 Hello everyone, welcome to theCUBE studios here in Palo Alto, I'm John Furrier, the co-host of theCUBE, co-founder of SiliconANGLE Media. This is our CUBE Conversation, Thought Leader Thursday. I'm here at Val Birchaviji, who's the founder and CEO of a new startup called Pencil Data. Val, CUBE alumni, I've been on many times with NetApp and then a variety of other great startups. But now you're doing your own thing around cryptocurrency, blockchain, enterprise, like technical infrastructure. You've been a CTO, now entrepreneur, co-founder CEO of Pencil Data. Congratulations, you're on the crypto wave. This wave is coming. Absolutely, I believe it's here. It's here. It couldn't be better. So I interviewed Dr. Jin Wang, who's the chairman of Alibaba's Technology Steering Committee, also the founder of Alibaba Cloud, just recently in China, presented by Intel, plug for Intel there, thanks Intel for supporting theCUBE. He said to me, and I put the clip out on Twitter natively on the video clip, which was, he said, I asked them about blockchain, you know, China, they blocked them, ICOs. He said blockchain is a fundamental part of the internet. It's like as fundamental as what TCPIP was. This is the nuance that is attracting a lot of tier one entrepreneurs. Obviously the money side's hyped up beyond all recognition right now, as Don Kline on our team was saying, it's melting up in terms of hype. But this really speaks to the transformation of the web that's, and the internet now, the web is the internet, from distributed, distributed and decentralized. This is a big sea change. Kind of building on the fundamentals of the internet, formerly called the information superhighway, before the web came along. But the web was designed to stand nuclear disaster, be resilient, be decentralized. It reminds me of back to the future in many, many ways because if you're as old as we are, you remember those DARPA origins of the internet, exactly that decentralized nature. And we've gone away from that, right? As Tim Berners-Lee brought on the HTTP protocol, we've had web protocols, and as major, the FANG vendors have really dominated their usage of that existing layer of technology. We've gone away, we've gone to a very, very centralized approach, which as we're seeing with the tech hearings this week carries all sorts of risks, not just business and legal and political. And you're referring to the Senate hearings where Facebook, Google, or Alphabet, and Twitter are in front of the Senate community, you're talking about the Russians, the Russian political thing, but they're bringing up the issue of the role of these mega platforms that have all this data. And the problem is that this is not what the user's bargained for, I use Facebook as a free app, I love Facebook, Facebook, we love you, what's happening here and there on Instagram, but my bargain was simple, I'll use your free app, I'll let you use some of my data, but now you're making billions, $10 billion quarter, fake news has infiltrated the country, I have a poor user experience every day, it's getting worse and worse, a lot of hate and division, this is not what I bargained for. So the world's kind of revolting against these mega siloed platforms. That's the risk of having such centralized control of a technology. If you remember in the old days when Microsoft's dominance was rising, all you had to do was target windows as a virus platform and you're able to impact thousands of businesses even in the early internet days within hours. And it's the same thing happening right now, as a weaponization of these social media platforms and Google's search engine technology and so forth, is the same side effect now, the centralization of that control is the problem. One of the reasons I love the block stack technology and in blockchain in general is the ability to decentralize these things right now. And the most passionate thing I care about nowadays is being driven out of Europe, where they have a lot more maturity in terms of handling these new scenarios. You mean the tech being driven out of Europe? The laws being driven out of Europe. Be specific, we'd like to say. The major deadline that's coming up in May 25th of 2018 is GDPR, General Data Protection Regulation where European citizens now in any company, American or otherwise catering to European citizens has to respond to things like the right to be forgotten request. You've got 24 hours as a global corporation with European operations to respond to European citizens, EU citizens, right to be forgotten request where all the personally identifiable information, the PII, has to be removed and audit trail, proving it's been removed, has to be gone from two, 300 internal systems within 24 hours. And this has teeth by the way, it's not like the $2.7 billion fine that Google just flipped away casually. This has up to 4% of your global profits per incident where you don't meet that requirement. Well, you bring up a good point, the GDPR is a good one, it has teeth and it's kind of in the weeds with the folks who might not know that regulation, but really it's about the privacy and the rights of the individual. But coming back to Facebook to kind of connect another dot is, what we're seeing with Facebook, Twitter and Alphabet, particularly the Senate hearings is that, and this is why the industry and the media is crumbling, you hear publications are dying, the newspapers and media is changing, is because knowing your customer is a really important thing. The people who want to be served