacto, even though it was in the CNCF and in an open source open, it wasn't really standard standard. There's no like standards, body, but what de facto thing has to happen in your mind's eye around making inter clouding or connecting clouds in a, in a way that's gonna create extensibility and growth. What do you see as a de facto thing that the industry should rally around? Obviously Kubernetes is one, is there something else that you see that's important for in an open way that the industry can discuss and, and get behind? >>Yeah. I mean, there are things like identity, right? Which are pretty critical. There is connectivity and networking. So these are all things that the industry can rally around. Right. And that goes along with any modern application infrastructure. So I would say those are the building blocks that need to happen on the data side. Of course there are so many choices as well. So >>How about, you know, security? I think about, you know, when after stuck net, the, the whole industry said, Hey, we have to do a better job of collaborating. And then when you said identity, it just sort of struck me. But then a lot of people tried to sort of monetize private reporting and things like that. So you do you see a movement within the technology industry to do a better job of collaborating to, to solve the acute, you know, security problems? >>Yeah. I think the customer pressure and government pressure right. Causes that way. Yeah. Even now, even in our current universe, you see, there is a lot of behind the scenes collaboration amongst the security teams of all of the tech companies that is not widely seen or known. Right. For example, my CISO knows the AWS CSO or the Microsoft CSO and they all talk and they share the right information about vulnerability attacks and so on and so forth. So there's already a certain amount of collaboration that's happening and that'll only increase. Do, >>Do you, you know, I was somewhat surprised. I didn't hear more in your face about security would, is that just because you had such a strong multi-cloud message that you wanted to get, get across, cuz your security story is very strong and deep. When you get into the DPU side of things, the, you know, the separation of resources and the encryption and I'll end to end >>I'm well, we have a phenomenal security story. Yeah. Yeah. Tell security story and yes. I mean I'll need guilty to the fact that in the keynote you have yeah, yeah, sure time. But what we are doing with NSX and you will hear about some NSX projects as you, if you have time to go to some of the, the sessions. Yeah. There's one called project, not star. Another is called project Watchman or watch, I think it's called, we're all dealing with this. That is gonna strengthen the security story even more. Yeah. >>We think security and data is gonna be a big part of it. Right. As CEO, I have to ask you now that you're the CEO, first of all, I'd love to talk about product with you cuz you're yeah. Yeah. We just great conversation. We want to kind of read thet leaves and ask pointed questions cuz we're putting the puzzle together in real time here with the audience. But as CEO, now you have a lot of discussions around the business. You, the Broadcom thing happening, you got the rename here, you got multi-cloud all good stuff happening. Dave and I were chatting before we came on this morning around the marketplace, around financial valuations and EBIDA numbers. When you have so much strategic Goodwill and investment in the oven right now with the, with the investments in cloud native multi-year investments on a trajectory, you got economies of scale there. >>It's just now coming out to be harvest and more behind it. Yeah. As you come into the Broadcom and or the new world wave that's coming, how do you talk about that value? Cuz you can't really put a number on it yet because there's no customers on it. I mean some customers, but you can't probably some for form. It's not like sales numbers. Yeah. Yeah. How do you make the argument to the PE type folks out there? Like EBIDA and then all the strategic value. What's the, what's the conversation like if you can share any, I know it's obviously public company, all the things going down, but like how do you talk about strategic value to numbers folks? >>Yeah. I mean, we are not talking to PE guys at all. Right. I mean the only conversation we have is helping Broadcom with >>Yeah. But, but number people who are looking at the number, EBIDA kind of, >>Yeah. I mean, you'd be surprised if, for, for example, even with Broadcom, they look at the business holistically as what are the prospects of this business becoming a franchise that is durable and could drive a lot of value. Right. So that's how they look at it holistically. It's not a number driven. >>They do. They look at that. >>Yeah. Yeah, absolutely. So I think it's a misperception to say, Hey, it's a numbers driven conversation. It's a business driven conversation where, I mean, and Hawk's been public about it. He says, look, I look at businesses. Can they be leaders in their market? Yeah. Because leaders get, as we all know a disproportionate share of the economic value, is it a durable franchise that's gonna last 10 years or more, right. Obviously with technology changes in between, but 10 years or more >>Or 10, you got your internal, VMware talent customers and >>Partners. Yeah. Significant competitive advantage. So that's, that's really where the conversation starts and the numbers fall out of it. Got it. >>Okay. So I think >>There's a track record too. >>That culture >>That VMware has, you've always had an engineering culture. That's turned, you know, ideas and problems into products that, that have been very successful. >>Well, they had different engineering cultures. They're chips. You guys are software. Right. You guys know >>Software. Yeah. Mean they've been very successful with Broadcom, the standalone networking company since they took it over. Right. I mean, it's, there's a lot of amazing innovation going on there. >>Yeah. Not, not that I'm smiling. I want to kind of poke at this question question. I'll see if I get an answer out of you, when you talk to Hawk tan, does he feel like he bought a lot more than he thought or does he, did he, does he know it's all here? So >>The last two months, I mean, they've been going through a very deliberate process of digging into each business and certainly feels like he got a phenomenal asset base. Yeah. He said that to me even today after the keynote, right. Is the amazing amount of product capability that he's seeing in every one of our businesses. And that's been the constant frame. >>But congratulations on that. >>I've heard, I've heard Hawk talk about the shift to, to Mer merchant Silicon. Yeah. From custom Silicon. But I wanted to ask you when you look at things like AWS nitro yeah. And graviton and train and the advantage that AWS has with custom Silicon, you see Google and Microsoft sort of Alibaba following suit. Would it benefit you to have custom Silicon for, for DPU? I mean, I guess you, you know, to have a tighter integration or do you feel like with the relationships that you have that doesn't buy you anything? >>Yeah. I mean we have pretty strong relationships with in fact fantastic relationships with the Invidia and Intel and AMD >>Benon and AMD now. >>Yeah. Yeah. I mean, we've been working with the Pendo team in their previous incarnations for years. Right, right. When they were at Cisco and then same thing with the, we know the Melanox team as well as the invi original teams and Intel is the collaboration right. From the get go of the company. So we don't feel a need for any of that. We think, I mean, it's clear for those cloud folks, right. They're going towards a vertical integration model and select portions of their stack, like you talked about, but there is always a room for horizontal integration model. Right. And that's what we are a part of. Right. So there'll be a number of DPU pro vendors. There'll be a number of CPU vendors. There'll be a number of other storage, et cetera, et cetera. And we think that is goodness in an alternative model compared to a vertically integr >>And yeah. What this trade offs, right. It's not one or the other, I mean I used to tell, talk to Al Shugar about this all the time. Right. I mean, if vertically integrated, there may be some cost advantages, but then you've got flexibility advantages. If you're using, you know, what the industry is building. Right. And those are the tradeoffs, so yeah. Yeah. >>Greg, what are you excited about right now? You got a lot going on obviously great event. Branding's good. Love the graphics. I was kind of nervous about the name changed. I likem world, but you know, that's, I'm kind of like it >>Doesn't readily roll off your phone. Yeah. >>I know. We, I had everyone miscue this morning already and said VMware Explorer. So >>You pay Laura fine. Yeah. >>Now, I >>Mean a quarter >>Curse jar, whatever I did wrong. I don't believe it. Only small mistake that's because the thing wasn't on. Okay. Anyway, what's on your plate. What's your, what's some of the milestones. Do you share for your employees, your customers and your partners out there that are watching that might wanna know what's next in the whole Broadcom VMware situation. Is there a timeline? Can you talk publicly about what? To what people can expect? >>Yeah, no, we, we talk all the time in the company about that. Right? Because even if there is no news, you need to talk about what is where we are. Right. Because this is such a big transaction and employees need to know where we are at every minute of the day. Right? Yeah. So, so we definitely talk about that. We definitely talk about that with customers too. And where we are is that the, all the processes are on track, right? There is a regulatory track going on. And like I alluded to a few minutes ago, Broadcom is doing what they call the discovery phase of the integration planning, where they learn about the business. And then once that is done, they'll figure out what the operating model is. What Broadcom is said publicly is that the acquisition will close in their fiscal 23, which starts in November of this year, runs through October of next year. >>So >>Anywhere window, okay. As to where it is in that window. >>All right, Raghu, thank you so much for taking valuable time out of your conference time here for the queue. I really appreciate Dave and I both appreciate your friendship. Congratulations on the success as CEO, cuz we've been following your trials and tribulations and endeavors for many years and it's been great to chat with you. >>Yeah. Yeah. It's been great to chat with you, not just today, but yeah. Over a period of time and you guys do great work with this, so >>Yeah. And you guys making, making all the right calls at VMware. All right. More coverage. I'm shot. Dave ante cube coverage day one of three days of world war cup here in Moscone west, the cube coverage of VMware Explorer, 22 be right back.

(upbeat electronic music) >> Narrator: From theCUBE studios in Palo Alto and Boston, connecting with thought leaders all around the world, this is a CUBE conversation. >> Okay, hello everyone. I'm John Furrier with theCUBE. We're here with Meet the Analysts segment Sunday morning. We've got everyone around the world here to discuss a bit of the news around the EU killing the privacy deal, striking it down, among other topics around, you know, data privacy and global commerce. We got great guests here, Ray Wang, CEO of Constellation Research. Bill Mew, founder and CEO of Cyber Crisis Management from the Firm Crisis Team. And JD, CEO of Spearhead Management. JD, I can let you say your name because I really can't pronounce it. How do I (laughs) pronounce it, doctor? >> I wouldn't even try it unless you are Dutch, otherwise it will seriously hurt your throat. (Ray laughing) So, JD works perfect for me. >> Doctor Drooghaag. >> And Sarbjeet Johal, who's obviously an influencer, a cloud awesome native expert. Great, guys. Great to have you on, appreciate it, thanks for comin' on. And Bill, thank you for initiating this, I appreciate all your tweets. >> Happy Sunday. (Bill laughing) >> You guys have been really tweeting up a storm, I want to get everyone together, kind of as an analyst, Meet the Analyst segment. Let's go through with it. The news is the EU and U.S. Privacy Shield for data struck down by the court, that's the BBC headline. Variety of news, different perspectives, you've got an American perspective and you've got an international perspective. Bill, we'll start with you. What does this news mean? I mean, basically half the people in the world probably don't know what the Privacy Shield means, so why is this ruling so important, and why should it be discussed? >> Well, thanks to sharing between Europe and America, it's based on a two-way promise that when data goes from Europe to America, the Americans promise to respect our privacy, and when data goes form America to Europe, the Europeans promise to respect the American privacy. Unfortunately, there are big cultural differences between the two blocks. The Europeans have a massive orientation around privacy as a human right. And in the U.S., there's somewhat more of a prioritization on national security, and therefore for some time there's been a mismatch here, and it could be argued that the Americans haven't been living up to their promise because they've had various different laws, and look how much talk about FISA and the Cloud Act that actually contravene European privacy and are incompatible with the promise Americans have given. That promise, first of all, was in the form of a treaty called Safe Harbor. This went to court and was struck down. It was replaced by Privacy Shield, which was pretty much the same thing really, and that has recently been to the court as well, and that has been struck down. There now is no other means of legally sharing data between Europe and America other than what are being called standard contractual clauses. This isn't a broad treaty between two nations, these are drawn by each individual country. But also in the ruling, they said that standard contractual clauses could not be used by any companies that were subject to mass surveillance. And actually in the U.S., the FISA courts enforce a level of mass surveillance through all of the major IT firms, of all major U.S. telcos, cloud firms, or indeed, social media firms. So, this means that for all of the companies out there and their clients, business should be carrying on as usual apart from if you're one of those major U.S. IT firms, or one of their clients. >> So, why did this come about? Was there like a major incident? Why now, was it in the court, stuck in the courts? Were people bitchin' and moanin' about it? Why did this go down, what's the real issue? >> For those of us who have been following this attentively, things have been getting more and more precarious for a number of years now. We've had a situation where there are different measures being taken in the U.S., that have continued to erode the different protections that there were for Europeans. FISA is an example that I've given, and that is the sort of secret courts and secret warrants that are issued to seize data without anyone's knowledge. There's the Cloud Act, which is a sort of extrajudicial law that means that warrants can be served in America to U.S. organizations, and they have to hand over data wherever that data resides, anywhere in the world. So, data could exist on a European server, if it was under the control of an American company, they'd have to hand that over. So, whilst FISA is in direct conflict with the promises that the Americans made, things like the Cloud Act are not only in controversion with the promise they've made, there's conflicting law here, because if you're a U.S. subsidiary of a big U.S. firm, and you're based in Europe, who do you obey, the European law that says you can't hand it over because of GDPR, or the American laws that says they've got extrajudicial control, and that you've got to hand it over. So, it's made things a complete mess. And to say has this stuff, hasn't really happened? No, there's been a gradual erosion, and this has been going through the courts for a number of years. And many of us have seen it coming, and now it just hit us. >> So, if I get you right in what you're saying, it's basically all this mishmash of different laws, and there's no coherency, and consistency, is that the core issue? >> On the European side you could argue there's quite a lot of consistency, because we uphold people's privacy, in theory. But there have been incidents which we could talk about with that, but in theory, we hold your rights dear, and also the rights of Europeans, so everyone's data should be safe here from the sort of mass surveillance we're seeing. In the U.S., there's more of a direct conflict between everything, including there's been a, in his first week in the White House, Donald Trump signed an executive order saying that the Privacy Act in the U.S., which had been the main protection for people in the U.S., no longer applied to non-U.S. citizens. Which was, if you wanted try and cause a storm, and if you wanted to try and undermine the treaty, there's no better way of doing it than that. >> A lot of ways, Ray, I mean simplify this for me, because I'm a startup, I'm hustlin', or I'm a big company, I don't even know who runs the servers anymore, and I've got data stored in multiple clouds, I got in regions, and Oracle just announced more regions, you got Amazon, a gazillion regions, I could be on-premise. I mean bottom line, what is this about? I mean, and -- >> Bill's right, I mean when Max Schrems, the Austrian. Bill's right, when Max Schrems the Austrian activist actually filed his case against Facebook for where data was being stored, data residency wasn't as popular. And you know, what it means for companies that are in the cloud is that you have to make sure your data's being stored in the region, and following those specific region rules, you can't skirt those rules anymore. And I think the cloud companies know that this has been coming for some time, and that's why there's been announced in a lot of regions, a lot of areas that are actually happening, so I think that's the important part. But going back to Bill's earlier point, which is important, is America is basically the Canary Islands of privacy, right? Privacy is there, but it isn't there in a very, very explicit sense, and I think we've been skirting the rules for quite some time, because a lot of our economy depends on that data, and the marketing of the data. And so we often confuse privacy with consent, and also with value exchange, and I think that's part of the problem of what's going on here. Companies that have been building their business models on free data, free private data, free personally identifiable data information are the ones that are at risk! And I think that's what's going on here. >> It's the classic Facebook issue, you're the product, and the data is your product. Well, I want to get into what this means, 'cause my personal take away, not knowing the specifics, and just following say, cyber security for instance, one of the tenets there is that data sharing is an invaluable, important ethos in the community. Now, everyone has their own privacy, or security data, they don't want to let everyone know about their exploits but, but it's well known in the security world that sharing data with each other, different companies and countries is actually a good thing. So, the question that comes in my mind, is this really about data sharing or data privacy, or both? >> I think it's about both. And actually what the ruling is saying here is, all we're asking from the European side is please stop spying on us and please give us a level of equal protection that you give to your own citizens. Because data comes from America to Europe, whatever that data belongs to, a U.S. citizen or a European citizen, it's given equal protection. It is only if data goes in the other direction, where you have secret courts, secret warrants, seizure of data on this massive scale, and also a level of lack of equivalence that has been imposed. And we're just asking that once you've sorted out a few of those things, we'd say everything's back on the table, away we go again! >> Why don't we merge the EU with the United States? Wouldn't that solve the problem? (Bill laughing) >> We just left Europe! (laughs heartily) >> Actually I always -- >> A hostile takeover of the UK maybe, the 52nd state. (Bill laughing loudly) >> I always pick on Bill, like Bill, you got all screaming loud and clear about all these concerns, but UKs trying to get out of that economic union. It is a union at the end of the day, and I think the problem is the institutional mismatch between the EU and U.S., U.S. is old democracy, bigger country, population wise, bigger economy. Whereas Europe is several countries trying to put together, band together as one entity, and the institutions are new, like you know, they're 15 years old, right? They're maturing. I think that's where the big mismatch is and -- >> Well, Ray, I want to get your thoughts on this, Ray wrote a book, I forget what year it was, this digital disruption, basically it was digital transformation before it was actually a trend. I mean to me it's like, do you do the process first and then figure out where the value extraction is, and this may be a Silicon Valley or an American thing, but go create value, then figure out how to create process or understand regulations. So, if data and entrepreneurship is going to be a new modern era of value, why wouldn't we want to create a rule based system that's open and enabling, and not restrictive? >> So, that's a great point, right? And the innovation culture means you go do it first, and you figure out the rules later, and that's been a very American way of getting things done, and very Silicon Valley in our perspective, not everyone, but I think in general that's kind of the trend. I think the challenge here is that we are trading privacy for security, privacy for convenience, privacy for personalization, right? And on the security level, it's a very different conversation than what it is on the consumer end, you know, personalization side. On the security side I think most Americans are okay with a little bit of "spying," at least on your own side, you know, to keep the country safe. We're not okay with a China level type of spying, which we're not sure exactly what that means or what's enforceable in the courts. We look like China to the Europeans in the way we treat privacy, and I think that's the perspective we need to understand because Europeans are very explicit about how privacy is being protected. And so this really comes back to a point where we actually have to get to a consent model on privacy, as to knowing what data is being shared, you have the right to say no, and when you have the right to say no. And then if you have a value exchange on that data, then it's really like sometimes it's monetary, sometimes it's non-monetary, sometimes there's other areas around consensus where you can actually put that into place. And I think that's what's missing at this point, saying, you know, "Do we pay for your data? Do we explicitly get your consent first before we use it?" And we haven't had that in place, and I think that's where we're headed towards. And you know sometimes we actually say privacy should be a human right, it is in the UN Charter, but we haven't figured out how to enforce it or talk about it in the digital age. And so I think that's the challenge. >> Okay, people, until they lose it, they don't really understand what it means. I mean, look at Americans. I have to say that we're idiots on this front, (Bill chuckling) but you know, the thing is most people don't even understand how much value's getting sucked out of their digital exhaust. Like, our kids, TikTok and whatnot. So I mean, I get that, I think there's some, there's going to be blow back for America for sure. I just worry it's going to increase the cost of doing business, and take away from the innovation for citizen value, the people, because at the end of the day, it's for the people right? I mean, at the end of the day it's like, what's my privacy mean if I lose value? >> Even before we start talking about the value of the data and the innovation that we can do through data use, you have to understand the European perspective here. For the European there's a level of double standards and an erosion of trust. There's double standards in the fact that in California you have new privacy regulations that are slightly different to GDPR, but they're very much GDPR like. And if the boot was on the other foot, to say if we were spying on Californians and looking at their personal data, and contravening CCPA, the Californians would be up in arms! Likewise if we having promised to have a level of equality, had enacted a local rule in Europe that said that when data from America's over here, actually the privacy of Americans counts for nothing, we're only going to prioritize the privacy of Europeans. Again, the Americans would be up in arms! And therefore you can see that there are real double standards here that are a massive issue, and until