The Cube presents Ignite 22, brought to you by Palo Alto Networks. Welcome back to Las Vegas. It's the Cube covering Palo Alto Networks 22 from the MGM grand, Lisa Martin with Dave Vellante. Dave, we are going to unpack in the next few minutes what we heard and saw at day one of Palo Alto Networks Ignite. A lot of great conversation, some great guests on the program today. Yeah, last Cube event of the year, probably the last major tech event of the year, it's kind of an interesting choice of timing two weeks after re-invent, but you know this crowd is, it's a lot of like network engineers, sec ops pros, there's not a lot of suits here. I think they were here yesterday, all the partners, we talked to Carl Sutherland about hey, these guys want to know how do I grow my business? So it was a lot of C level executives talking about their business and how they partnered with Palo Alto to grow. The crowd today is really hardcore security professionals. So we're hearing a story of consolidation. Yes. No surprise, we've talked about that and reported on it quite extensively. The one big takeaway, and I came in, as you know, wanting to understand, okay, can you through M&A maintain, build a suite of big, big portfolio and at the same time maintain best of breed? And the answer was consistent. We heard it from Nikesh, we heard it from near Zook. The answer is you can't be best of breed without having that large portfolio, single data lake, single version of the truth if there is such a thing. That was interesting that in security, you have to have that visibility. I would imagine that's true for a lot of things. Data, see what snowflake and Databricks are both trying to do, now AWS. So the joint we heard that last week. So that was one of the big takeaways. What were some of your thoughts? Just impressed with the level of threat intelligence that Unit 42 has done. I mean, we had Wendy Whitmore on, she was one of the alumni, great guest. The landscape has changed so dramatically. Every business in any industry, nobody's safe. They have such great intelligence on what's going on with malware, with ransomware, with smishing that they're able to help organizations on their way to becoming cyber resilient. We've been talking a lot about cyber resiliency lately. I always want to understand, well, what does it mean? How do different organizations and customers define it? Can they actually really get there? And Wendy talked about, yes, it's a journey, but organizations can achieve cyber resiliency, but they need to partner with a Palo Alto Networks to be able to understand the landscape and ensure that they've got security established across their organization as it's now geringly multi-cloud. Yeah, she's a blonde-haired Wonder Woman superhero. I was asked security pros that question. But when you talk to people like Wendy Whitmore, Kevin Mandia, somebody else, and the people at AWS or the big cloud companies who are on the inside looking at the threat intelligence, they have so much data and they have so much knowledge. They analyze, they identify the fingerprints of nation-states, different criminal organizations, and the one thing I think it was Wendy who said, maybe it was somebody else, I think it was Wendy, that they're tearing down and reforming, right? After they're discovered, okay, they pack up and leave. They're like, you know, Oceans 11. Okay, and then they recruit them and bring them back in. So that was really fascinating. Near Zook, we'd never had him on theCUBE before. He was a tremendous founder and CTO of Palo Alto Networks. Very opinionated, very clear thinker, basically saying, look, your SOC is going to be run by AI within the next five years. And machines are going to do things that humans can't do at scale is really what he was saying. And then they're going to get better at that and they're going to do other things that you have done well, that they haven't done well, and then they're going to do well. And so this is an interesting discussion about, I remember, you know, we had an event with MIT, Eric Brynjolfsson and Andy McAfee, they wrote the book, Second Machine Age, and they made the point, machines have always replaced humans. This is the first time ever that machines are replacing humans in cognitive functions. So what does that mean? That means that humans have to rely on creativity. There's got to be new training, new thinking. So it's not like you're going to be out of a job. You're just going to be doing a different job. Right, I thought Neerazook did a great job of explaining that we often hear people that are concerned with machines taking jobs. And he did a great job of, and you did a great recap of articulating the value that both bring and the opportunities to the humans that the machines actually deliver as well. Yeah, so, you know, we didn't get deep into the products today, tomorrow. We're going to have a little bit more deep dive on products.  And if I were, Nakesh, and he's doing exactly what I would do, putting him on a plane and saying, go meet with customers, go make rain. Right, and that's what he's doing. He's an individual who really knows how to interact with the C-suite as a driven value over the years. So they've got that angle going. They're driving go to market. They've got the technology piece and they've got to build out the ecosystem. That I think is the big opportunity for them. You know, if they're going to double as a company, this ecosystem has to quadruple, in my opinion. And we saw the same thing at CrowdStrike. We said the same thing about service now in 2013. And so, you know, now what's happened to the GSIs, the global system integrators start to get involved. They start to partner with them and then they get to get that flywheel effect. And then there's the super cloud. I think that, you know, I think near Zook said, hey, we are basically building out that. He didn't use the term super cloud, but we're building out that cross cloud capability. You don't need another stovepipe for the edge. You know, they said they got on-prem, they got AWS, Azure. He said, you have to absolutely have to run on Microsoft. Because they don't believe today, right? Today they run on, I heard somebody say they run on AWS and Google. I haven't heard much about Microsoft. Both AWS and Google are here. Microsoft, the bigger competitor in security, but near Zook was unequivocal. Yes, of course, you have to run it. You got to run on Alibaba cloud. He didn't say that, but if you want to secure the China cloud, you got to run on Alibaba. And Oracle, he said, didn't mention IBM. But no reason they can't run on IBM's cloud, but unless IBM doesn't want them to. Well, they're very customer focused and customer first. So it'll be interesting to see if customers take them in that direction. Well, it's a good point, right? If customers say, hey, we want you running this cloud, they will. But he did call out Oracle, which I thought was interesting. So Oracle's all about mission critical data, mission critical gaps, so that's a good sign. You know, I mean, there's so much opportunity in cyber, but so much confusion. Sneak had a raise today. It was a down round, no surprise there. But these companies are going to start getting tight on cash.  And so, I don't know who said, I think it was Carl at the end, said in the downturn, the strongest companies come out stronger. And that's generally been the case. They're kind of rich get richer. We see that in the last downturn. Yes and no, to a certain extent. It's still all about execution. I mean, I think about EMC coming out of the last downturn. They did come out stronger. And then they started to rock it, but then look what happened. They couldn't remain independent. They were just using M&A as a technique to hide the warts. You know, so what Nir Zook said that was most interesting to me is, when we acquire, we acquire with the intent of integrating. ServiceNow is as a similar philosophy. I think that's why they've been somewhat successful. And Oracle for sure is at a similar philosophy. So, and that, you know, that idea of shifting labor into vendor R&D has always been a winning formula. I think we heard that today. Excited for day two tomorrow. We've got some great conversations. We're going to be able to talk with some customers. The chief product officer is on. Yeah. So we have more great content coming from our last live show of the year. Dave, it's been great co-hosting day one with you. Look forward to doing it tomorrow. Yeah, thanks for doing this. All right. For Dave Vellante, I'm Lisa Martin. You've been watching theCUBE, the leader in live enterprise and emerging tech coverage. See you tomorrow.


