You're listening to the ECB podcast bringing you insights into the world of economics and central banking. My name is Katie Ranger. Climate change is one of the many challenges facing our planet and our livelihoods, but it's also a pressing issue for central banks. Here at the ECB, we've done a lot to acknowledge that in recent years. There's already a lot of work going on in different parts of the bank and just recently we added to it with new action. Our discussion today will focus on two big milestones. First of all, the results of our very first stress test on climate related risks for euro area banks. And second, our recent announcement on incorporating climate change into our monetary policy operations. For that, I'm welcoming Frank Eldersen back to the podcast. He's a member of our executive board and vice chair of our supervisory board. Frank, great to see you again for what is now, I believe, your fourth appearance on the podcast. Well, thank you so much, Katie. It's a pleasure to be here.  And we've just reached another milestone on that journey, the very first climate stress test looking specifically at banks. For the first time, we focused on risks posed by climate change. So that's physical risks, things like floods and droughts, but also transition risks. So risks that can emerge as our economy moves towards being less polluting and greener. Now this stress test was a special one too, because it looked at a very wide range of aspects, things like how prepared banks are to manage these risks, as well as a couple of other things that we'll talk about too. Frank, let's first talk about what exactly the stress test looked at. Can you walk us through that? Sure. So first of all, it's important to say that the test was very much a learning exercise for banks and for us as supervisors. It wasn't what we call a capital adequacy exercise to see whether banks have enough capital to withstand climate risks, as you would usually expect from a stress test. We collected numbers, yes, but we also collected more qualitative information. So when we say that, we mean everything that isn't the numbers. But that still plays a very important role in determining how prepared banks are to manage climate related risks, things like processes, best practices, even mindsets and levels of awareness. So you might want to know, so how did we do this? So we looked at 41 of the largest banks across the euro area and we assessed how they would fare in different scenarios and over several time horizons. So the exercise evaluates aspects of both physical and transition risk, as you just explained. And in terms of physical risks, our assessment focused on two extreme weather events. So a major flood and a severe drought over a one year time horizon. And then in terms of transition risk, in the test, we looked at short and long term vulnerabilities and strategies in the phase of several scenarios. So that sounds all very abstract. But let me explain. So in terms of the short term vulnerabilities, we looked at a three year disorderly transition scenario. And that actually means that what we looked at is what would happen if there were to be a sharp increase in the price of carbon emissions. That's what this disorderly means, right? Exactly. That it's not really done in an orderly or an organized way, shall we say? Exactly. So, you know, kind of like in terms of a surprise, suddenly that price of carbon goes up. So that's what we put in that scenario. And then in terms of the longer term strategies, we looked at various transition scenarios spanning a 30 year horizon. So much longer. Much longer. The exercise considers the impact of transition risk from a credit, a market, an operational and a reputational risk perspective. And we looked at qualitative, so non-number perspectives. And, you know, all in all, stress testing is really a great tool and a big step forward for us as a supervisor and also for the banks. Okay. So lots of different scenarios and time horizons because, well, essentially we don't know how the transition will be. I mean, we obviously hope there will be an orderly one, but we just don't know. Exactly. And that is new. We have not done that before. And again, we played a little bit with physical versus transition risks, one year scenario, three year scenarios, 30 year scenarios, to indeed try to get a grasp on what that uncertain future might entail. Now, it's not the first time that we've talked about climate change on the podcast, and we've actually also talked about how climate change can affect banks. Of course, we'll link to those previous episodes in the show notes, but I do think it's worth just briefly recapping with an example of what exactly happens. So banks give out, they grant loans to people and companies. And some of those people and companies that receive the loans are exposed to risks coming from climate change. Now, that can be floods, droughts, but it can also be that they're not just not prepared for a world, a greener world. Their business isn't prepared for it. Now, because of the impact of those risks on the people and the companies, it might be the case that they can't pay back the loans that the bank has given them. Well, what does that mean for the banks? Well, it means that they might make a loss on those loans. So it's very clear that banks need to have a better understanding of these climate-related risks so that they can manage them accordingly. And indeed, that's why stress testing is just so important here. Now, Frank, can you tell us what you found in the stress test? You said what you looked at, but what exactly were the findings? How prepared are banks for well, for what's coming our way? Sure. So on the stress test, it confirms that banks must sharpen their focus on climate risk. So let me start with the physical risk. So the impact varies across the banks. Whether banks are vulnerable to droughts highly depends on where they and the business that they are exposed to are located. And this is rather intuitive, isn't it? Yeah. The risk for banks rises as, for example, agriculture and construction activities decrease. And these are two sectors very much affected by weather extremes, as you can imagine. If big construction projects are put on hold, for example, because of extreme heat, this means losses for the banks, which have financed them. And similarly, in a flood risk scenario, it is mostly real estate collateral on mortgages and corporate loans that is expected to suffer in geographical locations at risk of flooding. Okay. So it's got a lot to do with geography, with geographical locations. Although I do have to say we are seeing a lot of hot weather all the way across Europe at the moment, not just in, shall we call them the traditional areas, which I suppose kind of highlights just how urgent this is. What about transition risk? What did you find there? Okay. So in terms of transition risks, the results of the stress test show that an orderly green transition translates into lower losses than a disorderly transition or no policy action at all. Also kind of intuitive. Certainly. Banks show little differentiation between long-term scenarios as they appear to have insufficiently detailed strategies, other than the tendency to reduce exposures from the most polluting sectors and supporting less carbon emitting businesses. Banks' climate risk-related credit and market risk modeling overall remains at an early stage of development. Okay. So they're just not looking at it in enough detail yet? Exactly. And they don't translate these possible futures into their strategy. And if they do, they don't differentiate between these various scenarios and we are convinced that they need to do so in order to manage the related risks appropriately. Now, I said earlier, this is a learning exercise and I said this is not the typical number crunching only kind of stress test. We also looked at the qualitative aspects. But in terms of a number, so if you want to put a number on all this, I can say that the stress test shows that in our scenarios, the 41 banks that we looked at would suffer 70 billion euro of losses. So quite a big number. Yes. But this understates the actual climate risk significantly. And there are a number of reasons why that is the case. So first, we only have a limited amount of data available at this stage. And second, the modeling that the banks use in their projections only captures climate factors in a rudimentary way. So it's not developed enough? No, exactly. Three, we excluded from our scenarios a general economic downturns. And the fourth reason why this number understates the risk is that we only looked about one third of the banks' exposures in this exercise. And then, and this is a little bit more technical, normally what we would do in a stress test is we get the numbers from the banks and then we would look at them very critically and apply what we would call supervisory overlays. And this time we didn't because this was a learning exercise. And then again, we in the end only looked at 41 banks in the number crunching part of this exercise. So again, maybe a little long list and maybe a little technical, but it shows that the 70 billion that we found is, again, most likely a significant understatement. Now, this was not just about the numbers. The learning part is crucial. And I've said this many times before in many speeches and in other occasions, but I will say it again. Banks must take decisive action to address their shortcomings and to prepare for the transition to a carbon neutral economy. And I'm convinced that the findings will serve as a compass for them to do just that. Now, we've already mentioned the very broad scope of this climate stress test. And in addition to the stress test itself that you've just described, Frank, we also looked at what our supervisors call climate stress testing capabilities. Quite a difficult phrase to say there. What was this part of the exercise all about? So here we looked at 104 banks in Europe and we assessed how well they are set up to deal with climate related risks. So remember that this is all still relatively new terrain for many banks. So the question that we asked was, are you able to measure and assess risk posed by climate change? And this covers looking at how climate risk affects different banks' businesses and how we look at what we call climate risk transmission channels. For example, market and credit risks and corporate or market portfolios. And we did that comparing banks against a common set of climate risk metrics. Okay. So it's all about seeing how good banks are at assessing the risk they're exposed to from climate change on an ongoing basis, essentially stress testing themselves, right? Exactly. And learning how to stress test. So in the future we will do more of these. And so it's very important not only that the banks do this first stress test and then we look at what is the outcome of it. But I would say right now it's even more important that we just learn together how to do this, how to use this new tool so that in the future we can do it in an even more sophisticated, effective manner. Okay. And what did you find in terms of their climate stress testing capabilities? So here we found that 60 percent, so more than half of the participating banks, do not yet have a climate risk stress testing framework in place. And in addition, most banks do not consider climate risk in their credit risk pricing or in their risk management models at all. And only one in five banks, so just 20 percent, consider climate risk when granting loans. Those are pretty worrying findings, I'd say. Yes, they are. And that's why we say that banks need to seriously step up their game in sharpening their focus on climate risk by having their own stress test framework in place. And otherwise they are operating in the dark when it comes to these risks. Absolutely. Now in the last part of this stress test exercise, you looked at banks' balance sheet. So in other words, who are banks giving loans to and how prepared are these parties for the upcoming transition? What's the picture like here? Now what we found here maybe doesn't come so much as a surprise. Banks generally still rely a lot on carbon-emitting sectors. Almost two-thirds of their income from business customers comes from greenhouse gas-intensive industries. And in many cases, these come from a small number of very big companies. And this of course increases the bank's exposure to transition risk a lot. So the risk is quite concentrated there. That's the term. And another finding is how much or better how little banks know about their customers' carbon footprint or transition plans. So we found that banks really heavily rely on what we call proxies to estimate their exposures to emission-intensive sectors. And that makes them vulnerable to transition risks. While proxies are a good first step to close data gaps, banks need to improve what we would call the robustness of these proxies.  