of investing in the payments world and so maybe just for kind of openers, what are each of your firms focused on within Fintech per se in the moment if there is a specific focus and if you're able to share some of that with us in terms of what you're actively looking at. David, maybe you'll start off from the Fintech VC angle. Sure, I'd be happy to. So I would say maybe start off broadly speaking, I think for venture capital and Fintech it has historically been a niche sector. So it has been about a billion dollars a year for the last 15 years in the early stage side and only recently has it become kind of as hot as it is and you know it's more in the $7 to $10 billion a year range because we treat it like a niche and we cover most areas of Fintech in addition to some of our other funds that would work in enterprise software healthcare. So within Fintech we're active in capital markets and an area there that we are actively looking for in mind is kind of the movement of capital market functions out to the cloud and more SaaS based models within capital markets. On the payment side we have looked at many things that are in the consumer payments to business and that was an earlier phase of the cycle I would say in terms of investing and now we're very focused on areas that are more value added payments and we think we can talk more about embedded payments and how the Uber-like experience where payments is embedded into application or a toast which is a restaurant point of sale system where payments are embedded into the restaurant software and a whole category of other verticals where we're seeing that happen slowly. And then third area is insurance. Insurance is probably the within the early state venture capital world the biggest sector for sure it's seven and a half trillion dollars worth of revenue in the industry it's the biggest category overall but it's had the least investment from the venture capital community until the last couple of years so there's been somewhat of a rotation into that and I think there's a good reason for that it's more difficult than some of the sectors of payments and capital markets and wealth management but nonetheless is an area that has a lot of opportunity for early state startups to disrupt both the brokerage side how people buy their insurance as well as over time the products that carriers create. Thank you. Jessica what about bottom line what are they looking at at this point? So bottom line technologies provides capabilities to financial institutions and corporates all around the world to make business to business payments so we heard a lot this morning about consumer based payments we're primarily focused or singularly focused on business to business payments so when we look at the FinTech market we look at organizations or businesses that are going to help us be more competitive in that space how can we get products that are going to make payments more secure more simple more streamlined for businesses to make business to business payments on to those organizations that they make business payments to regularly or kind of one-off business to business payments again we're global based so we have US is the primary market that we serve and we're looking at things not only from an acquisition perspective but also partnerships so we recently announced a partnership with Visa that enables us to provide banks and AP organizations with full service payment processing so ACH wire check on a global basis so we look both on the acquisition and partnership side and you know I'll tell you a little bit about PA associates before going to talk about the verticals and the themes that we're focused on in the payment space but as a firm we're growth focused investment firm the stage of company is profitable so think rapidly growing recurring revenue great business model but also generating free cash flows so we distinguish us from the you know earlier stage startup and venture investors and growth stage investors we've organized ourselves into a bunch of different industry groups and you know our roots come out of the technology industry so if you think about the themes that we like even in traditional areas we like businesses that differentiate themselves on the basis of technology payment certainly you know straddles both technology and traditional financial services given you know it backs up into the banking system but a lot of the innovation is coming from a technology perspective and so you think about the themes that we're focused on in payments specifically they've been around B2B payments we have an investment in a company called Eurowag and the Czech Republic which is focused on the fleet market fuel card market we've seen in the US and elsewhere an opportunity to add other corporate payment products into that market and use that as a platform to grow from which is our thesis around that investment the collision of software with payments we see as a mega trend it and it's certainly accelerating in terms of the investment into it and the interest from strategic as well as private equity firms like TA we have a portfolio company called BluePay which is based in Chicago that is focused on the integrated payments market and you know that they have organized themselves to partner with ISV's and also to either create or acquire software that connects them up ultimately to the end user and provide the end-to-end process from the use of the software all the way through the payment processing piece of it you know at the end of the day we're trying to find management teams CEOs CFOs owners who are like-minded as well and so we have thematic approaches to our investments we're also opportunistic and trying to find teams with whom we can partner and we think we can be successful and it's very important to us as you know owners of businesses who aren't managing businesses who aren't running businesses to find that type of managerial talent entrepreneurial talent to back and help them achieve new levels of success and that's really a key part of our strategy as a firm interesting and David very curious as a VC what verticals or business models within FinTech do you see as hot today maybe not hot tomorrow maybe hot you know how are you looking at the the market you know there's a lot of companies that are emerging that call themselves FinTech and may or may not be here in six months three years who knows curious what your take is in terms of the some of those that sectors that may be hot in the future and some that may be dying off in the near term yeah I you know I can speak to that probably from the numbers right in terms of where venture dollars going and so if you and you're right it doesn't move quickly right and any 48 month period right what is attracting you know or tripling or quadrupling in terms of venture dollars happens relatively quickly so there's your question I think the hottest sectors at the moment are actually cybersecurity which is broader than FinTech but very important in the financial services sector and insurance tech you know insurance tech it was a hundred million dollar venture capital investment category for many years it'll probably be 500 700 million this year and is extremely hot in terms of what people are putting money into in seed stage companies I think in to answer your question of what won't be hot is of course harder and nothing really goes away right I mean these are enduring categories of financial services so at the early stages is one lens on it I think you know blockchain would be an easy one to say it had a very strong investment period a few years ago right probably in 2015 is when it peaked and it is still attracting interest I think that we could talk at length about it that there are a lot of later stage rounds that have gotten done with companies that are now in the that trough phase of trying to build product not not much is commercialized in terms of like generating revenue but are out there but in terms of venture interest right that's in our way to see investments have been made teams have been backed and it's not the you know the hot category for the moment in terms of emerging categories I think are still on horizon Roy mentioned one that you know kind of in the reference of integrated payments and software colliding with payments that's one we think a lot about as well and I still think there are a lot of lakes as we look at that across different verticals the challenges of moving money tracking expenses making payments that looks a whole lot like some of the problems we have in personal financial planning and consumer payments and offering that as an integrated software experience to medical offices in the same way as again toast would do for a restaurant so I think that's a particular interest and then the final one odd which is I think we think a lot of that data aggregation and how that is becoming moving from something that was a nice to have and a tedious task that was outsourced because it was painful to do to one that's becoming more of a strategic platform for businesses and there I think it's important to payments because that's one of the things that gets integrated or aggregated but so are wealth management where your account financial holdings are and what the transactions are your credit card transactions and you know mint which is a very good example is a good example of aggregation but the real under the need plumbing players like Quovo and Yodely which was acquired by a large publicly traded company last year I think we see that and and plaid and a few others is really interesting examples like consumers won't want to look at their data in a siloed way going forward because they'll become very accustomed to seeing it holistically and once that becomes table stakes we think aggregation becomes all the more important and will be seen in and far more mobile applications and and web applications that we use thank you and Jessica bottom line has been very busy with acquisitions in the past few years I understand they've made about 25 acquisitions in the past eight years ten right and I'm curious from a strategic perspective what are some of the elements that you look for and also I have learned very recently that you have a unique approach to not even calling them acquisitions per se maybe you can comment a little bit about the process and and about the way you approach some of these strategic and so we consider ourselves an active acquirer we we've done about 25 acquisitions in recent years when we look at acquisitions we look at it for a couple of key things one is it gonna is the company going to expand our market presence is it going to give us an opportunity to expand what we offer to our current client base is it going to make us more competitive so if the answer to any of those questions is yes that would be somebody that we would certainly look at doing an acquisition with we actually have kind of a unique approach in the way that that we've built out our acquisition playbook if you will we call it a combination we don't call it an acquisition and that's really focused on kind of three key aspects the first is culture making sure that the culture that we've built at bottom line really continues on through the combination of the two organizations it goes so far as to say that little things I realize this is really in the weeds but that on the day one that we announced publicly that the acquisition or the combination is complete all the new employees of the of the company have business cards all the new employees of the combined company now have a bottom line issued laptop all the the offices have again this is really in the weeds but a painted blue wall and the the thought behind that is to make sure that the new organization that we're combining with understands that they're part of something bigger that they really feel part of that on day one and I can't emphasize enough how important that is the second thing is product strategy right you have to know how you're going to serve your customers and if you wait until after the combination is complete and then you start thinking about it and then you start talking about it you're going to be behind right customers want to know that you care about them right away and that you have a plan for how you're going to continue to service them and then the third piece is talent retaining the top talent retaining the leadership team if you look across bottom line in fact more than half of the leadership team is from combinations and that means that it's not just about the initial payout period that they've seen a culture they've seen a plan they've seen an organization that that they wanted to be part of long term and so the combination of those three things really comes down to culture comes down to customer come down comes down to people and that's made us really successful we've you know had some bumps along the road but we've learned a lot over the the past 25 acquisitions and we apply what we learn to each new acquisition that we do interesting and Roy being that at the point where you look at these acquisitions in the payment sector they're usually companies that have an EBITDA and a measurable one at that everybody always wants to know what type of multiples what's out there everything's very different but can you comment kind of broadly in terms of maybe some some areas in terms of either multiples based on sectors or maybe multiples based on growth rates or retention curious what your viewpoint of the world is in terms of the multiples that you see yeah we view everything through the lens of growth and repeatability so um you know do you have a serious customer concentration or do you have a meaningful portion of your revenue base that isn't recurring or repeating in some way so it's around the predictability of the business model the resilience of the business model frankly how embedded is that that you know the the tools or in the case of payments companies the payment process in the routines of the customer base and trying to get an understanding how sticky the application