Alright, here's the Sitch guys. I've been crook as a dog all week. I wanted to go skate this week but I was sick so I've just been laying on the couch. It's my last day off today. I wanted to try to go out and do something productive, film a video for you guys so that's what we're doing right now. I'm just walking down to this chill drain spot. Got my paint, my bag, got my camera. It's going to knock out a piece. It's been a minute since I've painted so I just wanted to do something outside the house. I've just been watching Netflix on the lounge, you know. It's been super lazy. I'm really starting to get used to the scenery out here which I shouldn't take it for granted because look at those mountains guys. Gorgeous. Look at this place. I've just got to duck underneath this fence and then go painting that drain right there. There's some houses there but it's a really chill spot for the most part, you know. Kind of overcast day here today. It might rain later. This is the last time I've painted in here before but I'm glad it's been buffed because I painted in like the last good spot. So this is basically the spot here. It's a tunnel and then it opens up with some walls but as it goes up it turns kind of flatter so last time I painted here I'm probably going to go here again because it's good coverage. The thing about this wall is it obviously gets a lot of sun damage so if you paint here the sun's just going to ruin your peace and it's just going to crack off the wall but whatever, you know. As long as we get a piece done today I'm happy. So here's the really really rough sketch of what I'm going to go for today. I don't know if I'll do the extra doodads. Maybe a wheel, maybe a wind tower go once I put the outline on the wall but this is basically it and it's got a bunch of like random colors so hopefully it all comes together. Right on this piece just kind of little lines and doodads. I don't know what you would call this aura extended aura I don't know aura off the wall like bands off the wall because it's not right up against the outline it's just kind of it's kind of there I don't know to be honest this piece can't really get any worse anyway so I'm just going to chuck on a little bunch of yellow here and there to spruce it up a bit. It doesn't matter no one's going to see this piece anyway. There we go. What do you guys see better, worse, same let me know. Piece is done I've got some leftover paint I don't want to carry home so I'm going to do evening mob sorry right here behind me. Who else is going to come down here and paint a part for me anyway so I don't feel guilty about taking up the good spots. If you're wondering how I'm able to carry a kit of paint a GoPro and my camera and a bottle of water check out these sick tote bags we just dropped this evening head on over to evening mob.com join the mob today and yeah you'll be able to carry a bunch of paint and all your other painting accessories and needs at evening mob.com because I've been sitting at home all week I've become like mentally fried and I just want to make a note to you guys that if you guys are feeling like fried mentally you don't want to move you sit on the couch just laying in bed all day the worst thing you can do is like not move your body being able to get outside getting some fresh air getting a little bit of exercise just doing something with your hands putting your mind to work is going to help you tenfold so I know it's hard to like get up and get out of bed and get up off the couch if you're feeling fried but yeah it's like the best thing ever to just try to go out and do something you know another thing you can do is just drink hella water like if you're feeling fried drink as much water as you can because being hydrated probably definitely helps with your mental mind state I'm not a doctor I'm just telling you by experience


Good afternoon everybody. Welcome to Perspectives on Energy here in things like Hawaii. I'm your host Guillermo Sabatier, Director of International Services for HSI. And today we have joining us as our guest is Rocky Cease, VP of Industrial Skills at HSI and also founder of SOS International. And we'll be talking about how we train the new energy industry professionals. Rocky, welcome to the show. Thank you. I'm very happy to be here again. All right. So very excited to have you here. And one thing, one disclaimer, Rocky also happens to be a good friend of mine. So definitely really exciting to have him as my guest. And this would be a nice flowing conversation. Rocky has been in the same industry that I've been. And in fact, I've worked for the same company. Rocky hired me over to SOS and then later was acquired at HSI. So Rocky, tell us more about how you started SOS and what need you, you know, that you met for the industry, that idea. Well, I started in the industry as a junior engineer at a company called Southern Electric Gas way back in 1981. So I've been at this a little over 40 years. In 1998, the North American Electric Reliability Corporation started its first system operator certification program. And in the original program, the only way to maintain the certification was to retake the exam every five years. So in 2002 and 2003, we got the idea that if we could build a training program to help operators recertify, in other words, retake the exam after five years and to help new operators that were entering the industry to take the exam for the first time. And if we could do a put together product that would provide assistance in passing that exam, that might be a good place to start a business. So that is in a nutshell is how we got started. Right. And definitely there's a huge regulatory component that came along after that, right, where there were a few changes. There was a couple of incidents known as the Northeast Blackout 2003 and that completely pulls the whole new set of responsibilities. So tell us more about that and how you met that challenge. Well, since we had just started the company not too long before the Blackout in 2003, a lot of our friends called and asked if we were the reason for the Blackout, which I'm glad to say we were not. But because of the Blackout in 2003, a lot of things happened after that. The United States Congress decided to get involved in the performance of system operators, among other things, but we're talking about system operators. So Congress got involved, they passed the Energy Policy Act of 2005 and it included many things. A lot of them were frankly, very frankly, good for our business. They changed from a certification every five years to a one-time certification with continuing education hours. And depending on your classification, you may have to have up to 200 hours in a 36-month period in order to renew your certification. They also began tightening up the exam. The exam's got more difficult to pass and they also implemented a simulation requirement, which was a big impact on our business as well. So those are some of the things that took place because of the Blackout in 2003. Okay, that's really interesting. And speaking of simulation, tell us how that has shaped the way we train our operators now. I mean, well, how it was back then because the nature of how we train, the nature of who we're training now has completely changed over the last five, 10, even 15 years. Would you tell us more about that? Because I know you've been the cutting edge of that. Yeah, sure. Simulation is a game changer. But until the late 2010, 2012, not very many people had access to a simulation. Simulations that time were built. They were replicas of the system that you operated and they could be a million dollars. And of course, if we look at the utilities in our country in North America, let's include Canada and that, many of the utilities are small. So a million dollars for a simulation is a big number