Okay, so not just rely on kind of third-party information but really get in there and ask their customers exactly what's going on. Exactly. Now data availability, because that's actually what we are talking about here, is a tricky terrain. And no doubt. But some banks, and that is actually the good news, are already on the right track. So some banks managed to collect direct data from their counterparties, from their customers, for at least 90% of their reported income. And other banks managed to build reliable proxies based on actual data from their customers. So we have found good practices. And this shows that it can be done. And this I think is actually a very important message. Maybe the number of examples that we found where there is indeed already today good practices is not so big. But the fact that they are there already today means that what we are asking is not beyond the possible. It is actually being done already. Okay, so there are a couple of positives that we've talked about. But if I reflect on our discussion so far, I have to say it does paint a kind of gloomy picture. And it seems that generally the banking sector just isn't well prepared at all for the climate crisis. As I said, there are some good practices. But indeed, we expect banks to take action on various fronts. For example, to develop robust climate stress testing frameworks. And to be clear, this needs to happen now. But it isn't all bad.  And although there isn't a single bank that does it all, that would of course be wonderful. We do see an increasing number of banks that have made good progress. So there are best practices out there. And this is a key aspect. We are currently collecting and planning to share best practices towards the end of this year. And together with individual feedback that each bank will receive from this exercise, we then expect them to put these best practices into action. You've said a few times that it's also a learning exercise for us as supervisors. So what's next for us? What will we do with all these findings? And how will that feed into our supervisory activities? This year, stress test results will feed into our annual supervisory process, only qualitatively. So when I say that what we mean is that when we assess the day-to-day practices and procedures, the mindset and the level of awareness in banks when it comes to climate risk, that's what I mean with qualitatively. So for now, there is no concrete impact on banks' capital requirement. But this is of course no excuse. Let me just underline this. This is no excuse to avoid progress. All I can say is that the bar will be raised over the coming years. And this exercise serves as a compass for banks to make progress. Now, the results will also work hand in hand with other supervisory activities. For example, this year's thematic review of how banks incorporate climate-related and environmental risks into their businesses. So we will make sure to improve further the methodology that we have used. And we will reflect on how to design bottom-up stress test scenarios to make them as accurate and as relevant as possible. So more to come on the supervisory front after this milestone and sounds like we'll definitely be raising the bar over the next few years. Now I'd like to turn to look at the other side of our house, if you will, at monetary policy. Pretty much exactly one year ago, we published our climate action plan as one of the key results of our strategy review. And in fact, earlier this week, we announced further steps towards greening our monetary policy operations. And that was really a big milestone for us as a central bank. Now, contrary to what we do on the banking supervision side, so making sure it's the banks who manage their climate risk appropriately and that they're prepared for what's to come, this step on the monetary policy side was all about what we do when we define and implement monetary policy for the euro area. Like the stress test, it was also a big package covering lots of different aspects. And listeners, if you do want to go into the details, we will be putting a link to the press release in the show notes. But today I'll focus on two of those measures. First of all, the greening of our corporate bond holdings. And second of all, the changes to what we call our collateral framework. These are really both measures that go to the core of what we do in terms of monetary policy. So Frank, let's start with the greening of our corporate bond holdings. Now it is just worth mentioning where we're coming from. So our corporate bond portfolios have so far had what we call a carbon intensive bias. Now, what does that mean? Well, it means that those portfolios had a bias towards firms in carbon intensive industries. So think big polluters. Now, this is because they're guided by a principle called market neutrality. And as such, they replicate the market average. Frank, what does it mean when we say that we want to move from being market neutral to carbon neutral? Can you just break that down a bit for us? Let me start with the big picture. We want to achieve three things with our decisions. One, we want to reduce financial risk related to climate change in our own balance sheet. The balance sheet of the European Central Bank. And two, we want to encourage transparency. And the third thing that we want to achieve is to support the green transition of the economy in line with the European Union's climate neutrality objectives. So these are all the kind of things underpinning or driving our decisions? Exactly. So one of the measures is that we have decided to start, as you just explained, greening our corporate bond holdings. And this will be done step by step. We want to gradually decarbonize them on a path that is aligned with the Paris Agreement goals as laid down in the EU's climate neutrality objectives. Okay. So decarbonize sounds like we're moving away from these very carbon intensive firms. Exactly. Exactly. So the total amount of bonds will stay the same as we have already stopped buying corporate bonds, but we do reinvest those that are maturing. And this gives us the opportunity to tilt our purchases towards issuers with better climate performance. So tilting is the word here and it means that the share of our assets issued by greener companies will be increased compared to companies with a lower climate performance. So how exactly will you go about this? I'm kind of curious to know how on earth you would know where to tilt to. Right. So we look at the firms that issued these bonds that we buy or in this case we reinvest in. And looking at these firms we look at their past greenhouse gas emissions, their climate related disclosures. Okay. So what they say about their own operations? Exactly. And this is also very important, their future decarbonization commitments. So we look to the past, we look to the future and we look to how they actually disclose. Okay. Got it. That's clear. But can I ask a somewhat blunt question? I mean it's all well and good that we're greening some of our operations, but ultimately it's governments who are the ones in the driving seat when it comes to policies to fight climate change, right? But where exactly did we come into this whole picture as a central bank? Excellent question. I'm glad you asked it because this comes up all the time and it's important that we give a clear answer to that. So indeed governments are climate policy makers and we are actually only climate policy takers. Now this having been said, addressing climate change is a global challenge and we have a strong interest in helping tackle it for several reasons that go straight to our mandate as a central bank. So our job is to keep prices stable and climate change affects how the prices of things change through its impact on the economy. And in our pursuit of this objective, we can do something to support the green transition of our economy and climate change poses a risk for our financial and banking systems and its impacts could badly damage the economy. And then there's a third element here, tackling climate change is a priority for the European Union. And on the basis of what we call our secondary objective, we have an obligation to support the general economic policies in the union as long as that does not prejudice our price stability objective. Okay, so there are lots of reasons why we also need to be part of this fight as a central bank. Exactly. Now focusing a little bit more specifically on tilting, tilting has two objectives. It aims to mitigate climate related financial risk of our own central bank balance sheet and it incentivizes issuers. So in this case, the companies, the firms to become better at disclosing their climate risks as well as reducing their carbon emissions in the future. So with our corporate bond purchases, we are actually one of the biggest players in that market. So our actions will indeed have an effect. We expect to start with this from October 2022. So this year, and we will publish more details closely before actually starting doing this in October. And I just talked a little bit about the disclosures and that's another part. It is important that we walk the talk. So we will also start publishing climate related information of our corporate bond holdings regularly as of the first quarter in 2023. Okay, so now you've decided on this important package and it's going to get underway in October. Is that the end of the story? No, it's not. We are also explicitly committing to reviewing our measures and reviewing constantly their impact with a view to changing them if they don't have the intended effect. So this package we just agreed on, it's important, but it's not the end of the story. So it's not the end of the story, but as you've explained, Frankie, it is all within our mandate. Exactly. So this is a big milestone for us, but it is indeed important to mention again that the ECB is not a legislator. We cannot set climate policies and our measures always need to be justified by our mandate. And again, we are dependent on governments to take action on climate policies. And then we translate that into what is our own remit. Okay, the last thing I'd like to ask you has to do with us lending money to banks. So kind of goes back to the banks that we started the episode with. Now, this is how we as a central bank create money. When banks borrow money from us, they do so against a certain amount of collateral. What's that? Well, in other words, it's a security for a case that the bank cannot pay back their loan. We've also decided something there when it comes to tackling climate change, right? Exactly. So what we have decided is to limit the share of assets linked to high carbon companies that can be pledged as collateral when banks borrow from us. So in the future, we will only accept assets issued by companies that are compliant with the EU rules for sustainability reporting once these are implemented. And this requirement will apply to all companies that fall within the scope of these rules. So taken together, these measures aim at reducing climate related financial risks in our own balance sheet. And ultimately, this may help to steer financial flows towards supporting the green transition. Well, this all sounds very, very promising, Frank. And as I've mentioned, the package is broader than just the corporate bonds and the collateral measures. So if you do want to read more about it, check out the links in the show notes. Now, Frank, before we wrap up, as you know very well, we always have a question that we ask our guests on the podcast. And that is for a hot tip linked to the topic we're discussing today. Now, I have to say you set the bar quite high in previous episodes with your hot tips. What do you have for us this time? Well, thank you. Thank you, Katie. And this is always one of the most fun parts of this conversation. I was thinking, you know, it's the beginning of July. So many of us will take some time off in the months to come. And, you know, we might travel to places that we love, that we think are exceptionally beautiful, that have memories when we were small and when they're maybe with our parents and brothers and sisters. Now, if you were to revisit such places in the mountains, on the shores of our wonderful continent, in the forest, wherever you really think this is beautiful, think about it in 2050. How will that look like?  And that might be, you know, a strong reminder for all of us how important it is to solve this issue of climate change. Thank you so much, Frank, for joining the conversation today. Thank you, Katie. Well, that brings us to the end of this episode. I want to thank Frank Elderson, member of the ECB's executive board and supervisory board vice chair for breaking down this topic for us. Check out the show notes for further reading. You've been listening to the ECB podcast with Katie Ranger. If you like what you've heard, please subscribe and leave us a review. Until next time, thanks for listening.


