Reimaginging motor-city on a blockchain

Andre Luckow (BMW), Alan Gori (Ford Motor Company), Michael del Castillo

MC: Thank you guys for joining us. We have Andrew and Alan. We are going to talk about copious amounts of skepticis mwithin their companies about whether blockchain is all it's cracked up to be or if there's something valuable there. I wanted to do a quick poll of the audience. How many of you have owned or currently own some form of cryptocurrency? How many you that have your hands raised, used that cryptocurrency for the very first time to buy something illegal? Alright. I may have known that his hand would be still up. I think that's a great starting point: how did we get from crypto to enterprise blockchain? Could you just briefly walk us through how you came across your first-- it's a long cool story, but how did you come across your first bitcoin and what you used to buy it, and how you bought it, and what that taught you about blockchain?

AG: Before I started working at Ford, I was in the software industry for 20+ years. My last job before Ford was that I was working at a fintech team at a company. The product that we developed if you guys use mobile banking apps and use the functionality where you can take a picture of a check and deposit it into your account, or take a picture of an invoice and pay it. With one of the major banks, it's a good chance that you're using some of the stuff that my team worked on. One of the things we were working on was extending the tech to work with other kinds of data, like IDs. A lot of the banks were going into signing up people online. So they wanted people to be able to put in their driver license or passport or something like that and be able to identify themselves. But in addition to that, we also wanted to authenticate the ID. We also wanted to be able to read the information on the ID, and then tell if the ID was authentic. We didnd't want to build the tech from scratch ourselves; there were some people already building parts of that. I was charged with recommending who to go with. So I wanted to do testing. if you're testing tech used to identify fake IDs, then I had to go buy fake IDs to use them as test data. The executive assistant of my boss had a son in a fraternity and he was my source of fake IDs. I also went online and used the same information and sources of the people we were trying to catch; so I went on reddit and there were recommendations about companies you could go to. I went and got $2k to buy fake IDs, and my first purchase, I actually made with a Western Union money order. All of these companies are illegal enterprises, and established banks wont bank them. So you can't pay with a credit card. I paid with a money order. I bought a $300 money order, paid $40 in charges for that money order, and I had to go to a 24/7 CVS pharmacy to buy that. I remember thinking, there has to be a better way. Most of those vendors also took bitcoin, which I noticed. That was my first experience buying bitcoin. I used Coinbase to buy it, right. So I was dumb at the time, I didn't really understand. I used my real name; I signed up and I bought the IDs direcly from my Coinbase account. I bought fake IDs from my Coinbase account. A week after my first purchase, I got an email from Coinbase telling me they don't want me as a customer anymore and where should they send my money.

MC: What did you learn from this?

AG: From this experience, what I learned is that cryptocurrency and the underlying tech of blockchain was great for people who wanted to transact with each other and didn't trust each other and wanted to do that without intermediaries.

MC: What was that feeling when you had literally just spent $40 and had to mail a money order-- versus clicking pay with bitcoin? What was the feeling?

AG: It was mind blowing for an older guy like me. I hadn't really experienced anything like that. It set in place immediately me trying to figure out what is the magic underlying this that made it work.

MC: So that mind blowing epiphany that triggered in Alan and many other people, tends to lead to this intuition that there must be something. If this value proposition is so powerful and mindblowing, there must be something else. Andre to my right here represent BMWs and he has put together their blockchain team and along with Alan they represent two of the biggest companies in the world who are acively looking for that other use cases. Let's address some skepticism-- how many think this could be used in the auto industry? It might be bigger out in the world than in this room? There is real work happening in giant auto companies exploring blockchain. Andre, could you just set the stage for us? What does your group look like? What kind of work are you doing?

Andre: The automotive industry and BMW started to look into blockchain around 2017. You have nothing more than a database that nobody manages. You insert an entry into the database, it's immutable, verifiable, and nobody can tamper with it or take the record down. This is quite a powerful thing. People came to realize this. In the automotive industry, we operate complex business ecosystems both on the supply chains where we collaborate with first tier and second tier companies, import/export businesses, this is a really complex setup. We're still using IT like paper. We're not sending around paper, now it's electronic messages like email and spreadsheets. Wouldn't it be nice if there was a single point of truth where we can all share the data into a database? That got us to the point where we said, hey we do need to actively do something with respect to blockchain. At this point in time, we also had our tech office in the US and I was offered the job by our CIO to setup a blockchain team to investigate the applications but also to investigate the technologies.