need to have a closed loop with the publication and these platforms are bow guarding all the data and so the right of the customer, the users are suffering and that's what people are generally talking about. Personally, a guy can rent a truck and go mow people down in Manhattan. We should know who these people are, the neighbors. So I think there's going to be a trend towards knowing who your neighbor is, knowing who the customers are. At a level that's not scary privacy violation, but we're going to know who the crazies are. We're going to know what's going on and then that's kind of out there, that's kind of my general feeling. But now getting back to the impact, GDPR, these big mega platforms where the users are at the center of the value proposition really comes down to the shift in user expectations around a decentralized internet. That means agile goes to a whole nother level. If I'm a user and I say, hey Facebook, delete my digital exhaust or digital footprints from Facebook over the past 10 years. I mean that's hard to do. I mean that's not technically is a really serious problem. I mean. And it's actually not just a technology challenge. It's always left to go back to Conway's law in these discussions. The org chart, how information is, infrastructure is budgeted for and managed through various different departments within any large enterprise, data savvy or not, is a challenge. It's coordinating these efforts, actually going beyond the talking face towards implementing a master data model. Those are the main, main challenges right now. And it's a movement that I believe now has political strength that you migrate across the pond over here as well. There's a groundswell movement called digital sovereignty as a response to GDPR in Europe where people are realizing that they have the right to be sovereign over their data, their digital exhaust, their digital footprint online. And that's a two way street. You want and demand control over your data. But on the other hand, your identity, which you control, has to be authentic as opposed to a fake identity. And your reputation has to be out there as well. These signals and these trends we're just referring to, to me, are just like little tremors of the tectonic plates that are going to be changing because if you look at the major shift in technology, let's take blockchain for instance, and look at the impact of a decentralized internet, now global, immutability with the ability now for more agile capability, not just permanent, I want to erase things that you're talking about. But three, the younger generation. If you look at what the young kids are doing, I have four kids, my oldest is 22. It's a gaming culture, right? It's a gaming culture. They're online all the time. They're not old like us. My son's like, Dad, Google search us for old people. I mean, that's a general sentiment. You don't over-categorize it. But combination of the new user experience, this younger generation, entrepreneurs and users, and these tremors we're seeing in the marketplace, signaling that, hey, Facebook, you might be too big for your bridges, or, hey, Twitter, you got a bot problem, hey, all you gamers using Twitch, and this is now a signal. Where is it leading to? I mean, and where does blockchain in particular impact this? Because this is kind of where everything's converging to. So what I'd like to say right now is you've got, you know, Mark Andrewsson's premise that software is eating the world. If you extend that, data's feeding it, blockchain is valuing it, and it's AI that's automating it. So in my mind, and you know, particularly in my experience earlier this year in AI industry, you realize that AI today really boils down to machine learning, which in itself boils down to deep learning, which boils down to data. Your access to data, Professor Andrew Wang did this at the Regional Rally Conference up in the city. He got up and lectured as a keynote instead of sharing slides, and his number one, two, and three advice to everyone in the audience was, get the right data sets to train your model. If you don't have that, you don't have a differentiated business, and that's what inspired Pencil Data, is my encountering of the cold start AI problem where the IP's in a public domain. Public data sets are ubiquitous, which is fantastic for academics, but as a business you can't differentiate unless you have access to the right data sets to train your models more specifically. Okay, as the founder and CEO of Pencil Data, that's your new startup. Let's get into some of the reasons why you're starting it. What problem are you attacking? I mean, obviously, Pencil, I mean, I can see Pencil and you're racing things. It's got data. The internet is no longer written in ink. That's the premise. Now with Pencil, you can erase some data. Well, blockchain, it says immutable, so this is kind of conflicting in my mind, so help me kind of rationalize this. The benefit of blockchain is everything's permanent if you're on chain, as they say. Exactly. If you're off chain, you could do some things. Is that kind of what we're getting at? We're mixing the best of both. So our premise is that again, whether you're an organization or an individual, you need to have to survive in a new digital economy control over your data. The blockchain part of it is the visibility side. So if you don't know who's doing what to your data, you're far less likely to share it. And once you know who's doing what to your data, and an immutable blockchain with a detailed audit trail