Richard Soley, Chairman & CEO of the Object Management Group Inc: Creating Standards for Technology and the Integration of IoT and DLT

This is episode #5 in the Automation Series. You can learn more about the Automation Series here. You can learn more about IOTA on their website. Richard Soley is an American computer scientist and businessman, and Chairman & CEO of the Object Management Group Inc. He is also the Executive Director of the Cloud Standards Customer Council, and Executive Director of the Industrial Internet Consortium, managed by the OMG. In this episode, Anthony Pompliano and Richard Soley cover how standards are created for emerging tech, vertical market standards and why standard are important, Soley’s take on the Internet of Things and how DLT intertwines with it, and why we need DLT for true automation.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:01Speaker 00

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to Off the Chain, simply the best podcast in crypto. Let's kick this thing off.

• 0:13Anthony Pompliano?

  The following episode is part of the Off the Chain Automation Series, sponsored by IOTA. The goal of this special series is to explore the intersection of distributed ledger technology and automation, specifically around digital currencies, digital wallets, and machine-to-machine transactions. My core belief is that every stock, bond, currency, and commodity will eventually be digitized, and distributed ledger technology will empower the full potential of automation to be realized. IOTA is the sponsor of the Automation Series. Their mission is to support the research and development of new distributed ledger technologies, including IOTA Tangle. The IOTA Foundation encourages the education and adoption of distributed ledger technologies through the creation of ecosystems and the standardization

• 0:56Anthony Pompliano?

  of these new protocols. You can find out more about the Automation Series and IOTA in the show notes.

• 1:02Speaker 00

  Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 1:29Anthony Pompliano?

  Richard Soley is an American computer scientist and businessman, and Chairman and CEO of the Object Management Group, Inc. He is also Executive Director of the Cloud Standards Customer Council, and Executive Director of the Industrial Internet Consortium, managed by the OMG. In this conversation, we discuss the importance of technology consortiums, his past experience with interconnected machines and devices, where cryptocurrencies fit in, and how automation is set to transform the IOT space as a whole. I really enjoyed this conversation, and I hope you do as well.

• 2:03Speaker 00

  All right, guys, bang, bang. I've got Richard here. Super excited to have this conversation. Thank you so much for taking the time to do this, sir.

• 2:10Speaker 02

  It's my pleasure to be here, or whatever bang, bang means.

• 2:14Speaker 00

  If I start every episode with bang, bang, it gets everyone focused on what we're doing. So that's what I do.

• 2:21Speaker 02

  As long as it works.

• 2:23Anthony Pompliano?

  Listen, you've been in and around technology for a few decades now and are probably one of the more experienced people that we've brought on to the podcast. I'm super excited to have this conversation. Let's maybe start with your background and kind of how you got your career started and then we can move into some of the things that you're doing today.

• 2:42Speaker 02

  Sure, fine, Anthony. I have to tell you, I never planned my career as such as it is, but it's been an interesting one and I'm not complaining. While getting a bachelor's, master's and PhD in computer science from a small engineering school on the river in Massachusetts, I started or helped to start five companies, three of which did what startups normally do, which is find a cliff and then jump. One of which was mildly successful, because AI Architects was one of the first AI startups in the 80s. And the last of which was called PictureTell, the first successful picture telephone company, which is now part of Polycom. So that was real fun, but what was missing was what to do with these distributed

• 3:25Speaker 02

  objects that people were all talking about in the late 80s. So we started a consortium, which was a very popular thing to do in the late 80s. Many consortiums were started, not many are still around. We've been around for 30 years. What we decided to do very quickly was set standards in distributed objects with what we've been called the Corbus standard. Then we moved into modeling languages and the UML language, which everyone in computer science knows, is one of our key standards as well. But now OMG develops standards in 30 different vertical markets: retail systems, military systems, command and control, satellite control, all sorts of things. And if you've got a mobile phone, you've got a Corbus standard, you've got an OMG standard. If you use a telephone system and the other way, every

• 4:09Speaker 02

  telecom switch in the world uses our standards. Every banking system, every robot, every retail point of sale, et cetera, et cetera. So we've been mildly successful as well in our 30 years. I think it's important to realize that the purpose of standards is to make possible interoperability and portability. I want to build a solution and run it on multiple systems, and I want multiple systems to be able to talk to each other. That's all we're asking for. I want to be able to plug my device into the wall as easily as I plug my device into the wall in most countries. That varies from country to country, so there are multiple standards, but there are only about five or six, which is not too bad. Makes it possible to plug in my razor just about anywhere.