The Denier River Combined School, at a ceremony held this week, in celebration of 50 years of service to the community bearing its name, paid homage to several of its long-serving principals, teachers, and ancillary staff, including those who have passed on. Although the exact anniversary date is October 2nd, 2022, the institution founded necessary to engage the community in a week of activities to mark the milestone. The Denier River Combined School began its operations on October 2nd, 1972, with a student population of 180 under the supervision of Francilia Jackson as principal. Current principal of the Denier River Combined School, Anacia Jules, says the school is what it is today because of the hard work of Ms. Jackson and her team. She was supposed to be here with us today, but because of her condition, she's unable and she would have really been unable to sit here to last this period. But we took the time out as Denier River Combined, along with a team of teachers, past students, and we went to her house on Sunday. We spent some time with her and we honoured her, and she was indeed very, very pleased. Minister with Responsibility for Education and MP for Dan Rinoff, Hon. Sean Edward, decked out in the colours of his alma mater, expressed his gratitude for the strong foundation he received as a student of the institution. This is where it starts. Yes, I was able to get a secondary education, I went to university, I have a master's degree. All of these things are important, but we should never, ever forget where the foundation started. Who taught you letter formation, who taught you how to write your name, who taught you from very early to put a value on education, and that is what the Denier River Combined School has done admirably over the years and continues to do even on a day like today. Guest speaker for the activity, Dr. Aaron Ajuda is a product of the Denier River Combined and the medical officer for the Denier District. He stressed on the importance of the role of the entire community in shaping the life of a child. And let us learn to attend to the needs of our community. We love our children, we take care of them, but there are children outside our household, there are persons from our community that need something. Whether it is books, attention, finances, let us be able to extend that, let us mentor these young persons, let us advise them, when they are not well, let us visit them. I want to visit them, bring something for them. Let us look at these children like they are ours. Education officer for District 5, Zhaxerif says the Denier River Combined School has grown from leaps and bounds, creating much history for itself, which he says will serve the current generation well into the future. We recognize the success, we recognize what you have done to the people of the community. And when you look around, the success stories are numerous. The success stories are great. And so I want to employ those of you ahead and those of you on staff, that it is your responsibility now to carry that flag. It is your responsibility now to make greater things happen for this community and for the school. The school's principal, along with Education Minister Sean Edward, unveiled a plaque located at the front of the school in order to mark the milestone of the school's 50 years of existence. From the Communications Unit of the Ministry of Education, Sustainable Development, Innovation, Science, Technology and Vocational Training, I am Chris Sacney reporting.


This is starp store friend when must were custom light up shoes out one night Not only were people constantly asking him where he bought them But everyone wanted to be his friend the shoes are just to form a self expression And they had the power to instantly connect strangers in this must decided to launch his own shoe company Resa to build a community for people who liked their own path After multiple trips to Asia years of development and teetering on the verge of failure He has created beautiful Exclusive shoes that light up to give everyone the magical feeling that he felt that night out today We chat with musta facade the founder of Reza about in upcoming collab with a huge car manufacturer The insights he learned after locking in the designer of Crocs as his first investor and how the brand Exploded in popularity after Steve Aoki wore them one night while performing. All right. Welcome to the podcast on today's show We're talking to the founder of Reza must thanks for coming on people who don't know. What does your company do? Thank you for having me Diego. I'm the founder of Reza our mission is to inspire people to light their own path We've built the world's most advanced their own path light their own path exactly I like that. Okay. Yeah, we're designed in Detroit And it's all about bringing people together from around the world and doing something new and footwear Which is really exciting. What did you see in the sneaker world where you were like, all right? I'd like to have my own take what's missing or what did you want to do different as it related to? Sort of a sneaker world. I thought sneaker world was it was very boring It was like the same drops growing up and I feel like there was a lack of community It was really just about who had the hottest shoe but not really about, you know What what does that mean to have the same product into into being a in a niche community? So for me it was that and it was also just lights lights are such an amazing way to bring people together And when I was in high school, I just took some Nike Air Forces. I just taped some LED Lights around them were in my hometown in Michigan and I like 20 people want to be my friend that night You know stopped me at a bar something on the street And I was like wow like lights really have possibility to bring people together Yeah, what other way to do this footwear you saw something in the human that's interesting and then I love the community building part I think fashion is that for you know when done well I think fashion is all about community and creating sort of this cohesiveness. It's not like explicitly said It's just something that sort of materializes What's your background? Do you have a background in in shoes and fashion? Well, you know, what was your first step and actually deciding to make a shoe? I love shoes, but I never had a background in in design. I studied business I went to college for two years in Michigan State. I ended up going to China for about six weeks When I was in college and I wanted to create a crude sample of my shoe So I went there once the factory found a supplier who could put lights and shoes I came back with was that hard to do did it take you a while to find that supplier? It did super hard I didn't speak Chinese. I didn't know anyone in the country. Yeah, I somehow convinced my parents to send me over there But when I came back, I had a beautiful, you know like a mock-up Or did you have like a prototype like a real version barely a prototype? It was just like it was just a really simple shoe with lights running around and I thought it looked cool And then ultimately I I started showing you the shoes to people people loved it And I was like, you know what I I this brings me happiness like I see people loving the product I see people wanting to connect I feel like there's so little ways to connect especially after COVID people are really looking for an outlet and If I was wearing these shoes and hundred people were stopping me on the street just asking me questions And they ended up being my friends. I was like, why not do this? So I ended up dropping out of university after my sophomore year So you believe in it that much like you saw it that much that you're like alright. I'm done with school I'm gonna go big into this sneaker company. I did I was naive, but I just jumped into it I kind of love that. Yeah, you found your passion. I guess to some extent So you're seeing the signals in the market people are sort of liking the shoe on a community level in your hometown Do you then order? Gazillion of them or is this like pre did you drop out with with the order already made or were you like I got To go start a brand I got to get the website and then I'll order the shoes later Yeah, I don't have any shoes. I don't have any supply chain I just met one gentleman who is the former chief product officer at Crocs He ended up becoming our first investor. So I basically dropped out having one How did you meet him just networking telling people what you're working on and you were introduced just the cold email Yeah, I reached out to probably a couple hundred people over that time frame ended up meeting an incredible designer Andrew James Who's designed for Reebok for new balance and he he designed the crock It's like his thing or he just worked for them our first investor He worked on he was one of the designs of the crocs that he was a chief product officer for a couple years Wow was interim CEO. What did you learn from him? Just I'm just so curious because I think it's like the ugliest shoe ever But it's probably one of the most sold shoes of all time also What did you find interesting and just learning from from him around the shoe? Maybe the concept of why it works why he thought it works what he saw in the market. Yeah I think Crocs is just it's very simple like it's a really comfortable product and Not everyone just cares about how things look people care about how things feel Yeah, what kind of like like emotion that gives them so I think like this exact from Crocs He he saw me with just 3d renderings of a light-up shoe and he was like, you know There might be something here So he kind of took a faith and was our first check and he had a plethora factories in China in Taiwan And he opened his doors to us and then I spent about a year and in Taiwan building the product with him Getting a team we got through we were accepting the tech stars accelerator, which was our first venture which one I'm sure it all which one did you guys go to Indianapolis. It's a tech stars Indianapolis It's a sports accelerator So we were one of the ten companies who went through that and it was a pretty awesome experience What was one of your most memorable times there like what's the best advice you got while going through the program? Really just great mentorship. We were the earliest company We didn't even have a shoe and other companies in the program had millions of dollars in revenue But our managing director was a really incredible gentleman Jordan Fliegel He was a founder of of draft comm and had had some really successful exits and He just you know put a stamp on us I think people really love like when kids are doing things that Speaks to their heart and just they just want to do and we had a lot of support come our way What do you think is the thing people when they meet you or