actually is you know if you're seeing a business that has 97 to 105 percent revenue retention meaning that that you know the average customer might grow by 5 percent you know they retain all their clients and the cost of customer acquisition is less than 12 months of revenue or gross profit return and you know you see the evidence of that in the P&L that's an incredibly valuable business it hardly matters of you know the size it's just a wonderful business model and they're doing something really really right and you should feel great about owning an asset like that we found in we're a fairly self-reflective firm um and we did a process um last year where we analyzed the last 15 years worth of deals and we actually found price wasn't a huge determinant the the terminator of the terminate of breakout deals or bad deals you know something else drove the breakout or something else drove the you know the the capital loss there so we you know we end up being price takers in in the market in your times when that doesn't fit from a return perspective and and so we have to to walk from that but just to kind of give a window and at least how one firm thinks about the world we're really focused first and foremost on the business model the growth opportunity the resiliency of the company the team and valuation comes comes after the fact I think in fintech David's comments around the amount of capital that's flowing into the the fintech venture market I would say I don't know the numbers as well as you know it in the venture market for private equity but it's many many billions of dollars that have flown into it from a private equity perspective in fact their entire firms that have become fintech firms that's all they are you know we have a fintech practice inside of a much more diversified larger firm and so that's the way we've approached it but there is incredible appetite for this category and I think for the right reasons these are this is a great industry and fintech is not an industry but it's more thematic but the the industries that comprise the the fintech landscape these are just phenomenal industries are really large it's change happening in a in a way that is adding value to their to the end customers and that's the type of stuff that we want to invest mine I'm curious if anybody thinks that valuations at this point are frothy or anybody foresees any type of looming correction per se or perhaps even you think that things are fairly priced and are going to just continue at the current pricing in the foreseeable future so maybe david hi go first no so yeah again i think it's important to separate the markets and then the early stage as defined by say you know startups without revenue or startups with less than 10 or 15 million revenue at the very high end in fintech that there is definitely been the the amount of capital that went in definitely drove up valuations and and what was probably an unsustainable way and that's natural for for these industries to go through um so there has been a correction hasn't been severe I think late last year we started and maybe even before that we started to see a cresting and you know the nuances are more around category leaders are still raising capital in fine way it's just less step up in valuation those that early stage company in really hot sectors like insurance with no revenue just ideas and great teams are raising very easily but in the middle there's a crunch and and it kind of started in series a crunch two years ago it's now a series b crunch and that means you know if you're not a category leader it will take longer rounds are getting smaller it's taking they're taking longer to get done and then as far as you know multiples are less telling I think in early stage because there isn't EBITDA and at best it's a revenue to revenue multiple to valuation but even though it's where we track them you know what I might say what historically might be a 8 to 10 x revenue multiple in early stage deals floated up to 10 to 15 and that has begun to correct as well Jessica I don't know if you uh well in addition to uh I probably don't have the same level of knowledge on the the market side as these guys do but in addition to being a active acquirer we consider ourselves a patient acquirer so we see that the the multiples are up and we continue to look for businesses that are going to fit in kind of those three key areas market competitive expanding relationships with existing clients or giving us new capabilities and you know from bottom line's perspective when we find that in addition to the culture fit we're gonna reach out to those customers to to those companies for combinations yeah and I think you know distinguishing between stage of company is really important you know in the stage companies that we're focused on a TA profitable companies in excess of 15 million of pre-tax profits annually up to over 200 million of pre-tax profits annually we are really looking at profit multiples we use revenue multiples as a sanity check to make sure that we're not buying a business that's over earning and that uh immediately upon our watch we're going to have to reinvest a massive amount of it back into the infrastructure of the business we want to make sure that we've planned for that as part of our our go-forward process with the team but you know in the kind of low end non-differentiated payment processor you know acquirer iso out there I think that is you know a different market than the vertical focus technology differentiation really providing valuable tools discreet to that in market that's a much different value prop and and a much different multiple and those can range between you know kind of mid single digits of EBITDA as a multiple up to you know 20 times EBITDA as a multiple so that's a huge range but I think it just underscores how investors and how strategics think about the different type of business model and I'm using merchant acquiring there's plenty of other payment you know payment types and and payment markets that are relevant you know that you can make the same critique of sure what about perhaps I don't know if each of you perhaps has a noteworthy transaction and noteworthy however you want to define but something perhaps that caught your attention over the past six to 12 months for whatever reason it could be a transaction that went well or it could be an example of something that you would avoid in the future anybody want to make a anybody want to jump in on that you know in the merchant acquiring space I think you saw two very large transactions in the last 12 months both of which you know would transverse and heartland both trading I think you have a big theme in that market of the largest of the large have acquired their way to channel diversity and channel growth and channel expertise and channel technology and you know heartland obviously had concentrations in a couple of in-markets restaurants and education being you know two of the the primary ones transverse maybe less so but had some fi business and was a well-run company you know scale matters in the market so the big had tried to get bigger by buying very chunky assets and you know when you see a 4.3 billion dollar you know sale as we did with heartland or a couple billion dollar sale as we did the transverse the multiples that those companies received I think were indicative of a couple things one you know let's face it they acquired their way to incremental growth and they were able to borrow a lot of money to finance this and so there was a financial play to it but there was also the the fact that these are really large assets and there's lots that you can do with a large asset to to create cost synergies and revenue synergies and and so I think you got to be a little careful looking at the headline multiples that were paid for those assets because I don't think it's indicative of how the buyers thought about them and so for the business owners who are out there they're thinking about you know what your business might be worth in the context of a similar type of of you know obviously almost smaller scale sale I think you have to think about what value am I bringing to the acquirer and you know is it is it fair for me to expect to get paid for the value that I'm bringing the answer is yes is it fair for me to expect to get paid for the value that the acquirer is bringing the answer is usually no and so I think those are two noteworthy ones that that made a lot of headlines one that didn't make a lot of headlines but I think it's noteworthy you know for maybe to to exemplify some of the themes BluePay one of our portfolio companies bought a company called Bill Highway which is focused on membership management accounting software and you know the enablement of payment of dues and fees and other things on a on a recurring basis it's a really terrific business led by a young founder with a lot of energy very very smart who's now taken over the not-for-profit vertical within within BluePay and I think that ability to kind of marry the software with the payment process and back it all the way back up into the commercial banking system through deep integrations with Bank of America and Fifth Third and other commercial banks that to me is a case study for how you can build a really big business and in our last board meeting I'd say that half the time we spent talking about growth opportunities we're around that business which is called you know 15 or 20 percent of the overall business of BluePay versus the the rest of it so I think that you know this idea of being vertical specific marrying software with the payment process is a huge theme I think you're going to make a lot of money for the companies that are executing on that strategy very well David any comments on the yeah I maybe I can add a compliment you know strategy because I think Roy's comments are really good in that area and maybe on international payments and just the the movement of money which is you know free as everyone here knows really well you know step back for years to the Western Union kind of domination of that and money grant you know it has been a very expensive proposition for good consumers for a very long time with lots of money being moved around and that you know volume's only growing by and large we invested in zoom a number of years ago which was an attempt at moving that online when public was acquired by PayPal a couple years ago and we now still look at that sector as really interesting but in a more vertical way as well so we recently invested in a vertical play called Flywire it's based here in Boston they help higher education schools of all types who have international students and need to pay with their foreign currency they help those schools accept those foreign exchange payments and they help the students get a very transparent process of a good exchange rate the transparency and where their fees are at each stage and ensure them that the university will actually get the full amount not the amount they wired minus a bunch of bank fees such that when they arrive they can't actually register for school so the very simple vertical payment but you know there's a number of attributes that we love about that you know in addition to providing something tangible to the university they actually provided to them for free right there's nothing better than a free product to get a buyer to buy so the university gets software that integrates with their accounting systems the Bersar world for free and the student pays in an invisible way they only paid via the FX spread which was something they would have paid anyway and and but they're paying a lower spread than they would have so that kind of business model of free soft again software matched with electronic payments monetizing it through in this case FX spread in other cases like Roy talked about through interchange you know make very beautiful business models and flyers now entered beginning this year the medical space so taking a similar playbook but to that vertical and saying international patients who come to hospitals in the US or Europe to seek care have also very large foreign exchange payments that they need to make and it's tricky for hospitals to manage this payment so you can see how that plays out across different verticals and that's one one we think is notable Jessica you I think from bottom line's perspective you know we're and I think other organizations are size they're looking for smaller or opportunities to combine look at it the same way it's one how can we extend or add to our kind of core competency our organic growth products that will add to our organic growth model and then the second is what other technologies can we bring on that supplements and extend that organic growth into new markets right so if we look at a few combinations that we've done in recent times one was a small predictive analytics organization that was based also in New Hampshire called Rational Wave and what we've been able to do with that capability is not put out a predictive analytics product but take our financial technology solutions our business-to-business payment solutions and extend that capability so in the Paymodex business-to-business payment network we use that to do vendor onboarding faster to predict who's going to say yes we use it in another line of business to be able to sell it to our customers so that they can predict what their customer base is going to do more effectively we also have done a combination with a cyber fraud risk management company that enabled us to do web payment fraud so as we look at kind of strategies or what is kind of noteworthy in the acquisition or the combination space we're looking for things that are not just expanding what we do in kind of our core baseline capabilities but also make those baseline capabilities more competitive or more relevant to the markets that we serve very interesting well let me let me ask you we've done a lot of talking up here about a variety of different angles looking at payments acquisitions vintech