• 4:49Speaker 02

  So in the early 2000s, we were approached by a group of companies that wanted to build knowledge in service-oriented architecture, not standards, but they wanted to do knowledge capture in using service-oriented architecture, SOA. My initial reaction was, no, we don't do that. We're a standards organization. My later reaction was an understanding and realization that what we did was we managed ecosystems. We helped people figure out what they wanted to deliver, and they then delivered that in an open, neutral, international fashion. We've been doing that for 20 years now, and I think we're quite successful at it. Most successfully, the Consortium for Information and Software Quality, and a consortium called

• 5:30Speaker 02

  the Industrial Internet Consortium, IIC, which builds large industrial IoT solutions all over the world. We've got them in Germany, in France, in India, in Japan, in China, in the United States, and so forth, just to prove out how you build industrial IoT systems, not is your refrigerator out of milk, but is your CNC machine in the factory down, or is your building in use? For example, we have a large smart building outside of Tokyo, and that has been a tremendous success with between 200 and 300 companies now building those systems all over the world. There are about 30 very large systems, 10 to 50 million euro in size, and we learned

• 6:15Speaker 02

  a huge amount about how you build industrial IoT systems and published the results in our Journal of Innovation. That was probably more of a bite of an answer than you wanted.

• 6:23Anthony Pompliano?

  No, listen, it's fantastic. One of the things that I'm personally interested in, so I'm assuming other people are interested in, is this idea of standards, right? You touched a little bit on why they're important, but maybe just talk about, like, what exactly is a standard and how do you come through a framework to establish the standard and then either enforce or kind of make sure that people are following that?

• 6:45Speaker 02

  That's a really good question. You know, a standard, what a standard is, abstractly, is pretty simple and straightforward. I want to be able to plug an electrical device into the wall. Anywhere in the US, I can do that with a standard, two flat blades, electrical connection anywhere in the US. Unfortunately, not the same in Europe, which uses two round poles. And there are, in fact, three different diameters of those two round poles, so there are multiple standards within that standard. But it means a way that the the end user of a of a solution can connect to the vendor of a solution in in a way that's that's doesn't worry about where who who built the the product. You want that from software as well. I want my air traffic control systems to talk to each other.

• 7:30Speaker 02

  I want my ATM to talk to whatever bank I happen to be you happen to have my money in regardless of the whether it's the bank I've got my money in. I want my um I want my point of sale system to work together with any printer, any any front end that I've got regardless of who built it. So vendors, of course, are going to try to lock you in quite often, not all. I think vendors understand the value of having choice and they want to give choice to their end users, but end users especially want to be able to have choose based on price, quality, um support, et cetera. And the only way they're going to get that choice is with portability and interoperability that comes from standardization.

• 8:13Speaker 02

  I wish I could tell people, you've got to use this standard, you must use it, but that doesn't work, it never works. It's been tried by governments for for thousands of years and has never succeeded. And certainly not going to succeed with a a private not-for-profit company called the Object Management Group or the effort that we've gotten in the IIC to to build test beds. But what we've got to do is show that we've we've come up with a better solution and the choice, allowing choice that comes from a standard is making it possible to build a larger market. It's about having a large a a piece of a larger pie rather than a larger piece of the pie. I think quite often vendors understand that they through standardization, they're going

• 8:55Speaker 02

  to make the pie so much bigger for their market that they might as well participate. But if it's not going to, then they should try to push us into uh into selecting their solution as a standard. Nobody, we're not controlled by anyone. We are not-for-profit with no shareholders, which makes it possible to have an open international neutral process for developing standards and then convincing people that they are the best solutions for the problems they have.

• 9:20Anthony Pompliano?

  Got it. And so as you're going through that process, right, you know, to take the electrical outlet or any of the examples you used, there's obviously multiple choices for you to choose from for the standard. So how do you come to the conclusion of which one is the best? Is there a group of experts or kind of industry veterans? Is there some sort of problem solving framework? Like, what's the process that goes through actually selecting the standard?

• 9:46Speaker 02

  There is, in fact, a multi-level solution process that ends up with experts that are selected by the members, not by me. But the reality is, a good solution is going to rise to the top by itself. Sometimes, in about 5% of our cases, we've done this 1,000 times in 30 years. Sometimes, there's more than one solution that comes about because a vendor doesn't care as much about having an open standard and wants his or her solution the way it is. When that happens, we do something terrible. That is, we vote. And it may not come up with the best possible solution, but it comes up with a solution that people can follow, people can trust, people can expect is actually going to be the standard.

• 10:29Speaker 02

  My great example, although we had nothing to do with it, is the VHS tape. It's not nearly as good technically as the Beta tape, but it won. And how did it win? You have to ask, why did VHS win over Beta if Beta is technically better? And the answer is obvious. They went over the line to become ubiquitous. As soon as it becomes ubiquitous, it's not a standard that anyone can resist. That's got to be true for the standards that we develop as well, and we spend a lot of time making sure that it happens with our multi-step process that looks at all the technical experts in that field and then technical experts about lots of technologies. Nevertheless, you want that to happen fast. Our process takes an average of 17 months. That's not how long it should or can take.

• 11:14Speaker 02

  That's how long it has taken on average, 1,000 times we've done it in 30 years. The slowest by far was three years for UML 2.0. 54 companies participated, though, so it was worth it. The fastest by far was nine months. That was the BPMN standard adopted oh, about 10 years ago. But on average, it's 17 months, not so bad for an industry that moves this fast.

• 11:38Anthony Pompliano?