see your product what gets them? Is it like this like childhood? We used to rock these la lights like what's the thing that you think really just captivates their attention and goes You know I'm gonna I'm gonna I'm gonna go ahead and get involved in this company I think it really the lights are amazing and the story I think is really cool. Let's talk about the product as well and what we've done. That's different. Yeah It's really you have a good team. So yeah, let's talk about the product and the evolution of what we're seeing right now Yeah, the product itself is is something that we've put a lot of our hearts into it So it's the first shoe in the world to have a laser diode in the shoe So the the the lights you see in the shoes is shooting through a glass tube And that's what gives us really beautiful Illuminate look inside of the shoe and it just feels very different than a kid's LED shoe feels really grown up And it's really sexy to wear at a nightclub Or just traveling and then also it has a wireless coil so you can charge it wirelessly It looks really futuristic and Reza itself means laser in Japanese So it has that appeal of people from many different geographies But I think the main thing that people really were attached to was light your own path. That's our philosophy Yeah, I love that and you have to apply to get access for the shoes So you have to write an application and tell us what you do different how you light your path and we've today We've had over 80,000 people apply for the shoes. Just go through the application whose idea was that? Where did you get that that concept to sort of you know make sure that in some way? Not that you're gatekeeping, but that you're like making sure people really care about the shoe How did that evolve it really came just to try to build something that is Authentic like when you have a product that is relatively new a new technology I think people don't know how to position it exactly correct. Yeah, I believe that yeah, so for for us Ask people to share their like most personable experience with us allow us to show them like no This is not a shoe. There's not what we're trying to do. Yeah, it's a part right out the gate Absolutely, and then for people listening or if you're listening you probably can't see what's in front of us If you're watching you can see it, but you how long did this thing take to create and so you have a shoe You need to charge it. There's probably 4,000 ways of achieving that You know what how did you land here? Which is a pad the shoes are on a pad right now people listening But how did you land on what we're seeing in front of us right now? It took two years from sketches to? Developing a product that's water resistant the lights work the lights are that's right Very comfortable the shoes comfortable going through different molds different testing We went through over 25 iterations of the shoe for our first production run so it took two years and it took a lot of Much more effort than I thought to make a shoe most people don't know that most Nike or Jordan's from sketch to storefront They they take about 36 months, so it's a very patient during that process Yeah, a lot of different parties involved a lot of testing and so what made you guys want to land on this like? Charging pad was it more of like you want people to have it in their house? And it's sort of like on display like a feature or you know, what was the logic here? It looks beautiful. It looks really it looks really cool. It does look cool. Yeah, yeah Just to have it really displayed as not even a shoe, but more of an experience. I can put anything on there Yeah, you can you can you can charge your iPhone on it and you can yeah Yeah, you can charge your iPhone, but a lot of features. Okay.  Are you like the people care?  How much is this you when you go to market? It's 360 bucks Okay, we already launched your own website. Yeah, so back on on that we My co-founder I wear in Taiwan for a year developing the products It took us we spent all of our venture money just on R&D and just flushing out the best product We could our factory ends up going bankrupt and we came back home to the US because of covid or partially Yeah, wow, we came back home from from covid with about 12 pairs of shoes And I think three of them didn't work so we had really nine pairs of shoes no money left my parents want me to go back to college and all of a sudden we get a We get a message from Steve Aoki's team and Steve Aoki had heard about the product somehow He got interested and I just I wake up at 2 a.m. And he's wearing our shoes in Las Vegas at Omnia I like a show that he's doing at his flagship show. Yeah. Wow. He starts posting us an Instagram to 10 20 million followers Everyone in my cousin is like Steve. Okie's wearing your shoes And then from there, you know a couple other amazing artist DJ ski and you had no idea how that happened Some of them were just through mutual connections. Some of them were just happening organically But those those nine pairs that we had we ended up seeing six of them and we had that's crazy Yeah, so you're down to your last nine you go at 12 three don't work. You're down to your last nine Steve Aoki shows up and you've sort of crushed it It couldn't it couldn't have gone better from a marketing perspective. It could not have gone better in two weeks Amazing we had 20,000 people signing for their shoes and then what happened and so then you got to find a new supplier start over or yeah Then we we did a drop it was 500 pairs We're like we can't have liability but you find a new supplier a new right well first We we did the drop we took the money from the customers We said it's gonna be a couple months and then we said let's find the supplier So we had the capital from our customers and we went back to Taiwan this time more determined Had a great supplier took us another couple months to make the shoes But we shipped we shipped them out to 20 countries and at some point or is like Steve and some of these third DJs are they like hey Look, this is what we want for iteration to this is what we this is what we see in the next Or are they kind of like they're good with it. They like what they see like what what advice are they giving you if any? Really colors like people like it's like like Steve and people like that They love to express themselves to different colors different iterations But I think when you come out with a product that's a little bit new like people just laugh On to it in in a really amazing way So we've sent Steve a bunch of pairs custom pairs custom designs different colorways I'm a couple other great artists who've just gone behind behind the brand and that was really, you know Steve doesn't have any kind of Equity or any partnership with us. It was just like it's the product Yeah, just he likes the product and really when we just back channel with his team Like he brought us out to to a show.  Can you change the color of the shoe? There's the light not so much the color of the light you can't yeah Not this this the first drop was founders edition was 500 pairs just blue Yeah, our second drop is 2000 pairs we sold out.  How do I get some shoes? Like how I mean people must bother you about getting shoes if they're all sold out They do they do it's a problem I I tend to I have a lot of samples at my house in Michigan So I you know, I'm always giving friends some shoes But it means a lot to have your family and and people around you support supportive in that sense My my parents they they're from Pakistan. We have a immigrant story and they they're doctors They want to mean to be a doctor But now they're really they're proud of me that there's some making light up shoes So it means a lot. They're proud of you. Absolutely. That means a lot Did you ever actually so in in real talk when you had nine pairs left, did you actually consider going to school again? Like where you like, okay, I'll go back in September. Yeah, I mean, I didn't have a choice like we we came out We went through tech stars. We had a loudmouth. We said we're gonna revolutionize footwear and We were down to our last nine shoes. So it was it was a pretty difficult situation But I think it happened with you know It could have gone out of that and in a better direction and yeah that I think as we grow the business and through any Experience in life you have to remember those those dark periods to push you forward and in the direction you want I think that's what it's all about. It's like this book like burn the boats that we have here It's like there's a burn the boats moment in every startup where it's like you don't have another choice And somehow that simplifies everything and it's also gives you an awareness of how close you are to achieving the thing That you set out to achieve And there's a beauty in that absolutely and then if you just keep chasing that I think that's when magic happens Absolutely. Yeah, so what's next for the company now? What are you guys working on today? Do you have more investors? Are you thinking of making this like a lifestyle company? Will you stick with issues? What does today look like for the company? We've raised a couple million bucks from from VCs We're really focused on building an amazing footwear brand. So we're scaling We're growing to probably 20 to 30,000 units over the next 12 months So it's really exciting for us scaling the team We brought on designers from Yeezy from Adidas to to lead our growth and footwear. We're also excited about apparel We made a light up track suit for for night running So a lot of our fan base they they run at nighttime and in the US I can be a real problem 15 people die every day by being hit by cars So any way that we can have the visibility I think is really important But really it's what's what's exciting about about when I hear from our customers and what I see what we do We've had people say They've met their girlfriend a boyfriend through wearing the shoes or we've had we have one of our customers is going through Chemotherapy and when they go when he goes he wears a resa hoodie in the shoes So I think for me, that's what gets me up every morning And I think that's what that's what the direction we want to go to we obviously don't know where that's gonna land But yeah, and let's say you bought the shoe the original with the with the pad Do you need to buy the pad again or is it does it do they all come with a pad? How does that work? Yeah, it's it's universal So the pad works with any any pair set of shoes and these originals they retail for 360 They're now trading on stock X for like 70 hundred bucks So that was really cool to see just the the secondary market. Absolutely. Yeah Have you gotten any companies that are coming in and trying to replicate what you're doing? Is that happening yet or trying to like, you know, take your take your thunder? I