those addressed, we're not going to trust the Americans. And likewise, the very fact that on a number of occasions Americans have signed up to treaties and promised to protect our data as they did with Safe Harbor, as they did with Privacy Shield, and then have blatantly, blatantly failed to do so means that actually to get back to even a level playing field, where we were, you have a great deal of trust to overcome! And the thing from the perspective of the big IT firms, they've seen this coming for a long time, as Ray was saying, and they sought to try and have a presence in Europe and other things. But the way this ruling has gone is that, I'm sorry, that isn't going to be sufficient! These big IT firms based in the U.S. that have been happy to hand over data, well some of them maybe more happy than others, but they all need to hand over data to the NSA or the CIA. They've been doing this for some time now without actually respecting this data privacy agreement that has existed between the two trading blocks. And now they've been called out, and the position now is that the U.S. is no longer trusted, and neither are any of these large American technology firms. And until the snooping stops and equality is introduced, they can now no longer, even from their European operations, they can no longer use standard contractual clauses to transfer data, which is going to be a massive restriction on their business. And if they had any sense, they'd be lobbying very, very hard right now to the Senate, to the House, to try and persuade U.S. lawmakers actually to stick to some these treaties! To stop introducing really mad laws that ride roughshod over other people's privacy, and have a certain amount of respect. >> Let's let JD weigh in, 'cause he just got in, sorry on the video, I made him back on a host 'cause he dropped off. Just, Bill, real quick, I mean I think it's like when, you know, I go to Europe there's the line for Americans, there's the line for EU. Or EU and everybody else. I mean we might be there, but ultimately this has to be solved. So, JD, I want to let you weigh in, Germany has been at the beginning forefront of privacy, and they've been hardcore, and how's this all playing out in your perspective? >> Well, the first thing that we have to understand is that in Germany, there is a very strong law for regulation. Germans panic as soon as they know regulation, so they need to understand what am I allowed to do, and what am I not allowed to do. And they expect the same from the others. For the record I'm not German, but I live in Germany for some 20 years, so I got a bit of a feeling for them. And that sense of need for regulation has spread very fast throughout the European Union, because most of the European member states of the European Union consider this, that it makes sense, and then we found that Britain had already a very good framework for privacy, so GDPR itself is very largely based on what the United Kingdom already had in place with their privacy act. Moving forward, we try to find agreement and consensus with other countries, especially the United States because that's where most of the tech providers are, only to find out, and that is where it started to go really, really bad, 2014, when the mass production by Edward Snowden came out, to find out it's not data from citizens, it's surveillance programs which include companies. I joined a purchasing conference a few weeks ago where the purchase of a large European multinational, where the purchasing director explicitly stated that usage of U.S. based tech providers for sensitive data is prohibited as a result of them finding out that they have been under surveillance. So, it's not just the citizens, there's mass -- >> There you have it, guys! We did trust you! We did have agreements there that you could have abided by, but you chose not to, you chose to abuse our trust! And you're now in a position where you are no longer trusted, and unless you can lobby your own elected representatives to actually recreate a level playing field, we're not going to continue trusting you. >> So, I think really I -- >> Well I mean that, you know, innovation has to come from somewhere, and you know, has to come from America if that's the case, you guys have to get on board, right? Is that what it -- >> Innovation without trust? >> Is that the perspective? >> I don't think it's a country thing, I mean like, it's not you or them, I think everybody -- >> I'm just bustin' Bill's chops there. >> No, but I think everybody, everybody is looking for what the privacy rules are, and that's important. And you can have that innovation with consent, and I think that's really where we're going to get to. And this is why I keep pushing that issue. I mean, privacy should be a fundamental right, and how you get paid for that privacy is interesting, or how you get compensated for that privacy if you know what the explicit value exchange is. What you're talking about here is the surveillance that's going on by companies, which shouldn't be happening, right? That shouldn't be happening at the company level. At the government level I can understand that that is happening, and I think those are treaties that the governments have to agree upon as to how much they're going to impinge on our personal privacy for the trade off for security, and I don't think they've had those discussions either. Or they decided and didn't tell any of their citizens, and I think that's probably more likely the case. >> I mean, I think what's happening here, Bill, you guys were pointing out, and Ray, you articulated there on the other side, and my kind of colorful joke aside, is that we're living a first generation modern sociology problem. I mean, this is a policy challenge that extends across multiple industries, cyber security, citizen's rights, geopolitical. I mean when would look, and even when we were doing CUBE events overseas in Europe, in North American companies we'd call it abroad, we'd just recycle the American program, and we found there's so much localization value. So, Ray, this is the digital disruption, it's the virtualization of physical for digital worlds, and it's a lot of network theory, which is computer science, a lot of sociology. This is a modern challenge, and I don't think it so much has a silver bullet, it's just that we need smart people working on this. That's my take away! >> I think we can describe the ideal endpoint being somewhere we have meaningful protection alongside the maximization of economic and social value through innovation. So, that should be what we would all agree would be the ideal endpoint. But we need both, we need meaningful protection, and we need the maximization of economic and social value through innovation! >> Can I add another axis? Another axis, security as well. >> Well, I could -- >> I put meaningful protection as becoming both security and privacy. >> Well, I'll speak for the American perspective here, and I won't speak, 'cause I'm not the President of the United States, but I will say as someone who's been from Silicon Valley and the east coast as a technical person, not a political person, our lawmakers are idiots when it comes to tech, just generally. (Ray laughing) They're not really -- (Bill laughing loudly) >> They really don't understand. They really don't understand the tech at all! >> So, the problem is -- >> I'm not claiming ours are a great deal better. (laughs) >> Well, this is why I think this is a modern problem. Like, the young people I talk to are like, "Why do we have this rules?" They're all lawyers that got into these positions of Congress on the American side, and so with the American JEDI Contract you guys have been following very closely is, it's been like the old school Oracle, IBM, and then Amazon is leading with an innovative solution, and Microsoft has come in and re-pivoted. And so what you have is a fight for the digital future of citizenship! And I think what's happening is that we're in a massive societal transition, where the people in charge don't know what the hell they're talkin' about, technically. And they don't know who to tap to solve the problems, or even shape or frame the problems. Now, there's pockets of people that are workin' on it, but to me as someone who looks at this saying, it's a pretty simple solution, no one's ever seen this before. So, there's a metaphor you can draw, but it's a completely different problem space because it's, this is all digital, data's involved. >> We've got a lobbyists out there, and we've got some tech firms spending an enormous amount of lobbying. If those lobbyists aren't trying to steer their representatives in the right direction to come up with law that aren't going to massively undermine trade and data sharing between Europe and America, then they're making a big mistake, because we got here through some really dumb lawmaking in the U.S., I mean, there are none of the laws in Europe that are a problem here. 'Cause GDPR isn't a great difference, a great deal different from some of the laws that we have already in California and elsewhere. >> Bill, Bill. >> The laws that are at issue here -- >> Bill, Bill! You have to like, back up a little bit from that rhetoric that EU is perfect and U.S. is not, that's not true actually. >> I'm not saying we're perfect! >> No, no, you say that all the time. >> But I'm saying there's a massive lack of innovation. Yeah, yeah. >> I don't, I've never said it! >> Arm wrestle! >> Yes, yes. >> When I'm being critical of some of the dumb laws in the U.S, (Sarbjeet laughing) I'm not saying Europe is perfect. What we're trying to say is that in this particular instance, I said there was an equal balance here between meaningful protection and the maximization of economic and social value. On the meaningful protection side, America's got it very wrong in terms of the meaningful protection it provides to civil European data. On the maximization of economic and social value, I think Europe's got it wrong. I think there are a lot of things we could do in Europe to actually have far more innovation. >> Yeah. >> It's a cultural issue. The Germans want rules, that's what they crave for. America's the other way, we don't want rules, I mean, pretty much is a rebel society. And that's kind of the ethos of most tech companies. But I think you know, to me the media, there's two things that go on with this tech business. The company's themselves have to be checked by say, government, and I believe in not a lot of regulation, but enough to check the power of bad actors. Media so called "checking power", both of these major roles, they don't really know what they're talking about, and this is back to the education piece. The people who are in the media so called "checking power" and the government checking power assume that the companies are bad. Right, so yeah, because eight out of ten companies like Amazon, actually try to do good things. If you don't know what good is, you don't really, (laughs) you know, you're in the wrong game. So, I think media and government have a huge education opportunity to look at this because they don't even know what they're measuring. >> I support the level of innovation -- >> I think we're unreeling from the globalization. Like, we are undoing the globalization, and that these are the side effects, these conflicts are a side effect of that. >> Yeah, so all I'm saying is I support the focus on innovation in America, and that has driven an enormous amount of wealth and value. What I'm questioning here is do you really need to spy on us, your allies, in order to help that innovation? And I'm starting to, I mean, do you need mass surveillance of your allies? I mean, I can see you may want to have some surveillance of people who are a threat to you, but wait, guys, we're meant to be on your side, and you haven't been treating our privacy with a great deal of respect! >> You know, Saudi Arabia was our ally. You know, 9/11 happened because of them, their people, right? There is no ally here, and there is no enemy, in a way. We don't know where the rogue actors are sitting, like they don't know, they can be within the walls -- >> It's well understood I think, I agree, sorry. it's well understood that nation states are enabling terrorist groups to take out cyber attacks. That's well known, the source enables it. So, I think there's the privacy versus -- >> I'm not sure it's true in your case that it's Europeans that's doing this though. >> No, no, well you know, they share -- >> I'm a former officer in the Royal Navy, I've stood shoulder to shoulder with my U.S. counterparts. I put my life on the line on NATO exercises in real war zones, and I'm now a disabled ex-serviceman as a result of that. I mean, if I put my line on the line shoulder to shoulder with Americans, why is my privacy not respected? >> Hold on -- >> I feel it's, I was going to say actually that it's not that, like even the U.S., right? Part of the spying internally is we have internal actors that are behaving poorly. >> Yeah. >> Right, we have Marxist organizations posing as, you know, whatever it is, I'll leave it at that. But my point being is we've got a lot of that, every country has that, every country has actors and citizens and people in the system that are destined to try to overthrow the system. And I think that's what that surveillance is about. The question is, we don't have treaties, or we didn't have your explicit agreements. And that's why I'm pushing really hard here, like, they're separating privacy versus security, which is the national security, and privacy versus us as citizens in terms of our data being basically taken over for free, being used for free. >> John: I agree with that. >> That I think we have some agreement on. I just think that our governments haven't really had that conversation about what surveillance means. Maybe someone agreed and said, "Okay, that's fine. You guys can go do that, we won't tell anybody." And that's what it feels like. And I don't think we deliberately are saying, "Hey, we wanted to spy on your citizens." I think someone said, "Hey, there's a benefit here too." Otherwise I don't think the EU would have let this happen for that long unless Max had made that case and started this ball rolling, so, and Edward Snowden and other folks. >> Yeah, and I totally support the need for security. >> I want to enter the -- >> I mean we need to, where there are domestic terrorists, we need to stop them, and we need to have local action in UK to stop it happening here, and in America to stop it happening there. But if we're doing that, there is absolutely no need for the Americans to be spying on us. And there's absolutely no need for the Americans to say that privacy applies to U.S. citizens only, and not to Europeans, these are daft, it's just daft! >> That's a fair point. I'm sure GCHQ and everyone else has this covered, I mean I'm sure they do. (laughs) >> Oh, Bill, I know, I've been involved, I've been involved, and I know for a fact the U.S. and the UK are discussing I know a company called IronNet, which is run by General Keith Alexander, funded by C5 Capital. There's a lot of collaboration, because again, they're tryin' to get their arms around how to frame it. And they all agree that sharing data for the security side is super important, right? And I think IronNet has this thing called Iron Dome, which is essentially like they're saying, hey, we'll just consistency around the rules of shared data, and we can both, everyone can have their own little data. So, I think there's recognition at the highest levels of some smart people on both countries. (laughs) "Hey, let's work together!" The issue I have is just policy, and I think there's a lot of clustering going on. Clustered here around just getting out of their own way. That's my take on that. >> Are we a PG show? Wait, are we a PG show? I just got to remember that. (laughs) (Bill laughing) >> It's the internet, there's no regulation, there's no rules! >> There's no regulation! >> The European rules or is it the American rules? (Ray laughing) >> I would like to jump back quickly to the purpose of the surveillance, and especially when mass surveillance is done under the cover of national security and terror prevention. I worked with five clients in the past decade who all have been targeted under mass surveillance, which was revealed by Edward Snowden, and when they did their own investigation, and partially was confirmed by Edward Snowden in person, they found out that their purchasing department, their engineering department, big parts of their pricing data was targeted in mass surveillance. There's no way that anyone can explain me that that has anything to do with preventing terror attacks, or finding the bad guys. That is economical espionage, you cannot call it in any other way. And that was authorized by the same legislation that authorizes the surveillance for the right purposes. I'm all for fighting terror, and anything that can help us prevent terror from happening, I would be the first person to welcome it. But I do not welcome when that regulation is abused for a lot of other things under the cover of national interest. I understand -- >> Back to the lawmakers again. And again, America's been victim to the Chinese some of the individual properties, well documented, well known in tech circles. >> Yeah, but just 'cause the Chinese have targeted you doesn't give you free right to target us. >> I'm not saying that, but its abuse of power -- >> If the U.S. can sort out a little bit of reform, in the Senate and the House, I think that would go a long way to solving the issues that Europeans have right now, and a long way to sort of reaching a far better place from which we can all innovate and cooperate. >> Here's the challenge that I see. If you want to be instrumenting everything, you need a closed society, because if you have a free country like America and the UK, a democracy, you're open. If you're open, you can't stop everything, right? So, there has to be a trust, to your point, Bill. As to me that I'm just, I just can't get my arms around that idea of complete lockdown and data surveillance because I don't think it's gettable in the United States, like it's a free world, it's like, open. It should be open. But here we've got the grids, and we've got the critical infrastructure that should be protected. So, that's one hand. I just can't get around that, 'cause once you start getting to locking down stuff and measuring everything, that's just a series of walled gardens. >> So, to JD's point on the procurement data and pricing data, I have been involved in some of those kind of operations, and I think it's financial espionage that they're looking at, financial security, trying to figure out a way to track down capital flows and what was purchased. I hope that was it in your client's case, but I think it's trying to figure out where the money flow is going, more so than trying to understand the pricing data from competitive purposes. If it is the latter, where they're stealing the competitive information on pricing, and data's getting back to a competitor, that is definitely a no-no! But if it's really to figure out where the money trail went, which is what I think most of those financial analysts are doing, especially in the CIA, or in the FBI, that's really what that probably would have been. >> Yeah, I don't think that the CIA is selling the data to your competitors, as a company, to Microsoft or to Google, they're not selling it to each other, right? They're not giving it to each other, right? So, I think the one big problem I studied with FISA is that they get the data, but how long they can keep the data and how long they can mine the data. So, they should use that data as exhaust. Means like, they use it and just throw it away. But they don't, they keep mining that data at a later date, and FISA is only good for five years. Like, I learned that every five years we revisit that, and that's what happened this time, that we renewed it for six years this time, not five, for some reason one extra year. So, I think we revisit all these laws -- >> Could be an election cycle. >> Huh? >> Could be an election cycle maybe. (laughs) >> Yes, exactly! So, we revisit all these laws with Congress and Senate here periodically just to make sure that they are up to date, and that they're not infringing on human rights, or citizen's rights, or stuff like that. >> When you say you update to check they're not conflicting with anything, did you not support that it was conflicting with Privacy Shield and some of the promises you made to Europeans? At what point did that fail to become obvious? >> It does, because there's heightened urgency. Every big incident happens, 9/11 caused a lot of new sort of like regulations and laws coming into the picture. And then the last time, that the Russian interference in our election, that created some sort of heightened urgency. Like, "We need to do something guys here, like if some country can topple our elections, right, that's not acceptable." So, yeah -- >> And what was it that your allies did that caused you to spy on us and to downgrade our privacy? >> I'm not expert on the political systems here. I think our allies are, okay, loose on their, okay, I call it village politics. Like, world is like a village. Like it's so only few countries, it's not millions of countries, right? That's how I see it, a city versus a village, and that's how I see the countries, like village politics. Like there are two camps, like there's Russia and China camp, and then there's U.S. camp on the other side. Like, we used to have Russia and U.S., two forces, big guys, and they managed the whole world balance somehow, right? Like some people with one camp, the other with the other, right? That's how they used to work. Now that Russia has gone, hold on, let me finish, let me finish. >> Yeah. >> Russia's gone, there's this void, right? And China's trying to fill the void. Chinese are not like, acting diplomatic enough to fill that void, and there's, it's all like we're on this imbalance, I believe. And then Russia becomes a rogue actor kind of in a way, that's how I see it, and then they are funding all these bad people. You see that all along, like what happened in the Middle East and all that stuff. >> You said there are different camps. We thought we were in your camp! We didn't expect to be spied on by you, or to have our rights downgraded by you. >> No, I understand but -- >> We thought we were on your side! >> But, but you have to guys to trust us also, like in a village. Let me tell you, I come from a village, that's why I use the villager as a hashtag in my twitter also. Like in village, there are usually one or two families which keep the village intact, that's our roles. >> Right. >> Like, I don't know if you have lived in a village or not -- >> Well, Bill, you're making some great statements. Where's the evidence on the surveillance, where can people find more information on this? Can you share? >> I think there's plenty of evidence, and I can send some stuff on, and I'm a little bit shocked given the awareness of the FISA Act, the Cloud Act, the fact that these things are in existence and they're not exactly unknown. And many people have been complaining about them for years. I mean, we've had Safe Harbor overturned, we've had Privacy Shield overturned, and these weren't just on a whim! >> Yeah, what does JD have in his hand? I want to know. >> The Edward Snowden book! (laughs) >> By Edward Snowden, which gives you plenty. But it wasn't enough, and it's something that we have to keep in mind, because we can always claim that whatever Edward Snowden wrote, that he made it up. Every publication by Edward Snowden is an avalanche of technical confirmation. One of the things that he described about the Cisco switches, which Bill prefers to quote every time, which is a proven case, there were bundles of researchers saying, "I told you guys!" Nobody paid attention to those researchers, and Edward Snowden was smart enough to get the mass media representation in there. But there's one thing, a question I have for Sabjeet, because in the two parties strategy, it is interesting that you always take out the European Union as part. And the European Union is a big player, and it will continue to grow. It has a growing amount of trade agreements with a growing amount of countries, and I still hope, and I think think Bill -- >> Well, I think the number of countries is reducing, you've just lost one! >> Only one. (Bill laughing loudly) Actually though, those are four countries under one kingdom, but that's another point. (Bill chortling heartily) >> Guys, final topic, 5G impact, 'cause you mentioned Cisco, couldn't help think about -- >> Let me finish please my question, John. >> Okay, go ahead. How would you the United States respond if the European Union would now legalize to spy on everybody and every company, and every governmental institution within the United States and say, "No, no, it's our privilege, we need that." How would the United States respond? >> You can try that and see economically what happens to you, that's how the village politics work, you have to listen to the mightier than you, and we are economically mightier, that's the fact. Actually it's hard to swallow fact for, even for anybody else. >> If you guys built a great