acquisitions does anybody in the audience want to post some questions to either our VC strategic or PE experts over here no anybody want to share their own acquisitions secret or strategy with us pre-NDA maybe okay well yeah I think it's been I think it's been very interesting in terms of the the three unique perspectives relative to targeting these companies I think one of the themes if I heard correctly goes back to whether it's b2b b2c goes back to something that's got a high degree of customer retention and and then adding value in terms of to existing product line and so it's always interesting to me as we encounter these companies and we see models that seem to produce revenue but they're more churn and burn payments models which although they have EBITDA seem to get very low valuations generally speaking in terms of are there any that you mentioned I think people everybody mentioned the medical education any other verticals that of particular interest either think the framework to think through that question is really one around the the penetration of electronic payments in in that vertical and so what what are the existing you know users using and and then the resiliency and the health of those in markets I think actually really you can make a case for almost any in market that has you know a large enough size and a healthy enough quote customer base or merchant base or whatever you want to say to be ripe for that type of approach so I don't know that there's really anything that I would exclude I think there are things that we would probably be more excited about than others I think that's exactly right if you look at the US based business to business payments market more than 50% of business to business payments today are still made by paper check that's insane right I mean we're so far behind the rest of the world so you look at the opportunity that that presents in the US for business to business payments checks are fraud prone there's an opportunity for you know security so I agree with Roy I think it's less about a particular industry necessarily and more about what are the key pain points that everybody's trying to solve and that there's a huge opportunity out there it's great well from our perspective unless there's any questions I think we've concluded the session thank you very much appreciate it thanks so I move from a discussion of how startups can secure investment in the payment space to a discussion of what startups are doing themselves and this is an excellent discussion and opportunity to hear the stories from the trenches of founders CEOs of startup companies fintech companies that are making a go in some cases doing it so quite successfully I'm going to introduce our monitor for the next discussion and I really encourage everybody to make this an interactive panel because it is an opportunity to take advantage of lessons learned from the leaders of these startups our monitor for this discussion is a great mind in analyzing all of the disruptive changes in the payments industry Jordan McKee is a senior analyst at 451 research he covers the payment space the fintech space spends a lot of time focusing on opportunities and challenges for startups in our area does a lot of great writing and research on it and is an expert on the challenges that fintech startups face Jordan is going to introduce the startups the CEOs who are here with us for us for this discussion so I will introduce and ask you all to join me in welcoming Jordan McKee all righty thanks so much Jason thank you all right hello everybody so it's very good to be here also based in Boston just across the river here so it's a nice easy event to get to don't have to fly out to Las Vegas like usual which is great so I mentioned we're here to talk about innovation and disruption today I think you know nowhere are those two terms more heavily used and and widely socialized and in the payment space and particularly in fintech I think in this space in particular we're a bit too liberal with those terms we're very quick to label vendors and service providers as innovative and disruptive and even technologies as innovative and disruptive uh you think that apple pay is a really good example of that and we're very quick to say that apple pay is a disruptive technology disruptive service but if you take a step back really and and think about it's it's sort of just a veneer over what already exists it's sort of just a abstraction layer over the existing infrastructure and pipes that make up the payment space today so what we're here to do today is to to separate the signal from the noise and to get to the bottom of what innovation and disruption is in fintech and to do that we have three very interesting startups based in the Boston area with us today I'm not going to label them as innovative or disruptive just yet but hopefully they can impart on you by the time that we wrap up the session here I'd like to introduce Chris from Toast Jason from Pidion and Pidion from Alfie already so so before we jump in gentlemen um you know if we can just quickly level set with the audience and and sort of think of this as a very large elevator full of prospective customers that you've been trying to grab the ears of for a while now if you want to just quickly uh introduce yourselves and more importantly just give us sort of like the 60 second pitch as to you know what your company is and and what exactly it's doing excellent this is a uh this is a really big elevator it is I'll make it quick so Toast uh Toast was founded in 2012 uh we're a cloud technology platform purpose built for the restaurant industry so our mission is to enable a world where restaurants of all sizes offer a better consumer experience to all the patrons through innovative technology at our core we have a mobile point of sale solution with integrated payments but we go very deep in terms of um restaurant functionality that's great yeah Paysing's business was founded in 2014 uh think about it basically as a mint dot com for the payment industry so if you're a global merchant or a merchant that has multiple providers one of the hardest things do you do every day is aggregate information and data and so what we're doing is we have a network of uh providers all across the world so representing close to 40 percent of all commerce transactions globally which merchants can connect into no it effort on their part and get all of their data and information understand really what's going on uh from a payment spec uh standpoint whether it's uh charge backs authorization or fees um so L fee is actually not very much related to the payment industry um we are working in the education financing space and working on basically unlocking human potential by taking away barriers that currently exist in financing education uh we do that by developing a different type of product not alone where you pay a fixed principle with fixed installments but it's called an income share agreement Purdue University just launched it launched it as well uh and basically you pay a fixed percentage of your income over a fixed period of time and we use data analytics to analyze people's income profiles so we can do that uh sustainably um we are also a lot younger than these two companies uh we just actually finished the the delta v accelerator here at MIT we've now grown our team to six people um and like I think 800 at those three 300 huh well still uh still some way for us to go but definitely an interesting space and I'm sure we have some challenges that are similar that's great very helpful context the big messages that we heard earlier today in the keynote was that you know innovation really can't occur without first there being a problem to solve and and all of your respective verticals you know there's a wealth of challenges there's a wealth of existing pain points uh but certainly they can't all be tackled by just one provider one vendor so I'd be curious to hear from each of you you know when you sort of looked at the the spaces that you're playing in what were sort of the the one or two or maybe three big pain points that you really picked out um and decided to sink your teeth into and specifically how did you identify those and uh Chris we'll start with you in the point of sales space I mean obviously I had just a ton of challenges that merchants face with their legacy systems what were some of the things that you picked out early on sure so um if you think about uh the restaurant vertical um they've been slow to adopt technology that's beyond what I'll call sort of a function point um for years uh there are several players in the space uh two large players that dominated the market with um client server technologies technologies that were very good at the time uh to solve certain function points within a restaurant but as other technologies came out on the landscape um integration became a key component um and the service model was also different it was a very much an on-premise service model so to to work with the client server technology you had to be on-premise in many cases to tweak it integrate it upgrade it so on and so forth um the other part of the market was still cash pen and paper you know still today about 15 to 20 percent of the restaurant space um is supported through cash pen and paper and they have not adopted technology um in any meaningful way so to be a restaurant owner um if you look at today's day and age you very much have to act like a mini CIO where you're being bombarded with technologies that are no longer client server based but maybe they're mobile consumer based maybe they're a gift card and loyalty based maybe they're payment based so in um in many ways the market has transformed forcing restaurants to really think about what is my strategy from a technology standpoint um and I think part of it is if you look at a company like Toast I'd argue that a company like Toast really couldn't exist more than four or five years ago because um you know how many of you got your first iPhone in 2009 2010 tablets are now becoming no longer just consumer devices but devices adopted by small businesses so I'd argue that tablets are now becoming mainstream not just for consumer but for small merchants I'd argue that the connectivity between a merchant and a consumer has also evolved in the last four years in a way that hasn't happened beforehand and I'd also say that cloud technology players have become much more robust resilient where you could actually operate um solutions at scale so I'd argue that there's been technology dimensions that have really happened over the course of the past four years that have allowed this um uh transformation to occur absolutely and Jason for you I mean merchants obviously have so many different data challenges um that they're sort of working through how did you you know specifically choose to to focus in on your path and sort of over the steps that led you there yeah so uh we had a previous business that we sold to a public company called Vantif and it was primarily in the uh processing space for online merchants so people like GoDaddy and Overstock and one of the trends that we saw within that business was that there was a movement from in the US from one provider to multiple providers internationally that was really already the case right so in order to have best of breed or really to improve either rates or performance from an authorization standpoint businesses need to go local and what ended up happening was there was a massive trend also in the fact that alternative payments and other means of collecting uh fees for merchants was also expanding so you basically had two things that were coming together one merchants having the technical ability to have multiple providers globally and two the fact that there are all these other options for merchants to take funds whether that's an alternative payment whether it's an alternative fraud source the technology and ability to do that was simplifying over time what was not simplifying actually was that the access to data and information was still very difficult so you're dealing on one side newer businesses like a Klarna or Paypal that had access into information or data that you could get easily for someone like a payment tech or a cyber source or data cache where that information was difficult now imagine trying to aggregate that and normalize it by region by codes all of it became incredibly difficult which was actually in a lot of ways siphoning innovation within these organizations so instead of basically having to just sell into this organization say hey take my alternative payment and on the technology side you also had to sell into the finance world that says how am I going to actually reconcile this and understand it through my business and so that was really the impetus for building our business and a relatively straightforward problem where you saw an expanding universe of providers that were available to a group of customers and then a need to help them understand how that business was going to perform over time but also simplifying the interaction between those multiple parties and the merchant in our case interesting and for Alfie you know we've all either directly or probably at least indirectly been involved with the process of financing and education we know that's an arduous process and there's a lot of obstacles as you sort of go down the road of getting the funds needed to to finance tuition what in particular did you see broken about that process and sort of what's the angle that you take into to alleviate that so I think I mean first it was sort of twofold I'm originally from the Netherlands where education is practically free and so I have always felt that the government has failed in bringing a solution to students here that allows them to not have to worry about that payments afterwards but just actually focus on innovation and on their passion and so on the one hand it's just the fact that certain systems simply didn't exist and on the other side it is that the systems that did exist the loan