Will the auto giants really stop competing to gain blockchain benefits?

Sebastien Henot (Renault-Nissan-Mitsubishi), Lucy Hakc (Mobi), Michael del Castillo (Forbes)

MC: I wanted to start with some concrete examples of work in the biggest companies in the world about blockchain. But now I want to bring the conversations to the difficulty of building. These ideas sound fun but what does it mean if you can't execute. You can't launch a distributed application on your own. It's an open question. You guys were both involved in the early days of Mobi. I would just like to hear the two of you reminesce about those early days. What were you doing, how did you meet each other and how did Mobi come to exist?

LH: Well it started whne people were making a lot of noise about bitcoin. So we started to look into how blockchain could disrupt other industries, like original equipment manufacturers (OEMs) or energy companies and other suppliers-- they started doing proof of concepts on blockchain. Because of this distributed ledger technology and its peer-to-peer nature (p2p), everyone became stuck and they didn't know what was next. There were informal conversations like with Chris from Toyota and he was one of the first people to do a proof of concept at Toyota on blockchain. They started meetings in Silicon Valley and then moved to the MIT Media Lab. At some point, these meetings became too big. The room didn't have any more seats for people. It started dawned on people that these are competitors having informal meetings with no official organization structure which could be risky. So it became clear that we had to setup an organization with clear policies. Chris volunteered to take this on as a full time opportunity. Mobi started as an organization in May 2018. We launched our first working groups and use cases that many of these OEMs wanted to concentrate and build on in July. Sebastien and Alan were some of the first to chair a working group on vehicle identity, which is the first working group to produce a standard coming out of Mobi.

MC: What about the sensation in the early days where you were in a room running out of space, filled with competitors and you said that's risky. I don't think we should gloss over that risk. That's core to why the consortium is necessary and core to some of the potential benefits of using a shared distributed ledger. If you unpack that risk, why is it so difficult to get companies like Renault and BMW and Ford to come together and put down their swords for a moment and build something collectively?

SH: The risk is simple, it's called prison. Anti-trust in big industries, competitors don't have0 the right to sit together and agree on commercial policies. It would be like, tomorrow, let's say all the manufacturers agree to raise the price and that's forbidden. That was the main risk. I think this was covered pretty fast and professionally by the Mobi team using an anti-trust solution that exists already. The rewards side is more exciting than the risk. One of the big ideas behind Mobi was standards. You all have laptops and phone sthat use USB. Because there's a USB standard, or multiple standards now, it's easy for you to plug your phone into your computer even if it's from a different manufacturer. This creates a lot of services. Tires on cars are standard; you can buy different tires from different manufacturers. So blockchain is the same. It's just brand new. We have to build standards. Coming back to identity, cars are big objects and they are pretty special because they are traded a lot on secondary markets. Nobody prevents you from selling this car to your neighbor or your friends or anyone you want. You can go to a rental dealership and trade in your car to buy a new one. You have to see the hitsory of the car; if it's not the same standard, then every car manufacturer and every insurer or actor in the ecosystem will have to build a specific system per manufacturer and you could imagine how complicated it would be. So there needs to be a standard for communication to increase transparency.

LH: One of the main risks here is the competition. Is me working with otehrs going to make me lose my competitive advantage? I want to mention this because it's not entirely gone. It's not that Mobi was very successful in gathering everyone and therefore we were extremely successful in convincing everyone that you need to work together.. by no means. There's still skeptics. They make us challenge the underlying value and make us produce output tha twill undeniably be very high quality. If we're producing a standard or business case, if someone is challenging the underlying value, then we will be more successful. The core concept of competitive advantage-- one of the reasons that Mobi was formed was that, you can't have competitive advantage by implemeting blockchain on your own. It's impossible. It's because it's a p2p technology. You can only do it by working with others.

MC: I think we glossed over on membership. How many total members are there in Mobi? Can you give us an eample-- rattle as many of them off as you can quickly, inclduing bigger companies or smaller ones?