  For sure. And then one of the things that you mentioned earlier that specifically around the standards that again, just personally curious about is this idea of vertical market standards, right? So there's protocols, let's say, for example, the electrical outlet, obviously you could plug all kinds of different things in there, whether it's a washing machine, a coffee, you know, etc. But also it doesn't have to be just be electrical appliances. It could be everything from blow dryers, charging packs, etc. So it kind of goes across different industries. The vertical market standard though seems to be much more focused on very specific use cases within industries. What's the difference there? Is it literally just that difference of protocols that versus the industry standard? Or is there something else?

• 12:23Speaker 02

  Yeah, good question. It's not really a difference in protocols. The protocols remain the same. It's mostly a difference in vocabulary. Let's choose one vertical in which we're very active. That's healthcare standards. In healthcare standards, we're talking about blood pressure and we're talking about, oh, I don't know, I'm not a doc, but you know what I mean. Those, those, that terminology is specific to healthcare and it means that that healthcare standards, which we've been developing for 15 years, are relevant to healthcare and probably not to any other, any other vertical market, whether it's point of sale systems or telecommunications systems or transportation systems. If it is more relevant outside of healthcare, then we'll take it to our platform technology group, which is

• 13:06Speaker 02

  responsible for technologies across platforms, across, across domains, across vertical markets. If it, but if it remains in its vertical market, it's relevant to a smaller group of companies, but it's more relevant than anything else. It's something they have to follow because they've got to get interoperability and portability in their vertical market.

• 13:25Anthony Pompliano?

  Got it. Okay. And then this industrial internet consortium that you're a part of and leading an effort on, explain what exactly that is?

• 13:35Speaker 02

  So five years ago, almost six years ago now, we were approached by a group of companies that had been meeting on a monthly basis led by General Electric, said, we've got to do something in industrial I R T. Consumer, consumer I R T is what's really captured the public's imagination. A refrigerator that knows when you're out of milk. You know what? I can tell if I'm out of milk by opening the goddamn refrigerator. That's not the problem. On top of it, there's no margins left because we're talking about consumer markets, white goods markets that have no margins. But there's an enormous opportunity in industrial I O T, using I O T in manufacturing, smart buildings, smart cities, energy management, precision agriculture. That's where the opportunity is.

• 14:17Speaker 02

  But five, six years ago, we realized there just was no expertise in that space. I pointed out to General Electric and a few others, you may have some of the world's best experts, but I've got them all because I've got two, three hundred companies working together. So the point was to build I O T systems in industrial settings, in manufacturing settings, in smart building settings, and harvest best practices so we'd know who to hire, who to train, who to retrain, what to retrain. What are the standards required to make sure that the next time we build this test bed, we can build it more responsibly faster? That's what we've been doing for these years, is building, we now have thirty very large industrial test beds. So I'll give you an example.

• 15:01Speaker 02

  In Ireland, in the country of Ireland, healthcare information about everyone who lives in Ireland is kept by the national government. But the ambulance service is run by the state, run by what we would call in the U S the state, the province, what's called in Ireland, the county. So County Cork wanted to provide better services to their customers. That's a smart city solution. Their customers are the citizens of that county, of course. So now when an ambulance is on its way to your house, if they know who they're picking up, they're going to download your, the data for that person from the national resources in Dublin and upload it directly into the ambulance so that the paramedics in the ambulance know exactly how to treat that customer that might have diabetes or Alzheimer's or allergies or whatever.

• 15:44Speaker 02

  Furthermore, whatever the paramedics do on the ambulance, if they have the time, they're going to upload the results back and they'll be shared with the national resources. So every hospital in the region was going to have that information so they can, they can better serve the patient when he or she arrives in the emergency ward. If you've ever been in an emergency ward, I apologize, I'm sorry you have. But you've seen paramedics screaming at the doctors and nurses, the nurses trying to come up with a stabilization plan and the doctors trying to come up with a treatment plan. That doesn't happen in County Cork anymore. If they know who they're going to pick up, the ambulance has already beamed the information back and chosen the correct hospital,

• 16:25Speaker 02

  whether it's an emergency situation or not, a heart attack or whatever. And the health records of the person they're bringing to that hospital are already in the hospital and updated with whatever the paramedics have done in the ambulance. It's a small matter of knowing where the ambulances are, where the homes are, where the problem is, where the hospitals are, and making all that data available in real time to the hospitals, the doctors, and the ambulances. It's been a tremendously successful testbed and we've learned a lot about how to make sure that not only are we providing useful data to the hospitals, but we're keeping track of the concerns of the drivers of the ambulances, for example.

• 17:07Anthony Pompliano?

  For sure. And so when you guys go and you create this system, right? Because it sounds awesome and obviously as it gets implemented, it's pretty obvious to see the value that can be created here. But how do you go about getting the implementation or the adoption done, right? So you create the standard and you say, this is the way things should be done. Earlier you said you can't really force people to do it. So what is that kind of, I'll call it a go-to-market strategy, but it's really just gaining adoption or implementation from the people who could benefit from it?