MC: Could you describe that team a little bit? Is it you and one other person; is it full timers? Are AI experts being repurposed? Let's get away from the esoteric. How big is your team, are you meeting daily?

AL: It's full time. We're part of the data group of BMW. We operate data lakes around the world. My boss is the chief data officer of BMW. He is responsible for providing technology to enable us to do data, machine learning, and AI at BMW across the entire motor value chain from A to Z. Right now, that stops at the border of the company. The team is fairly small, emerging tech team. Blockchain is roughly 10 people. We are also investigating other technologies. As of now, the business task is so important. We're actively focused on supply chain.

MC: Before we get to the business problems, Alan could you briefly give us the lay of the land-- what is the blockchain work at Ford look like? Is it distributed? Is it one team?

AG: It is distributed. It started in Ford Credit. We have a bank that does financing, like most of the motor companies. Even here, people thought of blockchain as a banking technology or fintech tech. This is how everyone looked at it. It started there. Now the team is in research and advanced engineering. There's about 6-8 people who work quite extensively on blockchain. I'm not actually part of that team. I'm a part of the IT research team. I'm referred to as a thought leader within Ford, but I don't manage a blockchain team but I manage an AI team.

MC: Could you give us an idea of Ford's commitment to this technology? Are these full timers, part timers?

AG: The vast majority of people working in blockchain also work on something else. Just like me. I don't think there's anybody that I know of within the company that is working on blockchain exclusively. But I think that's going to change. That's just where we are at right now.

MC: I want to talk about, why you two happen to know each other. Why are these two companies-- fierce competitors but perhaps just competitors-- which occassionally have friendly drinks together. To get to that, let's talk about the actual use cases. Andre, I'll ask you to get back to that. I know there's one that your group of companies has settled on. Before we sync on that one, could you give a bulletpoint list of-- what are some of the possible use cases that we have seen mentioned for blockchain in the auto industry?

AL: I'd like to start on the supply chain part. We have a complex supply chain network. We have tier 1 suppliers, tier 2 suppliers, and so on. Often the companies only talk with the tier 1 suppliers. It lacks transparency about what's going on in the complex supply chain network. So we started to deploy blockchain; we're running a pilot with production data. We have a supplier that produces parts for us in Czech republic and Mexico and the cars are built in the US and then shipped worldwide. This is a complex supply chain, and this is just one supplier. Sometimes we need to trace a root cause of a problem and we often don't have the data, we often have to manually request data and track down the issue. Then people from other departments came up with the idea of certification and reports on data-- you're exporting parts from the EU and NAFTA region, let's use that report to optimize our tariffs. Once we had some data in there, people saw a lot of use for that data and wanted to get access to that, so that pushed the project forward.

MC: Alan, we talked about COBOL recently. The concrete example of how-- it's a litlte different?

AG: It's really about conflict materials. Once again, it's something that the attacker---

MC: What is a conflict material?

AG: It's materials that people would go to war or do other terrible things to get, so that they can sell to the developed world, and we don't want those kinds of materials in the car. All the automakers have a vested interest in that. I think GM was in that. BMW might be. There's about three companies invovled in that. It's all about supply chain, but a supply chain involving multiple OEMs. Classic blockchain use case-- a group of people doesn't trust each other, they don't want anyone to own the data.

MC: Really quick, what about some other use cases. Some of them are really scifi sounding. We're not going to unpack them. There was international car charging ecosystem, gaosline and road taxes when cars are self-owned; doing ridesharing without a central authority just literally connecting drivers and passengers. When you decided to start taking this seriously; once you had the data then momentum started to build. It became apparent that building just within the organizations was going to have some limits. What were some of the pain points that you encountered as you experimented with blockchain and how that led to some strange friendships?