LH: We right now have over 70% of the mobility industry represented at Mobi. It's over 100 members. They are divided into a few categories-- the partners, which are the mobility service drivers like the OEMs and the tier 1 suppliers and these auto insurance companies like BMW, Ford, Honda, Renault, General Motors. Insurance companies, we have suppliers like Denzos of the world-- we have sponsors who help these OEMs and service providers to drive the tech forward, and these are the technology solution providers like small startups and large consultancies like IBM and Accentures of the world.

MC: And then your owrk you're doing is subdivided into working groups? Could you walk us through those?

LH: The third category was non-profits and affiliates like World Economic Forum and research institutions and other standard organizations like ISO and IEEE to make sure we're not duplicating any owrk at Mobi. Each working group has representatives from all of these categories. We have four active working groups. We have vhielce identity, usage based insurance, electrical grid, and connecting data marketplaces and mobility. There's a few more we want to launch like finance and securitization. These are use cases that we see as relevant to our members; we get interest from our communities to start exploring. Where there are real pain points where we think blockchain can potentially solve these pain points, and then we explore. If we se at some point that blockchain may not be the best fit, then that's perfectly fine.

MC: So we previously talked about some proofs of concepts built by the various companies. Mobi has settled on one for its first main focus. Can you talk about the announcement that was made earlier this month? Your first proof of concept or really big proof of concept and how it was selected. Sebastien? Lucy?

SH: I guess you're talking about vehicle identity. This is the work group that Alan and I are chairing. We have been working since May 2018 with many actors, so of course Ford, Renault and IBM and Accenture, all those big guys, to work together and sit together and figure out how to create a standard to identify cars. Right now there's just a serial number, but it's not enough information. If you give me your serial number for your vehicle, the VIN number, then I know what car it is because the first characters tell me that. Now I have a lot of information. But I don't know when the vehicle was produced; I don't know the owner, or the color, I would have to ask the OEM. It's a good tool today, but it wont be in the future. When you ship cars across the ocean, it's extremely complicated because this is the only trail you have and all around this is really fluctuating. So we decided, let's use distributed solutions to build an identity for vehicles that will be the cornerstone for all the use cases in the future. With identity, you can do a lot of things. This identity is shared across all the brands. So you have a system where actors from the outside can rely on this to make services like payments or sharing your car, dividing your car into tokenization or shared ownerships or whatever you want. The building brick was this identity. To come back to the point, we finalized a proposal draft in July of this year and that was a big world premiere. I am going to let Lucy speak about that. We're in the process of testing the standard in what we call a proof of concept.

MC: Let's make this real. I'm really excited about the work you guys are doing. There's a lot of skepticism, rightly so, we all do it all the time to face the skepticism. I think it's important to emphasize the difficulty of building a distributed application. Typically a startup will raise venture capital and hire the right team, that can take 2-3 years with one comapny. This is over 100 companies getting togehter, committing resources and doing real stuff. Going from the establishment of that standard, tell me about the proof of concept and what happens next.

LH: In general, standards are only as good as it gets adopted. One of Mobi's goals is to promote distributed ledger technoogy adoption and we do that by creating standards but also facilitating conversations about what's next and how can we help the ecosystem adopt this. Standards like Sebastien mentioned, it needs to be tested, it's just a proposal. We need security reviews and tehcnical detail reviews. And we need to get the OEMs together and do a production level or development level activity which is complex and a lot more difficult than bringing everyone together to work on standards. One of the key aspects of this is that no other use case can succeed without the vehicle identity use case being proven. Sebastien said it's one of the foundational building blocks; none of the scifi use cases can be done without a vehicle identifying itself on the blockchain. We need this to be developed and prove the concept. There's about 6 OEMs that have come together and agreed to test the standards. It's Honda, BMW, General Motors, Ford. Yes, these are very big names, they are competitors. Just coming to this point wasn't a small task; it's a huge accomplishment to get the agreement to even work on this. The beauty of this is that there's no vendor lock in or tech lock in. There's so much opportunity for people with building this. That was one of the key decisions for Mobi-- to be tech agnostic, vendor agnostic, and to make sure that our standards are inoperable and we want to ensure interoperability. The important part is that all of these competitors are coming to test it, but they still have the flexibility to build applications on this independently.