• 17:39Speaker 02

  Yeah, I want to make it clear again that we have no way in a capitalist society to force anyone to use any standard that we publish. But getting adoption is to point out, again, that the pie is going to be made bigger for the vendors and we're pointing out to the end-users that their opportunity is to have choice for price, choice for quality, choice for service, whatever. Therefore, it's valuable to have a standard and they're going to want a standard. So let's look at DLTs, for example, Distributed Ledger Technologies. There is no standard for DLTs today. We are developing at OMG and we will deliver next year standards for interoperability between the LTs and standards for the iota tangle.

• 18:22Speaker 02

  That's something that the market badly needs. There's no question they're going to adopt it because there's nothing else to adopt. That's why we're quite happy to be developing a standard in that sort of market. Where there is competition, it's a little bit more difficult.

• 18:35Anthony Pompliano?

  Got it. And so in those situations that have competition, is there any, like, major kind of...

• 18:43Anthony Pompliano?

  Standards where there's been one or two that people could, or really two or three that people can choose from. And you could tell us a story about how those kind of have played out in the past?

• 18:52Speaker 02

  That's a good question. I have to think about that one, though. In most cases, our standards are adopted because they know that our standards are going to be adopted. It becomes a self fulfilling prophecy. So I'm not too worried about it. I can't think of too many cases where there's, where there have been multiple standards. Well, the JavaScript case is a case where we walked away because the ECMA, the European Computer Manufacturers Association, had developed its own JavaScript standard. And there was no need to create one for ourselves. So we stopped adopting a standard in that space. It would have been competitive, but competitive uselessly. And we don't do standards when somebody else is, somebody else competent is already developing a standard.

• 19:36Anthony Pompliano?

  Okay. And then so let's talk about the Internet of Things, right? As you guys have started to look there, part of the mandate or the attention has turned to DLT, should be ledger technology. Maybe just talk a little bit about your view, sitting and having been through a lot of these different standards in various verticals. How you guys see DLT, Internet of Things, and some of the Internet consortium, et cetera, all being related?

• 20:04Speaker 02

  You know, I was super excited when I first heard about DLTs a few years ago. And I said, this is the right thing for the IRT space and something we can do in the IIC.

• 20:15Speaker 02

  Because it's a deconfliction technology that doesn't have a central force. For example, you don't need a bank for two people to do business together because they've got a DLT, a ledger technology that allows them to do it without both trusting the bank to provide a single central ledger. That was the obvious case. In the I O T space, for example, we have uh test beds in the manufacturing space and we'd like the manufacturing devices uh to be able to talk to something and and and know and and know that uh that they are trusted. The uh the D L T is an obvious way to know that we we're going to trust that technology. Trustworthiness

• 20:56Speaker 02

  has become a major part of the way that we uh develop the uh test beds today. In fact, we have a paper out um about a a month ago on on trustworthiness in I O T systems and D L Ts are the best way to provide it. But I spent uh an enormous amount of time about two years ago looking at specific D L T technologies and said, these are all garbage. They just don't understand the real world. Um uh for example, I looked at one not to be mentioned and it has a transaction rate of seven transactions a second. I had just finished a project at I at O M G with Swift, which does seven hundred thousand transactions a second. But I downloaded it anyway just to see how it worked and discovered that

• 21:40Speaker 02

  the download was two hundred to two hundred and fifty gigabytes. Well, that's no way that's going to work on a sensor in a C N C machine or or a a device on a manufacturing floor or or a a sensor checking for lights in a in an office in a in a smart smart building or an ambulance, et cetera, et cetera. There had to be a better way, but there wasn't. So I gave up. I said, this D L T stuff is just not up to snuff yet and use it. Through a friend, I met Dominic Sheiner and then later David T. Sonstabu. I said, these guys have a solution that's better. These guys have a solution that's something like a thirty megabyte download and transaction rate in the millions of transactions a second. They've seen this, they've seen the D L T promise and they understand the real needs of real

• 22:25Speaker 02

  people. That's something I wanted to be involved in. But I found out that there was no standard for that for what they were doing for that for that D L T, the I O T tangle. So that's why OMG immediately got involved and started to develop the standard in that space.

• 22:40Anthony Pompliano?

  Got it. And so, one of the things that I'm very interested in is this idea of a distributed letter technology, a blockchain, etc., being a operating system for the Internet of Things, right? Allowing for true automation. There's plenty of people who either disagree that that's possible or don't think that's gonna happen. But it just feels like it's not possible to have true automation and machine-to-machine transactions if the asset of value, right, whether it's a stock, a bond, a currency, or a commodity, if that's not truly digital, right? If it's still an electronic Q-SIP, and then obviously if it's physical paper or something, it just isn't compatible, right?

• 23:24Anthony Pompliano?

  And I can't get over the fact that people don't see that. Do you agree with that? Or do you have some other vision of the world and where we're going?