for that. So one of the game changers for our industry and for our business at that time, SOS, was we developed a generic simulation that we could make available at a much less cost than that to teach the principles of system operation. In much the same way that a pilot can get into a flight simulator and practice flying a plane in various scenarios, we were now able to take simulation to virtually 100% of the operators, the 10,000 system operators in North America, and make that easily available to them so that they could practice operating the grid in a variety of scenarios and practice their response to those scenarios. That's really interesting. I've seen it and I've used your particular simulator as well and definitely really, really helpful. And now we're also, it's not just the system operators, but we're also now simulating distribution dispatch controllers. So that's another, tell us more about that. Well, absolutely. Because of the amount of renewables that are being installed at private residences and private businesses, in the past, our generation, for 100 years, our generation facilities were connected to the transmission grid and we had huge power plants, whether they were coal fired, hydro, nuclear or whatever, they were hundreds of megawatts. Well, now we've been able to get renewable energy, such as solar and wind, down to a much smaller scale and some applications are in the homes. Well, you have the transmission operators that operate the high voltage lines and you have distribution operators that operate the lines in your neighborhood. And so because of those changes, now we're beginning to have generation sources at the distribution level. And so now those operators need to understand as much about how the grid works as the transmission operators need to know. So it's an expansion of what we have done for the last 20 years at the transmission operations level. Now we're taking that to the distribution operators. Okay. Now, one thing that I'm noticing, it's going to be really, really vital to train these upcoming workforces. There's been a lot of data on the type of operator, the type of candidates as being hired now. It's not quite what it used to be in the past. They're coming from different backgrounds, but not quite traditionally the utilities. Could you tell us more about that? Yeah. When I was a young man in the electric industry, most of our operators came from power plants or field positions. Maybe they were substation techs, but they came into the control room understanding pretty thoroughly the principles of electricity and how it worked. Plus, they had been in the field or they had been in the plant and they understood how their facilities were operated and that was useful in the control room. What happened over time is the demographics began to change and we were less able to hire people from other parts of the utility business and we were forced to hire individuals either straight out of college or straight out of high school or off the street so to speak and bring them into control room. So that resulted in a whole different training challenge than we had ever had before. In the past, we had to take someone that was maybe not an expert but had some experience in their particular field that they worked in. Now we're bringing people into the control room that had no experience in any aspect of operations and so we had to take a true novice and work with them to turn them into a professional expert system operator. That definitely puts a lot of emphasis and pressure on the initial training aspect of their career. Well, this new career really because I've also seen a lot of them coming in from different industries, altogether different industries and then they go from the oil and gas into the electric which in a lot of utilities, they do handle both but it's really interesting to see that transition. What has been your experience with them? I'll tell you a story about that. I won't name the utility at this point but we had a class, an instructor led class. We do a lot of things online as well but we had an instructor led class and one of the individuals in the class was a candy maker on Friday. On Monday they were in a NERC certification class so they came in really knowing nothing and having to get up to speed. So it's just a matter of repositioning the training and developing a lot of new training because in the past we were able to assume that the individuals knew something about electricity and literally over a period of a couple of years we were now training individuals that knew nothing about electricity. That is an interesting challenge right now because we're seeing that occurring more and more frequency when it comes to either the workforce or there's lack of availability and I know that COVID has had an impact. What has been your experience with that particular site of how that impact our business? Well, you know, COVID, mostly what the utilities tried to do was protect their system operators. If you think about a control room, a control room is a 24 by 7 by 365 operation and so they operate all the time and they have rotating shifts and so their concern was that the COVID virus might infiltrate their operating staff and just wipe out the entire staff. You know, the most extreme case would be to lose someone due to the death of COVID to COVID and then others just being too sick to work and of course there was the issue of infecting anyone who hadn't already been exposed to the virus. So mostly the utilities sequestered their operating staff many of them for months at a time and they set up camping locations and cots and warehouses and and all the logistics that went with that and so that was a challenge. Oddly enough, most of the utilities were able to deal with that pretty well. That we shut down face to face meetings and our business, we traveled a lot. You know that we both traveled a lot and the travel for two years there was no travel and so now we're just now beginning to travel again as we've got the vaccines and the treatments and we understand the virus a little bit better. So yeah, it definitely had an impact on the operations, had an impact on the way we interact with the operators. We continue to see some of their still places utilities where they won't allow outsiders to come in because of concerns about the virus. As far as helping deliver some of the training recently now at HSI, I have noticed that there has been quite a lot of activity when it comes to live and structured online training and I taught quite a few of those courses recently and it has its challenges, right? But so what has been your impression with that? Well, you know, it was a viable alternative because the advances in the internet had come so far in technology like Zoom and other platforms where you could do that and so we were able to put a live instructor in front of people who were somewhere else in real time so that you could have that interaction. I don't think, you know, I've been doing this for a long time, the company over 22 years. I don't think anything takes the place of being a face-to-face in person in the same room with the instructor and the trainee. However, virtual, you know, across the internet training is as close as we could get. It's certainly more personable than online training with no instructor, just the materials in front of you and a lot of material can be shared in that manner and be done, and that sharing be done well. But some material, particularly technical material, is really nice to be able to see and interact with the instructor live even if it is across the internet. It's better to be in person, and like you said, you did it yourself. Not only you have a great reputation, you must do a really good job at it. So yeah, it works. It works. But I've seen, there's a generational difference, right? Where