wouldn't say I wouldn't say that but we've had great conversation with other footwear brands I think IOT and technology and shoes has always been a really just exciting space Nike had a self-lacing shoe the dapped BB That was a pretty cool perfect concept So it's been pretty collaborative footwear production itself is pretty difficult when you're forging that with hardware It's not it's not an easy plate and it's something that you really have to be in a really particular setting like Taiwan which they have no high quality advanced chips and really detailed manufacturing so there's still a lot of Directions that I think people want to figure out in footwear and in apparel is how do we create the next generation and make it Make sure the cost is effective and the end user wants to have the product as well What kind of technology are you guys working on if any? Kinetic charging is something that we we've spent a lot of time on so right now the shoes charge on the charging pad But we envision When you walk the shoes just regenerate the battery itself and you can track your calorie intake your stride your GPS anything in an Apple watch you can put that in shoes I think for us that's the holy grail and what we think is exciting when you get a text your shoes vibrate Different kind of features in that way with would be really cool. Yeah, so they're super connected What do people do with them do people run in them? Do they just wear them all the time or they would you call it a running shoe? What do people mostly do in your shoes our first shoe is is athleisure So you can see there's no laces the shoe itself is pretty it's pretty light if you hold it It's something that we were really focused on that it doesn't have to feel like a light-up shoe it just feels like a really comfortable product to wear and Our designer who who built the product he was at New Balance for many years and we wanted to build something that looks kind of unique And kind of avant-garde and we're just going to continue continue in that direction But the most exciting thing for us is definitely just having a Product that is just has kinetic charging because then you can just walk and regenerate the batteries Really cool and the lights that we use our ourselves We have patents on and it's something that we've worked with a supplier to to develop Maybe you have something special and do you have like a dream collab a dream collab whether it be with a brand or maybe with like Obviously, so maybe someone like Steve or an athlete is there something that you would just you know, maybe you're working on already I don't know but yeah something that really like you'd be super pumped about yeah I think we're doing one of our dream clubs right now It's with a car company and we're doing an exclusive drop with them whoever buys a car It's an electric car is getting a free pair. I was literally about to say I literally before I asked this question I was like, I bet you and I'm not saying it's Tesla, but in my head. I was like these should come with like a cyber truck You know, I'm saying like I was like if I buy a cyber truck I should get I should get a pair of these shoes it because it makes the moment so much better I was like the acquisition of the vehicle. It's like now I got this gift and it could be in it could be Rivian, but the point is like an electric vehicle. It makes sense, right? Yeah, when is that? When does that drop? Can you announce it? That's dropping under this year. I don't think I can announce car company, but it's it's electric And it's it's pretty it's pretty exciting. That's amazing certain color It's it's a it's a red light So it's black shoe with red lights and actually red lights the car is red as well with a red interior So it's gonna be pretty cool. That's amazing people wear the shoe in many different ways Like, you know, we want to just make some that's versatile But a lot of our fan base is our athletes their skateboarders They like to jog but also you have people in healthcare who work in a pediatric ward Who would just want to put a smile on their patient's face? So it's really cool to see people express themselves differently. How would you wear there? How would you wear some light up shoes like this? That's what I was trying to think about I don't really know. It's like probably if I go to events, you know, I go to a lot of events and stuff like that And so had events I like if we're opening up something new like a ribbon cutting. I'd probably wear them there Right, you know something like that. I just like that. They're one color I don't know. I'm a simple guy if when it comes like right now. I'm wearing a white shirt I don't like logos and so this is like a it's interesting But it still has the flair because you can add the light right and so there's a component That's like stylish without sort of being in your face. Absolutely. I like about it Do you think there's anything in in fashion like how do you express yourself in terms of you don't have a lot of shoes? But what is there something that you notice and people whether it's a watch or whether it's a brand that kind of brings you together? Do you feel you have it in some in some correct capacity? That's interesting when I think about fashion I think about like the company market and we've had Mike Sherman on the podcast he's like a real creative genius from from my perspective and What I love about what he's doing is he'll take elements from culture that are relevant today And he has a way of creating these like t-shirts that are like I would say for the moment or street wear That's for the moment and that's a it's a really interesting way to look at fashion Right, and I just love that he does that and I love that he's built a community kind of exactly to what you're saying Actually, his whole thing is about community his whole thing is about you know His story he was bullied as a kid and so he found out that through fashion He could become like the cool kid or he could sort of come like come into the community He could be embraced by nothing other than fashion interesting and so he made his whole company about that and so when he's being part of the Culture it's like he's solving that problem that he has as little kid and that's the culture He's created and he's found a massive amount of people celebrities LeBron that wear his stuff all the time And so that's really interesting when I think about me personally I think about it like I just want it to be timeless like I want to look at a photo when I'm let's say 20 years old or 60 years old and It's not the fashion is not of the moment actually It's just like this like timeless piece You know and so what that means literally is it could be an old watch But it could be an old watch that I'm wearing in an old photo or wearing today. You don't know But it's like it's a piece and so everything for me in fashion is more of like pieces Which is why like right now just a waffle shirt white no logos And so you know the only thing that could tell you maybe the air is like the haircut You know I'm saying and so like that's how I think about fashion for me personally. That's what I like about it timelessness Yeah, it's not trying to do too much Yeah, does that make sense? Yeah, which I think is rare. I'm not also I'm not like a fashionista. I don't think but maybe I just like to keep it Simple so what's next? What can you tell us what's on the horizon besides the I love the electric vehicle drop That's pretty epic. Yeah. Yeah, I think it's really just like Sharing our philosophy like about light your path. I think it's I think it's really cool Concert that we're trying out what I what I think is really exciting for me It's just like in person events like a lot of stuff that you do I is just meeting people in person and that connection so strong. So in our discord channel We have all of our all of our users and thousands of people People are arranging meetups in Miami in Dubai and in Texas So it's about you know bringing people together and I think it's that's that's for me is puts a smile on my face when you can say Hey, people people met they shared they connected through a product that you've done That's that's really what we're after and we're going to continue to do I want to dive into this because I think like so almost give yourself advice from a sense of You're a young person. You had an idea start a company in doing that you have a product There's there's a couple different ways of launching a product You decided to do a drop in that you're trusting to some extent that everything you've done is going to work Right because it could it could also flop nobody could buy and so give people a window into Into things you did that made you successful During the drop and maybe what that was like for you in a real way of like fuck like I'm gonna go out and hope the world Sort of votes with dollars You know give people a window into the strategy of doing it and then what you were going through personally and then You know obviously it worked out, but yeah, are you asking more of the like how we knew that customers were gonna embrace the product or more Just what did you do insure it? I guess it was like once you once you decided to have a drop Then you have to make sure it's gonna execute of course So like what was that like nerve-wracking nerve-wracking for sure after we did the drop We had to go to Taiwan Taiwan was closed during COVID So we had to get a letter from the CDC to allow us to go there We had to do two weeks in hotel quarantine So I'd say just determination like when once you've put your cards down like you can't fail You have to make it work And I'd say some some sense of practicality as well Like we you can't just jump into something having no idea no context You have to really feel something and you have to be communicative to like we when people purchased our shoes There was nine month wait until we shipped we don't have one maybe one We'd have many customers that were upset They were excited about it and when they finally got the product they said hey the wait was worth it This made it better because it was right. It was like you spent your time getting it right exactly Yeah, getting it right and just being pragmatic and persisting. I think it's really important They're especially in fashion and and creating products. It's It seems easy, but once you get into the the smallest chip or the smallest unit It can take you way longer than you expected. Yeah, especially when you're buying that quantity also It's like anything can go wrong with a percent of them and that's that's real money Yeah, and you also have to sell sell stories with suppliers as well like in in footwear Most factories won't take you in unless you're doing a 30,000 unit and MQ and we had 500 pairs So you have to sell that story in when people believe that and on the other side of the world It's equally as important. Yeah, I love that. When's the next drop? Next drop is gonna be around September. So it's gonna be a new colorway color changing lights Our largest drop today probably about 5,000 pairs So it's gonna it's gonna be really cool and then and then the car thing is this fall. I'll be this round the same time It'll be this fall. Yeah, we're shooting a pretty cool commercial for that. So it'll be I believe it Yeah, well tell people where they can find you and and sort of well obviously buy stock X right now But where can they find you working? They buy working? They support on Instagram. Yeah, they can find Reza Reza dot footwear and they can find me just most of a dot say it and yeah We're always posting about our drops and we're always kind of sharing cool cool posts from our community I love it brother. Well, thanks. Thanks for coming on the podcast Of course can't wait for you to try the shoes and I'm going to get some pictures of it. Thanks, brother Thank you so much for the support and making it to the end of the episode If you haven't already please do review and show the episode with your friends If you never want to miss a beat on all things entrepreneurship Make sure to follow us on socials for daily content. See you next Tuesday for another great episode