app, I would use it, and surveil all you want. >> Yeah, but so this is going to be driven by the economics. (John laughing) But the -- >> That's exactly what John said. >> This is going to be driven by the economics here. The big U.S. cloud firms are got to find this ruling enormously difficult for them, and they are inevitably going to lobby for a level of reform. And I think a level of a reform is needed. Nobody on your side is actually arguing very vociferously that the Cloud Act and the discrimination against Europeans is actually a particularly good idea. The problem is that once you've done the reform, are we going to believe you when you say, "Oh, it's all good now, we've stopped it!" Because with Crypto AG scandal in Switzerland you weren't exactly honest about what you were doing. With the FISA courts, so I mean FISA secret courts, the secret warrants, how do we know and what proof can we have that you've stopped doing all these bad things? And I think one of the challenges, A, going to be the reform, and then B, got to be able to show that you actually got your act together and you're now clean. And until you can solve those two, many of your big tech companies are going to be at a competitive disadvantage, and they're going to be screaming for this reform. >> Well, I think that, you know, General Mattis said in his book about Trump and the United states, is that you need alliances, and I think your point about trust and executing together, without alliances, it really doesn't work. So, unless there's some sort of real alliance, (laughs) like understanding that there's going to be some teamwork here, (Bill laughing) I don't think it's going to go anywhere. So, otherwise it'll continue to be siloed and network based, right? So to the village point, if TikTok can become a massively successful app, and they're surveilling, so and then we have to decide that we're going to put up with that, I mean, that's not my decision, but that's what's goin' on here. It's like, what is TikTok, is it good or bad? Amazon sent out an email, and they've retracted it, that's because it went public. I guarantee you that they're talkin' about that at Amazon, like, "Why would we want infiltration by the Chinese?" And I'm speculating, I have no data, I'm just saying, you know. They email those out, then they pull it back, "Oh, we didn't mean to send that." Really, hmm? (laughs) You know, so this kind of -- >> But the TRA Balin's good, you always want to get TRA Balin out there. >> Yeah, exactly. There's some spying going on! So, this is the reality. >> So, John, you were talking about 5G, and I think you know, the role of 5G, you know, the battle between Cisco and Huawei, you just have to look at it this way, would you rather have the U.S. spy on you, or would you rather have China? And that's really your binary choice at this moment. And you know both is happening, and so the question is which one is better. Like, the one that you're in alliance with? The one that you're not in alliance with, the one that wants to bury you, and decimate your country, and steal all your secrets and then commercialize 'em? Or the one kind of does it, but doesn't really do it explicitly? So, you've got to choose. (laughs) >> It's supposed to be -- >> Or you can say no, we're going to create our own standard for 5G and kick both out, that's an option. >> It's probably not as straightforward a question as, or an answer to that question as you say, because if we were to fast-forward 50 years, I would argue that China is going to be the largest trading nation in the world. I believe that China is going to have the upper hand on many of these technologies, and therefore why would we not want to use some of their innovation, some of their technology, why would we not actually be more orientated around trading with them than we might be with the U.S.? I think the U.S. is throwing its weight around at this moment in time, but if we were to fast-forward I think looking in the longterm, if I had to put my money on Huawei or some of its competitors, I think given its level of investments in research and whatever, I think the better longterm bet is Huawei. >> No, no, actually you guys need to pick a camp. It's a village again. You have to pick a camp, you can't be with both guys. >> Global village. >> Oh, right, so we have to go with the guys that have been spying on us? >> How do you know the Chinese haven't been spying on you? (Ray and John laughing loudly) >> I think I'm very happy, you find a backdoor in the Huawei equipment and you show it to us, we'll take them to task on it. But don't start bullying us into making decisions based on what-ifs. >> I don't think I'm, I'm not qualified to represent the U.S., but what we would want to say is that if you look at the dynamics of what's going on, China, we've been studying that as well in terms of the geopolitical aspects of what happens in technology, they have to do what they're doing right now. Because in 20 years our population dynamics go like this, right? You've got the one child policy, and they won't have the ability to go out and fight for those same resources where they are, so what they're doing makes sense from a country perspective and country policy. But I think they're going to look like Japan in 20 years, right? Because the xenophobia, the lack of immigration, the lack of inside stuff coming in, an aging population. I mean, those are all factors that slow down your economy in the long run. And the lack of bringing new people in for ideas, I mean that's part of it, they're a closed system. And so I think the longterm dynamics of every closed system is that they tend to fail versus open systems. So, I'm not sure, they may have better technology along the way. But I think a lot of us are probably in the camp now thinking that we're not going to aid and abet them, in that sense to get there. >> You're competing a country with a company, I didn't say that China had necessarily everything rosy in its future, it'll be a bigger economy, and it'll be a bigger trading partner, but it's got its problems, the one child policy and the repercussions of that. But that is not one of the things, Huawei, I think Huawei's a massively unlimited company that has got a massive lead, certainly in 5G technology, and may continue to maintain a lead into 6G and beyond. >> Oh yeah, yeah, Huawei's done a great job on the 5G side, and I don't disagree with that. And they're ahead in many aspects compared to the U.S., and they're already working on the 6G technologies as well, and the roll outs have been further ahead. So, that's definitely -- >> And they've got a great backer too, the financer, the country China. Okay guys, (Ray laughing) let's wrap up the segment. Thanks for everyone's time. Final thoughts, just each of you on this core issue of the news that we discussed and the impact that was the conversation. What's the core issue? What should people think about? What's your solution? What's your opinion of how this plays out? Just final statements. We'll start with Bill, Ray, Sarbjeet and JD. >> All I'm going to ask you is stop spying on us, treat us equally, treat us like the allies that we are, and then I think we've got to a bright future together! >> John: Ray? >> I would say that Bill's right in that aspect in terms of how security agreements work, I think that we've needed to be more explicit about those. I can't represent the U.S. government, but I think the larger issue is really how do we view privacy, and how we do trade offs between security and convenience, and you know, what's required for personalization, and companies that are built on data. So, the sooner we get to those kind of rules, an understanding of what's possible, what's a consensus between different countries and companies, I think the better off we will all be a society. >> Yeah, I believe the most important kind of independence is the economic independence. Like, economically sound parties dictate the terms, that's what U.S. is doing. And the smaller countries have to live with it or pick the other bigger player, number two in this case is China. John said earlier, I think, also what JD said is the fine balance between national security and the privacy. You can't have, you have to strike that balance, because the rogue actors are sitting in your country, and across the boundaries of the countries, right? So, it's not that FISA is being fought by Europeans only. Our internal people are fighting that too, like how when you are mining our data, like what are you using it for? Like, I get concerned too, when you can use that data against me, that you have some data against me, right? So, I think it's the fine balance between security and privacy, we have to strike that. Awesome. JD? I'll include a little fake check, fact check, at the moment China is the largest economy, the European Union is the second largest economy, followed directly by the USA, it's a very small difference, and I recommend that these two big parties behind the largest economy start to collaborate and start to do that eye to eye, because if you want to balance the economical and manufacturing power of China, you cannot do that as being number two and number three. You have to join up forces, and that starts with sticking with the treaties that you signed, and that has not happened in the past, almost four years. So, let's go back to the table, let's work on rules where from both sides the rights and the privileges are properly reflected, and then do the most important thing, stick to them! >> Yep, I think that's awesome. I think I would say that these young kids in high school and college, they need to come up and solve the problems, this is going to be a new generational shift where the geopolitical landscape will change radically, you mentioned the top three there. And new alliances, new kinds of re-imagination has to be there, and from America's standpoint I'll just say that I'd like to see lawmakers have, instead of a LinkedIn handle, a GitHub handle. You know, when they all go out on campaign talk about what code they've written. So, I think having a technical background or some sort of knowledge of computer science and how the internet works with sociology and societal impact will be critical for our citizenships to advance. So, you know rather a lawyer, right so? (laughs) Maybe get some law involved in that, I mean the critical lawyers, but today most people are lawyers in American politics, but show me a GitHub handle of that congressman, that senator, I'd be impressed. So, that's what we need. >> Thanks, good night! >> Ray, you want to say something? >> I wanted to say something, because I thought the U.S. economy was 21 trillion, the EU is sittin' at about 16, and China was sitting about 14, but okay, I don't know. >> You need to do math man. >> Hey, we went over our 30 minutes time, we can do an hour with you guys, so you're still good. (laughs) >> Can't take anymore. >> No go on, get in there, go at it when you've got something to say. >> I don't think it's immaterial the exact size of the economy, I think that we're better off collaborating on even and fair terms, we are -- >> We're all better off collaborating. >> Yeah. >> Gentlemen -- >> But the collaboration has to be on equal and fair terms, you know. (laughs) >> How do you define fair, good point. Fair and balanced, you know, we've got the new -- >> We did define fair, we struck a treaty! We absolutely defined it, absolutely! >> Yeah. >> And then one side didn't stick to it. >> We will leave it right there, and we'll follow up (Bill laughing) in a later conversation. Gentlemen, you guys are good. Thank you. (relaxing electronic music)

Probably Toronto, Canada. It's the cube covering blockchain futurist conference 2018, brought to you by the queue. Hello and welcome back to you keep live covers here in Toronto for the untraceable blockchain uterus conference two days a wall to wall coverage. We were just seeing it here on the coupon shopper host Dave Vellante, Tony Lane, Cuba last night with culture and we have James Mcdonald, head of strategy of Sentinel. He's also a PGA professional golf professional and a boxer. Extraordinary. Welcome to the cube. Thanks. You ever had in my notes. Funny before camera came on. Super exciting. Even though the market's kind of in a downward trough and by the, you know, do its normal cycle and Crypto, tons of energy. The culture is changing. There's a real energy around focusing on high quality builders, high quality individuals. This is a real dynamic projects for good projects for profit is great engineering going on. What could be better for sure, and we've been through the trod so many times. We've gotten to the point that now I just kind of like. I'm like, well, I mean we're here again. You know what I mean? And now it's time for, we figure out right now who's really in it to win it and who's just playing the game. Tell you know what I love about. You've got great energy, great. Already got great culture. You've been around, you've seen it early, you've been involved in a lot of the iterations of the industry that's just now growing to be a baby and his growing up into it's elementary school years. What are you, what's your take? I mean you look at this, I know you do a lot of retreats and self reflection. What's the industry? Where's it come from? Where is it now? How do you feel about what's happening? So I did in blockchain since 2011 and from a price perspective, there's actually a science fiction story that came out on Reddit in 2014 or 13 by someone named, got underscore Nada and it's called I am from the future. And I am here to stop you from what you were doing in this science fiction story. He outlines this pricing curve that basically shows the first five years of bitcoins existence. If no other market factors happen, no outside influence, no qualitative influenced the first five years, 10 x every year, second five years, every other year, 10 x every other year. And what's crazy is that if we wouldn't have had Mt. Gox and some of these other events like bitcoin was only supposed to go to 10 k last year, which is double. So if we wouldn't have had those external events, that pattern would have actually been it. So what's really easy and simple to remember about bitcoin is that it has a scarce supply. That's, I think that's the easiest way to put any of this. And so this is just a period of time. The market over extended itself and it shouldn't have gone realistically past 10 K it doubled. So yeah, I mean that's a if that's to be expected, right? No, no. In my opinion, I looked at either an exercise about six months with my friend. We look at the Nasdaq during the pre bubble days and we'll exchange of the Nasdaq and that's just a small scale relative to global care crypto. It's actually in line with some of the expansion we've seen in other financial market, so I kinda think it's good to have to do curation going on and calling out some of the dead wood, bring it into the better projects. This is kind of the reality now. Rip Good Times. Well, you know Bradley or yesterday at the cloud and blockchain conference posited that wasn't talking about Bitcoin, he was talking about ether. He said there's just too many damn coins and every ICO is most ics anyway. Tied to the theory. Yes, buy it. Well, I mean you can take this one too, but what I see is a decoupling at some point that has to be some sort of decoupling at the moment. Everything is very correlated and I think as time goes on you will see it's like survival of the fittest. Right? So you've got, you've got a lot of blockchains and you've got a lot of tokens on ethereum that want to come off to theory and it's survival of the fittest. I feel like. Yeah, the best ones will prevail and the ones that aren't trusted or secure. Yeah. So talk about who's in it to win it. What do you look for in the contenders versus the pretenders? What are the attributes that you as deep experts in this field look toward the winters? Well, I see as right now we're kind of like a candy that you love coming out with a new flavor. It's like everyone's like, oh yeah, like remember this candy gotta buy it now, but at the end of the day it's pretty much the same candy and she was like a little different sweetener and so we will experience obviously a sharp correction. Yeah, for sure. But I think what's really beautiful about this is it's actually enabling creative potential jobs of the future are not going to be, oh, I know how to do c plus plus now I have a job forever. It's going to be about reinvention at that is the real economy of the future and chains and huge enabler for that new markets are opening up to. So it's not just the reinvention, which I agree, reimagined the reinvention and new markets. Our change was on earlier saying eight and 80 day tour of 10 countries. New markets are exploding. That's just a new markets is rechanging system, not your grandfather's venture capital model, silicon valley or New York or London. It's with the globe. There are many, many reasons to tokenize the world. The thing that, the thing that stands out to me is, you know, when you look at tokenizing securities, the fact that this opens up the free market to everyone, you know, these things can be traded 24 slash seven, three, six, five from anywhere in the world. Traditionally if you want to buy stocks, will streets open for less time than it's been. It's closed and so it. It just opens up the free market to everyone all over the world and to me that's that journalists, you're a professional golfer. Someone use a golf analogy too, because I'd love Golf Golfer, so excellent Golfer. Not a pro, but he could be. I don't keep score with them many times and he never played. She played like, well, why don't you twice a year consistently shoots. There's a little bit hockey and a happy Gilmore going on golf metaphor, so the world that we know that's the centralized governed world banks, big corporations that are being essential. I consider them like a wooden shaft and the old clubs. Now all of a sudden graphite shafts, youth club heads, new technology. The game doesn't really change fundamental APP, but it changes the performance you by that is that a good analogy? Needed to. Perfect analogy. When you go to the golf clubs, then you've got the older members and they don't buy it. They say that the performance doesn't increase with the new technology, but really we know that old stodgy members, it comes down to that people are naturally averse to change. People don't change something that they don't quite understand. They'd naturally dismissed if they don't want to delve in, felt dismiss that and everyone here today is going down this rabbit hole, but there's a hell of a lot of people out there that I didn't really get it. I don't want to get it. So. And they'll dismiss that and they'll even. They'll even talk it down if it threatens them. At the game changes. No, I mean come on. If you look at the current distribution, over time we've moved from tribalized kings and Queens to nation states. Let's hope that we actually enable a redistribution of wealth. I want to see blockchain create the garden of Eden. We're experiencing now is basically same incentives, slightly less bad people, and I feel that if we really use new technology is an opportunity for change. Change is gonna happen and if we make the integration of new technology about experiencing compassion in action as humanity, we changed human perception, human behavior, your understanding of your own limitations. When we enabled real freedom, not just the illusion of freedom as money on Amazon yesterday, which he's with, he's done an amazing work what he's doing to transform the Caribbean islands with exchange changing a society there digitally connected almost 100 percent penetration of mobile. It's incredible. They can't access some basic services society. A new game changer. You're taking an integrative approach to how you interact with people and it's part of your persona. Maybe I'm pushing the golf analogy to bring it, bring it, watching the end of the PGA this week and they were interviewed. Tiger Woods is back and he's comes in and they were interviewing him and he wants to be on the Ryder Cup team. Now, if you've observed him in the Ryder Cup, not great. This is a team sport. The euro's always killed the Americans when the superstar is right and it's sort of the same thing that you're saying. It's the get the haves and have nots. It's a team sport and it's community driven. Increases viewings like you wouldn't need tigers pain. Everyone tunes in, which is great for the sport, for the Americans because they always lose when he plays. I think it would be, you know, why not put him in the team because it's good for the game. It gets people more engaged. He goes and he's been humbled. You know that your thing is there a lock if you the back, you want them involved but you don't want to dominate it. Alright, so guys, let's take it back to reality. You guys are working together on a project we talking, talking you guys, what are you guys working on know about the projects you guys are involved in right now. What James and I do together is we take these skills, we've learned through my life, you a performing artist in his previous life as a professional athlete and we've really taken what we've learned through our knowledge and our network to help entrepreneurs who are driven with integrity and appear to be a success. So it's really, well we do together is we just really, um, and that's, that's what we do both for fun and for enjoyment. And what I'm working on personally, James is the head of strategy at a company and I'll let him get into that when I'm working on personally is global citizenship and my company culture is actually focused on something really integral to the block chain which is capitalizing the market share on the tradition, the transition out of nation states and into oriented and governance models. So we have one layer that's open source for free for the world, for ever to own your agreements and to own your identity as a self sovereign individual stewarded by your community to give everyone more context on each other. And then our for profit businesses basically facebook connects people to their friends, culture connects people to communities and connects communities to dapps that are services and economists basically. And we build that whole ecosystem. So that's really what I'm up to at culture. And then James and I have our own adventure together and James is also had a strategy at center. Yup. Okay. So sentinel is an interoperable network layer for distributed resources. So let me break that down. What block chain technology allows is for you to monetize access resources like access bandwidth, access, GPU or CPU power. And so our first working product is a decentralized vpn. So you know what a vpn is. Sure. So the sentinel, the VPN is distributed. So what that allows you to do for example, is you could access, you can monetize your excess bandwidth by hosting a note that people can connect to it. And the beauty of the decentralized vpn is that it's probable, so all the code is open source and there's proof that the data is actually being kept private, it's encrypted, um, and there's no, there's no centralized or a body or a company that can be shut down or, or forced to give up data or paid for paid for data. It's distributed. So it's fast and it's secure. So yeah, there's a lot of big companies in the crypto space that are very concerned with data privacy and they didn't, may not trump central vpn, traditional centralized vpn paid. So you host your own node, you get paid. It's a marketplace. So anyone in the world can set up their own node, run their own node, help other people obscure their traffic if they don't want. Like for example, Gdpr, if you don't want every website that you visit to monitor literally everything you do, you might want to consider using a vpn for the sake of preserving your own personal privacy and the integrity of your data which you own and rightfully should actually own the monetization value of. So in the world you can have a few node and you guys can pay, people can pay $5 your whole network and use it. So I can sell my xx compute capacity, network bandwidth, the storage sewer. No touching that. A storage, I mean down the line. So it's for, for, for distributed resources. That sentinel. The first product is the dvps yes. Down the line. Yeah. We're going to come up with much more so others could actually plug into that platform like a live stream in China. I can pop on a vpn. There it is. Run Google apps in China because you can run google. Yes. You know, she'd even China. Let's you. Cool. All right guys. Well thanks so much for coming on. Appreciate it. Thanks. Very inspirational. I think there's a lot of mission driven cultural change coming very fast. This next generation coming up is going to be the stewards of making the change happen. It's our job to set the table and get these services out there. Congratulations. Okay. Cube coverage here live in Toronto at the untraceable blockchain futures conference. Two days is the cube wall to wall coverage. I'm John Furrier, stay with us Dave ones continuing the best gas, the most important people. Bring in the great blockchain crypto world together here in Toronto. We'll be right back.