there are some of the operators, for them it's just like a fluid transition into this whole online live instruction, and then there's others who really don't like it, and there's something between, right? And it's, from my experience, it's been, it has not been too difficult to deliver a live online training. Usually a challenge mostly is engagement, right? To get them engaged. But I've noticed that if it's a smaller group, it's a lot easier. And usually in groups of no more than 10, it seems to be really, really effective. Speaking of simulation, especially when I get some of that, that really, really gets everybody engaged. And especially when you're simulating a book electric system with a grid. What is your, what is your prediction of where we might be headed, right? Regarding how this tool and how it'll enhance reliability and human performance and error reduction. Well, anytime you can practice scenarios, I mean, I think it would be impossible to imagine every scenario that an operator might face. So the first thing you have to do is help the operator understand the principles of electricity and the principles of operating the grid. And then you start putting them through scenarios. And one way to do scenarios is modeled on past events. And then maybe perhaps modeled on events that could happen, but maybe they've never happened, but they could happen. And then after that, it's a matter of repetition. And if you go through and you repeat doing something often enough, then it becomes second nature. It becomes subconscious. And so we try to walk the operators through what we call unconscious incompetence to an unconscious competence, where on the one end, the new operators, they think about everything they do before they do it. On the other end, you have someone that is unconsciously competent, and everything, so many things are second nature to them. And I think one of the things that we forget sometimes in system operations is system operations, the work itself is about 95% routine, maybe even boring, and 5% chaos. And you never know when the chaos is coming. It's just one minute, everything's fine. And the next minute, everything is just, you know, just falling apart around you. And so not everybody can handle that. So one of the things we try to do in simulation is to simulate that experience in scenarios where everything looks fine and then things start happening. So that you learn to, you know, decisiveness, decision making is a skill that can be learned. You can improve that skill by going through scenarios as much the way you can do training to fly, or you can do training to drive. The more you drive, the more skills you are responding to things. Same thing with system operators. So you can't do those scenarios in real life with enough frequency for the operator to call that training. But you can put them on a simulator and do it over and over and over until they almost, it's almost second nature to respond to some of those events. Well, one of the really important skills I see in the simulation, especially when managing emergencies, has been acquiring the skill where they're able to prioritize the urgency of those emergencies and what to handle first. And you and I both know the continuity analysis, right? Where this program does a lot of what-if scenarios for you. And it tells you the worst thing shows up first and you handle that first, right? And usually that's something that takes a while for some operators to actually get a handle on, but a simulation, usually that helps them when it comes to reducing errors, right? Because usually knowing what priority to put together is really important. And we've gotten a lot better at giving the operators tools to help determine those priorities. You're in a control room just like I was. I mean, 10, 15 years ago, when something happened, a lot of alarms start going off in the control room. I mean, voltage, frequency, relays, opening, breakers, closing, opening, closing. A lot of things happen and every one of those events generates an alarm. And the alarms would just come up on the screen to be line after line after line after line of alarms. Now we've gotten a lot better at using algorithms and other tools to prioritize those alarms. So the more significant alarms show up at the top of the list and some of the least significant, I mean, they're way down on the list. The operator may never see them at all. But it still takes judgment on the operator's part. They should never trust those algorithms 100%. You really need to pay attention. You need the skill. You need the training. You need to become very capable of making those decisions. This is going to leave you to my next question, right? And it's interesting. There is a lot of conversation now where they want to turn over as much control as possible to the machine. And as we all know, machine learning, AI is developing and becoming way more resilient than reliable. I myself have a little apprehension and getting my head around how can a machine handle everything when it comes time to do it. So I am still wondering what your opinion is on that as far as where we're headed and what you think is being worked on right now regarding that. We've cooperated with some studies done by University of North Carolina and Charlotte, Clemson University, NC State and some others. And that's one of the things that we've taken a look at is how artificial intelligence is going to affect the job of being a system operator. I think artificial intelligence will be a tool for the operator. I think that we can get better and provide better tools for the operator to make decisions they have to make. At this moment, I'm kind of like you. I don't know that artificial intelligence will take over that job completely. I think there will always be circumstance, like I said, you can't forecast everything. I think there will always there's always the potential for circumstances that are outside of the parameters of the scenarios that you've put together for the operators. You can't write a procedure for everything. That's another area that we talk about, what are guidelines because you can't forecast everything versus what are procedures where you go through the same steps and get the same outcome every time. You can't write a procedure for everything. You can't imagine a scenario for everything. So artificial intelligence is supposed to learn. How many events would the AI have to go through to learn it in order to be smart enough to keep it from happening again down the road? I don't know. I'm in a little bit of a wait and see. I'm a supporter of AI. I think it's will definitely be a useful tool whether it will take the place of a live system operator. I'm not so convinced of that right now. I think it'll become more of a partnership and it'll become a whole suite of enhanced tools. The operator will still be managing the shift, the operation of the actual grid at that point. A lot of things may be automated but I think initially it'll help relieve a lot of the clutter of information and I think of course it'll enhance human performance because there are some human performance errors that come with this overload of information and right now it's here at HSI. That of course is our human performance training and how to error reduction. That's another important aspect that we work on. There are several aspects of human performance. There's not only how do you use your training techniques, how do your trainers, how does your training material impact human performance but also how well the individual understands their own strengths and weaknesses affect their human performance as well. There are things that we need to do as individuals to improve our human performance but there are also things that we need the tools that we offer, the environment that we offer, the way that we apply the work and schedule the work that also makes human performance.  