• 23:33Speaker 02

  No, I absolutely agree with that. No question. First of all, you mentioned Q-SIP. I should mention OMG has a standard called FIGI, which is a better solution, a more all-encompassing solution to the problem specifying not only primary equities, but derivatives developed from those equities on multiple markets. You should take a look, F-I-G-I. But those things are electronic, whether they're Q-SIP, FIGI, or anything else today. Nobody, I mean, 100 years ago, you used to see people walking down Wall Street carrying sheaves of paper. That doesn't happen anymore. It all happens electronically. But it's, everything should happen electronically. There's no reason we can't trade properties, trade, as we trade money today. And that's gonna require a trustworthy way to do so.

• 24:18Speaker 02

  Our trustworthiness paper is worth looking at. It's better to understand that trustworthiness becomes the centerpiece of IOT systems. And you've gotta deliver that in a way that you, obviously, that you trust. For us, that means a DLT, if you can build a DLT that doesn't have a single point of failure, doesn't have a huge download constraint, and is fast enough to handle the transaction rates that we see in the real world today.

• 24:43Anthony Pompliano?

  For sure. And part of it, I guess, is you're not going to go to a world of, hey, the car's driving down the street and pays the toll by driving over a sensor tomorrow, right? That's kind of a more complex, it involves much more investment in infrastructure, both in the public and private sector. And so you can understand that the complexities are going to take time and significant dollar investments. But it sounds like you see this not only in those larger integrations of technology and sensors and endpoints, but also on a much, much smaller scale and in a shorter time period as well.

• 25:20Speaker 02

  Oh, absolutely, absolutely. I mean, so I do pay tolls electronically every day, unfortunately. And I do go through an electronic toll booth that I can hardly even see. And a box next to my mirror does pay the toll, and I've got to fill the box every now and then. But it's all electronic, and I think that's the point we're trying to make. But making it smaller with smaller investment has got to be critical. So, for example, we have a test bed in Germany, in Hamburg, in southwestern Germany, that's reinventing the way factories work. All it does is it tracks people, parts, work in progress, and tools, four things,

• 26:00Speaker 02

  everything inside the factory, and to see whether we can provide a safer factory for the human beings that work there, and provide a more efficient factory for the people that own the factory. And the answer is obviously yes, but how exactly? I can give you some examples. We know where the people are, we know where the robot arms are, we stop the robots when the people get near so they don't get hurt. And that's a lot better than the solution that's currently done, which is to put robots in cages so that people don't accidentally walk in and get hurt by the robot. You can do a lot better than that if you know where the robot arms are, you know where the people are. But the productivity message is even stronger. For example, we know where the tools are, and we know what job you're supposed to do. We know where to send you to pick up the tool.

• 26:42Speaker 02

  There was a factory, this this test bed is managed by Bosch by by the way. They have a customer that has factory um from a company that I'm not supposed to mention. Where the people in the factory were spending forty six percent of their time. Looking for the tool for the next job, forty six percent of their time, crazy. Manufacturing people are never surprised by that number, but I was I was shocked. In that factory now, the system which knows where the tools are says. Your next job is so and so, you have to do it in in so and so time and the tool to. Do that job is ten meters behind you on the left side. Because it knows where the tools are. Imagine the productivity that makes a difference that when the people in the factory are spending forty six percent of their time looking for the next tool. Imagine it.

• 27:27Speaker 02

  But that means I've got to trust the system, I've got to trust that it knows what what jobs need to be done. I got to trust tool which knows where it is and is reporting its location. I've got to trust that it is one of the tools that I'm supposed to be looking out for. All those things require some element of trust which might be handled with a central authority, but it's better handled with a D L T. Because I may not be able to get to the central authority and maybe down or worse and maybe hacked.

• 27:54Anthony Pompliano?

  Yeah, i- it's so interesting, right, the the the part that. I keep going back to here is um. The best technologies in the world are uh in companies are market expanding, right, so if you think of Uber uh as one example where. Um if you had looked at Uber early on and said, oh, it's a black car. Okay, one market it could disrupt is uh you know, kind of limousines and black cars. A a little bit bigger market, probably the extent of where most people thought was. Oh, what if they could actually do something as crazy as disrupt the taxi business, right? And how big is that market? Well, what Uber actually ended up doing was not only disrupting limousines and taxis.

• 28:35Anthony Pompliano?

  But then it also expanded the total addressable market to include people who had cars, right? And now they just don't drive their cars when they're drunk and and things like that, and so they they expanded that market opportunity. It feels like the technology that you're talking about around Internet of Things and these protocols and the connectivity. If you look at it from a kind of an obvious perspective, there's some market cap that exists, but it feels like it is a technology that can drastically expand over time. And there's probably things that get created that we can't even imagine today, or it would be very hard to imagine what could potentially come out from this.