AG: The first use case that I did at Ford was again going to this idea of blockchain where people don't trust each other. Well, what's an area of business where this happens in motors? Well, the used car business is often used as a synonyms for a lack of trust. Think about Carfax that sells vehicle history data. The car itself can have its own authorship of history. The idea is to share that data without an intermediary. That was interesting to me. We had a project called AutoDNA or Carfax without Carfax. I worked with a company in Silicon Valley a consulting company there and that same company had worked with a gentlemen called Chris Vallager that worked at Toyota at the time. They introduced me to Chris and on our first meeting he told me about this group of auto-bankers who would collaborate and form a consortium to go after auto blockchain use cases. He started having some meetings at Silicon Valley at their Toyota Research HQ which is not far from where Ford's is.

MC: Just to lay the foundation; Ford and Toyota started working together at an early stage on an exploratory project.

AG: This led to a group that he was forming... I think there were some other people from BMW there. There were representatives from 70% of the world's production were there.

MC: We will talk about dApps in the next panel. Andre, why is this necessary? When yuo identiy a problem, you hire a coder, you build a solution, but why can't BMW just build a blockchain app?

AL: As a matter of fact, when I started the job I was not so exposed to blockchain. I was figuring, get a machine, install the blockchain and we're done. But it was much more complex than I thought. I loaded all my data into the blockchain, but what's next. I talked with Chris Vallager and others and the vision resonated with me. How can we actually come to a decentralized ecosystem where everyone benefits from each others' data and we can all do business much more efficiently? One way would be to push our own ecosystem and onboard suppliers and basically get a minimum viable ecosystem which we do focus on in the case of supply chain. On the other side, nobody can claim to know how this thing is going to evolve. We need some standards, and once those standards are in place, we know great things will happen. There's so much creativity out there. That's what got us to say we want to be a part of that. It's very real.

MC: I want to wrap things up here. Before we do that, I'm curious as you guys have been building and learning the technology and leanring the difficulties of networking and building distributed applications... is there any way to quantify the business value of this? Are you saving money, what's the value here? Can we qualify or quantify what's at stake from a business perspective?

AG: I think it's too early. If someone else knows, then let me know. I think there's efficiencies to be gained, and there's new businesses to pursue. There's uber without uber. I think there's new opportunities but I don't think anyone has a good quantification of that yet. I think it will come.

AL: I agree. First generation blockchain is going to focus on transparency and then the business case will come later. Right now it's hard to come up with reliable numbers.

MC: What do your bosses think? We started about talking about skepticism in the room and elsewhere. Obviously the potential benefit is enough to dedicate smart people to the work; but there's not a solid business proposition yet and we don't have numbers. So how did you get your bosses to approve this? Are they onboard or are they skeptical?

AG: They are skeptical, and I think that's fine. It's an overhyped technology, and to some extent it's still overhyped. There's nothing wrong with being skeptical. Once we have a use case out there, making money for someone, then the skepticism will go away. I try to make sure I currate very good use cases to put in front of my management. In general, the reaction that I have gotten has been positive. Like someone saying, that sounds like a good use case. There are good use cases out there.

AL: My managers are supporting it; they are really excited and got me excited on it. I couldn't ask for more. I think it's important to demonstrate incremental value, that might look like a centralized system, but never leave decentralized ecosystem out of scope. So show that the business value is nearby, but follow the big story.

MC: So could blockchain be used to reimagine Detroit? I like stories that have strong settings. I don't want to lose the fact that we're in a real place with real walls and real money being generated. We talked last night about blockchain supremacy. Artificial intelligence supremacy-- a use case where AI can do it so much better than humans that it makes copious amounts of money.. that's a coarse way of describing it. Will there be such a thing as blockchain supremacy? Will there be a use case that blockchain is so strong that it becomes a new revenue stream for places like detroit?

AG: Blockchain supremacy has already been demonstrated. That's what cryptocurrency is. The world is waiting for a blockchain use case that is not cryptocurrency that does really well and makes a lot of money for someone. I'm not going to pretend what that use case is. I think it's someone in this room or in the under 30 crowd. It's probably someone younger than me who is going to come up with that use case. I believe it's there. I certainly have some ideas. I know it's probably going to be some sort of consortium effort. It's not going to be just one company in my opinion; that's why I wanted to be involved in Mobi. I think we'll see another use case other than crypto that makes blockchain used.

AL: I think blockchain can do it. Not only Detroit; every city on the planet. As we move forward towards Smart Cities, there will be many opportunities because blockchain will play an important role in orchestrating entire ecosystems of different mobility forms.