It's interesting because on my next segment we have a doctor at those functional medicine and he'll talk about how optimizing health and hormonal balance impacts human performance and some studies on how that hormonal imbalance led to some errors that had accidents. That'll be a good follow-up to this show. We're talking about human performance. It should be interesting. What is it that we're looking at now for candidates? How are companies attracting new candidates whether it's internal or from other industries? That's a bit of a challenge in our industry. The utility industry is what? 150 years old now and most young people think of as an old established industry maybe even boring. One thing that we've got to do when we're recruiting is to help them to understand that our industry is exciting and there are a lot of things going on here that it can be an electric utility can be a great place to work. They seem to be more receptive of the renewable utilities the companies that are working they consider renewable space to be new and exciting but a lot of those same things are going on at our legacy utilities like Duke and Civic Gas and Electric that have been around for a long time and so helping them to understand that those are exciting businesses to work in also changing our recruitment techniques changing the job changing the way that we train one of the things that we have to deal with some of the younger folks now is their attention span not universally not everybody but in general their attention span is pretty short because of TV and commercials and social media and all the things that they're used to so you'll find we're now offering training 10-minute snippets maybe even 30-second snippets depending on the topic and whatnot so that they don't have to be engaged for so long but they can still pick up information that they need for their jobs. That's really interesting and the industry is evolving, the training needs are evolving and then us as a training provider we're also evolving so we're striving to be in the cutting edge of that and there's some exciting new technology coming up that we're also looking at so to be real exciting any last final thoughts we got a few minutes left on the show like two but any final thoughts on things that we're looking at developing as far as training or training delivery Sure when I founded the company well back in 2002 the niche we were working it was pretty small I mean we mentioned earlier there's basically there's actually a little less but there's roughly 10,000 men and women that operate the grid in North America and those are the men and women that had to be certified so that was our core business was working with those individuals and so essentially we had a small company but we were very fortunate to have our company and enjoyed it very much but we were really a small company so now with what's happening and joining forces with HSI we're part of a much larger organization with many more resources many more opportunities to have an influence a positive influence on the business and where it's going so now we all for not only training for transmission operators but we're as you mentioned earlier we're building training for distribution operators we have also built training for power plan operators now we're looking at substation engineers and I don't know that at SOS we probably would have gotten around to it but it might have taken a few more years and our partnership our acquisition by HSI will allow that to happen a lot faster and you know it'll be a lot of fun for young guys like you old guys like me I don't know not that young anymore it'll be exciting all right we are now at a point where we're about to close we're a minute away but again it's amazing how quickly 30 minutes go by when you're having a good conversation about stuff you like with people you enjoy talking to thank you so much for coming on the show as a guest we're here at Think Tech Hawaii and on this show in particular our aim is to educate and spread the word about what we're doing and I think we strive to do that every two weeks so hopefully you'll be a guest with us again soon I hope so I'm very impressed with what Think Tech is doing and what not so real happy to be part of the show thank you for having me on thank you everybody


Hello, everyone, thanks for joining us. Today, Restream Collaborative and Collider will be jointly presented on a panel to talk through some lessons learned in the insurance industry. Restream, we'll get to meet Pat and talk a little bit more about what they do and some of the industry learning. And Collider will talk about some of the blockchain and technology learnings. So just to start with the speaker intro, Pat, if you'd like to start with some words about your background. Sure, thanks for having me. I'm Pat Schmid. I'm the vice president of the Institute's Restream Collaborative, which is a risk management and insurance blockchain consortium. I oversee Restream's core business, including our products, our relationship management, our operations, and our technology departments. And through these lenses, I work with our team to coordinate the Restream consortium of insurers, brokers, and reinsurers, and work with staff, members, and technical partners such as Clido in developing production-ready applications that can lower costs, improve the insurance experience, and hopefully drive efficiency across the industry. Thanks, Pat. We're really happy to have you here today. I'm Steve Cervini. Great to be with you today to be talking about blockchain and insurance. I'm the CEO of Clido. I'm joined by my fellow co-founder, Sophia. So always great to be tag-teaming with you. And Clido is a technology vendor in the blockchain space that's really specialized on enterprise-grade SaaS solutions, hosting of node infrastructure, and other off-chain components that enterprises need to really build and deploy the sort of solutions like what we're going to be talking about in this time. Thanks, Steve. I think just a little bit to add about our backgrounds. We have been in enterprise blockchain space from the very beginning. Steve launched the world's first blockchain as a service platform, and would work with hundreds of clients, executive ownership of some significant advances in the space from some of the leading vendors. So I think just in terms of what we're looking to accomplish in the panel, some of the industry's best practices lessons learned from the insurance industry across years of consortium building and governance and getting into some of the architectures and management and operation as well. With that, I'd like to turn it over to Pat, who's going to kick it off with a view on the insurance industry drivers and talk about restraining collaborative and what they've been doing in the space. Sure. So thanks again for having me. It's our opinion at the institutes. We feel that the technology behind blockchain and distributed ledger is network driven enterprise usage of this provides a means to work on shared business processes or multi-party business processes and challenges associated that in our industry plague the insurance industry and add cost. But it also, in our opinion, requires for competitors to get together requires a nonpartisan Switzerland type arbiter to kind of bring the industry together to test and learn about the technology and implement it. So the institutes risk stream collaborative emerged out of the institutes which is a not-for-profit educational entity was formed over 100 years ago out of the Wharton School and more than 100,000 learners annually on, generally on risk management insurance topics. Its board of directors include chief executive officers who represent a majority of domestic insurance