Hi, Roman. Thank you for coming. My name is Shlominoch and this is MySQL and the CapTheorem. We're going to see whether CapTheorem is relevant or irrelevant to production MySQL systems. I'm with the GitHub database infrastructure team. I'm assuming you know a little bit about GitHub. We do run MySQL in our back-end and clearly we're concerned with consistency and availability. We want our services to be available, right? We want you to be able to open a pull request page or an issue. Raise your hand if you've ever heard of the CapTheorem. Okay, so almost everyone. So the incentive to this session is a couple events. One was a blog post that I published at GitHub and the other one was an outage we had. And this sparkled community discussion. And people were saying things like, well, why did you design an available system? You should have designed a consistent system. Or, you know, CapTheorem says you can't have consistency if you prefer availability or vice versa. And basically waving the CapTheorem and saying, you know, one thing can be done and the other can't be done. It's like an E equals MC square kind of limitation. And I found many of these comments to be inaccurate, if not incorrect. So in this session I would like to explain what CapTheorem actually means and how it applies to production systems. So 20 years ago, Eric Brewer conjectured an idea that's the CapConjecture. And he said a system can be available, can be consistent, can be partition tolerant. It can't be all three. You have to pick two out of the three. That was the conjecture. A few years later, Lynch and Gilbert proved what we call the CapTheorem. Their paper was called after the CapConjecture by Eric Brewer. The name Eric Brewer appears on the title. But misunderstood by many, they did not prove Brewer's conjecture. They proved a different conjecture. You see, they changed the terms, and they made a mathematical proof. Now I've studied mathematics. I'm a great fan of math. And in math, a theorem only holds true as long as its terms and conditions are met. You cannot just change conditions and say, yeah, the theorem still holds. It doesn't work like that. So they use different terms. And because everybody today quotes the CapTheorem, we'll go by their terms and explain what their terms mean and how do they apply to our systems. So the terms are still consistency, availability, and partition tolerance, though the word availability lost the high part. And it goes like this. I'm going to read exactly the definition. So consistency. Once the right is successful on a node, any read on any other node must reflect that right or any later right. So say there's a table, there's a value, the value is 1, and I run a series of updates. I update to 2, 3, 4, 5, 6, 7, 8, 9, 10. I just updated to the number 7. I got an OK from the commit acknowledged. I go to any other node. I should see the number 7 or 8 or 9 maybe newer writes were taking place, but absolutely I shouldn't be seeing 5 or 6 or 4, right? Make sense? Availability. That's the big change from Grover's definition. Pay attention. Every non-crushed node must respond to requests in a finite amount of time. That is the definition of this theorem. Any non-crushed node must respond to requests in a finite amount of time. Now, a few notes about this. There is no limit on this finite amount of time. It could be 5 seconds. It could be 5 minutes. It could be 7 years. If a request returns within 7 years, the system is available. Now, it is not explicitly declared, but otherwise this disproves the cap theorem that the response must be successful. If the system returns errors all the time, then it's not available. It must respect that request which we sent. Another last thing to note, because this is a mathematical definition, every non-crushed node must respond to requests in a finite amount of time. What we have in math is like truing an empty way or truing an empty statement. According to this definition, a system, a database system where all the nodes are crushed is available. Because only the non-crushed nodes must respond to requests in a finite amount of time. It is perfectly valid to declare such a crushed system as available according to these rules. Now, if I told you that we are interested in availability and so we are crushing all our database service to make it available, you would say that this doesn't utterly make sense. Agreed? Okay, we continue. Petition tolerance means basically what it is that the system can operate with network failures. And I will rephrase the entire cap theorem. Instead of doing the two out of three, I'll define it in this way. So, if the network is good, you can achieve both consistency and availability no problem. If the network is bad, then you might need to choose between availability and consistency. That's what the theorem says. All right. So, we're going to prove the cap theorem right here and now. This is literally the proof on the paper. It's absolutely not complicated as you will shortly agree with me. So, the proof uses two nodes, node N1 and N2. They're connected, they're replicating from each other, they're happy, everything's fine. We place a network partition between them. We put a barrier. This barrier is held for an infinite amount of time. Okay. It will never come back. It's an infinite amount of time. We assume that the system is available. Agreed? Let's just assume that it is available according to the definition of availability which we have just described. So, we write, let's say there's some roads, there's some data. The value is three here and three here and the system is consistent. We now write the value of seven on node number one. Because we said the system is available, that means that request will return in a finite amount of time. Whatever time it is. But since it's finite, it's valid to speak about what happens afterwards. And what happens afterwards is that we're going to read a value from node number two. And that too, if we assume that the system is available, is going to complete within a finite amount of time. It is therefore valid to speak about what happens next. What happens next is that a finite amount of time has passed. We place the value seven on node number one. There is no way it reached node number two because throughout this time the network was broken. QED, we assumed availability, therefore there cannot be consistency. Does that make sense? That's a proof. It's a mathematical proof. That's basically it. You know the cap theorem now. And as a mathematical proof, it is excellent. That's the way we prove things in mathematics, right? You want to prove that something is not possible. You show one counter example where it breaks, right? Otherwise it might be completely possible. But if there's one use case where it breaks, then it is not possible. It is not possible to achieve availability and consistency both together because there is that single use case which breaks it. But we as engineers understand that things are not black and white. For example, let's talk about real high availability the way we understand it as engineers. We already agree that there's no such thing as 100% availability. And we talk about five nines and four nines and whatever makes us happy in production, right? We acknowledge that there could be single use cases that we might not meet. If I'm to tell you that in the next five years there will be at least three seconds of outage in your services, okay, you will believe me, but you won't be shocked, right? We understand that. And we understand that we can make trade-offs sometimes. Last about CAP itself, it does not discuss a myriad of other topics which we as engineers are very interested in such as scalability, uptime, latencies, durability, etc. With that said, let's move on and see how CAP as we defined it applies to production MySQL systems. So we begin with the simple MySQL replication cluster. Sorry, that's the asynchronous replication single master multiple replicas. Is this an AP or a CP system? What do you think? Don't be shy. AP or CP? There's no time. Faster, faster. It's CP. Okay, so clearly we all agree that this cannot be a CP system, right? This is asynchronous replication. The master, there could be replication lag. Nothing guarantees that the data will be there. We know that on a daily basis. So clearly this cannot be a consistent system. I write here, I read here. Well, it's not the same value, surprise. So we know it's not a CP system. Is it an AP system? So my question whether this was AP or CP is really not a good question because it is neither. The fact that the system is not AP doesn't make it CP. The fact that the system is not CP doesn't make it AP. Why is it not an AP system? Well, this cluster doesn't really meet the definition or the state of mind of the CAP theorem. According to the CAP theorem, any node must accept a request in order to be available, right? And respond to any of our requests in a finite amount of time and without error. In this system, there is only a single node that can respond to write requests. All the other nodes do not even play that game. There's a unidirectional thing here. But the CAP theorem doesn't make these distinctions. It needs all nodes to be able to participate. And if this node goes down, no one is able to serve writes. CAP is not interested in failovers and what will happen in five seconds after I failover. According to CAP, this is not an available system. It is not consistent. It is not available. But we know how to get consistency, right? We can always read from