• 29:16Speaker 02

  Yeah, well, I'm gonna try to imagine for you what I can. First of all, I should mention that Uber didn't just change the car business. Uber changed the dispatch business. It did away with dispatch business. Taxis are not dispatched by human beings anymore. That's a pretty important change if you're in the dispatch business before. I think we're gonna see those kinds of changes from IOT too. Some of them I can see now. For example, smart devices. Devices that are attached to the factory that created them forever. Devices that automatically tell the manufacturer, "I'm failing. You need to send them a new one today." Because some part is replaced. I think we're gonna see a day when a toy in my house has a failing part. I don't even know about it, but I have a replacement part in the mail

• 30:02Speaker 02

  one day without asking for it. Because it knows and it's connected to the internet. And the internet connects all these things. People don't realize how important that is. So I think smart devices are a major source of IOT. New product opportunities, new business models. But we're gonna see others. Because that's one of the things we're trying to learn with our testbed program. What are the new business models? Can we discover what those business models are? And how do we address those business models? Absolutely, it's going to expand the market. But nobody really knows how exactly. All I know is I can do a better business if I understand my business better, understand the data that it's collecting, and understand what to do with that data.

• 30:44Speaker 02

  I have several friends that are running companies that that collect data around cars, internet-connected vehicles, they're called. Not necessarily self-driving vehicles, just vehicles that understand their surroundings. My son, for example, is an expert in this area, internet-connected vehicles. Alexander Soley is written quite extensively on the subject. And it's amazing, but it requires that the vehicle knows where it is, knows what it is, and that you have trust in the data that it is reporting. And that's going to require a DLT. Because there's no way that every car on the planet is going to talk to a central authority, ever. There's no central authority that can deal with that much bandwidth.

• 31:21Anthony Pompliano?

  For sure. What do you think is the biggest obstacle or potential reason why this could all fail?

• 31:28Speaker 02

  Yeah, you know, that's a good question. I just answered that for someone else in the press earlier today. I'm supposed to answer the security. Everybody says it's security, and it ain't security. I mean, obviously, I want my systems to be secure. I want it to be private, and I want to be able to trust the results that I get from censored devices that are plugged into my devices. But that's not the problem today. We've discovered in our testbed program, the biggest problem by far is finding the expertise to build these systems. And that is, one of the things that we're collecting by building the actual systems is collecting expertise, and we're proud of that.

• 32:04Anthony Pompliano?

  Yeah. It's really, really interesting to start thinking about what's possible here. You're also, one of the other things you're doing is, you're on the supervisory board as a member for IOTA, and they're sponsoring the automation series that we're doing. Maybe talk a little bit as to what the attraction was there and what you're doing in the role as a supervisory board member.

• 32:29Speaker 02

  Sure, I'm happy to. As I mentioned, about a year or two ago, I was introduced to Dom Schiner. We had lunch in Frankfurt, and we've had a deep friendship ever since. I've also met, well, I met on Skype, David Sonstebu. And I realized these two not only had a technology that could change the world, but a technology that was being intelligently handled, intelligently manipulated, problems out in front where people could see them, and problems being solved by a community that understands the technology, understands why to make the technology better. When Dom asked me to join the Stiftungsrat, the Supervisory Board, I asked him what for. He said he basically was looking for gray hair,

• 33:13Speaker 02

  looking for somebody with some experience running startup companies that can help them put together a useful company that would build that system, build it intelligently, and they are doing that today. I've been to some some now this past summer. That's the Summer Summit of the Iota Foundation, and it's a team that's incredibly impressive and understands the technology that they're building and why they're building it as much as they understand their individual jobs.

• 33:39Anthony Pompliano?

  For sure. And then in terms of the Supervisory Board, maybe talk a little bit about exactly what that is and kind of why, you know, why you joined.

• 33:50Speaker 02

  Sure. I don't want to get into the details of German corporate structure, but Iota Foundation is in fact a German foundation and therefore has two boards like all companies in Germany. And I'm a member of the upper board that makes sure that the lower board actually understands what they're doing and has members on that lower board that can manage the company on a day-to-day basis. So I'm not involved in the day-to-day management of the company. I'm brought in sort of as an advisor to make sure that we have a strong board and a strong team to deliver Iota and Iota Tangle in intelligent form.

• 34:28Anthony Pompliano?

  Yeah. And so what is your thoughts on creating a standardized protocol around Internet of Things and how that is in line with or competes with a standard currency or token, right? So what I mean by that is there's the flow of information and then there is something that can be used of value as well. Are those two things that compete with each other? Or do you think they can be complementary? Maybe you think that they can be the same thing? Like, how do you think about that trade-off?

• 35:06Speaker 02

  Yeah, so some of the protocols already exist. It's not just protocols. Standards look like either protocols or languages or APIs, programming interfaces. In this case, it's a set of programming interfaces, some protocols and the data model of the Tangle itself.

• 35:25Speaker 02

  There's not in, those are not in contradiction. You can hear those, those specific protocols, DLTs on top of standard protocols like Corba, DGS, MQD and so forth. So I'm, I'm not worried that they're competitive. I am worried that they're designed intelligently so they are likely to be adopted by vendors and users alike. So there's, there's a real reason to expect those standards to come out on top of the standards that we already have.

• 35:54Anthony Pompliano?