(upbeat music) >> Live from Toronto, Canada, it's theCUBE. Covering Global Cloud and Blockchain Summit 2018. Brought to you by theCUBE. >> Hello everyone and welcome back to theCUBE's live coverage in Toronto for the Blockchain Cloud Summit, part of the Blockchain Futurist event happening tomorrow and Thursday here in Toronto. I'm John Furrier with Dave Vellante. We're here with Gabriel Abed who's the founder of Bitt and also the Digital Asset Fund. Great story he's been there from the beginning. President at creation in the movement that's now changing the world. Blockchain and cryptocurrency certainly. Infrastructure and token economics, changing how things are doing. And rolling out, reimagining everything from infrastructure to value exchanges. Gabriel welcome to theCUBE. >> Thank you it's great to be here. >> So we were just talking on camera, you like to go after the big changes. You're an entrepreneur, you have that fire in your belly. You've been very successful. Where are we? I mean, you've been part of the movement, we're now on the cusp of mainstream adoption, there's still work to do. >> Oh, plenty of work. Lots of infrastructure still to build, many regulators and legislators still to educate, lots of laws still to be amended and changed. And, at the end of the day, it's happening and it's happening quickly and beautifully right now. The entire industry is changing. >> One of the things that you've done, you've taken on some big projects and you've made change happen. Regulation is one of the hottest topics we're hearing certainly in the United States, it affects innovation and there's so much entrepreneurial activity happening right now. There's so many entrepreneurs, alpha entrepreneurs really want to do great things, and regulation is just a blocker. It's an antibody for innovation. And you've busted through that. And it's probably going to continue. The old guard is either going to be replaced or adapting to the technology. You've done that, and a lot of people want to do what you've done. What's the secret? What's the secret of your success? How have you taken on these big, incumbent positions and taken them over >> But you're not running from regulators, you're embracing them. >> No, no, I think regulators are important to a responsible and sophisticated market. When my partner and I started Bitt in 2013, 2014, we immediately realized that if we wanted to build a product for the monetary authorities around the world, we needed to have the buy-in from the regulators. So from day one we were regulator-friendly. And it's not to say that we don't believe in a decentralized future, I'm as big of an advocate for decentralization and the freedom of information as anyone else, but I'm also a big believer in if you're a product for a market in the traditional world you have to involve the regulators in order to ensure that product does its job, keeps the consumers safe, and ensures that the economy around it doesn't collapse. So regulators are critical in this field. >> Talk about what you guys have done. Take a minute to explain the project you did, how it worked out, the tenacity, but also, what was the outcome? What were you trying to do in the project and where is it right now? >> It depends on the project you're referring to >> Maybe start at the beginning >> The Caribbean >> Let's start at the beginning. >> Yeah, yeah. >> Okay, so, Gabriel Abed, born, raised, educated in Barbados, around the age of 19, I decided I was going to take my computer science education a bit further. I went to Canada, I did a Bachelor of IT, where I majored in network security. In Ontario, the University of Ontario. And, unlike the rest of of my peers, who usually stay in Canada, I decided to go back to my little nation with the education that I had just received. And I took that education home, and started one of the world's first blockchain companies, but at the time I didn't understand blockchain per se, I understood it as a commodity, as a cool investment, I didn't understand the true nature behind the protocol itself. It was only until 2013 that my partner and I ran one of the larger mining operations in the world, that we realized a commodity was actually a protocol. A network tool. A system that you could build on top of. So in 2014, we actually created one of the world's first blockchain assets, on Bitcoin's blockchain. And that a representation of a digital dollar for a central bank. And the notion behind Bitt.com in 2014 was, let's compete with cash, because it's inefficient, it's costly, and it slows down the movement of society. So what we wanted to do is create a digital version of that, that would save economies hundreds of millions of dollars. Cash is expensive to to create, that linen, plastic, paper money, it's easily forged, it can be counterfeited, it's hard to transport, it has an expense to transport, it has an expense to count, it has an expense to secure, and then it has overheads around the entire ecosystem of accountability. Whereas, a blockchain-based digital dollar eliminates all of those efficiencies, and increases the ability for a monetary authority to trace, track, and have a better form of anti-money laundering, counter-terrorism financing and a better overview of their entire society. So that all, we took that notion, went to the central bank of Barbados, who at the time was being led by Dr. DeLisle Worrell, and our very first meeting he had asked me to excuse his office. And 13 meetings later, and a whole two years, lots of development, building out infrastructure around compliance, around finance, around security, and around regulation, we finally got the nod of approval from Dr. DeLisle Worrell to operate a fiat example of a digital dollar in Barbados. And since then, we have been working with several central banks around the world, bitt.com today is the leading central bank provider for digital dollars. A lot has changed, I've developed other tools since, and other businesses, but bitt.com continues to be the best friend for central banks looking to move and transition into the digital arena. >> Why, I mean other than a closed mindset, why wouldn't every government around the world want to move in this direction? Initiate some kind of FedCoin, for example. >> Education, education, it's the fear that the system may not be scalable, it's the fear that the system could be hacked, it's the fear that they could be cut out, their control, at the end of the day, monetary authorities, like the Federal Reserve, they have a control on the money supply. Whereas, something like decentralized cryptographic currencies, there is nobody in control of the money supply. Hence, inflation versus deflation systems. Then there's the issue of hacking and the threat of digital and cybersecurity. Typically, the head of these monetary authorities are older gentlemen who are traditionally conservative. And who are not (mumbles) with cybersecurity. So the fear of hacking is very real for someone like them, whereas someone like me who is trained as a network security expert, those fears can be mitigated with good policy and procedure, cold wallets, and the right process, to ensuring the environment can run without the risk or the fear of malicious attacks. So it really boils down to education. The educated governors of central banks, like there's one, for example, Timothy Antoine. Dr. Antoine is the governor of the Eastern Caribbean Central Bank. And they govern and mandate the currency union of eight islands below them. St. Lucia, Grenada, Antigua, et cetera. Now, he's a governor that gets this and has wrapped his head around it, and understands that this is the future. He gets it so much that he signed an agreement with bitt.com to begin exploring a pilot for his currency union to have a digital dollar implemented in it. You also have governors and presidents like that of Curacao. Or the central bank of Curacao, where we've just signed an agreement to move forward with a phase of looking at the implications of rolling out a digital dollar in a society like Curacao and St. Maarten. What is the ramifications? What is the feasibility study behind that? So, to answer your question, it's not every single regulator, governor, and central bank manager is going to head toward this technology tomorrow. But with more education, and more lobbying, you will see more and more central bank governors moving in this direction, because it's better, cheaper, faster, makes their job easier, gives them more control, gives them more oversight, and provides all the things that they would want as a central bank to continue to do their job for their society. Which is to protect their dollar from alien threats. And to ensure that the dollar remains stable, and to just generally ensure that the society is functioning the way it should. >> Gabriel, what's your vision on what this will enable for the citizens? What's the impact that you see happening? If this continues down the trajectory, what is the adoption look like, impact to people's lives on a everyday basis. >> Well, for a very starting point, you democratize payment. Right now, if I want to make a payment, I have to go through a utility company called a bank. And this bank typically has frictional costs, and frictional overheads and time. That's one of the biggest problems, is that these monopolistic infrastructures hinder the ability for the average participation of a free-flowing payment system. So what you end up having is rather than me being able to make a digital payment in seconds, with no cost, I have to wait days, I have to use manual-based systems whether it's check, cash or the bank's Visa Mastercard system. And then it has frictional costs. So right off the bat, you democratize payment. What does that do for a society in a developing nation? It empowers people. And you're empowered because now as a developer, I can build on this payment system. As an entrepreneur, I can tap in to this payment system. As a merchant, I can utilize this low-cost payment system. As a society, I now have GDP growth because of financial inclusion. The underbanked, who do not have access to banking facilities for one reason or another, maybe they don't like the bank, maybe the banks don't like them. Maybe they don't have two proofs of ID. Maybe they don't have a fixed place of abode. Maybe they don't have the minimum deposit amount. All of these features keep the poor and the underbanked out of the system. Whereas, in developed nations, we have mobile penetration rates that are through the roof. In some cases, like Barbados, over 100 percent. So if you have 100 percent penetration rate of this mobile platform, this thing in my pocket, but I cannot access the banking system, well flip that around, democratize the payment system, allow payments to exist on this mobile phone, and watch how quickly society becomes banked. So what you end up having is full adoption. Why would we not have full adoption when it's cheaper, it's faster, it's more inclusive. >> And the data from that collective intelligence only creates a digital nation >> A more responsible environment. >> Wealth creation environment. >> It creates a more traced, tracked, and accountable society so that the monetary authorities in the government can now start making educated decisions on data. They now know who's buying milk, who's gambling, who's paying their taxes and who's not. >> The downstream benefits of this are massive. >> The downstream benefits are massive, enormous. They're disruptive. This is a brand new fiscal tool, a monetary tool, being given to central banks to start eroding the field of private e-money systems, and to start bringing about a uniform standard towards payments. Plain and simple. We're going to the central banks and introducing a new monetary instrument, that they're in control of. That now the commercial banks, the financial institutions, the corporatocracies, the citizens, and the merchants can all fall under one roof issued by their monetary authority. And this is not a cell phone company or a bank building their own private system that I have to jump through some hoops and some red tape and sign away my first born and give away my left arm to enter. This is a free and open source standard system. >> And it's networked, as you said, penetration is 100 percent on mobile or roughly that, it's a network society that now has digital fabric built into it. This is the future. >> But I played this out in terms of, when you talked about this in your panel, now every device, every thing, every physical asset will be instrumented. >> Yes. >> And as a result, theory can be coconuts. >> You're building the deep infrastructure. I remember we met with World Bank back in 2014 and they coined this term for me. Because they were saying we want to help entrepreneurs and it's important to help entrepreneurs in developing nations because they're the lifeblood of it. But what we are building is the deep infrastructure. And that's exactly what it is. It's the infrastructure that would allow the entrepreneur and the developer to now have a framework that they can build against to provide more uplift. So in essence, it's really going to be exponential growth once systems like this are implemented. The stock market can move digital, and people could buy stocks using digital dollars. E-commerce can occur because I can now buy things online or sell things online with digital dollars. I can now be part of a global, financial ecosystem, with my smartphone and my wallet. >> That's a great use case, congratulations on amazing success, so much is on your plate, you've had great success in this new era, what's on your plate now, what are you working on, what's happening in your world now? >> So in 2017, we realized Bitt was entering a new growth phase. It was no longer a battle of trying to convince regulators and central banks, our product had been proven. Our reputation had been proven. It was time now to scale the company into a professional level of dealing with these regulators around the world. At the end of the day, we would like to digitize cash, wherever cash exists. And to provide those tools for central banks around the world. That would require professional management, and that is not I. >> (laughs) >> So, our investors and shareholders were quite comfortable with our proposal of bringing on that professional management, so in 2017 I resigned as CEO, retained a board position and still single largest shareholder, but with the idea of what other types of infrastructure can I build, now that a deep infrastructure had been put in place. So I've been attacking three major markets, the banking sector, an actual commercial banking enterprise working with a group from the United States towards looking at deploying the future of where we think commercial banking is going. I think that the community, the crypto community in general, there's a lot of noise happening in the chats. And therefore we built a machine learning chat bot to start looking at market sentiments and aggregating market information and of course building common tools for community members. So we've launched a agent called Gabby, the form to gab. My name's Gabriel and my mom calls me Gabby, so it works out quite well. >> You have the gift of gab that's for sure. >> And then I launched a mutual fund with a very sophisticated former managing director of JPMorgan. A guy named Richard Galvin. And we launched the world's first protocol-only fund. We focus only on protocols. And that's called Digital Asset Fund. And we launched that in late 2017 and got full regulatory approval to become a professional fund, that handles 100 percent, solely crypto. And that's basically been my ride, and then outside of that, just your standard consulting, because everybody from World Bank, to IADB, to some government agency to some private organization wants to know about blockchain they want advice, and they need a team of people to give them that advice. So it's just been, all around, looking at how I can be an entrepreneur in this space, while finding great leaders, and partnering with those leaders to build out great companies. While still focusing on ensuring bitt.com becomes the solution for dollars, digital dollars, worldwide. >> Got a great mission, entrepreneur, builder, congratulations. >> Thank you. >> Industry's lucky to have you, congratulations. >> Thanks for coming on. >> Thanks for coming on theCUBE. >> Thank you guys. >> CUBE coverage here, live in Toronto for the first Global Cloud and Blockchain Summit in concert with the Blockchain Futures Conference happening in the next two days after today. More coverage from theCUBE we're live here, stay with us for more great coverage after this short break. (upbeat electronic music)

>> Voiceover: From New York, it's theCUBE covering Blockchain Week. Now, here's John Furrier. >> Hello everyone, welcome back, I'm John Furrier here in the ground in New York City, Manhattan, for Blockchain Week New York, also day three of Consensus 2018; it's a huge event, everyone's here in all the action. Philipp Pieper's the CEO and co-founder of... he's with Swarm Funds; now, it's an interesting story, we've interviewed a couple of other companies: Polymath, Securitize, these guys got a unique value proposition. Philip, Swarm Funds, tell about what you guys are doing? >> Sure. >> What's the value proposition, where you guys are at? >> So we are the first security token framework that is live in the market. We launched, actually, end of January, only three months after the ICO, and we focus actually on tokenizing LP positions and funds, and we do that with a unique legal structure, governing structure, and obviously token infrastructure, that actually is meant to become a lingua franca that anyone in the market can collaborate on, so we even invite the previously named companies to actually collaborate with this because it's not a one-person or one organization sellout. >> And you got a shipping product. >> We have a shipping product. We actually have business on it, which means that there's funds that have tokenized on our platform, four of them actually. We have another 50 right now in the pipeline, so the next couple of weeks we're going to see at least nine to maybe 15 that are going to come to the market. >> So, I understand your value proposition. Are you guys operationalizing venture capital or equity partners? Or is it targeting entrepreneurs themselves or both? Who's the customer for you? >> So, on the project side, on the investment opportunity side, it's actually people that have something that they've done in the past that have existing business and where we just become another part of their capital structure. So, when you >> Give me an example. >> When you focus on a fund, so for example, we have a fund called Andra Capital that is a pre-IPO tech fund, so you can buy into a composite of Airbnb, Uber, and other tech companies where they buy secondaries off the market. They're an existing fund, they have existing LP's, they have existing business, and for them to open up to the crypto landscape, both for crypto investors as well as family offices, we're that conduit. >> Yeah. >> So, for them it's no change of legal structures, they can just do this in the existing way, and for us in the crypto community it's an excellent way to democratize access to that, so you can get into these kind of things that normally were only for the privileged investors. >> And so the benefit to them is that they don't have to unwind or mess with a tangled web of deals and LP's, relationships, because it's complicated, the side deals, all kinds of, not side deals, but you know what I'm saying, like one, there's a lot of moving parts, right, so? >> Well, yeah, and even more so, they don't have to put all their chips into this one thing that, you know, we all believe that is going to be big, but who knows whether it's going to pan out? So, you know, if I would approach one of those partners and say, "Well, your entire fund has to be tokenized." That's a pretty big deal with a lot of resistance. In this way, they can just open up a backdoor saying, "Okay, let's test this out, see how it works" and, by the way, they can actually push their existing investors to that direction, too, because it has a liquidity to it. That's the key element that is missing >> Yeah and they don't have to do anything different, so it's really smart. So, I've got to ask you, so, your advice or security token's been a pretty positive reaction from most folks. Hey, finally a security token, there are people are raising money, that's what we're doing, I mean that's what we're doing, no one has product. I mean, we have a product, some people have products, you have products. The thing is that there's very few people that have products so they're basically raising money. So call it what it is, it's a raising money token. Security tokens are now good, but as the entrepreneurs out there, they say, "Well, do I just pledge with my cashflow, or do I put equity against it?" What's your vision on how entrepreneurs should think about what they give up for the tokens, how they securitize it? >> Are you meaning that the entrepreneurs actually come to the space with their entrepreneurial efforts or? >> So, I'm an entrepreneur and I say I want to raise 15 million dollars or 10 million dollars on an issuing a security token and what do I get for that? So the investor wants security. >> Well, the investor wants actually something that is reliable in the most legal way possible, which means that it is something that they can, you know, have confidence that there's something on the other end, that there is a trustful asset that is underlying, that there's a legal stress that they can put this to and if things go sideways, that they have a voice that they can actually govern their ownership with. >> What is that now, what's the standard? Is there a standard evolving around what that is behind the security token? Is it cashflow, is it equity? >> Well, so, in our case we pay attention to actually having a vetting process that actually makes sure that things exist where actually, so this one token being the utilities, sort of like, it's a token to consider us as an AWS for fund operations, so, we incentivize existing players to help vet. We are working with some of the biggest servicing firms and auditing firms to, in the end, actually put the rubber stamp on stuff saying this actually is in existence and it's being, you know, looked at in detail, and the community in the end then can actually say, "We want this, too" or "We don't want this." So, there's multiple hoops that someone has to jump through before they can actually claim to be on a network like Swarm on this SRC-20 token that we have. >> What's interesting, too, is that what I like about your business model is that there's leverage, too, and, as you do things, you don't have to do it again, and, so, everyone has to sort of replicate and provision their company some way, right? So, it's complicated. >> Well, and, by the way, just to extend that also to the fact that there's only, there's one investor graph that is a qualified investor graph that basically anyone can chip in to, and it makes it incredibly easy for a qualified investor to move around on amongst different security tokens, and not just do that, like on a dedicated platform, but we are taking this into existing exchanges. You can even think of a model where this works with a decentralized exchange, where people can confidently actually trade one another and they don't have to requalify with the decentralized exchange, which doesn't have an organization to qualify them. >> It sounds like cloud computing and devops in action. >> Yeah. >> Bringing in some crypto, so you probably bring great service, okay, what else is going on, how much did you raise, how big is the team, what's going on with the company? >> Yeah. >> What's next? What's on the road map? >> So, we actually started thinking this end of 2016, before this whole craziness started, so there's a lot of pen to paper that we had to put in place, so there's a preparation into the ICO that we did in September/October; we were very restrictive, the way that we did it, we had a token liquidator release in order to appeal to some of the more US-focused investors. We raised 5.5 million dollars back then, valued in ether, pretty good. We then actually, the foundation still hold half of the tokens, we just were really cleared to be not a security. In this realm, we clearly separated the security from the utility function and we are off to the races with actually not just being listed on exchanges but also to actually list the security tokens on exchanges with a clear mandate by the token issuers that that's something that they are qualified to do. >> That's awesome. So, Philipp, I'm going to give you a use case, if I'm going to do a token offering, say for theCUBE, hypothetical, wink wink, what do I do? How do I engage with you? Would I use your service? How would I use your service? I'm going to issue tokens, you know, we're building the business, we're building the brand, we're going to open it up. I don't have time to deal with all those details. It's a lot of hassles. Do I do the Cayman Islands, special purpose vehicles, I mean, where is my entity, what's my domicile, what's the law here? Do I use you? I mean, would I use you guys and that would be the service or are you targeting, would I have to go somewhere else? Who do I use? Who would I, how would I use Swarm? >> Well there's two parts to answer that question: one is actually, obviously, we have a lot of institutional organizations on the other end that have their own custom setup, they have existing things, we make it incredibly easy for them to engage with us because we form these SPV's which are, you know, so far we've trialed this in MBVI and Cayman's and Estonia and Lichtenstein, but those entities become shareholders of the underlying assets. So, if someone wants to list something, they go to tokenize.swarm.fund; there's an in-take form that actually allows them to supply their proposals, their proposals get put through different layers of vetting, so we work with... >> From your team? >> Well, first on our team, but we work with external people that vet that, too, and then actually it goes to an auditing firms that actually then say this is something real because before we take it to market, and actually offer it to the broader community, we really want to make sure that this is actually something that has validity to it because, as you know, market can be killed by the first ill leanings of actually something not being real. >> So do you pay for those service or is it paid in tokens? >> It's paid in tokens. Again, the analogy is the AWS, so it's basically, if someone wants to list, there's a gas for a fund listing that has to be paid, and that goes to both investor qualification as well as the auditing process. The same actually applies to the fund operations, so there's gas for fund operations, which goes to the technical nodes, the legal service providers we work with, accounting firms, people that want to do due diligence, like say I receive a nav report and that adds some value through it. >> It's coin-operated, literally. >> Exactly, but if I receive a net asset value report from one of the underlying assets, and I as an investor don't believe it, I can stake to say I want to have KPMG go off and actually validate that this is actually real and it's actually built on standards. >> You're bringing a lot of service providers together, you're also providing some base services, that's cool, what's next, what are you going to do this next year? What's next for you guys the second half of the year? >> I think we're just scratching the surface of what this is going to do. I mean, we're very happy that actually there's a very big focus by the market on actually security tokens, Wall Street is taking it extremely serious and legislators across the world are taking it seriously, so we're very, very fortunate to be in some of those conversations with legislators who want the security tokens base to be compliant with what they're thinking about. I think it's just going to be volume, on both ends, our target is to actually have a hundred thousand active investors engaged. We want to have at least a hundred funds that are live on the platform on the network, and we want to stitch partnerships with whoever wants to participate. That makes this a frictionless ecosystem such that everyone can continue doing their business. >> Well, we need more faster, better products out there. The SEC, you've seen some of the regulatory issues, slowing things down in the US and a lot of action going on outside the United States, so, the sooner the better, right? >> Yeah, but I think the SEC is taking the approach to say, "We're going to regulate the bad actors, but we're urging a self-regulatory position by the industry." And, so, efforts like all the ones that you mentioned and us actually going in the direction to be compliant, not shying away from having security tokens in a legal fashion is the good news because the more we show that the more actually they understand that this is not some kind of evasion strategy in many different directions. >> Yeah, and we need to move faster, cool. Well, great job Philipp, we've got a great job here, Swarm Fund, check it out, they're really making it easier for investors and limited partners, the Big Money, to actually move an encrypto, open up a door, put a toe in the water, and make money, get liquid, thanks for coming on. >> Thanks so much. >> We appreciate it, BlockChain Week New York City, I'm John Furrier, thanks for watching.