the master. That's our way. Everybody knows that, right? You write to the master. You want consistency. You read back from the master. We know that it doesn't scale. But do we really care that not all replicas have data at that exact time? We have something. We have some solution. So it doesn't scale. So we can use ProxySQL with casual GDAD reads, right? This would work for pair connection queries and not for all queries. It is not CAP consistent. It is not fully production consistent. But we can mitigate a large part of the problem. We can offload the reads from the master. And GDW use Fresno to heuristically suggest that all replicas are up to date and we can offload queries from the master. This is not CAP consistent. But we can achieve better consistency with less impact on the master. Let's move on to Semi-Sync. With Semi-Sync, I write to the master and the write is not acknowledged until the event, the binlog event has been shipped to one or more replicas depending on configuration. Is this a more consistent system? Is this a consistent system right now? It is not a consistent system because the only thing that Semi-Sync guarantees is durability of my data physically on another node. But nothing promises that the data has been, the changes been applied on that node. I still have replication like the same as before. So this system is no more consistent. Is it more available? It is not more available because there's still a single master. It still doesn't fit the model. Is it even less available? Possibly, depending on configuration. If you put an infinite time out on Semi-Sync and all the replicas are isolated, that query on the master might never return which makes the system not available or less available depending on how long you wait. At GitHub, we have this hybrid setup. So we have local DC replicas use Semi-Sync with a master wait time out of 500 milliseconds and remote DC replicas don't use Semi-Sync at all. Is my system AP or CP? It is neither, right? It's not CP, but is it more AP or more CP if we try to approximate? Well, this really depends when and where you look. In this DC, it is like more CP. In that DC, it's a little bit more AP. It depends on the time of day on the workload. You cannot classify this system by a single attribute, right? This is an AP system. You cannot. It's a hybrid system. Take VITES. So VITES runs on top of normal MySQL clusters and it has this SQL Interface Divinity Tablet which acts like a proxy. It is stateless. You send queries. It will break apart those queries and send them to the shards, the appropriate shards. Is that an AP system, a CP system? It is neither because it runs on top of normal MySQL clusters. Hence, it has the exact same properties. But if you set semi-sync and you send only read traffic only from the master and you have a reasonable failover mechanism, then you can get a very highly available system, a very highly consistent system, one that can scale because the load on the master is no longer an issue. You can always reshud. So you can get much of all the good things together without this system being neither available nor consistent.  It does not have the power of E equals mc2. Imagine NASA wanted to send a spaceship that goes beyond the speed of light, right? Imagine this brilliant engineer stepping up and says, I know I'm going to make a trade-off. I'm going to build a spaceship that runs 10 times the speed of light, 99% of the time, and then the next 1% of the time is to run only half the speed of light. That can't be done because E equals mc2. You can do that. Sorry. But with CAP theorem, we are able to work around the limitations and come up with a highly consistent, highly available system. And we don't... Do we really need it? There's more. Let's talk about the big cluster. B48.014, thank you, Oracle, for changing my slides at the last moment. So, single writer in the cluster. Now we have Paxos, right? There's consensus. There's interesting stuff. Is this an available system? Is this a consistent system? Who says it's available? Who says it's consistent? It is neither available nor consistent, people. So, availability. Why is this not an available system? Because I could partition the network so badly that there will be no quorum. If there's no quorum, there's no leader. If there's no leader, there's no writer. No writes can be accepted. So, we can make this system unavailable on network petition. Is it consistent? It is not, because in the big cluster, B48.014 only guarantees, much like semi-sync, that the data gets durable in another node, but not necessarily applied. Of course, you can put proxy and route all queries to the leader and get very, very good consistency, but cap-wise, it's neither. With multi-writer nodes, you still get the same not available, not consistent system. And it's possibly even less available, because now nodes may refuse your requests because of conflict. And that's not good with cap. So, it's even less available if you have more writers. Does it make sense? Less and less. Galera. So, Galera is just as unavailable as in the big cluster, because I could partition the network so badly that there's no quorum, no leader, no writes. But it introduces the WSREP-sync-weight argument variable, which we can set to a non-zero value. Let's say it's 3, which means I could block on the reads until they've been applied... block on the writes until they've been applied on the other nodes, or block on the reads so they wait on those writes to apply. That sounds like a consistent system. And really, in practice, it's wonderful. According to cap, this is not a consistent system, because a single node can be isolated. And when it's isolated, it will take a timeout for that node to recognize that it's isolated. During that time, it will serve inconsistent reads. It will serve stale data. It could be five seconds, it could be nothing, right? According to the cap theorem. This is mathematics, right? We just proved that something can be done using an infinite network petition, right? So here's another use case. This is not a consistent system. InnoDB cluster, congratulations Oracle. 10 days ago, released a week ago, whatever. 8.014, with really interesting stuff. InnoDB cluster, it can now serve consistent reads. Not cap consistent, I'm sorry. It is not an available system because of the same network petitioning problem. And much like the Galera problem, if I isolate a single node, there will be a timeout, some amount of time, some small amount of time. Again, in production, I'm really happy with this. Cap theorem-wise, this is not consistent system. So this will serve stale reads. Now, within InnoDB cluster, we have an extra option that says, what happens to that isolated server? Does it just turn read-only and refuses queries?  It can kill itself, commit suicide once it realizes it is not a part of the quorum or part of the cluster. So that doesn't make it more consistent, but killing the node makes it more available. So it's a bit ironic that by killing a node, which makes perfect sense, by the way, we make the system more available according to the cap theorem. Sorry? Okay. All right, I have to move on. I'll take this later. So far, we haven't seen a single AP system, a single CP system. Is there an AP system? Yes, there is. Take six masters, not connected to each other in any way, not replicating, not doing anything between each other. But this is an AP system. Of course, there's zero consistency and this is not interesting. A circular master replication is also an AP system, but we all know that in production, we are moving away from this setup. This is not something that I know a lot of companies have. It's just moved away from master-master replication. So the AP systems are not very compelling. And so, it's takeaways, and I'm running out of time, is takeaways. I'm not sure CAP is the right model for us. We just... I just took all these setups and said, not available, not consistent, not available, not consistent. Is that the bad thing for those systems? I don't think so. I think these systems are excellent. We are able to achieve most what we want from those systems. Maybe the problem is that we try to enforce the cap theorem on something that does not play well with the cap theorem. So we necessarily want to talk about the cap theorem. The definition of availability according to CAP is not something I feel comfortable with. It doesn't make sense to me. And so, please be wary of people waving the CAP theorem saying you can't achieve this because of that. Yes, there is a trade-off between availability and consistency, but it's not the one everyone thinks it is. It's a different trade-off. There's an extension to CAP. I'll read about it later.  There's a lot of information on the internet on the CAP theorem. I found many misleading or incorrect articles. So I'm pointing here quite a few links that are correct, I believe. And thank you.


I'm just fascinated by what goes into your head, right?  Like, I had so many new revelations about my communication skills. How do you put something into language? And I think we're going to start with that. I think I'm glad you're using the word communication, Daniel, because a lot of people think that a better word is speaking and communication is far more complex than just speaking. Anybody can just speak a thought, but if you want that thought to engage with your listeners and you want to be memorable and stand up because most communicators are highly forgettable. And if you want to be memorable and stand out and distinctive, then you have to commit to the art of communication, not just saying something. So that became a shift for me. Many years ago, I wanted to become curious and I wanted to excel at communication, but I didn't know what that word really meant until I began to study it and its component parts. And of course, as you say, my communication masterclass goes into depth on the different component parts that I think are essential to a great communicator. And one of the big superpowers I think of great communicators in the world is that they are outstanding listeners, not outstanding speakers first. And I think what makes great communicators great communicators is that they have become students of listening, not students of speaking. That was the big shift for me, Daniel, you know, decades ago when I began this communication public speaking journey is that I realized that I didn't get much better as a speaker when I studied speaking. I got much better when I studied listening and learned the art of listening, because the better you are at listening, the more you know what people care about rather than what you care about or what I care about. And the more you realize how it needs to be said to connect with a wider group of people than just the ones you normally speak to in whatever bubble of life you are in.