premium volume in PNC and whose organizations also have a sizable international presence. So if you need a network for private permission or enterprise blockchain the institutes already has one established within the PNC space. So to establish the same type of arrangement in the life and annuities insurance area the risk management or the risk stream collaborative teamed up with an organization called LEMRA, a risk management research and professional development trade association for the financial services industry. The risk stream collaborative is the largest which formed out of the institutes is the largest insurance blockchain consortium with over 30 member companies and a broader emerging ecosystem. Our members include well-known insurers like travelers, Liberty Mutual, nationwide, USAA, Securian, brokers. I think we have a slide on this too. Brokers like Marsh, Truist, and Reinsurers like Everstree and Renry. I think we have a slide on this, Sophia, if we advance forward. So it just backtracking for just a second. We're the largest blockchain consortium with over 30 member companies and a broader emerging ecosystem. Again, our members include well-known entities like travelers, Liberty Mutual, nationwide, USAA, Securian, brokers like Marsh, Truist, Aeon, and Reinsurers like Everstree, Renry. We are a separate 501C6 not-for-profit that has been working on blockchain and DLT application for the last few years. Today we operate as a consortium that is using this network of member companies to develop industry specific blockchain applications. And our goal is to develop these applications for a variety of use cases across the industry. So while our activity for the consortium really began in the property casualty insurance space with kind of the institutes as the sponsor, the life and annuities industry is starting to catch up as well. Restream membership, which are carriers, distributors, or reinsurers, they pretty much lead all areas of our consortium's governance and activity. For example, the members and leadership work to prioritize use cases and launch working groups on those use cases. These groups, in turn, design use cases and then work with staff and folks like Kaleido to build out the associated applications. So while all of our efforts at Restream have really centered around our membership, the consortium, as demonstrated on this slide, has started to create a larger ecosystem. And our goal is to position providers, builders, connectors, or enablers, not for profits, which we describe as kind of associations, consortia, or academia, collaborators, which could be any entity that touches the insurance space. And when you think about that, that's an awful lot of industries that really touch the insurance space. And then we define these as civics, which are basically regulators, departments of insurance, and government. And our hope there is to really start to establish an ecosystem. So that goal is to position those parties to help consortium members devise solutions and shared business processes, across shared business processes within the risk management and insurance space. So finally, our use cases are decentralized applications for blockchain really stretch across a variety of areas of insurance. For example, we have use cases in personal auto for proof of insurance verification and first nurse of loss data sharing. Cases in commercial lines, we'll talk a little bit more about this in a moment, on certificates of insurance for verification, surety bonds for power of attorney verification. We have use cases in reinsurance for placement and border reporting. And finally, we'll focus a little bit on life and annuities use cases, like mortality monitor, which looks into sharing of certain information related to policy holders who passed away and licensing and appointments. You can kind of get a good view of our ecosystem from this slide and how all the different parties are really interacting with one another. This goes kind of hand in hand with the previous slide. If we advance down to the next slide though, I think we've been on quite a journey within risk stream. We worked with a variety of different solution providers across our journey, which started really in, I think actually late 2016, we became founding members of the Enterprise Ethereum Alliance at the time. We worked with consensus and building out for proof of concepts initially. We went back to that board, again, the board of the institutes at the time, which is comprised of about 40 to 50 CEOs representing a large percentage of the insurance industry. And they came back and they said, okay, build these for proof of concepts but also show us that the industry even wants to work together on this. And we demonstrated that we moved forward and developed a platform which we called Canopy 1.0, which is a private permissioned version of Ethereum. We did so with Deloitte, built out a few applications there. We extended that further, started building out what we call Canopy 2.0, which was built around Corda. We worked with Accenture, Deloitte, and Ernst & Young on a variety of elements related to that. But all along, we had a vision of a blockchain interoperable structure that we could leverage as an industry. And around this time, we really met Kaleida. And we recognized the fact that they were building or had built something that we were aiming to build. And therefore, we started to team up on something we call Canopy 3. And we're really excited about it because we feel it fulfills our vision for blockchain with an insurance, providing a low-cost method that's truly underlying blockchain, agnostic to enterprise blockchain. Canopy was created to provide a backbone for various blockchain or DLT apps in insurance to be built upon. It allows for efficient build, easy stand-up of new apps using simple APIs. It's SOC2 certified, ISO certified. We've worked with our members to go through SIG processes, and we're excited to say that our platform is certified. We've also become much more efficient at standing up nodes. They're now click-button and now have a hosted node option. And as we've highlighted, Kaleida's platform is platform agnostic. So it's potentially possible to build applications on Corda, Ethereum, and of course now Hyperledger. So we're super excited about that because a lot of the industry initiatives have been built on separate different types of blockchains and we want to bring them together. So we're very excited about the potential even down the road for our industry members to build their own use case. So it's been a great teamwork getting to this point. And now I think the last slide that we have here on my side before I hand it over to Sophia and Steve is that we're building applications across insurance. And this slide gives you a good perspective on that. In personal auto, one of the first things that we're all familiar with is when we're stopped by a law enforcement officer or we're involved in an accident, we pull out our paper card. And we all know that now the insurers have the ability to use applications to showcase that you have proof of insurance. The problem with that is it's not up to date. And there's no way to transmit that to another party. We build out a ability for us to transmit after an accident between different parties on our network. So for example, if USAA enters into their mobile application and nationwide it enters into theirs, there's a potential to transmit and verify insurance coverage on the spot. Not only peer-to-peer, but also peer-to-law enforcement officer and so on. We've also built out a first notice of lost data sharing application which allows our member companies, once they get notified of an accident, to enter into their existing claim system, which we're using using GuideWire as an example here and register that share via the