systems that they have never really focused on the student on giving the student opportunity and so all the innovations we see now they continue on doing more of the same like but so far in common bond they're doing for example they absolutely are doing smart things they're looking at data beyond FICO scores but they're still looking at the same type of data on default rates whereas we are saying there's a lot more information in the data you can actually predict people's income profiles and just having that different approach to what you can do with data that for some reason nobody else is doing that is what we saw as a large opportunity combined with that lack of what the government is doing. Interesting so I think we each of you have hit on this point already but I'd like to sort of elaborate on it a bit you know one of the things that we've heard you know in each session today I think is that you know a lot of the the traditional services offered by the payments ecosystem and even in finance and banking are sort of moving towards commodity status and really the value creation is coming from what you build on top of that sort of the layer on top of the commodity and I think increasingly data is a is a key driver of value creation and payments and finance and in banking and it sounds like each of your your three respective companies have leveraged data in some way to create a new source of value so I'd love to just hear from you Chris I mean from a merchant perspective they're they're thirsty for insights as it relates to data and how they can run their business better but what are some of the things you brought to the table in that regard? Sure I mean I actually feel like we are in the restaurant space just getting started when it comes to the ability for a mature restaurant operator to leverage data. Typically the data hasn't been their data and we're teaching restaurants that this is actually your data it's your orders it's your customers it's your payments it's your operations and there's ways in which you could leverage this both real-time on any device at any point to understand the health of the restaurant you know whether that's the most frequent visitors what the how you doing on orders today sales today what regions are doing better than others so the concept of having sort of agile BI tools at your fingertips that give you a lens into your operation is somewhat new in the business I mean certainly in the client server world data was accessible and you had either cubes or reports you know candid or canned reports that you could run but now it's becoming much more agile in the form of looking at reporting and real-time analytics I think we're just coming into this space and I'm actually interested in what Jason's doing because I actually think it's going to start to move towards AI machine learning data science because then there's even more interesting things that you can do but certainly we look at the data in terms of internal to the operation even things like course firing you know when to fire what course into the kitchen so that the kitchen has a real-time view of what's happening on the restaurant floor you know typically a lot of that communication was through person or tickets but now with technology and data access you can start to automate certain operations within the restaurant which they haven't been able to do before right and so you're primarily dealing with SMDs do they you know do they understand what they can actually do with data or is there some education and some hand-holding that's required to sort of get them towards the path of actually leveraging this for business I think I think there's a ton of education yeah to sort of lead them to the water and show them approaches that are a little bit novel but I think they're also used to technologies that have been around for decades which is sort of very structured way of doing things so I think some of the more mature operators you know have a pretty good feel for the customer experience and how to leverage that data but for others you have to educate educate lead them to it in terms of how they take advantage of it right and Jason again you sort of hit on this already but you know what are those big pain points that merchants have with their payments data I imagine there's a lot of them but what are the big ones that they that really need fixing today yes I mean so I I think a lot of it depends on the vertical and the type of business you're in so if you're a you know traditional retailer and you're a five billion dollar retail versus a you know billion dollar retail you have very different problems right you know you always want to know you're approving at the highest rate you always want to know that your fees are appropriate you want to understand where your charge back level is which is very different from for example a subscription or recurring business right so you know their goal is to you know you know take a you know average lifetime value of a customer up up up and making sure that they can get cards approved over time and then they're getting the most money from every marketing channel that they're coming after what we found is that it's not you know our business is really about creating products or views into data that help them understand a business problem they're trying to solve so nothing that we do nothing we build does not have a problem associated with that build and so what we found even though a sophisticated merchants where you have someone like a netflix for example that have eight product managers that just deal with payments and their job is to expand the growth of netflix's payment operation across the world you know working with x number of providers and managing the the profile of each one of those providers however the problem becomes you've got all this data and information coming in and you kind of alluded to it even a you know a small restaurant or first a large provider you can get all the data in the world if you can actually get to a point where it's actually telling you something and how to improve your business it really doesn't matter and so we spent a lot of time for example building alerting functionality within the within the product that alerts you of problems that are there and then obviously over time what happens is then if you see that pattern across multiple providers multiple merchants globally then you can actually start making suggestions so as a simple example all of a sudden your card mix changes where 10% of the transactions that are coming in are foreign transactions and they're declining now at an 80% rate because you have an issue you have an acquirer in the US versus an issuer and all the cards are issued internationally you're automatically going to have a higher decline rate that could be meaningful your business if it's a million transactions if it's 10 transactions it may not be as meaningful so then it becomes a opportunity cost or you know what we call kind of cost of incomplete systems where you need to decide whether that alert that you've received and the income that's related to that alert can actually should change your business mindset and how you move forward and so for us it's really you know we you know in two years we process more transactions than you know Lytle did in eight years right so on a magnitude of when we sold the business we were processing almost 22 billion dollars of transactions the problem is you can always have a lot of data it's what you do with it and kind of make sure it's actually a product that a customer can get their hands on and use yeah sorry go ahead and for Alfie you know have you found yourself using any you know perhaps non-traditional data streams that you know some of the other lenders may have looked over not found mainstream enough to incorporate into their models have you found yourselves using some of those that have maybe differentiated your approach a bit uh so we did find some unconventional sources of data and what what I always find somewhat for the anecdotes that some of my co-founders say you shouldn't tell the story but is that in this large national survey we found that one of the best predictors of your likely financial future is the age at which you first had sexual intercourse now that is not something that we can test so we cannot actually use it but it's it's very interesting to see that in the giant sets of data that are out there by indeed applying the AI and machine learning tools that we heard there is really a lot of patterns that we hadn't even imagined are there and so I think first yes we have definitely found data sources with with insights that we hadn't considered and that I am absolutely certain that nobody else is currently considering interesting interesting so as each of you have have honed your value propositions you've obviously encountered your share of setbacks and obstacles as as you try to innovate and you try to disrupt your respective industries and we know the payments and banking markets in particular aren't always kind to new entrants so I'd just be curious if you could speak to some of the the key barriers that you've faced on the path innovation whether that's you know maybe regulatory or technology or simply just creating awareness you know what are some of those things that you've encountered and how have you stayed the course how have you sort of circumvented them or found an alternative to get around them Chris we can start with you sure I'd say most of our challenges have been technology oriented and service oriented in that we're putting together a business model cloud based not on-premise with multiple layers of technology it starts with mobile tablets if you look at the mobile tablet space you know a rugged mobile tablet didn't really exist prior to consumer devices and you know mobile tablets one out of three tablets that we ship are handhelds at the table that restaurants are using at the table so thinking about the handheld at the table the networking interfacing internally within the restaurant you know speaking to each other and then interfacing to the cloud taking payments and and then being fault tolerant you know to four or five nines when you start to put together that stack you know there's complexities at every layer that you stumble into and then we if we had known you know you start a company because you're a little bit naive to what the space is going to bring you but then you you figure out how to stay focused and to block and tackle and put together a solution that's fault tolerant at every layer so if the internet goes down if the payment processing goes down if some of the tablets go down the restaurant still needs to operate we all go to restaurants and it still needs to operate so how do you solve that in a very seamless experience for all stakeholders is a pretty big challenge and i'd say we've we've walked into bottlenecks and challenges at every layer of that stack but we've also tried to stay extremely focused whereas some of our competition has gone off after different verticals and we think it's really important to stay focused and stay focused on the type of customer you're going after the vertical that you're in and and what your sweet spot is so it's it's taken a lot of decision making saying no and and really just some pretty hardcore technical work the other thing that i'll mention is also the service model is you know cloud companies hitting small merchants you know it's a different service model so i mentioned it earlier but the ability to offer best in class customer support or customer success when you're not sending a field service person on site that's an interesting challenge as well so how do you make sure that people have access to data have access to systems like zen desk have access to systems that tell us where payments are so that our team across the board can service a restaurant or a chain seamlessly without having to to build an army in the field and send people on premise right so that's been another big challenge and you mentioned you're a cloud based service i know in the enterprise market there's still a bit of resistance to migrating you know core business applications over to the cloud do you find that resistance in the smb market at all or is it more viewed as an opportunity and not so much a threat or a security concern or what have you i'd say it depends on the type of restaurant segment or sub segment that you're in and their maturity adopting technology the good news is you know several players in the ecosystem are approaching the same restaurants so if it's not us you know poking the restaurant to think about cloud technology for pos and integrated payments you know it's probably someone like open table or hot schedules or an online delivery service so a lot of us are sort of poking the same merchants saying hey listen cloud's coming get used to it and it's and it's mature very good um i would say our biggest challenges especially over the first year and a half were mostly around saying no to people so it's incredibly important as you grow a business to believe in you know what you're doing or what you're trying to achieve obviously you need to be able to pivot and understand you know where there's opportunities but what we found that our most challenge is where we were looking at alternatives things that we can do within the system but staying the course around that and getting the team to to buy in that process i would say the other biggest challenge we've had bar none is hiring and so if you look at just the boston community where we are you know getting quality engineers getting quality people in every position is incredibly difficult you know the ones that are good are not looking and you know getting people to buy into your your business your plan the stability of your business is incredibly difficult and you know i think you've seen uh some of the things that have happened for example from a regulatory standpoint or or a legal standpoint within the state around uh non-disclosures and around non-competes it's