with strong authentication of literally who's doing what to your data gives you that visibility, then you do what modern asset managers do. You can't really value an asset until you fully control it. And our premise is you can't control something until you can take it back. So the notion of Pencil data is the ability to go on chain for the visibility and off chain for managing data and encrypted containers. And if a data owner or publisher doesn't like how the subscriber is consuming their data, they have the power to revoke all downloaded copies. So just like kind of like a shadow blockchain kind of model, I mean, I'm trying to find a mental model because I mean, I remember the old days back, you know, I was breaking into the industry in the late 80s, early 90s, worm drives, right once, read many, right? And you know, you write it once as a laser with optical, optical drives at the time. Also demilitarized zones in networking was an area where there was kind of a safe harbor kind of thing where people could play around. I mean, what metaphor, what mental model can people take away from some of the things that you're trying to solve? Is it like a DMZ? Is it like a? It is a lot, the implementation is a lot like a DMZ. And the business challenge and opportunity is that there's a lot of tension between protecting data because we have an epidemic of data breaches right now. I think you're foolish if you're assuming that you haven't been breached yet, but you might be because everyone has been breached personally and organizationally. So we have to deal with the rising need to protect data more and more. But at the same time, you can't stay in business if you don't optimize the monetization of the data you have. And so pencil data walks that fine line between letting you do both. Letting you not just protect infrastructure, that's a whole other industry that we're not involved in, but literally protect data at the data level. If you look up terms like crypto anchor, you'll see some of the technologies that are taking advantage over there, but being able to monetize data by unlocking all that latent value of data hidden behind firewalls. If you use a physics analogy of potential and kinetic energy applied to data behind firewalls, there's hundreds of billions of dollars of value in latent data basically, potential data hiding behind firewalls. And when you can safely share it, give the owners control they've never had before, then you expose the value of that data for the first time. All right, so let's take us through where you're at, obviously super exciting. You're leveraging the blockchain and you've got an ICO initial coin offering coming up. But that's not, you're not just doing that for the sake of doing this. A lot of scams out there. You're taking a little bit more of a pragmatic approach. Give us the status. Obviously you're the founder and CEO. What's the makeup of the team? How big are you guys? What are you guys looking for? Obviously you're looking for team members, almost the most likely. We're looking for developers, obviously. So we're in the process, are you? We are a two-month-old company. We're at the seed stage and we've actually assembled a world-class team. We hear that a lot, but I'm really proud of the team members we have right now. World-class? Are they from around the world and they have class? Or what's the... They're world-class. They're world-class, like myself, you know, I travel a lot. So an example, my chief privacy officer is Sheila Fitzpatrick. She's a worldwide recognized leader in data privacy. She's on many, many privacy boards in the US and in the EU and so forth. And she now is traveling non-stop lecturing on GDPR, itself specifically. She's one of those recognized experts. Should you see yourself as a solution for GDPR? Because that's, again, it does have teeth. I would say that we've been reporting on this through Wikibon, our research team, as well as theCUBE. It comes up all the time and there's heavy fines associated with it. So it's not like... GDPR is the perfect use case because on the one hand, we have that audit trail that proves what you're doing with data. On the other hand, we have a kill switch, that revocable use clause for data where you can literally comply with GDPR in minutes or seconds as opposed to take a full 24 hours to scour database and delete selective records. All right, so what about the product? Give us an example of the product. Will you be, first of all, that's right around the corner, it's next year. It's like, I know it's March or April's time for that kind of the exact date, but it's pretty soon. Public beta before the end of this year, version 1.0, first or second quarter next year. For you guys, pencil data. Yes. So you're working with anyone right now, you have a handful. So we've actually got really interesting distribution partnerships that we're not in a position to announce it right now, but the top tier brand name enterprise cloud vendors, both on the SaaS and infrastructure and database side are lining up to work with us because we're enabling amazing use cases in healthcare and life sciences, the ability to selectively share patient data with insurers, with healthcare providers, clinical trials now to share more information through differential privacy and collectively have more data to be processed and analyzed. Use cases are just off the chart. Well, you know, we go to all the big data shows were horizontally scaled, the event site circuit, but this is the number one thing that comes up. I