blockchain, the DLT, who that other carrier is. So for example, if it comes in to, I don't know, USAA and they entered into their GuideWire system and the other party involved was nationwide, it literally will populate in the nationwide claim system and there's reconciliation back and forth between the two parties, therefore cutting down on the time spent on the phone between the different parties, trying to get more information on the claim. We've also built out applications in the commercial line space and I'll run through this very quickly. There are 30 bonds which is an international effort on power of attorney verification. It's probably the lead there. In reinsurance, we're looking into border row reporting and placement and life and annuities. We work closely with Kaleido on a project called the Mortality Monitor which allows for carriers to share information on a policyholder who's passed away amongst one another. And we found with only three carriers, 4% of the time there is overlap between a policyholder who may have had an annuity with someone like nationwide and might have a retirement account, an individual life policy or a group life policy with an organization like Securian. So that's quite an amount of time just between three parties and we anticipate that that would grow. But more importantly, when the first party pays, there's normally at least a 60-day on a median, 180-day on an average day delay between when the second party pays. So in order to make that much more streamlined beneficiary experience, you should share the data between the different carriers. And we built a solution to do that and also incentivize it using tokens. So I'm going to turn it over to Sophia and Steve now to talk a little bit more about what they do and how they've worked with us. Thanks, Pat. And before we transition, I did want, I know one question we've been asked is with COVID over the last year, how do you see this affecting some of the work you're doing around this digital transformation space with the insurers? That's a great question. I think that the pandemic has certainly affected the insurance industry. Digital transformation was very important pre- and post-pandemic. For example, there was an organization and the insurance space called AMBest that was coming out within their credit rating agency, coming out with an innovation rating. So that was happening. I feel like it's undeniable that the pandemic and the associated policies afterwards have expedited some of the change. I mean, we've all been working from home. So the pandemic response kind of led to declines in driving in many other areas that affected insurance for sure. But moreover, the broad access to the internet, the work from home tools allowed insurance workers to work from home and maintain connection to company systems through cloud-related services and other technologies that allow for continuation of business and reasonable security. And for some companies, I think that really started to really underscore the value in a digital roadmap. But not only a data, internal data policy, but also start to formulate what's your external data strategy. So for some companies, I think the digital roadmap was somewhat paused because of the pandemic. But for others, I think it actually expedited the need to move forward and faster. And given the online, automated environment that we were all operating within. So on net, I think the low interest rate environment certainly affects insurers that traditionally invest in conservative assets leads even more so to a need for to lower operating costs within the industry in order to remain profitable. So all these different factors kind of coming to a head, I think has expedited in some ways some of the desire to move forward with a digital roadmap. And I think obviously one of the causal factors there was the pandemic. That's great. Yeah. And another one we actually got before this session was given you have over four years in this space and more than two dozen blockchain use cases, is there any advice you'd have for the hyperledger audience? I think that listening to the market is very relevant for us. We've really tried to degrade use cases on desirability, feasibility and viability and look into where use cases can work. Another thing that we've done internally is develop something we call risk stream labs which allows us to move through use cases and see if there's market interest because it's really hard to know in advance before you start kind of working groups how relevant the use case is going to be and what the potential ROI is. So what we've done instead is started a process to develop the applications utilizing very carefully a minimal amount of risk stream resources, product managers, project managers and just get enough to see if the industry really wants to fund the use case development and if they do want to fund that use case development they're putting stake in the game and they're showing the value of what we could do next. And that's I think really helped us become more operationally efficient internally but also focus on use cases that have likely the most bang for the buck for the industry players because that's a big challenge is knowing where to start. There's lots of potential use cases for this technology and knowing where the areas that we really should focus on is a challenge. So that would be one area of advice that I would have for other consortia. Pat, I think that's extremely helpful for people. Thanks for sharing. I guess just transitioning to some of the technical lessons learned we've worked across all industries with the leading blockchain networks and consortia. One common pattern we see is that people embark on a blockchain project but about five to 10% is the actual blockchain you know the data on the chain the logic on the chain and it's a very important part of the solution it's what provides a decentralization a lot of the benefits people are looking for but typical projects have up to 40 components on the off-chain stack and you know looking at the apps in middleware layers so when you're looking at really going to market with a blockchain solution it's important to realize there's a full stack of technologies and that's you know the blockchain's a beating heart and you look at the data the transaction's happening but there's also the middleware application and then the business operations and then the DevOps as well. So Clido was really built for this in mind we're almost four years ago making looking at bringing these business networks together making that radically simple and for enterprise Pat mentioned some of the benefits to risk stream of that we do work across cloud and hybrid across multiple protocols so wanted to let everyone know that Pat mentioned that was important for their members because they're looking at a variety of two dozen use cases across all of these you know protocols and I want to provide that flexibility and choice so you can get to the right use case and the right of the business value they're looking for looking at solving the problem of bringing consortia together really drove a certain you know data model and a lot of choices from the ground up so you get all of those tools and that includes for network operators such as risk stream just that multi-party platform and providing a control plane, data plane and where members you know own their resources and those are all private and isolated so there's a variety of plug-and-play components you need you know and the way the on and off chain pieces come together is extremely important we've learned a lot we've actually as I mentioned in the intro been in the enterprise blockchain space since the very beginning 2015 so I've seen you know the second generation of blockchain projects coming through such as the ones that risk stream