absolutely horrendous uh you know we are without a doubt falling behind other places in the world because of it and we need to fix that problem and it starts with being able to you know bring more people into this country that can help build the technology that that we're known for and it's you know by far within the biggest challenge for us over time you know and and we had a pool of people because we built a you know a similar business within the space it's not similar business but it's you know around payments so we had expertise that we could pull from but it's still incredibly difficult to do it but what have you found as sort of your your greatest asset or maybe a greatest strategy when it comes to attracting talent because you know you're still an emerging vendor and you know your recognition might be so as high as other firms out there yeah I mean our the biggest uh the biggest pull for why people come to our business is that when they come in interview they see the caliber of the team they also know very uh that you know every two weeks we're bringing out products and features they're going to be used by people like Disney and Microsoft and Zillow so it's it's actually a it's incredibly fulfilling for them uh that they know someone's using it and the feedback that we get on purpose into the business around the product how it works uh directly from our customers actually helps drive a lot of confidence from the team that we're going in the right direction uh and that they're a big part of that but it's uh you know it's it's a constant struggle right because I mean you you've got engineers for example go out to lunch and they're getting you know 15 calls from recruiters in order to go somewhere else and you know listen the grass can always be greener so it's uh you know we've you know we've done a fairly good job of holding on to our you know core group of team and that's it's probably the the biggest piece of that is because of the customer growth and the success of the business which you know with other people that have been in startups they've seen that you know once that kind of plateaus or doesn't happen you know you start to lose really good people because there's tons of opportunities here absolutely and for Alfie? Yeah so fortunately uh we haven't had the same problem yet I hope that we will get that point no I think I wanted to start here by saying that on the regulatory point of view even though particularly student loans it seems like heavily regulated and it is but we have actually been very much welcomed with open arms by both the SEC and the CFPB and I think that is because it's because most most people there they're they're all such as people they have children and they see that they're a student death crisis and they really want to see a solution and so we were in DC not too long a few weeks ago and had a meeting at the CFPB with five of the most senior people in student lending and we were like wow we're just sort of the startup that started a few months ago so so that part actually we haven't experienced any hurdles. I think the biggest hurdle for us is more around sort of a mental model that people have on how you do credit assessments for example like what we have seen in our data is that things like SAP scores or GPA it's it's not relevant at all for where your financial future is and nonetheless at this cover I had a credit card at this cover here I can say something about payments it's and they they asked you for your GPA and that sort of impacts your your interest rate yeah your credit limit exactly and so what we've been struggling with is trying to get people to understand that there's a different way of looking at these kind of financial products and then looking at underwriting and so first trying to get the capital to give to the students has been a big hurdle because we can show in all of our models that like we are better at predicting this than a lot of other things there are and we know if you group these students together portfolio theory there's really very very little risk that anything goes wrong it's a product that is hedged against inflation because income grows with inflation all these things and still people are like yeah but what about default rate what about FICO score so it's more the mental model that we are trying to attack so in a similar vein to obstacles and challenges I think one of the the key ingredients that an emerging potentially disruptive vendor needs to to stay alive is access to capital right it's it's what's going to fill your business it's what's going to take you to the next chapter of your evolution toast as a vendor that that raised I think it was about 30 million dollars earlier this year a fairly substantial round and I'd just be curious to hear you know what were some of those key things that really resonated with investors when you were sitting in your meetings up and down sandhill road or wherever they have led you and and sort of just walk us through that process of courting investors and trying to get them on the same page as you and your vision sure it it definitely was not a fun process it took took too long you know I'd say one one point that we learned was again stay focused on what you actually think you you really need you realistically need and how long we should take in capital for how long how long our burn will last based on that capital so I think once we crack the right equation on that front it was then the story around disrupting you know a market that had a ton of potential there's even in the U.S. alone there's a million restaurants and if you look at the the restaurant market even today cloud players within that restaurant market only are impacting three to five three three to five percent of that market so we looked at the market opportunity not just in the U.S. but internationally to have a major impact no different than salesforce.com has had on the enterprise space so we looked at the market opportunity the concept of staying focused on a vertical and going very deep in that vertical very much resonated with our investors so to be able to go very very deep into restaurant functionality versus diverse and thin was extremely important I'd say that the third piece was you know building the best team you know my founders and I we came out of a company called in deca we a lot of success in the retail e-commerce space we learned a ton in the retail e-commerce space and we decided to sort of take some of those learnings into toast but building the best team possible as a pretty hardcore r&d product software company resonated and that's where we tended to flex our muscles in terms of our dna of our culture the team we were building and and the type of impact we wanted to have but those are a few of the the elements that certainly got Bessermer excited google ventures excited and sort of our our competitive landscape that's great and Jason keep me honest here I believe Paisian took in a strategic investment from world pay a few years back can you just speak to the value of having a strategic investor and sort of some of the things that you've been able to gain through that relationship as you as you have evolved yeah so I mean we took a very different tack especially for a new business and we had an opportunity basically to go one of two routes one was we had terms used from the traditional venture capitalists in the Boston area and then we had a ability to take a round from at the time when world pay was actually private they were owned by bane capital and advent and so we had had a long-standing relationship with with bane and advent but also more importantly with the team that had been now running world pay and so one of the things that was important to us because of being in the space for a long time is that scale was a really big deal and so the other side was also getting access to different endpoints whether that's visa and mastercard or whether it's different properties within the payment landscape so when we made that when we looked at that decision point it really revolved around the fact that with world pay they gave us full access into their customer base which allowed us to basically then drive a great deal of volume and access to things that we needed in order to build or prototype the product and then go from there so it was it's a very non-traditional route i actually would not suggest it for most businesses it was it was just happened to be a you know an interesting scenario for us because of some of the things that we wanted to do and the base of merchants that we are going after as when we were looking at raising money you know we looked at it in a very similar way right so it was really about first the team that we put together in order to attack this space because if that is really the number one thing that differentiates you from other people there are always going to be businesses that are similar to yours the one thing that is not going to be similar is the team that you put in place how you work together and more importantly when things go poorly how you work together which is really the the biggest piece of that the second piece of advice that i would give is that before you go out and raise money research the partners at the firms all around the in Silicon Valley and here that understand your space and understand the industry they are going into because there's nothing worse than spending 30 minutes in a meeting explaining for example payments to a partner in the venture capital because first of all the first you know you're only really getting three minutes of attention span in that first 30 minutes and if they don't understand payments and you have to explain it to over time you waste a ton of time and helping them understand why there's a market versus what you're doing and why it's important within a market and so regardless whether it's payments or any industry find the the venture capitalists or investors that really understand that space because you will save a ton of time they may not say yes but you spend a lot of you spend a lot less time really getting to the point of what you're trying to do. It's a great lead-in for for Alfie I mean as a younger startup even in startup years you guys are still fairly young you know what's that process that you plan to go through when when you're inevitably going to raise a round of funding how do you plan to identify investors that are going to best align with your goals and your vision and I guess more importantly how do you get on their radar first how do you create some awareness to actually get that initial meeting and that foot in the door. Yeah yeah it's well it definitely helps that we are a team from MIT Sloan MIT CSAIL computer science artificial intelligence lab and Harvard goal that there's a great ecosystem around it and I think sort of the maybe the challenge but particularly the the way to do this is by being patient we've had people that come to us and say like hey if you need money how much money do you need and it was easy for us to say like oh well I don't know give us $150,000 and we can go do something with it but very much to to Chris's point on like looking at what what do you really need what do you really want to achieve and that is some we were lucky we had some mentors who are willing to give us money but who also said like are you really going to learn something with this money and so over time we learned that it's great to build those relationships but just be very clear and saying we're not looking for money yet but let's talk about things so that they also realize that by the time you do come to ask for money that that they know that you have thought about what you're going to use it for and that they know it is going to be impactful and that you have chosen them because you have done your research because you have talked with so many other different partners already and then the second part to it is that like by by sort of preparing this way you can already show a slate of people saying all these firms are going to invest in this if you also join because nobody really wants to be the first one and if you can show that there's just actual interest it makes it a lot easier so our approach it's similar to what you said like what are we what are we going to do after the first demo day we got a lot of emails from people saying oh do you need money do you need money and we're like ah the next two months will be fine let's talk again and by then we're first trying to figure this out so that we can show you better where we are what our traction is and yeah we just want to build a trustworthy relationship great so I think one of the things that you know we've we've heard a lot today and and really that we've we've come to realize about fintech in general is that you know just because you have a product or an idea that you think might be disruptive or innovative doesn't mean it's it's going to be successful right it's not a build it and they will come scenario where you create create something that's great and the customers just show up the next day it really doesn't work like that in any market and I think especially in the fintech space um and that's probably you know a direct result of a number of factors but one of them is that there are a lot of incumbents in the spaces that that each of you play in that are very much in trench that have very strong brand recognition that own the channels and have a lot of control over the customers and the customer relationships so I just be curious to hear as as each of you have developed your go-to market strategies you know can you speak to how you've been able to court customers as a newer provider that may not have the brand recognition that may not have built up the trust yet you know how have you went about that process of actually just getting on a customer's radar and getting them to switch from a provider they've been with the past decade or who knows how long you know are you embracing traditional channels is it a situation where you're just taking a completely new approach Chris