>> Announcer: Live from Las Vegas, it's theCUBE, covering IBM Think 2018, brought to you by IBM. >> Welcome back to theCUBE. We are live on Day One of our three days of coverage of IBM Think, the inaugural single event from IBM. I'm Lisa Martin with Dave Vellante. We're at the Mandalay Bay in beautiful sunny Las Vegas, and we're excited to welcome to theCUBE for the first time, Steve Hill, the Global Head of Innovation at KPMG. Welcome. >> Thanks for having me here. >> So you are giving a talk Wednesday, you said, at the event. >> Yes. >> I want to get a little bit into your role at KPMG, as well as your session. So talk to us a little bit about what your role as the Global Head of Innovation. >> So Innovation is an overused word. I don't particular like the word innovation, but in the context of my role, it really is taking a look at our business and our clients, and saying what it is that our clients need for their futures. What's going to create relevance for our clients as we go forward, and how does our portfolio of services relate to that relevance? And if we have gaps where we see our services not serving them best, or not going to serve them best in the future, my job responsibility is to help for strategy purposes and for investment purposes, bring those points to bear, and to get either investment into those areas, right, or changes in the business as appropriate to make KPMG more relevant to our clients, and to their relevance to their clients, right, that's the whole idea. >> So, Lisa and I talk to a lot of people in theCUBE, and we talk lots about invention, startups inventing something or new technology that gets invented, but innovation to us, and I think KPMG is at the heart of this is taking an invention and actually applying it to effect change, getting it adopted, >> That's right. >> and changing a business, a societal change potentially, is that-- >> That's right, I mean, our short phrase for it is idea to cash for our clients, right. I mean at the end of the day, and I think this is profound in certainly corporate governance evolution, right. We've seen the advent of lots of escrow changes of how companies have been managed, enterprise has been managed, right. The Dutch started with the East Indian Trading Company, one of the first large global enterprises, and since that time we've seen the maturation, the new roles. The CIO role didn't exist much prior to 1950, right. Today we're starting to see innovation to be a very important skill and capability for all corporations, all enterprises, including government, right. And I think we're starting to see a maturation of corporate capability, I would say, in the innovation space, because the pace of change is so fast today, the political, economic, technological, social trends are so complex that you've got to get something in your muscle memory that helps you change your business as much as operate it effectively. >> I'd love to know who you're talking to within organizations. You mentioned CIO role, the CISO role, chief data officer. >> Steve: Right. >> Who are the minds that you're helping to bring together so that an enterprise that needs to digitalize to be competitive will survive, right, really survive these days? How do you help them really embrace a culture of innovation as really there's no other choice? How do you get these minds collectively agreeing, yes, this is the direction we need to go in? >> Yeah, I think, I mean first of all, this is a C-suite conversation and a board conversation in many cases, but the reality is when you start to look at the lack of innovation in an organization, right, and when the environment changes, competitors start to change, and the more complex it is, it's harder and harder for companies to pivot and to reinvent themselves. And we're seeing a lot of unbundling of businesses in today's environment, whether it's a company that moves packages, right, or a professional services firm, or a company that used to distribute videos, right. I mean things change and some of the irony is that sometimes the innovation in companies like Kodak, Steve Sasson invented digital camera, it took eight minutes to go from a snap to a picture, but they invented digital technology from cameras, and that the distribution of digital videos is that it actually would help to, further the demise of that organization. So that notion of how do you take change going on in the environment that you're working at, and more importantly your customers and clients, how does that convert into your business, that's a C-suite conversation, and I think innovation can be embodied in a person to help build process, meaning how do you take an idea, how do you look at the marketplace and get sensory input, convert that to ideas for strategy and for investment, and the investments have to be deployed to the field to the business, and that relationship, that whole lifecycle of innovation requires a lot of people from the enterprise to be involved in it. And I would argue the culture has to evolve because until recently most people, in fact, I would say, including current times, most people in organizations are rewarded for doing what they do well, not breaking what they do, not rethinking what they do. And the more you get into that operational mindset, that I want to wring all the efficiencies out of this process that I can. Right, the more you're wed to the status quo, the more somebody comes in from the side and takes you out. >> So I love this conversation 'cause Steve you're able to take the long view and then I want to sort of shorten it up, and then maybe put it into a longer term context. So over our, your guys 20-plus-year careers, mine a little longer, most of this industry has marched to the cadence of Moore's Law, that's where innovation came from. >> Yes. >> How do you take advantage of Moore's Law? How do you go to client server software, whatever it was, the innovation equation is changing now. It seems to be a function of, these guys have been hearing me say this all day but data that's not siloed, but data that you have access to, applying machine intelligence-- >> Yep. >> And then getting cloud, scale, economics and network effects, and then applying it to your business. >> Bingo. >> So talk about how you see the new wave of innovation in this world of digital or however you phrase it. >> Well, it's interesting, I mean, I don't hear a lot of people phrase it the way you do which I think is spot on which is, and my words are, ubiquitous access to technology which is cloud, data, and that's a huge question mark and a big C-suite conversation. Having a lot of data isn't the key, having the right lot of data is the key. Right so Dyson is moving into auto-making today, right. They have a lot of data and it's very different from what the incumbents have. Is it better or worse? We're going to see, right. And then of course smart computers which is the machine intelligence, right. Those three elements, I think they're fundamentally changing labor productivity. And what I would say is to your question is that innovation is really important here because if all you do is take those three elements and you just digitize a status quo process, you might get marginal benefits, you might get some labor productivity enhancement, you may get some marginal improvement, you may change an outsourcing agreement to an onshore RPA deal, but if that's all you do, you're setting yourself up for a disappointment because what's really going to happen with thinkers, i.e., those that have innovations, they're going to rethink the process. Most of our analog systems are created around people checking people, so you may have nine steps, I'm making it up, in a process, that in a digital world only requires one or two or zero when launching in some cases. And so if you can rethink that process to go from a nine-step to a zero-step process or a one-step that's a nano second long, that changes the dynamic of the process. In fact that's not even nirvana, right, the real nirvana is can you change your business model, right? And I would use IBM, since we're here, as an example of going from a big box with a lot of people running around it, called IBM of the past, Watson, to an API engine that David Kenny has helped to build that says, we're going to have a platform business model leveraging network effects, and I want to have a supply and a demand curve that are much faster growing than my sort of organic ways of growing a network could be, right, through people point clicking. That's innovation. >> IBM is an interesting company because it is a company with a lot of legacy, but I think gets, as you just described it, but you look at the top five companies by market value today, they're six, 700-billion dollar market companies, they are data companies not just with a lot of data, but they've put data at the core, so it's Amazon, it's Apple, it's Facebook, it's Google, et cetera. They've put data at the core whereas most organizations, I'm sure many that you deal with, they have human expertise built around other assets that aren't data. It might be factories, it might be the bottling plants, et cetera. So there's a gap, I don't know, machine, AI gap between sort of those that are innovating today, now granted the stock market can change and, >> Sure. >> Who knows, maybe the oil companies will be back involved, not to drop but how do you deal, how do you advice your clients on how to close that gap? That seems like a huge challenge. >> Well it is a huge challenge, and I think, going back to the three elements, it would be very easy for you to dive bomb into a transformation effort and say, I'm going to go and get some smart computers and hire a bunch of people that know machine intelligence and natural language process, and all that stuff, and put them in a room, and go create some applications, the bottom line is, that's not unimportant. You got to get your hand on the mountain and start climbing, but the data piece, I mean, if you don't understand how data is going to be relevant to your business and to your clients and their clients, right, in the future, you lose. And the reason why those five that you talked about earlier are so successful is they think a couple of steps ahead on the data strategy, right, and they're not thinking about, most organizations by the way, they'll say we want a data strategy and then they'll relegate the strategy thinking part to their businesses which are bifurcated, and they look at the world in silos. And they're doing exactly what they should do which is take care of those businesses, but when you step back into those five companies you've talked about, they step back from those silos and say, what is the enterprise implications, and how do I create new businesses with correlations of data that I didn't have before? I think that requires a whole different level of strategy. It's C-suite and board that has to guide those kinds of decisions. You don't see a lot of people really getting their hands dirty around intense forward-thinking data strategies at the enterprise level like we're talking about here. >> You believe we are entering or going to enter shortly a productivity renaissance. >> I agree, yes. >> That's sort of I'm talking about our off-camera conversation. Explain why you think that, compare it to sort of the Industrial Revolution. Take us through your scenario. >> Sure. So, I mean, when you think about labor, I mean, what are the things that I think those three elements will give us as a society, as a global community, is a pretty big S curve jump in labor productivity. In fact we have at KPMG some efforts to quantify what that might be, looking at what we call frontier firms, and applying those practices back to incumbents. 90% of most industry players is saying what are those differences that we can model. The fact of the matter is when you go back to the Mechanical Revolution, the Industrial Revolution, people did everything by hand prior, right. Equipment helped them do things whether it was, even the printing press saw changes in society and labor, but when you start to getting into heavy manufacture in the Industrial Revolution, productivity was enhanced dramatically, and instead of putting all of these people who were doing things by hand out of business and out of work, it actually created more jobs, a lot more jobs, and a lot more wealth for society. I think we're heading for a similar S-curve change with smart computers, cloud, and with data. And that the roboticism of people is going to be automated, and people are going to be allowed to practice and use what's between their ears a lot more. That's going to create value, insight, new questions to be asked. I mean, how many times have you ever heard this? Every time you answer a question on something that's very important, you want to understand there's two more questions to be asked. Medicine is that way for sure. But you're going to start to see massive advancement in areas where people have had to use a lot of cognitive skills, right. It's severely under-leveraged because they were doing so much roboticism and doing things that computers can start to do now. So I think you're going to start to see a renaissance, if you will, of people using their nogers in ways we haven't seen before, and that's going to change the dynamics of productivity and labor in a way that's going to create wealth for everyone. >> And it's going to change industry. So, okay, so I got a bunch of questions for you then. >> Steve: Yep. >> Here we go. And I asked this earlier but I didn't really get an answer. Will machines? >> Steve: From me or from somebody else? >> No, from somebody else. >> Steve: Okay. >> Will machines make better diagnoses than doctors and when? >> I mean, what's the regression line? I mean, the samples said, I think today you'll find machines giving better diagnoses than doctors in some cases. >> Dave: Okay. >> I don't know where the regression line sits today, but if you look at the productivity of doctors going a hundredfold, and the morals scattering around lung cancer, it's impressive. >> Dave: Yeah. >> And do you want a doctor involved? Yes, you do, because part of it is in an orthodoxy of trust which by the way ten years ago, you wouldn't put your credit card online to buy anything, right. It's the same kind of orthodoxy. But I do think that machines can read so much more data, interpolate so many more correlations than people that when you add that to an oncologist for example and cancer, you have a super oncologist capabilities which is really what you're looking for. We're not looking to replace the oncologist per se, what we're looking to do is get the productivity of the oncologist from two to 200. >> I was talking about diagnoses. So you would say yes, okay. >> Yep. >> Will large retail stores mostly disappear in your opinion? >> No, I think they'll change. I think that the customer experience is still, we're still people, we need physical space, and we need physical things to touch, smell, and feel. I think those things will change, but we'll still need experiences. >> I'm going to keep going 'cause Steve's playing along. Will driving and owning your own car become an exception? >> Yes. >> Okay. >> I can elaborate if you want. >> Please, yeah, go ahead. >> So, I mean, the first, I mean, we actually did at KPMG a study called islands of autonomy which modeled LA and San Diego, Atlanta and Chicago, and we modeled how do people move. And we did this for a reason because autonomous vehicles are often times amalgamated as one thing. Oh well autonomous vehicle is coming so you better sell your sports cars and your SUVs, not so fast. The reality is mobility is very different based on where you are. If you're in the middle of Kansas or something, you're going to need a truck to run around in your farm, but if you're in LA or Atlanta or Chicago, you're going to move with autonomy, with autonomous vehicles, and then you're going to really enable mobility as a service very clearly, but differently. The way people move in these cities is different, and if the US auto industry understands those differences, and extrapolates those to a global marketplace, they're going to be very advantaged as mobility as a service becomes real, but the first car that goes, I hate all of the viewers that love this category, but sedan is the first cars to go. I would say sports cars, I race cars, so I love sports cars. People still ride horses today but they don't need them for transportation. And SUVs, right, specialty vehicles that you may, it may not, the economies may not be there, but as we know transportation and car ownership, it's going to change fundamentally, and that's going to have a massive effect on FS, right, insurance companies, banks that are doing loans today. It's going to have a big effect on healthcare. Mobility as a service is going to transcend to healthcare, mobile healthcare in ways that we can't see. >> You got great perspective. I got one more for you, maybe a couple more. Do you think traditional banks will lose control over payment systems? >> Well, a lot of them are already nervous about that, wouldn't you think? >> Yeah, but it hasn't happened yet though. >> I understand, the bottom line is no 'cause I think the traditional banks are getting smarter and they're leveraging their own innovation horsepower to understand things like Blockchain, and how to incorporate those things into their business models. So the answer is I think the way they do, look, banks exist because of one reason, trust. They have trusted brands, right. As long as they can stay current enough to be relevant to your banking needs, you're going to stay with that trusted brand. I think the trick for banks is how do they move fast enough, leverage the technologies that make your life easier, and not waiting three or four days for bank clearing of a check, for example. >> That's they say if you're-- >> And get to that trust in a new way. >> Unless you're a Bitcoin millionaire or a billionaire. >> You still need a bank. >> Maybe somewhere down the line. >> Yeah. >> Okay, last one, I promise. Will robots and maybe even RPA reverse offshore manufacturing advantages? >> Yes. >> Can you elaborate and give us a sense of-- >> I think, first of all, if you really look at what RPA is doing in many ways, is disintermediating the value of geographic location in many ways, right. So where I may have had, again this is important that you understand, so I can still go offshore today and get labor arbitrage and get margin, but I'm not rethinking the business. What I really want to do is own, I want to have more control and I want to have more flexibility and growth in that back office function. So it would behoove when you think about our RPA, and bring in our RPA technology so I have it one onshore, two, leverage the data more securely potentially, and then leverage that data as part of my lake to say how do I use that data to correlate to get to what I really need which is customer relevance at the front office, right. So, look, I think that this whole notion of you're in a different country, and therefore the labor pools are different, and therefore their arbitrage will get benefits from that, those days are over. I mean, it's just a question of when does it die. >> Dave: The data value offsets that arbitrage advantage. >> Well, forget that. The arbitrage is dead itself because the machines, >> Yeah, yeah, right. >> You're talking about orders that have made it to a cheaper per unit cost for an RPA, for a bot to do something than it is for a person that has to eat, sleep, take vacation, and get sick, and all that stuff. And so no matter where they are in the world. So what I would say is that notion is dead. It's just not buried. And overtime we're going to migrate again to machines doing all that robotic stuff. But, again, those people, they're going to do different things. It's not like we're going to see hordes, hundreds of thousands and millions of people not be able to work, I think they're going to be doing different things using their heads in different ways. >> Lisa: I like that answer. >> That's a plan. >> Dave: It's good. >> There's a price somewhere? >> I'm absolutely wrong, I just don't know how wrong, right. >> Well, it's fun to think about, and you provided some context. It was very useful. So, thank you. >> And I imagine folks that are attending your session at IBM Think on Wednesday are going to hear a little bit more into that. So thanks for sharing. >> We going to see some specifics, yeah. >> Thanks for sharing your insights, Steve, and for joining us on theCUBE. You guys, the innovation equation is changing, and I thank you for letting me sit between a very innovative and informative conversation. >> Thank you both. It was fun. >> Thanks Steve. >> For Dave Vellante, I am Lisa Martin. You're watching theCUBE live on Day One of IBM Think 2018. Head over to thecube.net to watch all of our videos with our guests, and siliconanglemedia.com for all the written articles about that. Also check out Wikibon, find out what our analysts are saying about all things digital transformation, Blockchain, AI, ML, et cetera. Dave and I are going to be right back after a short break with our next guest. We'll see you then. (upbeat music)

>> Narrator: Live from San Juan, Puerto Rico, it's theCube. Covering Blockchain Unbound, brought you to by Blockchain Industries. (upbeat Latin Music) >> Hello everyone welcome back to our our exclusive coverage, theCube in Puerto Rico for the big story about Blockchain UnBound. That's the event it's a global conference from investors, bitcoin billionaires and millionaires, as well as entrepreneurs coming to Puerto Rico to discuss the future of Blockchain, the future cryptocurrency, the future of decentral application. Partnering with the island of Puerto Rico, our next guest is Damarius Riviera with Puerto Rico Advantage. And the big story is a lot of people are moving here for either tax advantages or entrepreneurial reasons and Damarius and her team at the Puerto Rico Advantage help set that up. Damarius, welcome to theCube. >> Hola, how are you? >> Thanks for coming on. >> Thanks. >> One of the big rush here is like a gold rush for folks coming in, moving to Puerto Rico but it's hard. You guys provide a service to do that for folks. How fast is it, how does it work? How does the service work? Okay, we're Puerto Rico Advantage came together as me, I'm a local from Puerto Rico and my partners are American from Wisconsin. They're both Act 20 and Act 22 themselves. So when they got here to the island, they took like seven months to find out the opportunity analysis and if the tax incentives work for them. So when they met me, I worked previously in the government before so I know how all of this works and I said let's come with one business that will be a one stop for each client. So when they come to us they get their grants, plus the relocation services for their business and themselves. >> Certainly the incentives right now are really wonderful for business and folks who are building companies and creating wealth. The tax advantages are here. There's been a surge of people coming here. What's it like? What's, how many people are coming through? Was it a lot of volume? You guys busy? Give us some insight into how it's working. >> Yes, a lot of people are coming. They're moving real estate pretty much in San Juan area. It's gone, so the other places like Dorado and Rincon are packed. When I go to the supermarket, everywhere I go it's full of American and people from upstate. And when you ask them where you're from and they will tell you from Puerto Rico. They're already calling themselves Puerto Rican. So it's very exciting and a great opportunity for us. >> One of the things I've been impressed with is the acceptance and the blending of the island folks and people coming in. Take me through an example. Let's just say hypothetically, hypothetically, I wanted to move to Puerto Rico, what do I do? I call you guys up and say hey get me a flat, get me a house. I need security I need a car. Do I need a driver's license? Do I need insurance, I mean what has to happen? Take me through and how do I, and what happens for me? Is it turn key, is it easy? What do you guys do? What do I have to do? Take me through a use case. >> Okay, first when the client calls, if it's interested in Act 20 business, they will tell a little bit about their business and then we can say if their business qualified. Then, we will take them to the CBA and work everything about the grant. It usually takes two week depending on all the info the client gives us and the quickly and I will manage everything in the government agencies. For the residential part, we schedule their meetings when they have kids to the great private schools here. We help them with the real estate, driver's license. They do need driver's licenses. I take them to get their voters ID, everything. We have like a draft, a checklist, with everything they need to qualify for residence, a Puerto Rico resident. And we take them, we make the process very easy for them. >> So they write a big check to you guys, for the service, but you guide them through the entire process? >> Yes, we do. >> So, for individuals, you can do it for individuals and businesses and individuals right? >> Yes. >> Take me through the scenarios. >> For individuals it will be the basic Act 22. So, that one is very simple and we just tell them what they need to do to comply with the 183 days they need to reside here in Puerto Rico to get the benefits for the grants tax incentives. >> So, take me through the business aspect. >> Oh, the business aspect is also very easy. As long as your company gives an export service, it qualifies. So, we even do the, if they need to hire staff, manage their business, everything. We help them with everything. >> And you guys see a lot of business coming from, people that were going to go to the Cayman Islands, or somewhere else, are they coming here? >> Yes, everybody likes because they feel Puerto Rico is part of the United States, but then we don't pay federal taxes so they have that great benefit, so they're moving a lot of the companies here. >> So since the Hurricane obviously there's been a lot of effort in the U.S. and focusing attention on helping Puerto Rico, and there's been stories good and bad, but as the new Blockchain and the Bitcoin cryptocurrency newly minted millionaires and billionaires come in, how has the culture reacted to that? They seem to be open arms. Has it been well received? What's some of the feedback that's been happening here in Puero Rico with the new in migration of folks? >> Yes, it's very well received and it's amazing because this group of the Blockchain just came after Hurricane Maria. So people were amazed like, wow, they're still considering moving here and help the island, even after this big natural disaster. So, it gives hope to a lot of people here and it's helping the island to do a lot of more progress. >> And what's great is the island is first of all beautiful but, with the infrastructure, opportunity to reboot it and reset new infrastructure, all the tech geeks, this is Blockchain, they're like tech nerds. They love the high-speed internet, they want to have the good infrastructure and the schools have now connected Blockchain. I talked to an entrepreneur here two days ago where he's linking all the schools, educational institutions and colleges with Blockchain to create a community. So there's kind of a nerd nation emerging here in Puerto Rico, isn't there? >> Yes, yes, it's amazing that we've been considered for all of that. >> Well thank you for coming on and explaining The Puerto Rican Advantage. Also, her partners are Jennifer Brockman and Angela Brookman. You guys are doing a great service. Thank you for what you do. I think a lot of people that I've talked to really appreciated it. For folks who want to come to Puerto Rico and help out and contribute but also get some real advantages for the business and as an individual. The tax breaks and the benefits are significant here and it's part of the U.S. So, great stuff. Thank you so much. >> Yes, thank you a lot. >> More live coverage here in Puerto Rico. I'm John Furrier, host of theCube. We're back after this short break. (electronic music)