collaborative is leading and there's a lot of learnings in there for the community with that I'll pass to Steve and he'll talk about some of the learnings and how that's translating to open source exciting news at Hyperledger Sophia you know in transitioning at Clota we have a deep commitment to open source communities we think the end value for our customers is tremendous and so we've been very active over our entire existence you know in some of these awesome projects that are out there and that spans across blockchain protocols as well as some of the emerging off-chain technologies you know standards work around tokens and other things I wanted to spend you know just the last couple of minutes to let you know that there's something really exciting that's being announced this week at the Hyperledger Global Forum and that's a new emerging initiative called Firefly and Sophia if you move on I believe and I may be a little bit biased because we're quite involved in this new project but we believe that Firefly really helps solve some missing pieces in the puzzle that have been really difficult you know for some of the first movers and earlier adopters Pat was talking about the journey the risk stream has been on in the insurance space and that's multifaceted there's the business side of it but there's the technical side as well and the evolution of their technology stack and the value that that has for their members on that we see there's a certain amount of plumbing right for a lack of a better term but all blockchain networks need to build really as a side effect of trying to go build your use cases and that plumbing exists around the chain Sophia you were talking about how you know those 40 components most of them are not the blockchain they're alongside on top sometimes underneath of the blockchain things like getting events, triggering events and triggering actions and thinking about business processes it spans multiple parties and there's a tremendous amount of plumbing to deliver data and events and messages reliably across party and also privately into your back office and so Firefly is a new initiative almost like a next generation approach that you may have heard the term in the industry a multi-party system but we see Firefly fulfilling this larger goal of giving you something to build on that's not those low level blockchain a protocol type interfaces it's a very simple API that spans across off chain and on chain components and then there are a set of infrastructure run times that again is broader than the blockchain itself that our companion to the running blockchain and so all of that together gives you a system to build upon that takes a lot of that plumbing that the nasty plumbing that's sort of almost like a dirty secret in our space on the technical side of an unforeseen challenge takes that off the table and can it really accelerate building out of your use cases if you go on again Sophia zooming in a little bit to the Firefly node and this code is out there in the Hyperledger community and you can go check it out yourself and sort of read up on the docs there's a lot of excitement about this project I think folks have been talking about the gaps and the need for this for some time we've heard from some of the in fact some of the texturing committee members of Hyperledger itself that was the case but looking quickly under the hood you know there are a number of components that are designed in a micro service architecture very easy to run infrastructure it sits on top of Kubernetes very nicely it's organized into a core which gives a clean API to build your application against there's a second layer of connectors and the community is mobilizing around these connectors and we're starting to see even just launching this project today publicly already seeing folks coming forward interested in helping to contribute connectors into their infrastructure run times of course the blockchain node is an important infrastructure run time it's still there front and centered providing global ordering finality a lot of the core values of a blockchain but Firefly is sort of providing the larger piece so if you want to learn more there is and I was just mentioning that Firefly is designed to be multi protocol as well for that running a blockchain so you can see support across sort of the big three if you want to learn more about Firefly I do want to say that you can there's an entire half day event this Friday and there's a link there where you can see the agenda you can come there's a hands on lab there's a tech overview where you can really go deep there's also a keynote that explains a bit more of the context and the backstory as well as the opportunity that Firefly presents for you so it's really good there's something for everyone there you can get to it through the Hyperledger Global Forum webpage itself I'm pasting up a link you can click through there participation is a part of the Global Forum itself so you can join through seamlessly there's also a direct URL that we have up on the screen here with the agenda really looking forward to any and all folks who can make it out so with that I'll turn it back to Sophia for any last words or thoughts, Pat as well and I want to thank everyone for attending thank you thank you Pat and Steve I know we did have a question I think we have about maybe a minute left if it makes sense to answer some of the questions Steve Eduardo asked is Firefly an alternative to blockchain and then Lino you're asking if Kaleido can provide a hybrid network out of the box or is it accomplished to consulting for Lino is an easy one yes you can create that out of the box it's an actual product so if you go on and try just go on to the Kaleido website and you can get started there we have a free trial Steve on the Firefly question from Eduardo is Firefly an alternative to blockchain maybe we can spend 20-30 seconds on that and then wrap up real quickly on the hybrid you can natively create managed nodes there sometimes folks say hybrid they mean that sometimes they mean a mix of SAS nodes and self-managed nodes Kaleido also has that through what we call private stack technology so some members can run self-hosted node anywhere and securely connect them with the rest of the members that are hosting the SAS on Firefly it's not an alternative to blockchain so there is a blockchain in the box we support the intention is to support all of the big three but you do need to select as your bootstrapping config as you start up a Firefly node you need to select a blockchain protocol it's just there it's running so the complexity of interacting with it is abstracted away from you and as Pat was saying really interesting to some of the leading blockchain networks out there the ability to either move from one protocol to the other is drastically simpler but also the ability to have multiple networks running side by side for different use cases implemented on different technologies so Firefly relies on the blockchain for key integrity elements of the data flows and the data exchanges it just brings along a lot of the plumbing that we see folks reinventing the wheel over and over again in the industry to do things like off chain private data exchanges messaging event synchronization and so on so it's that bigger system on top of the blockchain thanks Steve well a huge thanks to Pat I think what you are doing leading with risk stream collaborative is just a tremendous contribution to not just the insurance industry but a leading the path of all blockchain consortia so thanks thanks I know that's what you do every day thanks for coming to share some of the insights and your approach and plans we appreciate all the support your team has given us and we look forward to the collective road ahead I guess thanks for having me thank you everyone bye