we'll start up with you in toast how have you went about that yeah so it's evolved I mean I'd say today it's really a multifaceted approach to customer acquisition I'd say in the early days it was persistence and a direct approach in markets knocking on doors cold calling visiting restaurants making each early customer a huge raving fan restaurants talk to each other so building a referral network and a network effect off of customer success early in our life cycle was was really key especially in Boston you know it started with 10 restaurants then 25 then 100 and then I jumped in at around 200 225 restaurants but that area today today were multiple thousand great but I'd say in the early days it was really building a direct team that went deep on product many of whom came out of the restaurant space many of whom had dealt with small merchants but you know knocking on doors cold calling and going to market direct more in the SMB space so you know restaurants that are you know one to 10 units in size and that's how we built the business in the early days but today it's multifaceted that piece of the business continues to see maturity and momentum but in multiple markets so Chicago LA San Francisco New York and it's a very repeatable model the unit economics are proven and we know how to scale it but then we've looked at what some of the traditional big players have done there's two very large players in our space and we've looked at reseller markets as well so in second tier cities where it's very difficult to get feet on the street how do you take advantage of reseller networks and who are the key resellers and you know how how productive can they be you know do they see the market turning with the two big guys in terms of transforming to cloud so I'd say the reseller networks another interest in area that we've poked at I'd say the third area that we've poked at is no different than any you know best in class SaaS company is can you build a demand gen model aka no different than HubSpot or Acquia where you can have BDRs with inside sales reps and a demand gen model where you're talking about the product as product experts over the phone and then doing demonstration and actually closing restaurants over the phone and that's also an interesting model that we've poked at certainly as we go upstream you know it looks much more like an enterprise software market where if you're going after larger chains it's very much a direct market but with enterprise class sales execs so it's multifaceted at this point and we're measuring each and and playing with the knobs but at the end of the day it's still a very much direct market when you're talking to restaurant owners and operators it's a relationship business and you can't discount that in the SMB space how powerful have you found word of mouth to be I mean obviously a lot of these merchants know each other especially in Boston in the restaurant space they talk have you found that to be a powerful sales driver and have you embraced it in any any special way yeah I'd say it's it's it's powerful it could even be more powerful depending on how you capitalize on on those references and those case studies you know we're very interested in not only taking happy customers you know through a stages of being happy or stages of being sort of referrals but if you look at tools like Influtiv you know tools that allow you to build catalysts out of your customer base we're certainly growing the base but I even think about what you could do for from a user conference standpoint so regional user conferences where customers are up there talking about best practices and machine learning and data so I think there's much more that could be done as the base of happy customers is built up but you could do quite a bit you know we are we are very much in the business of eliminating churn certainly restaurants go out of business and that's natural but but if they're not going out of business and we can help them survive and be happy we're trying our best to figure out all the ways in which we can do that and you could certainly incent it that's another thing you could do is which is incent it to have referrals to other restaurants great Jason I imagine the relationship with world pay helps a lot to start those initial conversations with customers or man some scenarios but what are some of the other approaches you've taken to taken to build out a reputation yeah so I mean it's you can't go after you know a huge customer base without having a couple customers you actually build the product with and so we took a very you know the tactical approach of picking three markets and then picking one customer in each one of those markets and building the product with each one of those so when you looked at as we rolled it out we picked you know call it three merchants one in retail one in travel one in online services which would be you know someone selling digital goods for example online and then we systematically built feature by feature you know with each one of those customers knowing the fact that if they wanted those features or services there was probably a good a good or a high likelihood that that feature would be usable across that different vertical we didn't take that for granted so we actually tested that and as we built each one we had a group of about 40 or 50 merchants that we were in constant contact from our old you know from our previous business that we could call on or from world pays portfolio we could go and test concept test different features or services so as an example we hired you know one UX guy and and his job was to be a you know advisor to us with that merchant community and say listen here the things we're building it actually was a great way to get ourselves embedded within that merchant community and then we made a very tactical process around rolling out the service so in our industry there's probably three major shows that we go to there specifically in the U.S. and then others in Europe and Asia but we targeted those events a year after we started with some very specific things actually getting those three merchants for example on a panel with us to talk about their challenges with multiple providers and then that agree from there so our business is much the same way right there's you can either go direct or you can have a channel business around it you know it's the question becomes you know what's the ability for the channel really to sell your product amongst other things that they're probably selling and that's the number one concern that we get you know as we kind of go through the different thought processes for how to go to market great and for Alfie unlike Toast and Paysian you're not after merchants you're after consumers and specifically perspective college students how do you generate some awareness amongst that community are you doing anything unique to sort of promote your brand and your presence I think the biggest thing that makes us unique is that our entire team consists of ex-college students with a lot of student debt and so we wanted to make a product that we all wanted to have as all of our students that is in the company in that sense that that we would have the same product and that is something when we talk to students a lot of it is also initially was direct and we made sure that people understood that we are in the same shoes as they are and so we're trying to say to solve a problem for them and it works for us so it's also good for you at the same time we also realize that we have this other set of customers which are the people who invest money in these students and they need to get a return and so obviously we can make a product that's really beneficial for us as students but it sucks for investors and so we have made sure that the way that we as a company get compensated is linked to how the investors get compensated and that forces to really think on both sides on making a product that simply works well and that story it's very genuine and we try to well we cannot do everything direct because there's some schools just don't allow us on campus so we do use I mean Facebook campaigns almost everything is online that we do it's of course effective but on our website where we try to generate traffic to we try to bring that story back of us just being a genuine company a genuine group of people that's really just trying to make something better and that people can identify with and if you compare that to the banks I mean a lot of people still see banks as evil big sort of concrete buildings and I don't know that's so far it's been helping us we've had a lot of requests for financing now we just need to get the finances to give as financing that's great very very interesting information so I think we have about seven or so minutes left we'd love to just open it up to the audience if there are maybe a handful of questions we can feedback to the panelists here got one over here is there a roaming mic anywhere I have a question for Jason so technically speaking I looked at your website it looks great from the analytics standpoint are you technically a gateway or do you get data feeds from processors that you then report on how does the business actually work sure so one of the main tenets of the business is that we wanted to have light or almost no it effort on behalf of our customers to bring in so when you look at for example the the mid.com model right where they're providing credentials or other information in order to drive that data into the mid.com site to give advice on your personal financial life that's very much the way that our business works so in mid.com's world they had a back end that was done by yieldly and yieldly basically created all those connections to the five thousand next banks in the country so we're taking a different tack we're actually we're building that yieldly version ourselves so we're going out to all the international and domestic acquirers gateways alternative payment providers whatever it may be and actually making those connections ourselves then our customers allow us access for their specific accounts into those different providers and then we pull that for them automatically on a daily basis so we are not in for example the authorization or settlement stream what we're doing is really pulling the data ourselves in the background perfect and one of the huge value ads we have is actually that infrastructure because as you get scale or even on that even for a smaller merchant just having those reports available and pulling those reports on a daily basis actually is quite difficult believe it or not because they don't show up on the same time they change all the time so managing that process actually is a big piece of how we kind of show the value to many of the customers we have today so a second part to the question now that I understand that piece of it so do you have any advice besides the world pace scenario which you explained had to do a lot with timing and relationships how do you recommend to go and maybe secure some of those relationships with the processors to be able to give you that data or for somebody else that might be doing it in a different type of business I mean the problem is we I would say for us it was less the relationship of the world paid more than it was the you know long-standing relationships we've had for 12 years in the industry right and unfortunately today that industry is you know while there is you know as people say only 200 people in the industry that actually control it the problem is that you know getting access to those people and getting them to understand kind of why it's beneficial to them is quite difficult so you know do I have a a silver bullet to say you know how are you know how if if you need to get data from all these different providers in a way that actually makes it meaningful for you to you know or easy for you to pull it in I don't you know it's a you know it's you know it's just a lot of hard work and you know the the the problem becomes there's a bunch of roadblocks over time so let's say you get access in to that provider let's you know you do it in one or two ways you're you know you're screen scraping or you have a direct API connection where you're pulling data out you know at any point in time there can be someone that you know sticks their you know nose in it and says well you know you know are you guys PCI compliant and you know do you have you know act us from this particular merchant for the you know this other merchant right so it is not a you know as I said it's a nice it's a huge moat for our business because we've gone out over the last two years and built the connections order to make it happen you know over time I'm not sure you know that some of that stuff is changing so for example that you know the regulatory environment in Europe is forcing banks to you know provide access to this information in a much easier fashion it the problem is they actually haven't mandated what they're giving you access to so and they have also haven't mandated it's for free so they the problem becomes over time how does how do you go through that and you've already seen that happen right where like Bank America for example is now starting to throttle people like yodeling because the fact they've realized that data and access to your personal accounts is valuable for them because they're screen scraping it and they're trying to yodeling has moved I'm 99% of their product is not screen scraping anymore it's direct connections into the back ends but the problem becomes you know all these banks are trying to figure out how to monetize the information and so you know why shouldn't yodeling pay for that access is they're theoretically making a you know transaction fee on everyone on everybody else that's coming in so that'll change over time but then the the real question will be you know the you know how do you then figure out how to monetize yourself in a way that makes sense yeah very interesting and I'd like to talk to you after but one more question since you