  What, uh, what's the thing that you're most excited about, um, in the standard, uh, in the standards, um, kind of corner of the world? Is there, is there some area that hasn't been conquered yet or standard hasn't been issued that you're saying, hey, that this is a, a place that I think somebody should go look at?

• 36:08Speaker 02

  Oh, there are lots of places where standards need to be developed and haven't been developed yet. The IOT space, digital twins, um, and, uh, the, the entire, um, uh, maturity of, of, uh, digital transformation needs to be addressed. Um, and the low level, um, standards for DLTs are obviously important and that's why we're working on them and why we're working with the Iota Foundation. Um, there are lots of areas, uh, in verticals and in, on the platform where standards would, would make the, the world an easier place to work with. Um, so I'm excited about all of them. I'm not gonna get, I'm not gonna let you get any of my, uh, chairs mad at me.

• 36:45Anthony Pompliano?

  I love it, I love it. Um, all right. Before, uh, before I finish up, I always, uh, do some rapid fire questions. Other than Niota, is there a company in the blockchain or crypto space that, uh, that you're excited about?

• 36:57Speaker 02

  Oh, good question, except, um, I'm not gonna mention any names. Uh, I, I just talked to a friend who's got a, a, a blockchain startup in, in New York that specializes in, in digitizing any, any, any, uh, resource at all. It could be anything that says you wanna trade. Uh, I think that's the, the right sort of thing you should do with whatever blockchain happens to win. Maybe one more than one blockchain technology. I don't care if it's Bitcoin or Ethereum, Iota or whatever.

• 37:24Anthony Pompliano?

  What is the one regulation that you would change in technology if you could wave a magic wand and change it?

• 37:30Speaker 02

  There's very little regulation in technology. I think some of the more amusing regulations that have been suggested went by the wayside. For example, when I knew the Digital Commissioner of the European Community, he proposed a regulation standard that said that you would not be able to ship any IOT device in the European Union unless it passed some security test that he had in mind. All sounds perfectly nice, except there were no security tests. And there's an obvious solution, which is don't call your product an IOT product anymore. That regulation was stillborn. It was killed before it started.

• 38:14Speaker 02

  And I think that most regulations in technology look like that. They come from people not really truly understanding the technology or how the technology affects society.

• 38:23Anthony Pompliano?

  Got it. What's the most important book you've ever read?

• 38:25Speaker 02

  You know, there are a lot of important books. And I know I'm supposed to say the Bible, but I love to say Scott Works by Ben Rich. It really teaches you to think outside the box. It talks about the creation of the F-17A fighter, the SR-71 reconnaissance aircraft, and all sorts of lessons about how to build the aircraft differently, how to think about engineering and large engineering projects, how to sell things, and how to solve unsolvable problems in ways that are just not the way you'd think of. I just bought a copy for a friend of mine. And I buy copies for friends all the time, just so they can understand thinking outside the box.

• 39:02Anthony Pompliano?

  Aliens, believer or non-believer?

• 39:05Speaker 02

  Let me just say, with this many stars and this many galaxies in the universe, there's no chance, zero chance, that none of the other ones, none of the other planets around the star somewhere didn't create some form of life. Unfortunately, we have the limitation of the speed of light, so I'm not sure we're ever going to meet any aliens. But are there other forms of life? Absolutely.

• 39:27Anthony Pompliano?

  I tend to agree with you and think that that is the most logical and safest argument as to why aliens are very, very, very likely to exist. So you have an agreeer here in me. I end each podcast letting somebody ask me a question. What one question do you have for me?

• 39:50Speaker 02

  I love asking this question. I ask it all the time. Have you shorted Bitcoin yet?

• 39:59Anthony Pompliano?

  Are you not a Bitcoin believer?

• 40:01Speaker 02

  Not at $10,000, I'm not a Bitcoin believer, no. One of the arguments about Bitcoin is there's nothing behind it, but there's nothing behind the US dollar either, so that shouldn't matter. Well, excuse me, but what's the Federal Reserve? What's the European Bank of Credit? What is the great lady of Threadneedle Street? There are actually banks behind fiat currencies, and there's nothing behind Bitcoin. So there's no reason for the price to be so incredibly high. I'm not saying that this should be valueless, that's a different argument. But the price should be incredibly high. I don't think it's gonna hold.

• 40:33Anthony Pompliano?

  What is the price that you would go from non-believer to it's interesting?

• 40:41Speaker 02

  Oh, that's a hard question, but certainly nowhere near where it is today. I'm thinking more like $10, $20.

• 40:50Anthony Pompliano?

  I love it, I love it. Yeah, look, I think that what you're talking about is like the infrastructure around the fiat currency.

• 41:00Speaker 02

  It's not just the infrastructure. Those banks actually defend their currencies. The US Federal Reserve defends the dollar. Nobody defends Bitcoin. And I think we're seeing an incredibly high price for Bitcoin simply because the demand is quite large and the supply is quite small, which the economists tell us causes prices to go up. But when demand falls, I don't think supply is gonna change, but when demand falls, we might see a tremendous change in value.

• 41:26Anthony Pompliano?