(upbeat music) >> Narrator: Live from Nassau, in the Bahamas it's theCUBE. Covering POLYCON18. >> Hello welcome back everyone this is theCUBE's exclusive coverage from the Bahamas, we are here at POLYCON18 Put on by Polymath and Grit Capital This is an amazing event, it's really the cryptocurrency, blockchain, token economics, the decentralized future-internet is happening now. The industry if forming, CUBE is starting its 2018 run. We'll cover all the top events this year, in the cryptos. As you know, we know cloud, big data, we do all those other events, we'll start covering in a big way because the ecosystem is formed, you're seeing people making money. The early whales, the big guys, now you've got institutional investors coming in, a real ecosystem dynamic. This is what industries look like when they're formed. Our next guest is Carlos Domingo, founder of and managing partner at SPiCE VC, and the founder and chairman at Securitize. One of the tell-signs of a maturing ecosystem that's growing very fast is companies that are adding value. You're one of them, Carlos. >> Thank you. >> Welcome to theCUBE. >> Thank you, thank you guys for having me here. >> So, you know Dave Vellante who just had to jump on a plane 'cause the snowstorm in Boston would comment, he would say, 'cause we talk about this all the time, "You know you look "for the big waves, and you see what's happening. "But How do you know when there's a tipping point "in a new industry?" And that when there's stuff being created, value being captured, industry being formed with an ecosystem, and a community, this is absolutely happening. >> Correct. >> You're bringing a very valuable service to market. You guys self-funded this operation, Securitize. You're automating other value chains that were old guard businesses in a new way. >> Correct. >> Take a minute to explain Securitize, why the idea, what you guys have built, what you've got going on, and, What's the disruption of that product? >> Good, so the idea came originally 'cause last year me and my partners, we wanted to tokenize a VC fund. And basically show a security token that contains the economic rights of the fund as a way to provide liquidity to the investors because liquidity on the VC space is one of the biggest problems, right, you invest money and it takes like seven to 10 years and then you can actually get your money back. So we had that idea, at that time Blockchain Capital had done one security token, was the first security token, for a 10 million dollar offering, and we wanted to kind of build on that, so we went out and looked for people that could actually do the issuance of the security token in a regulated way, so the KYC, the AML, the accreditation process per country, not just for the US. And basically ran the ICO in a secure way with secure wallets for different cryptocurrencies, and then also have the smart contract issuing the token, but also smart contract managing what happens with the token on the secondary market, which is very important, right? 'Cause see, in the secondary market the tokens can actually move from a wallet to a wallet, and suddenly you're outside the regulatory framework that you protected at the beginning Right, so we went out and talked to Polymath and many, the few companies that were doing that and no one was actually ready with a platform last year, so, we are all tech entrepreneurs and product people, so we did what we know how to do, we hire a CTO, hire engineers and went and built our own platform for SPiCE VC, for tokenizing the fund. And then when we announced the project around September, October last year, I posted a Medium about the investment process, and the screenshots of the path and how it works, all the features that it has, we also integrated Bancorp as the central exchange to provide liquidity. And then started of getting flooded with people saying, wow, this is very cool yeah, we wanted to do security tokens, think this is the future, and no one actually is ready with the platform and you guys seem to have one, so who has built it? And I told people, we built it, this is our platform. And then we took the decision last year to basically separate the platform from the fund. And the fund becoming the first customer, and we created Securitize. Which is basically an end-to-end issuance platform for security tokens. >> And so this is really filling a void for people who want to either raise money for a startup-like venture, And then also maybe want to raise cryptocurrency in capital for growing a business that they're tokenizing. That's a big trend, so you've got the startup, hey I've got a great idea with a whitepaper, we're going to revolutionize the world, People are interested, some people call it the dumbest idea they've ever seen, which turns into a billion-dollar idea, because that's the way it works. (laughs) So got to raise some cash. And then there's the businesses that are growing saying, you know, I can grow with working capital in a tokenized environment, 'cause the business model shifts for that. >> Correct, I think that what people don't realize is that you know, getting actual liquidity in a market, like doing an IPO is either very difficult, or very expensive, or both things. >> John: Yeah, and the hurdle's very high. >> Yeah, the hurdle is very high, the cost could be like 10 to 12% of the money you raise you know paying the underwriters and paying everyone to get it done, so I think that what tokenizing real assets, like asset-backed tokens or security tokens, this basically allows for two things. One is the network of investors you can actually reach is anyone with an internet connection that within the regulation in their country are allowed to invest. So suddenly you've multiplied by 100 the reach you have of potentially finding investors. And second, is it's cheaper to do it. There's less friction. Third, is managing all of these thousands of investors would not be possible in the traditional financial system, right? Because you have investors from many countries, with different currencies, different bank accounts, different banks, and with the smart contract and tokens you can automate the entire process, >> And from your accent you're obviously not in the US, not an american but you're from? >> I'm from Barcelona. >> Barcelona, so you're really laid back, you're chill about this, but you're hardcore techie, right? >> (laughs) Yes. >> Okay, so let me just go through the process here, so what's interesting to me is, first of all, I love cloud computing and I think what DevOps has done in software with open-source that's clearly, in line with crypto market scene, mission. Automation is a really big deal, when you can automate something down to efficient process, you're doing it, you guys are doing this different, it's well not different it's automated, great, but the investment piece is accredited investors, right? Am I getting it right? >> It depends on the jurisdiction. So, most countries have security laws, so what our platform does, is we'll actually identify through the KYC on the name of the investor, and depending on the jurisdiction where you're from, we will apply a different rule, because in the US it is accredited investors only but in other countries you can take the small portion of retail. Also the meaning of accredited investor is different, how you actually comply with that, the documentation you need to collect or not collect for validating that someone's an accredited investor is not the same in the US and in other jurisdictions. >> Alright so, here's the problem that I see you solving, correct me if I'm wrong, if I'm a company XYZ Corporation, we're growing like crazy and we can tokenize our business, and we say hey, we could raise a token, 'cause we actually have a product and security token is a great vehicle, and so they go their lawyer well you're in the US, you can only use accredited investors, if you want to go outside the US you got to go to the Cayman Islands or somewhere else, set up a new company and do all that stuff, 'cause they have to manage the process, and they got to go find investors, that's hard! >> That's hard. >> Okay, do you solve that problem for them? >> We streamline the problem, so basically, first the fact that you setup a company in Cayman doesn't actually prevent you from, you know, the regulations in each country because the regulators care about where the investor sits, not where the company is. So what we solve the problem, is basically allow them to provide a liquidity event through fundraising and provide liquidity for the investors on the secondary market, so we basically will save them the trouble of having to figure out how to do all these processes country-by-country. >> So it's a liquidity value, too, so it's also getting the process done, streamlined, and then managing some liquidity challenges that the company would have to put cycles into managing it. >> Exactly. >> Okay so here's a question, so this is like a consulting hour for the people watching. I'm a company, XYZ Corporation I want to tokenize my business, now, we've been up and running for a few years and say hey, Securitize is really interesting, these guys are amazing, the same ethos as us, they're cloud guys, they're automating. Let's just go through them. We sign up, we apply to yo. What we do, do we have to set up a new company, is there risk issues, what's your advice on the playbook? >> So the fact, because you're using a security you don't actually have to go through all the jurisdictions, right? You can just do it from wherever you are, because you're issuing a security that assigns some economic interest on you your business, right? Now in terms of us, we're trying to become kind of like a quality security token ICO place, so we create a lot and decide which ones we bring on board or not, first, because we have so many, we have hundreds of leads coming to us all the time. And secondly, because we want to make sure that people who we're securitizing, that those are quality companies that we've vetted, and our lawyers have checked that the company's interesting, that the company is going to do well not only and the fundraising, but later down the road, so, >> What about the legal and regulatory challenges? So again, most people do a new code because they want to protect their corporate shield, there's a corporate shield to protect themselves, you know investors are always are gun-shy or trigger-happy when it comes to suing people. Especially in this economy. How does an entrepreneur or business manager protect against that, do you guys handle some of that, or is it just a buyer beware kind of thing? >> No, so we work with our attorneys, Colten in New York they specialize in securities, and we basically will advise the customer that actually uses our attorneys because they are very experienced in doing this, and in terms of protection, in a security token you're not just getting the token, you're actually signing a subscription agreement which is a legal binding document that explains exactly what the token is going to do, and there's and information memorandum which is basically describing what the business is going to do. So there's a legal framework, off-chain if you want alongside the on-chain token and the smart contract side. >> So all that stuff's happened, so awesome. Alright so we're going to change gears here, Carlos. Talk about, talk about you, why, why do this? What drove you here, are you scratching an itch or are you serial entrepreneur, how did you get here, what's the story? >> So the story is I've been, this is like the third phase of my career. My first 10 years of career, I was at the middle of the dot-com boom, I took company public in Inashik, Japan. And then went through years of corporate companies and then everything crashed so I lived both the up and the down. The second part of my career started in 2006 and then lasted another 10 years, which is during Telefonica, one of the largest telcos in the world, and I lived through all the mobile boom with the iPhone coming out in 2007 and 2008 and all the excitement happening in the industry but to me it was the opposite, I was looking for what is the next thing I do, because all these industries are now not as exciting anymore. So I came across blockchain and crypto, two things. One is I was doing a project in small cities and Dubai, where I live, where we started looking at blockchain and ran some pilots and then one of my colleagues, and friend, Brendan Eich who is the founder of Mozilla and he actually did an ICO for a company called Brave in March last year, when I saw that-- >> Brave browser? >> Yeah, yeah. >> Very familiar, great, great offering. >> He's a great entrepreneur, the guy's invented JavaScript and when I saw he did that, I met him actually a year ago and I met him this week as well in Barcelona at Mobile World Congress and when I say what he did I was like wow this is very revolutionary, right, so this is a completely different way of raising money and it's also a great way for investors because you get liquidity so why not get there and find a project. So, I started with one and then-- >> Serial entrepreneur, great story, lot of experience coming into cryptos, you got some young guns who are inventing, and making some cash, and doing well, also starting funds. You've got developers and business entrepreneurs who are successful and they're becoming investors and then you got the pros coming in, alpha geeks, serial entrepreneurs, pros on the banking side, all think differently, and they see the vision, so I got to ask you, what is your vision of the decentralized internet? You've seen how telcos work and you know their challenge is over the top content, centralized organization, you see what Brave's doing, you've lived the dot-com up and down, what's your vision of decentralized internet, how would you describe how big the wave is, and what's the opportunity? >> So I think that if you think of why people were excited in 1994 1995 over the internet, it was precisely because the internet promised decentralization back then, right? So there were all these protocols that allow you to move voice, move data, move webpages that we're going to disintermediate people. And what happened is that a lot of traditional players got disintermediated but then the weight shifted into players which are now high concentrated and centralized, right, everything on Facebook or Google. So I think that the excitement around crypto's about making a reality, the decentralized internet that didn't happen the first time. And I think that because the protocols have a way to monetize, and there's an economic incentive to be part of the network, this time will be different. >> Cloud computing has also helped a little bit, too. Because with open source and cloud computing you have a great creative environment on technology's side. >> Correct, this is like open-source money if you want to think about like crypto. So I think yes, the fact that the maturity of some adjacent technologies is helping this move faster. >> And open-source has been a proven formula, one, second tier citizen when I was growing up in the open-source community, I remember people were poo-pooing Linux back in the day, and all of the sudden now it's tier one powering the world, and now you have community modeling around how that worked, how would you compare and contrast? And you have other things coming into this, too. You've got cryptography systems you've got gamers and cryptocurrency and you got cloud, how would you tease out the industry and describe the cryptocurrency and the blockchain communities, I mean it's kind of a confluence of a lot of-- >> I think it's a very interesting industry and it has forced myself also to have to learn about adjacent topics, right, because you've got to understand about technology, but you've got to understand about software, cryptography, you've got to understand about finance and economy to understand what a monetary policy is and how you're going to define that into your token. You've got to understand about finance if you do security tokens, you know securities laws, so it is fascinating because of this confluence of different things. >> We were having a joke on one of our broadcasts, I said to my co-host, these startups will soon have a CTO, a CEO, and a Chief Economic Officer, I mean this is kind of token economics! >> Makes all the sense. >> I mean you're going to have to say, hey do we increase the coin rate, do we drop this down? >> A legal counselor. >> I mean it's a big human dynamic there. >> I think this is for me why I am so excited about it. 'cause I was kind of bored of being in an industry for 10 years, you feel that you already know more or less everything, and yet there's new things coming, but are kind of like incremental improvements. This feels like an exponential improvement, something is going to really change things, and as you said it forces you to understand more disciplines than just software technology. >> I mean to use a California example, to end the segment, you know you see the waves coming and the surfers grabbing their boards, and they're on the wave hangin' 10. And that's what's going on, you see the best people attracted to this space because there's problems or opportunities, there's challenges and there's a social impact, mission-driven impact. And I think people are seeing that, and it's attracting new entrants into the space, from banking, all sectors now coming in, they're seeing the ecosystem develop, how would you see that going, because, you do agree that the ecosystem is forming pretty quickly. >> It is forming very, very quickly, surprisingly quickly. And I think that one of the things you mentioned is the fact that, people like me or other people that come from you know long-standing backgrounds in tech are moving into this industry who are also making the industry kind of grow faster, because the industry is a bit immature if you want, in terms of everything technology. This is why there's so many hacks, the usability of the products is still not there, so as more people from a traditional tech industry move here, and start building good products, this will actually change very quickly. >> Great leadership, Carlos, on your end, congratulations. You're seeing an opportunity and you're making a difference. You're putting out a great product service I think people are going to use a lot of, and looking forward to chatting more about it and of course you got to VC fund, and you're doing some investments, you put some skin in the game as well, with your companies, congratulations. This is theCUBE live coverage we'll be back with more, here in the Bahamas, and our friend from Barcelona here. Great entrepreneur, looking forward to chatting more about the decentralized economics, the technology, how the value will be captured, the technology that's going to enable that and the impact to society. It's theCUBE, more live coverage after this short break. (upbeat music)

>> Narrator: Live from Washington, D.C. It's Cube Conversations with John Furrier. (techno music) >> Hello everyone, welcome to our special on the ground presentations, The Cube coverage in Washington, D.C. I'm John Furrier, the co-founder of SiliconANGEL, the host of the Cube. We are getting all the stories on what's happening with the innovation and entrepenuership in our societal nonprofits and/or innovation in government. We hear Peter Prix is the OneRelief app founder, onereliefapp.com, OneRelief is your venture. You're part of the PeaceTech Accelerator. We're here at the United States Peace Institute in D.C. Tell us about your opportunity. >> Great pleasure. Yes, my name is Peter, CEO and founder of OneRelief, the OneRelief app. What we do is let people like you and me make quick donations, micro donations to disaster relief aid. So after emergency has struck, Hurricane Maria, last year in September, approaching the Caribbean Islands. We all knew about it, we all saw those pictures on TV. And we all felt empathy and wanted to help and wanted to gift, but there's no easy way. So what we do with the OneRelief web app is we let people like you and me easily, with the click of a button, make quick donations that supports certified disaster relief agencies on the ground. >> And you guys are a start up here at the PeaceTech Accelerator. >> Exactly, we're a startup here at the PeaceTech Accelerator. >> Great, well I'm really bullish and I think crowdsourcing has opened up the democratization of giving, which has been phenomenal. But there's some scale issues, now there's ten zillion apps, certainly GoFundMe, we know about those things. They're kind of peer-to-peer. You know, friend has to socialize with that but you know, a lot of folks are wondering, hey, if I donate to that Haiti situation, or hurricane, where does the money go? We heard in Puerto Rico, half the stuff didn't even get there. This is a big fear, cognitive dissonance from the giver. Do you guys solve that problem? >> Yes, so absolutely. When it comes to giving at the moment you can choose between giving to the big players, the big charities that we don't trust, as we know. Or you can go on a platform like GoFundMe and there's actually 12,000 fundraisers for Hurricane Maria. And you don't know who to trust either. So what we do in OneRelief is we provide a marketplace, a platform that is certifying charities with confirmed people on the ground. And when you make a donation through the platform you actually get an update. You get a status notification, help has been embarked, help has arrived in a community. You get visuals, you get video of what's happening on the ground. And you get feedback at the end of the disaster of what has actually been achieved with the money you've donated. >> So you close in the loop from the giver, from the journey of the money to the destination, and seeing the impact of it. >> Absolutely. From the second you press the donate button and you donate and you share a fundraiser, you can see how the money is getting to the country, how the money's being used, what it's being used for, and what the progress of that is, providing you information on the impact of your donation and closing the loop and encouraging you the next time another disaster happens to donate again. >> Create some reliability. You're essentially verifying the end points of where the cash goes. >> Peter: Absolutely. >> How's it going? How far along are you guys? Sounds like a great idea, I think it's an awesome idea. Getting a little dashboard, seeing the impact, make people feel good, know their money's going to work. How do you get this off the ground? You're in the Accelerator, what's the status? >> Absolutely, we're about three weeks away from the launch of the platform, it will be launched on March 1st, so we are in the final push of getting the app off the ground. We have partners, we have contracts signed with, for example, Action Against Hunger, where agencies that have country offices that have been working in the countries that are very often struck by crises for many many years. So it's not that their money goes to a small charity that we've never heard of and are not able to get any accountability information, but it's going to certified agencies that have people on the ground. >> And they're excited by this, it sounds like. >> Oh they are more than excited. It's changing the entire industry. It's rather than the rich people signing big checks it's people like you and me small donations that have an impact of changing the world. And what the OneRelief app is really special and good at it's the speed at what this happens. So, a disaster strikes, within hours, the fundraiser's online on social media and people can donate. >> And one of the great things about us covering Gov Cloud, we've observed that bringing a modern stack like cloud you can actually radically transform these industries that have technology going in some cases so antiquated they don't