do have over 200 providers that you're doing this work for globally what percentage of them have a way to provide a data stream through an api or an sxtp dump or something like that versus screen scraping being the only available so the problem is it's not as simple as that because the fact it depends on what systems you're in right so if you're a you know if you're a middle market merchant you may be going to one you know platform for them versus if you're a larger provider larger merchant you make it to another so you look at first data for example they've got seven different platforms that you can connect into just in the u.s. right then you have you know someone you know world pay same kind of thing you've got three or four vantif you've got three or four so it really just it really it's not as simple as it's 80 20 great thank you all right i think we run up against our time here so please join me in a round of applause for the panelists very interesting session thank you Jordan we're gonna go ahead and take a better family break so please help yourself to a second round of lunch if you'd like and we'll reconvene in about three minutes with our very exciting blockchain discussion and bake off and that was your dongle correct oh that was your adapter oh okay you didn't want to steal it from there again can i try as well to make sure i'm not following later of course um so is this all for the panel i'm sorry i think we're going to switch we'll probably switch machines okay oh okay when you're done i want to i want to make sure that i'm not following later how do i make sure doesn't do any audio um it might be but don't worry about it actually maybe you should worry about it oh we don't we don't need excuse me i know the audio line works i just want to make sure that when we when we go to it that we plug the audio back in right so yeah we're actually going to end up needing the uh to mirror it and you say you'd like the note at the bottom or so great so it should it should be set in we'll help you all right are you going to be the first up here for um yes Okay, so is it going to be this? Yeah, it's going to be, it's going to be a lot of work. I'll hear you just play, you know, so that's a positive person. And for anyone who's not familiar, they can start off, basically. I want to be like a reviewer, and talk about this. Here's an idea, like, what is pretty good about that. More like, so maybe 10 minutes, but it's going to flow well. So we'll have, like, 10 whole minutes to share. I mean, it's weird. We have to do one more time to start the session off. What is watching? What is PCI? And we'll come to me and Mark. The other Mark. And we'll show you an example of friends that have been watching. Then we will interview Tommy, and he will engage in, and we'll see how we can do it. And by saying, yeah, so what I don't want to do is, like, have to drag it up into a little tiny corner. So that's like, is that okay? Makes sense, you look worried. Oh yeah, we should put it on the slide so we don't forget it. Yes. Is that right? Which one? Okay, yeah, that's great. And so when I plug back in, it's just going to jump up. I should remember the needed information. If it doesn't, we'll be here to help. Okay, great. Thank you. You provide your own soundtrack. Thank you. Oh, actually, we'll plug it in first. Sometimes it gets confused. Hi. What is this? No, this is... Oh, reading off of? I would say phone is best at this moment. Yeah, because we're actually mirroring, so it's not even... Yeah. Cheers. Yeah. Ladies and gentlemen, if I could ask you to please grab your seats. We're going to go ahead and get started. Thank you very much. We're enjoying a terrific day of programming and discussion of Fintech and innovation and payments. It's been a true honor to host this, and I want to again thank our friends at MIT for having us here. On behalf of ETA, I also want to recognize and acknowledge and thank for joining us. It's a true honor. The former prime minister of Haiti, Mr. Laurent Lamotte, is here. And I want to thank you for being here and joining us and recognize your innovation and participation in the great world of Fintech in addition to your legacy of terrific service to the people of Haiti. So thank you for being here. I'm going to introduce as our moderator and leader for the reminder of the afternoon before we spend some time together over cocktails Daza Greenwood, who really is the reason we're here together in this beautiful building on this beautiful campus. Daza's been a great partner to us at ETA. He's a lecturer and research scientist here at the MIT Media Lab, I should say. And his research is focused on just a great variety of hot topics in our space ranging from big data to identity to trust. And of course, he does a lot of great research on blockchain innovation. He also in his spare time, and I don't know when that is, runs the civics.com consultancy where he does a lot of work on behalf of his clients on the business law and other aspects of our innovation economy. Yes, BLT, that's right. He likes saying BLT, he does. I always think of a sandwich when I hear that, but it works. Yes, it is a delicious area of practice. Daza is going to lead us through some really interesting companies that are doing some great work in blockchain and without any further ado, and again with our thanks for making this day possible, Daza Greenwood. Thank you. Thank you. It's just good. And I hasten to add that Electronic Transactions Association has been a terrific partner as well. And what a pleasure it's been collaborating with you and your policy team and operations and the companies that you've introduced us to through this process. Seems like a lot of good things have happened today and maybe we got some great starts as well. Also, I appreciate your recognition to me for this building and everything else. I wish I could accept it. It's Professor Sandy Pentland who isn't with us physically here, but this very, anyways, is the house that Sandy built and Nick Negroponte and others. And he's a professor that runs the Human Dynamics Lab where I'm a research scientist and it was his call to make this space available for this event and to basically make space to begin a collaboration, we hope, that can extend beyond today, but absolutely to allow the speech readers today. So he asked me to say hello and he wishes us the best on all of this. Now, what's about to happen, I would say in perhaps Media Lab style, is itself somewhat innovative. This session was built, you might have noticed, as the great blockchain bake off of 2016. And the idea I had that I wanted to test here was to see if we could engage many startups and companies, open source teams who have blockchain enabled payment solutions to come and demonstrate their solutions and rate them. And, you know, after doing several different types of invitations and with some great help, we got, is that agreed to come to show things that were either not really blockchain or not really payment. And there's Coinbase and there's some exchanges, but honestly, we had a tough time finding a lot of companies that could demonstrate blockchain enabled technology that resulted in legal tender payment. So this, as David Schreyer said, is a new space, genuinely new. And the attempt to find specific companies that were at the point where we could do an apples to apples comparison in a way that eventually could perhaps show a sense of competition in a market or standardization or certification really demonstrated to me that, okay, this is early technology in commerce. And so what we're doing now is we're pivoting a little bit from a competition to more of a set of demonstrations to show you a what is the landscape of blockchain and electronic transactions more broadly than blockchain enabled legal tender to like ACH or credit card or PayPal or something. For the most part, we're going to show you more like electronic contracts, smart contracts, some other types of legal instruments, and then we'll show you how these things can be integrated with blockchain so that you can get a sense for what the technology does in the underlying properties and maybe begin to think in your businesses and in your sectors, are there some potential wins for the capability that we'll demonstrate. So that'll be the first part where we just kind of show what it is and describe it. And then we will do a deeper dive for, I think, YUETA, Uniform Electronic Transactions Act and ESIGN electronic contracts, electronic signatures, electronic transactions are very much part of what the bread and butter of members of the Electronic Transactions Association are about. And we'll show a direct demonstration of a corporation in a box in Delaware and an electronic contract automation flow that's very web-facing and demonstrate how that could be integrated in your company's back office workflows or in your markets with blockchain and then that will bring us into why it is that the implications are such that some law... There are legal implications, business implications, a lot of technical implications for the way that things are currently structured and Congressman Tricard has demonstrated some real leadership here and so you've probably seen on the most recent agenda that we... that we'll be kicking off an engagement for legislation that is bubbling up on the hill now. So more on that at the end of the session and then we'll have... and we'll talk you through some of the more detailed issues and options and problems and prospects that need to be addressed or are beginning to be addressed legislatively and regulatory overlay soon and then begin to talk through and get actually feedback and advice literally as part of a longer-term engagement with the Electronic Transactions Association and then we'll hand it back to Jason. So that's what's happening and I think the best thing I can do now by way of describing what the blockchain is and giving examples of why the Media Lab and MIT has been marshalling so much time, energy, attention, resources focusing on this at such senior levels and right through our organization setting up a new initiative with Digital Currency Initiative would be my friend and colleague Mark Webber who is now got a seat here in the Media Lab as a project manager for the Digital Currency Initiative and who is an incoming MBA student at the Sloan School of Management and who can do a good job of describing in a more canonical way what is the blockchain and why does it matter from a Media Lab perspective at a lower level than you heard at the keynote from David Shrier and then specifically give a couple of real-world examples of things that we're doing here something with the Government of Mexico and specifically what it is and then another example in the Dominican Republic so that we can give it really grounded in what we're talking about as we then apply it to your business with that. Are you ready? Okay, take it away. Thanks. I'll set a little timer here to keep myself honest and I get nervous behind podium so I'm just going to come out a little closer to you guys. I'm delighted to be here. Thank you, Deza, for putting this together. It's late in the afternoon so I'll try to keep this short and sweet. I'm a project manager at the Digital Currency Initiative. I'm just about to begin my management studies at the MIT Sloan School focusing on finance and fintech. I actually come to this space for more of a political economy and development background. Most recently I produced a documentary film called Poverty Inc. which is a critical analysis of the way that we in the West go about fighting poverty worldwide and some of the unintended consequences that flow from that. One of the key themes that we tapped into and we shot over 200 interviews in 20 countries over the course of like seven years. One of the key themes we discovered was exclusion. And we have a chapter called Excluded. And this chapter focuses on the fact that a lot of people lack especially on emerging markets but also here that one of the systemic causes or underpinnings of poverty is exclusion from participation in networks of productivity and exchange. They can't get in or they don't have the institutions of justice things like what we take for granted things like property rights and rule of law and formalization. And so how does this connect to blockchain? Well a few years ago probably in 2012 actually I was talking about a website and he was showing me something in his basement and it turned behind me it wasn't anything to be sure of me and it was this world of modern computers and I was like what is that? And he goes oh it's my bitcoin mining operation and I was like what is bitcoin? So I explained that to me and I was like I don't really understand how it's going to have any worth and I just kind of moved on unfortunately and without giving a whole word of thought and it wasn't until a year or two ago when I wrote an article about Hernandez Soto and the potential implications of blockchain technology as a secure ledger for property rights in emerging markets. Then I said I had my aha moment where I said oh my god if you can have a secure transparent ledger of everyone's title this could have profound effects socially it could have had a profound effect in governance and it could have had a profound effect on the whole financial system which is really rooted in assets that are used as collateral to open up credit flows and this as we know is not just about markets it's about everyday people and everyday lives and so that was the right aha moment when I started I connected with the digital currency initiative the rich property yank and I had Michael Casey's book he's a senior advisor here and we just hit it off and so we've been working together especially for the past this past year started to know an engagement we had if we could not tweet or post publicly anything about the site because I want to tell you about some stuff that's going on but we don't necessarily want press for what? because one of the things you realize in this space is there's