SH: Flexibility is the most important for OEMs. We have a lot of actors. They want to do things in a certain way; but also, the blockchain tech is very pioneering and the whole auto industry is not yet at this level. When you go and register your car, there's a good chance that you won't be able to use a digital identifier to be used in the next few years. We need to build something that is bulletproof ready for the future, but also something that will open the door for things in the future. In the future, you will have self-driving cars in Detroit that you could hail with your phone. These could be physically autonomous but also financially autonomous and rely on vehicle identity. We need to build something that will last for the next 30 years. If we want adoption, then it needs to be compatible from day one with the existing legacy systems.

MC: So you have something called the Mobi challenge. What is the challenge? Is there a third class ready to happen?

LH: The Mobi grand challenge was inspired by the DARPA Challenge. If you guys have seen the autonomous vehicle challenge, you probably noticed that in the first runway there were a number of companies and not a single one of them made it to the finish line. I think just 18 months ago, literally every one of those companies made it to the finish line and there was an autonomous car that made the journey in seconds. That was the inspiration of Mobi grand challenge. It's a 3 year series of challenges phased in 6 month to 1 year phases. It was meant to spark the imaginatio nof the developers and startups and young entreprenuers to develop blockchain mobility solutions. One of the key points that Sebastien has alluded to is that we're very early in blockchain tech in general, so there's a lot ot be explored. One of the ways that Mobi wants to do that is to outsource that to the innovative communities out there and the poeple in this audience. Each one of you, please apply to the grand children. We get prizes from our partners; we have partnered with Hyperledger, Ethereum Enterprise Alliance, Consensys, every platform is partnered with us, a lot of the consultancies and so on.

MC: What is the challenge and is there a prize?

LH: There is a prize. Every phase has its own prize. The very first challenge was very open and was just about unlocking imagination. It was open ended, and some companies provided tools or doing micropayments or other things. This particular phase we're in right now is very focused on Smart Cities and this concept of Citopia and how to incentivize people for less congestion, using green energy and making our cities a better place to live in.

MC: I like that this challenge is City based because this event is so focused on the city of Detroit. We have to wrap things up, but I hope to point everyone in the room here-- Forbes just published an article that mentions a lot of Mobi's work, but it highlights in a cool fun way a lot of the Blockchain work in Detroit. There's a lot of blockchain startups, cryptocurrency startups, non-profit organizations... if you had parents that nmade money in the auto industry, or if yu guys have made money in the auto industry and want to figure out what the next step is, then read the article, talk with these people and ask questions. You will see a lot of blockchain skeptics saying nothing is happening, but I think launching a distributed application isn't on the same time frame as launching other applications. These companies are enormous. It's an understatement. I encourage all of you to get involved. I want to ask the question to our panelists: will these giant competitors stop fighting long enough to build something that helps them all?

SH: The quick and short answer is that, we'll never stop competing. That's the game. That's how it is. The auto industry is going to change in the next 15 year smore than it has in the last 100 years. Not just because of autonomous vehicles and self-driving cars; but they will be self-paying and they will be packed to the brim with the technologies from our smartphones. What if the competitors were really the outsiders like Google and Apple? Sitting together in this consortium and building the future is not going to stop us from competing together on the market, but it will give us a fair advantage towards the other competition and it will allow us to build the mobility or the ownership of the future. This is really important, because we are looking at the next 30 years.

LH: Mobility is shifting towards mobility as a service. A lot of ways that auto manufacturers are trying to remain relevant. Blockchain is definitely part of it. There will never be stop to competition. But stopping competition to gain benefits on blockchain, I absolutely believe that.

MC: Let me embarrass that. Sebastien just became a US Citizen, and Lucy is turning 30 in 2 days so she is just barely missing the 30under30 cutoff.