don't want to, I want to move from batch marketing, batch process, batch business to real time business. Speed is essential, but it's always been a conflict between how do I enable data to move really fast and be available for applications with the, but protecting the privacy. Do you solve that problem? Is that something that you see yourself solving? It's not necessarily innovating on speed of data movement. It's going to be a SaaS service. So it's availability mode. It's availability of data that's really never been shared before. And I think that's the key here is we know there's a lot of value locked up behind corporate firewalls. The irony is we don't even have to sell this outside firewalls initially. When you go to any medium to large size enterprise, it has more than one site or more than one department. Sales doesn't trust marketing and vice versa. Engineering doesn't trust customer support. Neither or the four of them trust each other. So we're actually going to enable more data sharing within enterprise. So that's a starting point for you guys. That's a starting point. That's the easiest low hanging food sale we have. Pencil data, that's great stuff, Val. Congratulations on that startup. I mean, you got a world class management team and this kind of brings a point that I've been banging on theCUBE pretty much every time I go out and talk about blockchain and ICO because you know where theCUBE is a very decentralized audience and that's a value that we're looking at as well with blockchain. But I got to ask you the personal question and from your own personal perspective, experienced, executive and CTO, why is blockchain attracting so many A players? Because you're seeing a lot of what I call A players, entrepreneurs, technical geeks, really jumping into this because they can see it, they can smell the opportunity and also it also attracts the scammers as well. But specifically why are these A players coming in? Is it, what are you hearing? What's the general vibe? What's the anecdotal reason? So as you said earlier on, it's a fundamental evolution of the core internet as a technology. That's fundamental as HTTP and web was on top of TCPIP back 20 years ago. But it's got that rare combination not only being a technical innovation that empowers new use cases on the web, on the internet, it's also got immediate amazing business applications as a store of value initially as an actual valuation, the various business processes or data sets in my case, as an ability to exchange that value so transparently so in such a frictionless liquid manner, those are some of the amazing innovations that brings to the table. And I think the most important thing is not to think of this as being able to do digital transformation or faster analog. It's about completely reimagining exchange of value, measurement of value and new kinds of businesses that just weren't possible before. Yeah, and all points of the stack, not the low levels and the application level, the business logic and to the geek side, right? You agree. Absolutely. I mean, that's great. And as you know, the cube is looking at a blockchain, ICO and then the horizon. So keep an eye out for that. Cube coins could be in everyone's future. So we're super excited like you. I'm looking forward to your preside. Just like I'm looking forward to mine. Well, we'll see. And the bottom line is that this is where the reality is. I mean, reimagining the applications is what people are thinking. And I think people should be aware of the scams out there. And then, you know, final question I want to ask you is obviously you're both in the community together with our teams. How, share your perspective on the ecosystem because obviously decentralization will change the nature of traditional ecosystems. Very much so. What's your vision on how the ecosystem will evolve? And how big is it now relative to these early markets? You know, we're actually starting to enter the middle innings of the cloud game, if you will. We're seeing a very good maturity, a good diversification of profitable learnings and outcomes for the major cloud players. So I think we've gone well down the cloud path so far, but, you know, the decentralized world is in its infancy. It's embryonic right now. And I've always been a proponent of the multi-cloud environment and the multi-cloud world. And decentralization, fundamentally, is based on and depends on a multi-cloud, not just multi-region, but multi-data center in a closet scenario as well, to be able to actually have a democratic model for determining, you know, where the value is, where the value isn't blockchain-node style. And that is incredibly exciting to me because that really cements these rebalancing of the pendulum between core and edge in terms of where processing and value happens. Yeah, and value exchange, obviously now marketplace is becoming the du jour way to exchange value. Users are in control. Infrastructure equilibrium is interesting. Great stuff. And obviously, perfect storm for innovation. The waves are coming. You know, one thing I've learned over the years is the innovation change never stops. There's always an opportunity to innovate and that's what I love about this business. Blockchain, ICO, pencil data, check them out, Val Virgilvici, founder and CEO, great friend of theCUBE, also really strong TTO. Check these guys out, this wave of innovation around blockchain, ICOs and infrastructure, reimagining the future is here upon us at theCUBE. We'll be right back with more. Thanks for watching.