Will James Cameron's avatar the way of the water break the box office? Or is he shooting for a number so high? It's unobtainium. That's a reference to the first film no one remembers. Let's talk about Avatar 2. Avatar came out in 2009. That was 14 years ago.  It's a what? Oh my gosh, a Navi just popped up from the water. What's that nameless blue smurf friend? Oh, thank you. He's saying you should subscribe to the channel. Adam does movies right here so that you don't miss any of the commentary or reviews I put out every single week. Thanks.  Let's keep going. James Cameron started in the industry doing math paintings and he rose the ranks on skill. That is a rarity in Hollywood today. He's only done one flop and that was Piranha 3D, not really his fault.   We're talking worldwide here, baby. Now the interesting thing about this number, if numbers could be interesting, which they're not, is two-thirds of that revenue is international, meaning America isn't near as important as, say, China or some of these other countries. So the guy has an impeccable track record. Great. What else can he bring to the table? Well, besides the fact that he invented a lot of these undersea cameras and he knows the long-term goals of all this shit, taking years or decades even to see his vision come to life and he will stop at nothing short of perfection to achieve his goal, I mean, I don't know what else he has going for him. So sarcasm aside, let's get down to brass tacks. I have concerns about this movie. Now, if you would have asked me just a couple of years back, if I thought Avatar 2 would do huge numbers, I would have said, yeah, absolutely. In Cameron, we trust. In fact, I probably did tweet that out at some point. I don't think that anymore, and it has nothing to do with my lack of confidence in the man or the brilliance of this movie. Now, I should also point out I'm a big fan of Avatar, the original, not because it has a brilliant story. I don't think anyone would say it does. It has a competent story. I think it's too long, and I think it's tough to watch at home. This is a movie experience everyone should have on the big screen. It's a ride. You put on the 3D glasses.  You are with all these cool Navi creatures, running up trees, dodging bullets, and having a great time.  Most people also don't have 3D glasses and a massive screen to watch the event on with blackout windows and some cool floor lighting and surround sound. It's just not the same. And of course, every movie is going to pale a little bit in comparison to that magical moment in the theater. But Avatar truly misses a massive amount of its charm when watched at home. In fact, I've tried watching Avatar several times at home and I don't think I ever get through the whole thing. But if I were to see that in theaters again, oh man, would it be fun. Not a lot of movies hit that same way. The only other one actually that springs to mind right out of the gates is Gravity with Sandra Bullock. And that was another movie that was very much the IMAX experience with those 3D glasses. You just have to have that level of immersion to really appreciate it. It really is like a ride. All of these things I'm saying right now are very much a factor of why I'm concerned about the sequel. I have a numbered list. Let's get to the first of five points. Number one and a very big one, theaters are struggling. Now they did have a wet hot summer and that was mainly because Tom Cruise carried the whole movie industry on his shoulders.  I don't think anyone saw that coming. Yeah, of course, Tom Cruise pulls in numbers. But my God, that was a huge film. It was also a badass film, which helps. It appeals to a massive audience of people. Avatar, by comparison, yeah, domestically it does well. But here in the States, you ask anybody about Avatar. A lot of them don't even remember the first movie outside of there was giant blue people in it. And it was a cool movie to watch in the big screen. I've talked to several friends and neighbors who didn't even know the sequel was coming out this week. That's not good. That's not good. But back to the theaters, people are not going to films like they were a couple years back. Obviously COVID played a huge part of that. It kept people home. The rise in streaming is destroying theaters, amongst other things. But that's really the biggest caveat keeping people home is the comfort, the luxury of staying in their own place. They all have brand new TVs. They all have surround sound. Plus there's a good chunk of films that are doing day one releases, both tandem theater streaming exclusives such as the Halloween films. Why is this happening? You are burying theaters with moves like this. You are training the audience to think that oh well in a week or two this will be at home much like what's going on with Glass Onion. They give it like a two week window in the theaters. What are you doing Netflix? We've been seeing more and more articles pop up about how AMC is filing from bankruptcy. They can't pay their bills. Or this theater chain is closing down or on the verge of closing down. They're only at 17% capacity. How much longer can this go on? That's a good question. On an anecdotal level, my local theater one of one that I have within a like two hour driving range has six urinals. Only one of them works. The others are all broken. I don't know how. I can't imagine what scenario took place that would destroy all of these. But there's some real tasteful caution tape or plastic bags on top of them. Real tasteful, real classy stuff. They've been broken for four months now. When I started going to this movie six months ago, they were all working. Now, it's possible we could chalk it up to bad management. I know the manager, she seems lovely.  The more realistic explanation, they don't have money. Number two is kind of a piggyback off number one. I alluded to it already. Streaming has taken over. People don't care to go to the theater anymore. Why would they? They have most of the comforts at home without dealing with the douchebags at the big screen.  The budgets are garbage. The quality is mediocre at best.  Like it's nothing. Because at the end of the day it kind of is nothing. You feel dead inside watching it and when it's over, you forgot what you just saw. Number three, which piggybacks off what I was saying at number two, people are shittier now. This is only coming from a person who was around for 40 years and most of that time wasn't spent in the theater. But from the 90s to today, the level of respect of decorum has gone out the goddamn window. I believe there was a time before I was going when you would head to the Cineplex and it was kind of a regal event. You would dress up in your Sunday best.  There would be an usher that would take you to the seat. The movie would start up with the characters. Let's all go to the lobby. Let's all go to the lobby. There would be brief intermissions where people would politely discuss the film and what was happening. Now, fast forward to today.  Instead, you're treated to a three-hour clusterfuck that you can't escape because there's no intermission anymore. We got to keep these movies going so we can put them back to back to back. You got to play the movie as many times as you can in a 24-hour period so you can recoup some of that loss. People don't wear their Sunday best anymore. They come in pajamas. They have onesies. They have snuggies. They have blankets and pillows.  Tammy in the front row just set up her TikTok account and she's live streaming the movie as it's going. Don't worry, guy, in the way back row trying to watch the big screen. Just check out Tammy's little shitty one because she's got her opacity. She's got her brightness at 100% still. I've had not one but three people vaping during the movie. Vaping during the movie. What is happening anymore?  Nah, fam. They're making $8 an hour and they can't wait for their shift to be over. There used to be a time where I really wanted to work at a theater because I loved movies. I couldn't wait to talk about movies to people that would come in to get to see them early. Now when I go to the theater, these people working there don't even know what movies are playing. Movie goers today are rude. They're dirty. They're smelly. They're chatty. They're basically snow white in the seven douchebags. So of course people don't want to rush out to see a movie when they know the experience could very likely be ruined. Number four, and this is another big one. Avatar had a huge hook when it came out in 2009. It was in 3D. It was James Cameron's next big movie after Titanic. It was a huge world event that everyone had to rush out to see in theaters so they didn't feel left out. It's kind of like not owning Elton John's Candle in the Wind single for Princess Diana.  That was a very deep cut. Subscribe for deep cuts. So what's the hook for Avatar the Way of the Water? The updated effects? That's not enough. Is this movie in 3D? 4D? 8D? What are you doing Cameron? I have not seen a single trailer or commercial that has told me if this movie requires glasses to watch. I haven't been told that this is an experience you have to see in theaters. They should be marketing this better.  One that you can tell your grandkids about someday. When they're in their hover cars, watching the Back to the Future remake on their eyeball lens. And number five, maybe the most critical and depressing one of them all, I think I might have mentioned it earlier, James Cameron's kind of nervous. This guy was a god amongst mortal men at one point announcing he's the king of the world when he received one of his many Oscars for Titanic. Now he's even saying yeah, I'm looking at this.  So it has to return a huge investment. We have to recoup some of these funds we put in. Otherwise we're in trouble and we're probably not gonna get Avatar 3, 4 and 5. We might just get Avatar 3 the end? At one interview at one point he said, yeah, we might have a 30% drop in revenue. That's brutal because he sees what's going on in the world. He knows things are not like they were when Avatar 2009 came out. I do not put a video out like this lightly. It's not to be smug.  I just have that gut feeling and it's not good. Again, I've defended this sequel for many years. I'm a huge fan of James Cameron. I've done extensive research on the guy for a mini documentary I put out a couple years back. Maybe it was last year on a screen rant how Avatar changed the world. I stand by that video. It's fantastic. You should watch. Regardless, I also see what's going on in the world much like Cameron and it's not painting a good picture for theaters and it's certainly not painting a good picture for Avatar the way of the water. People have moved on since the first film. A lot of them instantaneously because it was that amusement park ride. You got the high. You went to it a couple times because it was so fun. But after going on even the best roller coaster it starts to lose its luster. The fear starts to go away. The excitement starts to go down. The energy is not there. So trying to recapture the roller coaster again but not even putting in a new hook like this one's higher. It drops further or it goes in reverse. People don't have the reason to go out and see it and I think that's exactly the problem here. I fear this movie is going to do bad numbers. Bomb? I guess because it has to make so much money. Financially speaking I think it's going to put up solid numbers but for Avatar's sake it's not going to do what they need it to. That's my prediction. I hope I'm wrong but I see what's going on. I'm reading the tea leaves and they're not reading like a good book. Let me know in the comments below what you think is going to happen. Like the video if you had a good time. Again please subscribe if you haven't. I post tons of movie related rants and reviews every single week. I'd love to see you stick around. You're helping for the best. Take care. That was a fun passionate rant wasn't it? If you want to see me do other things that are a little lighter and sillier check out my second brand new channel Adam After Dark. It's a skit based channel. They're two to four minute comedy routines. I would really appreciate your help sharing that channel around telling your friend telling your mom of course she's a big fan I'm sure and yeah we can just grow this thing and it's going to be great. You can also find me on Patreon at patreon.com slash Adam Does Movies.  I'm also on YouTube Join. You can join become a member. There's lots of ways to support it. It's a one man operation and it's a passion project much like Avatar. I want it to succeed.