  So I will agree with you that Federal Reserve, other central banks are prone to defend their currency. That's absolutely a factual statement. What is your reaction if I made the argument that the miners in cohort with the difficulty adjustment built into the Bitcoin blockchain algorithm defended the currency as well?

• 41:51Speaker 02

  They don't. They don't defend the currency. They defend... They defend the, they defended the, the available supply of currency, absolutely. But that's it. Whereas the Federal Reserve has, I think it's four different controls over, over monetary control. In, in the case of Bitcoin, you have only the difficulty. And it, it makes a difference to have fiscal control and monetary control. To say that it doesn't make a difference is, is just missing the fact of how, how fiat currency works.

• 42:21Anthony Pompliano?

  Yeah, and, and I guess the, the argument that people would have, right, there, there's a lot of people, and I'm not even playing, there's a lot of people who I think would, would agree with you on that, around fiat currencies, monetary control, the, the role of central banks, et cetera. I, I guess the argument, or one of the arguments that folks in the cryptocurrency community would have is that if you are taking an action to defend your currency that ultimately manipulates it and over a long period of time hurts it, are you actually defending it or are you simply trading short-term benefit for long-term loss? Right? So an example would be, as you print more of the currency to defend it, you're really

• 43:05Anthony Pompliano?

  just debasing it at a faster rate and therefore continues to lose purchasing power over time, right? I guess it's the framework that some would use.

• 43:13Speaker 02

  Right, in other words, the argument you're making is, is fiscal versus monetary control, which every, every central bank has to deal with all the time. That simply doesn't exist in, in the cryptocurrency world. I'm not saying all cryptocurrency is bad. I, I'm a, I'm a deep believer, for example, in, in Iota currency. Where it sits today is, I think, is a reasonable price, although it's hard to say what's reasonable when it's just about demand and supply. But comparing it in, in any sense to fiat currency, I think is a mistake.

• 43:44Anthony Pompliano?

  I got it. Look, I, I, I always appreciate people who have an understanding of monetary policy, fiat currencies, and, and even though we disagree on...

• 43:55Anthony Pompliano?

  Is Bitcoin valuable or not? Uh, you have a very logical argument, right? It's the people, the people who uh are frustrating, right? To, to talk to are the people who just say, uh, you know, it's stupid, it's a bubble, it's that type of stuff, right? So, so I actually appreciate when people have um a very well-defined position and reasoning as to why they believe what they believe, which I, I think that your position is uh, is fair, um, you know.

• 44:23Speaker 02

  Spoken like a good Bitcoin investor.

• 44:27Anthony Pompliano?

  Well, well, here's, look, it, it's a, there's a balance, right? It is, um, I think contrary to popular belief, I'm actually not uh at all emotional um about Bitcoin uh in terms of like a religious zealot type um emotion. It, to me, is just much more um a belief in uh the fact that people, like you, you said, right? It's a supply and demand uh type equation. And I have a thesis on why demand will continue to increase over a long period of time, right? And that's really where my belief um and comfort, right? And trust in uh storing wealth there comes from.

• 45:09Anthony Pompliano?

  And, and it literally is just that people are going to actually trust a transparent algorithm and software with their wealth and, and the monetary policy decisions rather than trust humans.

• 45:25Speaker 02

  Yeah, no, I, I, I understand that argument. I have respect for that argument as well. Um, I, I don't entirely agree. I think there are other places to store money that have the same problem, by the way. Gold is the obvious case. I mean, it has fluctuated in my lifetime between a hundred dollars an ounce, a troy ounce and a couple thousand dollars a troy ounce. Um, because there's nothing backing it either. And the intrinsic value of gold is pretty low, right? And it's just, it's a good, it's the best conductor. But other than that, it's not very interesting. Diamonds, um, there are a lot of cases where, where metals and, and minerals are, are priced at much higher than their intrinsic values. So I, I understand the argument. It's a reasonable argument. It's simply not the, the one that I'm, I'm following today.

• 46:11Anthony Pompliano?

  I, I, uh, I, I hear you, man. Um, all right. Listen, this is super fun. I, I really appreciate you taking the time to, uh, to come talk for about 45 minutes or so. Um, I, I think that people will get a ton out of this. Uh, and you, you've had a, a long storied career and, and pushed the pace on, uh, on standards across a whole bunch of, uh, industries. So I really appreciate, uh, you taking time to kind of give us an insight into your world. Um, and then we'll have to do it again in the future as, uh, as you continue to establish these, uh, these standards in various industries over, uh, over the years to come.

• 46:41Speaker 02

  Looking forward to it. Thanks for taking the time.

• 46:44Anthony Pompliano?

  Hey everyone, Pop here. If you liked this episode of Off the Chain and want to help us take crypto to the top of the apple, Spotify and other podcast charts, please do us a favor and rate, review and subscribe. To review, simply go to the Off the Chain homepage, scroll down until you see the five blank stars. Taking 15 seconds to fill those stars in and leave a quick review goes a long way in helping us take the entire crypto ecosystem to the top of the charts. I appreciate you listening and see you next time on Off the Chain.