know what's running on. >> Oh no, absolutely. So, the platform itself is running on AWS and we use serverless cloud technology that allows us to really scale the platform, whether a thousand people donate or a million people donate at the same time it's running on a serverless cloud. >> So you're providing critical infrastructure services for donations , big or small? >> Absolutely, and it's 100% scalable, which wasn't able a few years ago. >> How is the accelerator helping you, PeaceTech? >> Yeah, a really interesting question in multiple ways, both through mentoring support that we get through the partners that bring incredible support and help us really in getting the platform off the ground. AWS helps helps us with setting it up on lambda, that's wonderful. We have C5 who gives us some really interesting support in how we can operate this as a nonprofit with a tech startup mechanism. We have partners like the PeaceTech Lab that helps us really operate as a nonprofit. >> We've been covering AI for Social Good Intel among other partners. Really kind of look at this, not just as a philanthropy opportunity, real change. But what's interesting to us us we've reported on SiliconANGLE is the societal entrepreneurship market is booming in D.C. Can you comment about what it's like here? I mean, is that right? Obviously Silicon Valley where we live you get a lot of the tech alpha tech guys out there. But here it's like non-profits. What old ways of doing things are now kind of becoming more entrepreneurial because of cloud? What's your reaction to that? >> No, absolutely, I think Washington, D.C. Is the best place for us to be at. It's a mix of government, non-profits, and foundations that come in. There's a lot of, actually a lot of young startups coming up, impact startups. There's lots of coworking spaces. And we can really feel it. This is the most conducive environment for us as a startup to grow and to thrive getting support from partners that we need. >> Societal entrepreneurship as a category, I mean, I don't even know if that's the name of it, what do you call it, is booming. Can you share any anecdotes, is it booming, is it just emerging? What's your thoughts? >> Societal entrepreneurship. Yes, what the OneRelief platform really does, it allows everyone to give. It is enabling every citizen in the world to make a quick donation an amount that every one of us can afford. >> Final question, what's your core challenges as you get through the accelerator, look to go to market, is it the partnerships, is it the tech? What are your core challenges? >> I think it's really clearly communicating how OneRelief is different and how it is not like all the other platforms out there, how we are the one stop shop in a marketplace that is connecting people who want to do good with receiving charities on the ground. >> How do you compare and contrast to say these other crowdsourcing and crowdfunding platforms? >> Yes, on the one hand there's the big players, the big charities that we don't trust, that we want to give directly to because we don't know what happens with the money. And there's peer-to-peer fundraising that we don't trust either because they're tiny and we don't know who's setting up those fundraisers. We are right in between. We are a platform that is connecting the donor with a certified charity. >> How about emerging technologies like blockchain which has been very popular in supply chain-like things, because you're basically an end-to-end supply chain of money moving to the end point, the relief or whatever. >> Peter: Yeah! >> Good use of blockchain? No? Are you thinking about that? >> Oh no, absolutely. We actually have an innovation lab that is only purely looking at blockchain from different angles. One of them is for us to accept crypto donations and to be the first platform on the market that is accepting micro donations in cryptocurrency. And secondly, we are looking at blockchain technology and running a hyperledger project at the moment to see how we can accelerate the speed at how long it takes to get the donation from when a person makes it into the receiving bank account on the ground in country xyz in the world. >> A whole new infrastructure wave is coming, you're seeing it decentralize applications and hardened end-to-end apps like you guys. >> Yeah, no, absolutely. >> Well, congratulations Peter. Thanks for joining me here. This is the Cube Conversation on the ground here in Washington, D.C. where emerging markets and nonprofits and just ventures for good are now the new entrepreneurship craze in Washington, D.C. It's the center of the action and with cloud and modern software and blockchain and things of that nature you can make it happen. Thanks for watching. (techo music)

>> Announcer: From Barcelona, Spain, it's theCUBE covering Cisco Live 2018. Brought to you by Cisco, Veeam and theCUBE's ecosystem partners. >> Here in Barcelona, Spain. It's theCUBE's exclusive coverage of Cisco Live 2018 in Europe. I'm John Furrier, co-host of theCUBE, with my partner in crime this week Stu Miniman, Senior Analyst at Wikibon. Also co-host of many events across the world in terms of networking, storage, Cloud, you name it, Stu is on the developers with me. Stu, thanks. Nice seeing you. Stefan Renner is Technical Director, Global Alliances at Veeam Software is with us with Darren Williams, @MrHyperFlex, that's his Twitter handle, go check him out. HyperFlex-V at Cisco, guys welcome to theCUBE. >> Thank you. >> Also love the Twitter handle. >> Darren: I live the brand. >> You live the brand. I mean that's got some longevity to it, it's evergreen. So congratulations on that. You guys are together with Cisco Veeam, what's the story? What's going on in Europe with Cisco and Veeam? >> I would say there is a lot of stuff going on between Cisco and Veeam. Especially around the Hyperflex story, obviously is the topic of this session, right? So having integration, Hyperflex, having a good go-to-market, having a good relationship between the two companies. We just joked about how often we've been in front of cameras talking about this exact same topic. So that shows that the relationship between the two of us is really moving forward and in a good shape. >> I think we're in good shape in terms of, you think about not just my product, Hyperflex, but you look at what Veeam can do for the rest of Cisco data-centered products, and be that backup, safer hands around what we need in terms of that data protection layer. But also then, what we can add in terms of that target to be the server of choice for backups so you get the benefits of the speed, performance, and more importantly, you get quicker restores. Because that's the important bit, you need to be able to do the quick restore. >> Yeah, we usually talk about availability, right? We don't talk about backups or recovery. Even if recovery is maybe the most important part of availability, still we talk more about availability than maybe anything else. The good thing about Cisco is that the actually can deliver what we need in terms of performance, in terms of capacity, in terms of compute resources. So yeah, that's a real benefit. >> It's such an interesting time, I mean we look back at history, go back 10 years ago, maybe, or more; backup recover, that's like, "Oh, we forgot to talk about that in our RFP." Kind of bolted on, kind of retrofitted in. But now we've seen it come to the main center. But more importantly, with AI and Cloud, and all the action happening with DevOpps on premises, you hear CIOs and CXOs and developers saying, "We're data driven." >> Yeah. >> Okay, so if you're data driven, you have to be data protection driven too. So those things go hand in hand. So the question for you guys is how does a data driven organization, whether it's in the data center, all the way up to the business units, or the business processes, become data protection built in? How do they design in from day one a data protection system up and down the stack? >> Yeah, so maybe I'll start to answer that question. I think when I'm going to customers, and I fully agree on what you just said, most customers 10 years ago were focusing on getting used to platforms and getting used to org systems. It has to be an isolated project, right? Now in those days when I go to customers I tried to convince them to include data protection in every project the do in data center, because at the end, data protection is one of the core elements. >> So designing in early, at the front end? >> I say whenever you go about having a new Hyperflex system or whenever you talk about replacing your existing environment, whatever you do, right, just look into data protection, looking into your availability story. Because right now, and you mentioned that, it's about data services, right? We don't really talk about restoring of EM, we don't restore to the single file. It's about, the customer wants to have a data availability in terms of a service availability. And that includes more than just the VM, it includes more than just the single thing, right? >> Yeah. So they need to include data protection and the design of that in the whole org chart. From the beginning. >> And you're point? >> Yeah we look at it from a similar thing in terms of where you've got changes happening in terms of the way people are looking at how they want to design their applications, where they want their data to live. And that's the whole messaging around 3.0, is that multi-Cloud readiness platform. Being able to think about an application and go, "Do I want to design in the public, and house privately, "or vice versa? Do I want to house the data "of the application in a private location "and the actual application in public?" Having that being able to be transparent to a user in terms of the way they design it and then position, but also as we look at other applications, not all people on this journey are going to go, "We're going to put everything in the Cloud." They're going to look at about, maybe have a little bit in the Cloud, a little bit of the traditional apps we need to manage and protect. And it's all about that 3.0 that we've delivered the pre-multi-Cloud offering around Hyperconvergence, we've now brought the multi-Cloud element. It's giving you the choice of where you want to position things, where you want to house things, how you want to design things. And keeping it nice and simple for customers, and the agility and performance. >> Darren, some really interesting points that you just had there. When I think back to a few years ago, Hyperconverge, pretty strong in North America. But it was project based, it was like, let's take a VDI, some virtualized environment, it wasn't a Cloud discussion. >> Darren: Correct. >> Take us inside what you're seeing in Europe here, because today Hyperconverge is a lot about Cloud, how that kind of hybrid or multi-Cloud environment, so what are you hearing from your customers? >> Absolutely, and I think if you look at the, what's happened in times of Hyperconvergence up to this point it's the initial building block of this multi-Cloud. And we're seeing more and more customers now, I think the latest IDC survey, surveyed that 87% of all customers have a multi-Cloud strategy. And we're seeing now more of the ability to think of Hyperconvergence as that multi-Cloud strategy, and have that simplicity that people have done in terms of the initial thought around a simple application, how they can collapse the layers, they can now utilize that experience into the multi-Cloud experience. And we're seeing more and more of that. We've now got 2500 users around the world around Hyperflex, and about 700-800 EMEA, and the majority of those are utilizing it as private Cloud experience. They're getting the benefits of what they've had in the Cloud, and getting away from the sovereignty issues, and the shadow IT issues that they all face. They can now bring it back into their own data center. They can start small. They can spin out applications very quickly. They're getting the benefit of that Cloud message, but locally now. >> And I think that perfectly aligns with the Veeam story because as you know we are also focusing on the Cloud. We recently changed and also did some acquisitions on the Cloud, so we're also moving forward in the Cloud story and the HyperCloud area. And that's more or less what Cisco's multi-Cloud's story is also about, right? And I think one thing we should also mention here coming a bit back to how to implement and how to design such solutions as having more of a broad view on all the projects. I think one important thing for customers is the CBD Cisco has, right? And we do have CBD available to beam Cisco on the data protection layer. So we try to make it really easy for customers and for partners to design, implement and actually do the right decisions for those projects. >> Stefan, at Veeam On, of course a lot of partners, a lot of talk about the multi-Cloud, of course Veeam has a long history of VMware, but why don't you talk about Microsoft? I believe there's some things you've been doing lately with Hyper-V and the like, what's the update? >> Yeah, so obviously with Hyperflex there is Hyper-V coming, right? That's one of the bigger things coming to Hyperflex. Now for us, when we started to talk with Cisco, Cisco actually told us that Hyper-V is next and 3.0. We said that's fine for us, because as I said, we are dealing with Hyper-V like we did with VMware since a couple of years. So there is no big difference in terms of features and what we can do with Hyper-V. On the Microsoft side obviously it's around extract, which also is a big story with Cisco and Veeam, because there is a extract solution, and so we tried to get the extract fully integrated in the Veeam portfolio, and it's about effort, right? As we just talked about, making this Cloud journey even easier for the customer, making sure we have data protection forever, or making sure we can actually use our Cloud solutions to provide the full experience in the cloud. >> So the question on European audience, I was just looking at some Twitter tweets, getting in some feedback, is, "Ask the GDPR our question." Which is basically code words for the sophistication between data protection, you know we say as you get bitten in the butt if you don't prepare. And this is one of those things where I mean literally, there's so much data out there, people can't understand their own tables. I mean, if you have accounts, how do I know a user uses a certain name in this one, I got a certain name in this database, I mean it's just a nightmare to even understand what data do you have, nevermind taking someone out of a database. >> Yeah. >> So, the challenges are massive. >> Yep. >> This is coming down and it really highlights the bigger trend is: what do I do with the data, what is my protection, what's my recovery, how do I engage in real time, GDPR issue? Talk about the GDPR issue, and then what it really is going to mean for customers going forward. >> Well, I think if you think about GDPR, and people, I've got the understanding that it's just a mere thing, it's not. It's a worldwide thing. Any data that relates to a European citizen, anywhere in the world, is covered under the GDPR. So you've got to think about the multinationals we work with, have to have this GDPR thoughts, even if they're not based in EMEA. They may house data based around a European citizen. So it's a massive thing. Now, not one person or one organization can fix GDPR. We're all part of a bigger framework. So it looks like if you look at the Hyperflex offering, having self-encrypting drives, having good data protection and replication of the data so it's protected. That protects the actual content of a record, but it doesn't solve everything around GDPR. There's no one organization that can do that. It's about having that framework of you do the right decisions around the architecture, and the data protection, you'll get in there in terms of the protection. >> Well, I mean, I'm just going to rant here and say whoever came up with GDPR doesn't know anything about databases, okay. >> Darren: Yeah. >> I mean I get the concept, but, I mean, just think about how hard it is to deal with unstructured data, and structured data in and of itself within a company. Nevermind inside a company, what's happening externally, it is a technical nightmare. And so, yeah, just hand waving, "Hey, someone came "to your website." Well, did they come in anonymously, did they login, which identity did they login on? There's no - I mean it's a nightmare. This is a huge problem. What do customers do? >> I think if you talk about GDPR it's first of all not about a single solution, right? It's not an issue of just one company, or one vendor, one solution. It goes across different databases, different applications, different software, so as you said, it's database solutions, you need to delete maybe a single table entry, which is almost impossible right now. Especially if that's ina backup, right? How are you going to do that? I think between Cisco and us, and he mentioned that one important part of GDPR is data protection itself. So the customers need to make sure they can actually promise and they can show to the government that they have a proper data protection in place, so they can showcase what does my DR plan look like? How do I recover? What is my RPO? So we can already solve those issues. >> It changes your game because, for you, it turns you into a insurance policy to a proactive; in order to do data protection you actually have to know what the data is. So it kind of creates an opportunity to say hey, this is an opportunity to say we're going to start thinking about, kind of a new e-discovery model. >> If you look at 3.0, the multi-Cloud platform, we were discussing around how Hyperconvergence started very small in certain apps. But when you actually then expand that out into the multi-Cloud, security is a major pillar. And you've got to have the security elements, and Cisco has some great security offerings in the data center and outside of the data center. They all form part of that GDPR message. But it's been baked into multi-Cloud 3.0. as a key component to allow customers that confidence. >> It's going to be a Hyperconvergence of databases. So this is coming. >> Darren: Yeah. >> So this is going to force, I think the compliance is going to be more a shot across the bow, if you will. I don't know how hardcore they're going to be enforcing it. >> It's going to be interesting in the first one. Because at the moment I think a lot of customers are thinking, "Well, we'll wait till we see "how big the fines are, and then we'll decide." >> They're going to create shell corporations in the Cayman Islands. (laughter) >> Alright, so we've talked a little bit about some of the headwinds we're facing in IT. Talk about the tailwinds. A lot of things in the Hyperflex 3.0, got 700-800 customers, what's going to drive adoption, get that into thousands of customers here in 2018? >> So I think it's the simplicity message. Customers want ease of use of technology. They want to get away from what they've had before where they've had tough times standing up applications, where they've had to invest time around different skill sets for the infrastructure, be it networking, be it storage, be it compute. Having 3 teams back leaning against each other, and change windows. So the simplicity message of Hyperflex is you can have a three node cluster up and running in 34 minutes, including the network. We're the only ones that incorporate the network into the solution, and we do it for good reason. Because when we can get predictability in performance, and we can grow the solution very, very easily. And that's the whole point of what they're doing, is they want to be able to start small, and add more nodes when required, around what applications they're going to deploy on. Our tagline is "any application, anywhere" now, and either private location or into that multi-Cloud location. Gives customers choice, and I think as we start seeing more and more customers, 700 in just under 2 years is a phenomenal amount in EMEA, and 2500 worldwide, we've had some great traction. And it's just going to get faster and faster. >> Yeah, I think a lot of customers are obviously talking about moving to the Cloud completely or at least majority of the data. So for the customers that stay for them, and I talked with some customers today, and they told me, "For us right now, we can't focus "anymore on a data center itself. "We do have much more difficult and more important "topics to talk about and to cover in our IT business "than the basic data center itself" That includes compute, that includes digitalization. So it's great to hear you can actually set up a Hyperflex system, no matter if that's Hyper-V or VM or whatever in less than an hour, right? And if I tell you now that if you add Veeam on that to provide the availability for Hyperflex environment that's also less than an hour. So if you know how to configure that you can be done in a couple of hours, and you have more or less the whole data center set up. >> You bring up a really good point. What are customers concerned about? I have to worry about my application portfolio, I have my security issue, my whole Cloud strategy piece, so, if the infrastructure piece is just invisible and I don't have to touch it, tweak it and do that, I'm going to have time to actually grow my business. >> The more integrated it is, the more easy it is to set up and to maintain and troubleshoot by the way, that's also an important thing, right? What if it doesn't work? If there is a consistent layer, a consistent way to get all this information sent to get a troubleshooting thing done, the better it is for our customers. Because again, they don't want to care anymore about what's happening in the back end. >> And that's the next challenge we're addressing, in-app product or Insight, is taking that management solution into the Cloud to make things easier for customers. And being able to take a lot of the things we have in point product into a Cloud model. So the likes of analytics, the likes of Smart Tac. Customers get fed up if when they have an issue they have to go and roll the logs up into Tac, and then go and FTP them. They get away from that, they don't need to do that in Insight. And it's all about, we're talking about the deployment of technology, well one of the fist benefits of Insight is Hyperflex. We can roll out sites without even visiting them. You just do a Cloud deployment, and a Cloud management, and it's job done. >> And this is the whole point we were kind of getting at earlier, connect back to the compliance issue, these agile like things are happening; it's throwing off data too. So now you got to organize the data, you can't protect what you don't understand. >> Correct. >> I mean that is ultimately the bottom line for what's happening here. >> Yeah, you can't protect what you don't understand, I think that's a good conclusion of the whole thing. And I think for us >> By the way when you guys use that tagline I want royalties. But it's true. (laughter) We'll get back to you on that. No, but this is a big problem. Protection is inherently assuming you know the data is. >> Stefan: Yeah. >> Darren: Yeah. >> There it is. >> That's for sure the case, and one thing we worked on and, you know, we announced it a couple of months ago, was the Veeam Ability Orchestrator, which is another layer on top of it. So he just talked about how they can deploy within the site, multiple sites of Hyperflex very easily. And for us it's about, you know, getting the customer an easy solution with all the successful recovery and failovers in areas across the data centers with the Availability Orchestrator. >> Data is the competitive advantage, data is messy if you don't control it and reign it in, of course theCUBE is doing their part and bringing the data to you guys here in theCUBE with Veeam and Cisco partnership. I'm John Furrier, Stu Miniman breaking it down here at Cisco Live in Europe 2018. Live coverage with theCUBE. Be back with more after this short break. (techno music)

(upbeat orchestra music) >> Hello there and welcome to this CUBEConversations. I'm John Furrier here in our Palo Alto studios. This is theCUBE, Cube Signal program. Here with Grant Fondo, partner at Goodwin, CUBE alumni, been on before, thanks for coming back in. >> Good to be back. >> Partner at Goodwin, one of the best law firms around ICOs and just corporate government. He's a security guru, regulatory guru. We've talked in the past there's a YouTube video out there. Check it out. Search for Grant Fondo, you'll find our previous interview laying out the ICO playbook. Update. Let's get the update to the playbook. So, ICO's kind of in a winter state now, but still ICO's going on. Signal announced massive traction with their ICO. They're going to do an insider kind of private sale, looks like and then open it up. They got millions of people. So that's interesting. But then ICO stabilized. You got Siemens at 20 million range. What's the current update from the ICO front? >> So I think in the US, the current update is sort of post Munchee. So there was a SEC enforcement action and then Commissioner Clayton made certain statements about ICOs and then the net on that is I think it has provided greater clarity about issuing utility tokens in the US. Clayton's statement essentially was that they haven't really, the SEC really hasn't seen any utility tokens that are really utility tokens. The Munchee decision emphasized that in some regard. So with the Munchee decision, some of the things that they focused on was the marketing of the token. Even though they essentially, the SEC assumed that the token was a utility, had tremendous utility essentially on the platform, but what the SEC did was looked past that and said okay, what's the practical reality of that? And so what they focused on, they focused was the marketing. So how is that company marketing the token? Are they selling to people just to use it on a platform? Or are they selling it much more broadly to investor, kind of crypto-investors, VCs, that type of thing? Also there were some certain marketing statements where the company was actually trying to drive up their, emphasize that the price of the token would go up in value. They also focused on the fact that it was going to be on an exchange. And so what they, what they said was listen, this token is not a pure utility token. What it is is a token for people to buy with the idea, hope and expectation that it will go up in profit. >> So they basically, Munchee decision was targeting guys who were throwing everything at the wall? They seem to be. >> Yeah so it's funny. I think that's a little bit of a misinterpretation. So there's, clearly there were statements in there that you sort of shake your head a little bit. But I think that misses the picture of the Munchee decision if you focus on oh well we won't make those sort of statements. You need to look at, and focus on also, what were the other underpinnings of that, that enforcement action and what was the message, combined message with that, with the July 25th guidance that they issued and then Clayton's statements. And I think the message is that utility tokens are going to be a tough road in the US going forward. They certainly have not identified what a valid utility token would look like. So I think it's, it's a little bit of a, they've created greater clarity, but also a lot of uncertainty as well. >> I was having a conversation with some friends. And we were talking about ICOs. As you know we're bullish on ICOs. But the conversation turned towards two bipolar positions. Man this is a crypto, so awesome, blockchain, innovation, take down the incumbent, decentralize the apps, this is the future. And then the other side, from very smart people, is man that's fraud, don't associate yourself with ICOs. So there's a little bit of a Wolf of Wall Street wolf of ICO kind of mentality going on where they see the pink sheets, the old over the counter market that they made the movie Wolf of Wall Street around. People are nervous about that. I'm not saying that's happening, but there's a vibe there. What's your reaction to that? And I'm sure you might have conversations about the same kind of reaction. >> Yeah my reaction is this is a seat change. And it's going to happen and it's happening. And I equate it to the internet in many ways. And so I think you have to go in eyes wide open. I think you have to understand the regulatory risks if you're a company doing it. You know, there's not a certain path to do it in the US. And you have to evaluate that. There's, you can go offshore and there's certain paths that way. But as someone who's potentially going to purchase tokens or digital currency, and I sort of separate them between like the Bitcoin and Ethereum, which is more digital currency, and then tokens which are some of the ones we've been talking about. >> Close to 1,400 now out there. >> I would assume there's even more at this point. So they're literally popping up every day. And I think you have to, like the internet, I think there will be winners and losers. There'll probably end up being more losers than winners. I think the regulatory environment will get more certain. And then there's going to be, and that's fine. You have to go eyes wide open and you may lose your money in it, and then there's the category of pure fraud. And so that, there's always, whenever there's an opportunity, the criminals come jumping in. Or people take advantage of a situation where maybe they would not have otherwise. And that's going to be a portion of it too. But I think you can get a pretty good read on some of these whether this sounds like pretty sketchy or not and you just have to be realistic about it. >> And you guys are doing a good job. The Goodwin practitioner community is really working hard. I mean I always say, my feeling on this, we've talked about this before, is that the internet bubble was a bubble, but everything played out. You can buy pet food online. You can have stuff delivered to your home. So I think the same thing's happening with ICO. I think the things that are coming out that's innovative will end up happening. The question is the compressed nature of how fast forward this bubble is. I mean look at the NASDAQ growth during the dot-com bubble stage. And look at the crypto market total market cap. It's so fast forward. It's happening faster than even the dot-com bubble. How do you keep up? I mean, what's your day like? Do you go through research notes? I mean, you're talking to clients. It's a fire hose. >> Yeah it is, but it's a great time to be a lawyer in this space too. So a lot of it's dealing with clients and trying to figure out how do we deal with the regulatory situation. Advising them, connecting with foreign council as well. Dealing, there's been some enforcement activity both on the state and federal level. So I'm dealing with that as well. Advising them through that process. So, I mean, it's a fun time to be a crypto lawyer, an ICO lawyer. And I think too that what is also part of it you're seeing here that's fun and interesting is that regardless of how you feel about ICOs, one of the great benefits of it is you have all these different companies that otherwise would have never thought about using the blockchain or hadn't focused on it. And they're suddenly using the blockchain and this technology. So you've mentioned about how fast forward it's going. How quickly things. I think these have accelerated this change and this disruption by five to 10 years. And I think that's an enormous impact that is a positive impact. And so no matter what happens with the coins that you buy or may not buy, that's going to be a change that's going to be with us going forward. >> Talk about the regulatory update. There's obviously concerns in whether you're investing in crypto or investing as an individual or a fund or as an entrepreneur trying to build a business. What are the regulatory things that people should be aware of now? That's different than before or that's maybe more prominent. How would you talk about the regulatory? >> So I think there's a couple of buckets. So one is if you're the company doing the ICO you've got to address whether that token is a security. I think the SEC has said most of them or all of them are securities. You have to deal with that reality. If you're trying to create a cryptocurrency you have to look at are we going to be registered by FinCEN? And so I think you need to assess those. I think if you are part of the ecosystem helping these sales, so let's say that you're doing the marketing for one of these token sales. Or you're an advisor who's trying to bring in other investors or things of that nature. You have to look at what's called participant liability under the SEC rules. And so you have to be aware of what you're doing whether does that create exposure to you or your company if that token ends up being an unlicensed security. Likewise, if you're an exchange, moving these tokens or facilitating the sale of these transactions. You now have to think about am I, should I be registered with FinCEN, should I be registered with the SEC? So those are really kind of issues, core issues that you have to deal with. And then as an investor, I think generally investors would be viewed as the victim by these regulatory agencies so I don't know that there's real exposure from a liability or litigation perspective, but I do think it's more, again, like doing the due diligence and eyes wide open and understanding that if it fails, you may not, may not have any recourse. >> So everyone wants their tokens to go up. That seems to be the trend. Let's parse through the concept of utility and security we did, but now I have a token out there. An ICO, and I plan to take and ICO, or I'm ICO. What's the role of exchanges in all this? Because good tokens should have liquidity. People should be exchanging tokens. Some people hold the tokens or hoard them. But the role of an exchange. Do I plug with an exchange? Do I do my own exchange? What's some of the law around that? Because you know if I'm an ICO candidate I'm like hey I'm going to launch my token. It's going to be a secondary token, but I'm going to run my own exchange. And of course, list my token on the big exchange so people can trade it and the price will go up. >> Yeah so that's-- >> So that's natural reaction. >> So that to the SEC is going to sound like a security. So one of the things you have to address is if you're going to do this in the US or bring in US money is, I think it's a real risk to put the tokens up on an exchange. >> Is there hybrid models? Cause I can see a utility vehicle and saying hey we're a utility like the arcade example we used before. But what good is a token if the price doesn't go up right? So say that utility doesn't go fast enough in all this arbitrage, can I do a hybrid utility and security? >> I think it's hard, I mean it depends on how it's structured. One way to do, potentially to do a hybrid. And this has not been tested as far as with a utility token. But the SEC has, sanctions is not the right word, but it said what's called passive bulletin boards, are not securities exchanges. So that's in the context, imagine, you essentially say here's the platform for people, buyers and sellers of our token to exchange it between each other. We're not in the middle, we're not taking any transaction fees. And so there's a path to that and that may not be attractive to certain ICO companies but that is a potential path where you can provide liquidity. >> So like a Craigslist, or like a bulletin board. >> Craigslist. >> The old school, you know, bulletin board days. >> Yes, people still use them. >> John: They still use the word bulletin board? >> Yeah. >> Good news, okay. >> Grant: Exactly. And so that.. >> Social network? >> Yeah, that's a path to do it. You can also, if you do create a system where the token does not leave the exchange, excuse me leave your platform, so it's a closed loop token. That's a potential path that you can do. Again, may, it may-- >> So there's solutions for people who need to have some sort of interaction between token holders. >> Grant: Yes. >> Without going pure exchange in the sense of trading and having a market cap and all that stuff. >> Yes, I think it's many clients would say that it's less attractive from a marketing perspective. But there are, there are potential paths. There's also the path that we're seeing more and more which is securities tokens. I think when you and I met last time we had just started touching on that, but I think that-- >> Explain. What's the big change? >> So the concept is the securities token is you're basically going to treat it like you are going to treat it as security. You're going to own it and you're going to go to the SEC and get it registered through like a Reg A+, which is essentially is a 50 million or less raise. That's sort of a common one we're seeing. And so in that context, you are saying it's a token, but it's a security. You don't have to give up equity. There's other ways to do it so you can give up a percentage of the revenue. Sort of treat it like a divided. And in that way it's a regulated entity and you're not taking that risk about are a utility token or not. >> That's a good path and it makes sense. Depending on the ICO. Okay let's talk about bounties. As you know we love bounties, love the concept of bounties. Media business would call promotions spiff, channel partner, whatever, people use promotional incentives. Bounties are popular, you've seen bug bounty in open source being used. Tried to get Kelsey to, Kelsey kind of addressed it a little bit, but it's more of a legal thing now. What's the status of bounties? You mentioned before we came on that gets the SEC's attention. >> So the bounty is designed to sell the token. So you're in your fundraise round for example. And you put out a bounty so that people will go sell the tokens. I think it creates issues with the SEC. Part of it is it's very hard to control that bounty. So you're going to have people who are trying to make money selling your token. And they are potentially going to make statements that are going to indicate or make statements the SEC is not going to like. So it's something-- >> Or promises. Said basically to sell the deal. Broker dealer almost, right? >> Correct. So there's a couple of issues. Not only from the company perspective that you've got somebody out there who's probably marketing your token in a way that the SEC's not going to like and so that creates potential exposure but also from the bounty person, the person doing the bounty, there's potential exposure. But are they essentially doing a broker or are they acting as a broker dealer or other type of seller of unregistered securities as a participant for example. And so it's not something we generally recommend to our clients. That said, if you are going like more of a true utility tout, there's nothing wrong with like a reseller agreement. So you could structure something most of these bounties tend to be like hey if you bring us x amount of token sales, we'll just give you something. There's no real strong contractual arrangement. But if you are a company that has traditional resellers, and the purpose of the sell of these tokens is for that customer to use it on your platform, I think you can structure things so you have reseller agreements. >> So it's really case dependent. If you're using bounties >> Very case dependent. >> as an arbitrage to sell the deal versus actually part of your business model, that's kind of the way you look at it. >> Yes, I think that's a distinction and I think that's a distinction, no guarantees, but I think the SEC would understand. I mean, it's all part of it. They're looking at the picture. Are you trying to just make this token go up in value or is this token really supposed to be used on your platform? >> Alright so question for you. Since we last talked, I think it might have been two months ago, may have been 60 days or so, I can't remember the actual when you came in last, it seemed like yesterday. What's changed, what have you learned, what's new? What's surprised you? What's interesting that's happened over the past few months? >> So I don't think any of the regulatory action has surprised me. I think we sort of knew that was probably coming. I think what's surprised me though is that every time there's been guidance issued by or an enforcement action issued by the SEC, we now also have state actors, Massachusetts has become pretty active. Texas has also been active. You would think that it would dampen or slow down the market and it really hasn't. So I've been surprised that it almost has led to more phone calls. Not just about, oh are we in trouble, but more in the context of okay, we really recognize we need lawyers. We need to try and do this right. But it hasn't, the enthusiasm is still really there. >> So it's validation in the fact that they're issuing guidance, in my opinion. But I think it brings the question of man, I need help on this thing. People are then they got to call in the pros. Alright the other thing that's interesting about these guidances, if I can get your reaction to is has it really set the rules of the road yet? What I'm trying to look for is what are the rules of the road? I drive on the right side of the road here in the US, I stop at the stop sign, I can get through things. But the rules, what's changing, what's stable? Obviously securities tokens is solid, right? That's a good rule. >> Yep. >> John: What rules of the road are developing? >> So I think, using your analogy, I would say that what the SEC has said if you go over 20 miles an hour, probably more like 10 miles an hour, you're speeding and that's a security. But we're not going to tell you if the floor is 10 miles an hour. So it may be that if you go two, three, five miles an hour, we're also going to give you a ticket. And that's sort of the environment we're in. We know where there's the danger zone where you've crossed that line. What we don't know is where is the safety zone. And so that, that I think in some ways is where that guidance has come. I think where that is pushing people though, is is more offshore and I think that's always a risk. I was involved in digital currency several years ago with certain regulators and that's when I think the government was more interested in stamping it out. And there was a huge offshore movement. You're seeing that with token sales now too. The companies that want to be in the US are moving offshore. So hopefully, my goal and hope is that the regulators avoid that problem. I do think that it's, the regulators still are not looking to crush this industry, they're trying to regulate it. And I do think that's a big change. I'm not saying that there aren't going to be people hurt. >> It's better. >> It's better. >> Not great. >> Not great. >> They're not moving fast enough basically is the issue right? Or... >> Yeah, I also think that companies... For a company that's going through that process, it's sort of still extraordinarily painful. So I'm not saying in any way that the regulators are having a light touch, but I do think there's also recognition here that we don't want to destroy this industry. And I think Congress is the same way. >> And you do a great job, you guys are pioneering a whole new class of law. Documents, agreements are all being kind of re-casted and re-imagined with crypto. >> Grant: Daily. >> It's daily. Well I've got to ask you the final question. As things progress, things are happening, you've got a lot more deals under your belt now. You guys are doing great over there at Goodwin, you're the top set of law firms doing crypto deals. So I got to ask you. What are you advising clients now? I mean obviously you're trying to zig and zag at the right time based on guidance. Make sure everyone's covered and the risk reduction. But at the same time, you guys have also been, I don't want to say super aggressive, but you've balanced aggressiveness of opportunity recognition capture with risk management. What's your current advice now? >> I think if, generally it is really take a hard look at the securities token. I think that that, it's not the perfect path for everybody, there's costs, expense, et cetera. But I think if you really want to do a token in the US, you want to be safe, I think you've really got to look hard at going down the securities token route. The other one is to go purely off shore. And do, pick a venue that is relatively crypto friendly. And do everything offshore which means no US money. Not even at the soft stage early on. And also have the token go on and if you're going to put it on an exchange, don't put it on an exchange that has US people buying and selling tokens. That is sort of the two paradigms that we're seeing. I think anything in the middle, then we're advising, alright, let's talk about pure utility token here. Where, I mentioned it before, where the token stays, doesn't go outside the platform. Or where you've set a fixed price on the token. Or if you do create some type of token do a passive bulletin board. Those are models still to be explored. I don't think many companies are doing them. But those are sort of the paths. I think that the utility token that we've been seeing in the last six months now is a pretty difficult path to go. >> And the offshore thing, Kelsey Lemster, who was on Tact Partner at your firm, was just talking with me about, it might not be the best thing with the tax reform in the US. >> Grant: Yeah. >> So what's your state now on that? Do you still advising offshore? Or does it kind of depends now based upon decision making on whether you're a security or not? >> Yeah, so with Kelsey, he's talking about tax issues. And historically with these tokens, the tax issues were very significant and there was a push to go offshore for those reasons. And there was also always a push about whether you go offshore for the regulatory reasons. We're not going to touch the US. I think those are both things that companies have to figure out and intersect. So we had companies that ultimately decided not to go offshore because the tax advantages were not that significant. Maybe they'd lost a lot of money during the course of their three or four years and so they decided we can offset those gains. Also there's aggravation with going offshore. And so you have to build that in, getting money back from the Cayman Islands or elsewhere there's a process versus just going to a B of A down the street. So I think it's all these things that you have to counterbalance and like we mentioned, it's just everything's changing very rapidly and so it literally is like a day by day assessment of what's the next path. >> It's like the big set of waves coming in, it's really awesome. Final comment I'd like to get. I'm looking at a hedge fund, fund of funds deck from a crypto currency bond of funds, so now you're seeing funds of funds and bonds, and hedgefunds. So a couple of bullet points I want to get your reaction to. New investible asset class. Un-corelated with others. value creation as massive scale. Nascient markets with liquidity unlike VC. Inefficiency provides opportunity. Those are kind of the main bullets on the first page. (laughing) >> I think my reaction-- >> No regulation, regulatory concern, we got tax. It sounds great, I should jump right in. >> So, the advantage to the cryptocurrency is skyrocketing. I mean we've had kind of a pull back a little bit over the last week or so, but some of them are back up today. So I think it is, there is a lot of opportunity and I think some of the opportunity they're talking about, so we represent a number of hedge funds and others who create kind of financial products with this. Some of the opportunities, you look at the stock market. The stock market now is really hard to basically game the market in the sense of not cheating, but like doing arbitrage where if you go to one exchange and buy the stock from there and sell it in another, that type of thing, very hard to make money. There's a lot of sophisticated players, a lot of technology. You're talking literally, what was that movie about where they were able to do a trade like a millisecond faster and it gave them an advantage. That's what you're talking about. Here in the crypto space, you don't have that sophistication yet, so there are companies who are figuring out ways to buy and sell currency in the same currency and make money in that transaction. Maybe they buy from one exchange at a dollar and it's selling at a dollar 20 at the other exchange so they sell it. So I think there is a lot of opportunity. Ultimately these are being regulated. Even the cryptocurrencies are regulated. Some are regulated by FinCEN. The exchanges are regulated by FinCEN. So there's regulation, but there's a lot of opportunity. >> A lot of arbitrage certainly. >> Grant: Yep. >> Big time. >> Yep, so it's a really fascinating market. Very sophisticated market. Again, eyes wide open if you go in and invest in it. >> And this really talks about the make up and the personality of the people involved if you can handle the wave, you should get out there. Hence the reaction to some people look at it as a little bit nervous, they're the risk averse folks. You've got to be, you have to have a stomach for this. You know. >> You do. You also have to be smart. Like you shouldn't put all your money in it. You shouldn't pull out your 401k money to start investing in any asset class. You have to invest enough that if you lose it, it's not going to be life changing. >> Well a lot of smart people that I know, and I know that a lot of people who were really into this and see great opportunity, certainly there's the bad actors in there, but I love this opportunity, I think it's a once in a generation movement. I think it's the biggest wave that's hit since many generations so really awesome. Congratulations on the work you're doing. Any new update on Goodwin front? >> No, it's just been a fascinating time for us. And it has, we've got a ton of people doing a lot of interesting stuff. And literally every day we hear a new project. We're like wow that's a really interesting application of this technology. Or a different use case. And our clients are coming to us. I mean that's the beauty of Silicon Valley and that model is we learn things from our clients so we love having those meetings. I think you're just going to see tremendous change. Literally week to week. >> How's your VC client base? They're probably engaged heavily at this point. I'm hearing a lot of folks on the VC side. Not feeling like they're being left out, but they're seeing this as a new way. They certainly have been called out here in the hedge fund. Unlike VC. I mean classic venture capital's been out for a while. >> It's a new paradigm for them. I think they're grasping with it. I think that in some ways it's attractive to them because it does provide for their LPs. It provides much greater liquidity than a typical VC investment which is a five to 10 year wait. But they're also, people are saying they're being replaced and they're having issues where companies no longer want to go to VC, they say why should I give that equity and control when I can get the money through different means. So I think it's disrupting their world. I think they're slowly, not slowly they move pretty quick, they're adapting to it. I think that there's tremendous value to having VCs involved in the ecosystem. >> I mean they should do it, I mean they should take a little bit of their fund because just the opportunity to get appreciation and again, liquidity in an unregulated market is an opportunity. >> It is an opportunity. And they're in it, they're exploring it and stuff. >> Grant Fondo, partner at Goodwin, check out Goodwin. Great firm on the ICO front. They're the top in Silicon Valley and around they world. They've got great tax law, Grant, good friend of theCUBE. Thanks forc coming on again, appreciate your commentary. An update on the ICO playbook. I'm John Furrier, this is CUBEConversation. Thanks for watching (upbeat music)