a lot of hype and talk and they find excitement and we're doing this and they put a list of a blockchain and a lot of a blockchain and a lot of a blockchain so we're a research institute and we really want to you know we don't want to help we just want to do our work and so we don't want to public promise and under deliver so I'll tell you about a few of the exciting things that we have is there anybody that's totally in core last what Bitcoin is in blockchain okay so we can kind of go into its applications we're in core with it as a currency and a currency does underpin it's security that's important there's a lot of there's a lot of there's a temptation right now to just completely separate blockchain from currency but as I've worked with research now I know I've said I've had consensus protocols for 30 years that's not not what's known as a security but it is ushered in by the currency side of it by the game they're like figuring out how banks and incentives come into play not around this ledger to be so free and incorruptible and nothing is truly immutable we hear that word a lot like immutable it's an immutable ledger it's immutable ledger nothing is perfect, nothing is immutable mathematical it's possible to compromise but it is pretty insecure and it hasn't been hacked yet and that even if the ledger does get hacked the history really can't be deleted in the same way that it can be on centralized databases so security what it is meant for for social impact for economy etc I'll give you three examples using engagement with the government of Mexico right now which is the project that I'm charged with leading the first of those are allowances Mexico's allowances from the US they don't paste their AR revenues so that's the way they're coming into the country allowances a lot of the receivables as you can imagine are low income Mexicans so how do we help there's two things we can we might be able to use but crime as a payment for our blockchain in general with to help these people get rid of their money so reducing their fees this is at the heart of you know the history of electronic transactions but the other is how do I allow them to send money more frequently so that they don't have to sell out in certain amounts of money but they may send some scroll supplies I can just send 10 bucks or 20 bucks and what this does as we say in development studies we've seen that one of the biggest struggles low income people have is not just how much they make but it's the peaks and barriers of income it's when they're in that value and all of a sudden something important comes up they don't have the cash on hand to get what they need so how do I slow that cash flow by allowing people to send money more frequently well one of the ways that we'll explain this DCI this is more of a connecting the bats row this is like how can I connect a Bitcoin exchange in Mexico City which is already exists with an ATM company a Bitcoin ATM company in New York New Jersey which already exists with a financial literacy education for non-profit for Latinos which already exists how do I connect those dots and then also are faced with regulators and legislators who are very compliant so that's one of the values we're playing is a dark character in helping organizations and companies imagine how do I work to make the most of these underserved and open half of unbanked people a second one and related to this before all is property rights in not only countries in some cases 80% of people don't have title to the land or clear title anyway but I may have but they won't accept it because it's either as collateral to access how do I need to invest in a tractor or what do I have to do this is another thing if a rich private agent got an ethics they'll say you can't start in a company and so how do I reserve ownership is one of those things that if you can hash to the blockchain title records of things and then banks can very easily use those hash values to pull up the information associated with it and enter a poll and open it you can radically change the risk calculus for a given commercial institution to engage that person in that country and offer them financial services so it could have an effect on rates and interest rates that people are offered it could have an effect on the productivity gains that we might see in agriculture etc that's something that's another part of this going on in the Republic of Georgia in Honduras in Mexico is interested in Honduras and even in Sweden so it's that I'm not sure if I'm going to control it but I don't really have the right bank in the world but they're still invested in us because they think maybe it could even be bought out and maybe it can be a standard bar for the rest of the world of what it could be there's my time I don't really know about what it could be because this is an exciting one too check it out I'm going to show you which is complexities into what happened and I don't think that we can solve this problem overnight but one of the very specific projects that we're excited about with Mexico is the opportunity to help them digitize their warehouse receipt system so we have our warehouse receipts in our paper right now and one of the warehouse receipts is for those sort of buying and they're going to sell at the doorcaps and they pay to have it stored in the warehouse in return I'll do a piece of paper that says I have X amount of green in storage at this government authorized warehouse I can even use that paper to be done in the grocery store or I can do a bit of digging and pledge it as collateral get pre-owned to the paper we're going to bring it because a lot of us this paper is fraudulent because people buy it from the store from land and used against pretty well so we think we have expanse to use due diligence but there is also a potential by the spring program you know you're in a warehouse spring and you're working a user for us at the same time and you're going to get the same asset in other words instead of a one-to-one matching it's a two-to-one and I'm also going to be mad I'm going to have a a fair amount of miles where millions of barrels of assets are backed by nothing and just to rule the ground channel there is a two billion barrel warehouse fraud now this happens in a warehouse it can happen a lot it can happen in intervies financing this is so prevalent in the financial system in terms of whether it may explode until a disaster happens so in that way they could pull up in a computer and sell it how much green is stored in warehouses in Mexico today and how much was stored yesterday versus how much was stored last week what fraction of a barrel has been collateralized what fraction of a barrel has been secured thousand and sold up a fraction of a fraction has been traded so it's hard for them to have a direct relationship with me and our friends nor do I say I need a second-hand axe over here but they literally trust the money to send them up when I say I have what you can act as as escrow and the warehouse can act as that but I don't want a third-party system if the security I can show I have very good personal property because it's been a very, very bad system which has gotten a lot worse and then when I pay that for a month maybe it could be a little across but it could cross a currency and everything is trivial automatically for the larger to the last step further when I finish up here you can even imagine an MIT extension of this in a little space where the participants can imagine the participants that are keeping the level of their own machine so instead of just relying on the right-hand smoker to write down the right weight of their grand and autonomous machine the machine itself also participates in keeping up the ledger so the machine has the information that it weighs from its lasers and they don't have pretty advanced machines in some of Mexico's warehouses the machine itself is part of that ledger so that the machines and the human beings are keeping each other honest if the machine makes a mistake the human being can display it if the human being is just consistently running the business it's very bad for us as well so you can imagine a world where people have more access to participate in the work that are currently and in other social institutions we can think of how many things that we need to have ability or money or room to help participate in I can also accept a micro-generic level that would be nice to increase the standard risk it's very important to keep in mind that this is a massive technology and I think it's very valuable to start thinking about this as something that can go far beyond just payments and currencies and Bitcoin so thank you for having me I want to introduce I'm sorry what's your last name Kevin just going to give a little introduction so thank you for your time I have to get going unfortunately if you're in the email or if you want to come to our DCI website my email is I'm Dan Webber at MIT.edu it would love to know what questions you have in this space what you're getting in this space and stands out with you represent significant investment to launch such a thing that you just heard about and if you click on research and you can find out more about what you just heard about and here's the project you're about to know about blockchain brokerage which connects to some of the demos that we will show you next and we think to your businesses so without further ado thank you Baza thank you so much to Amy for her who did a lot of work in making this possible and to the ETA and everybody else who's been part of this so I am going to talk to you very briefly about something that doesn't matter working on today both the digital currency initiative and what is the blockchain data bank so the idea of this blockchain data bank is to cover both of these in this space blockchain tools and resources to prototype an app that can be customized and then test them to assure transparent payments and to provide identity in the blockchain so as of right now we don't really know what that looks like we're looking at different kinds of companies that have already been successful at this and just trying to see what we can actually do here so as of right now currently we have 1 million people living in the Dominican Republic who are undocumented so they live without documentation perhaps to have a prototype design that will support and extend a community savings bank not be able to identify the Dominican Republic and help me and this is a bank that I called the World Bank about the year 4,013 so the majority of this will begin with government identification so the money lines of credit we actually think that there might be a way of addressing banking and authority issues using the blockchain technology this is a class that's not limited to consensus I'm not sure if anyone here is familiar with consensus to have a report product that I've come up with works back in the you know that's known as evidence so rather than having a product that I came up with first so I always have a good friend of the Dominican Republic on November 1st to just be a testing on this prototype app thank you so much and feel free to get more involved and read about the project at www.mit.edu slash blockchain.org thank you this is an example of a true rapid product also a perfect market that we're looking to do so one of the reasons why I asked K-1 to present that wasn't because it's the biggest project or has the largest institutional support just the opposite this is something scrappy that we're doing through a couple of hackathons and with tools and open source code and protocols that are working around and spreadsheet technologies and among other things some of these circle stuff perhaps from paper to something that can be seen in a dash and established risk scoring and some other things with data and so the reason I'm highlighting that is between the two of us I think that's 100% of the decision makes for a project pretty much and so if you see something here that you've been fixing to try out or that you want to explore within the context of your companies or people that you know of and literally contact K-1 like work all the way in front of the public for six months and want to send her down there with a nice whipped pack of technology that's appropriate to the situation and that also requires some field testing that people want to learn about so thank you for this commercial announcement this is your machine right okay great can you set up what you're about to do so I'm going to start the bail what's coming now in the U.S. context with the next generation of electronic contracts electronic signatures and electronic transactions and you know I guess for the next six, seven, eight months I'm just going to leave to you the electronic signatures and the whole national commerce authority and the Uniform and for the electronic transactions act at the state level and the transition from more or less paper and paper equivalents to the authoritative enforceable instrument being digital the same pattern is beginning now and so the technology you're about to see is an example now of the full absorption of a transition to the legal instruments from what we made what we read in each setting and what is giving rise to the need to take a closer look at the existing legislative and regulatory framework and also policy and procedure framework to make it ready for the new capabilities of the tools of blockchain that people are exploring now there's an innovator and a startup corporate attorney who's got I'm just going to call it implementation although it is a process of what we have in mind with UEDA and with eSign and it's a perfect wrap to the issues at hand that we want to engage you on so without further ado Mark can you show us the hot stuff Hi, I'm Mark Woodward Has anybody in the room ever incorporated a company? Great. Has anybody ever made a chart from the incident? How long does it take? Months? About at least weeks? Months? Yeah, I think there's a good range and where do they cost? A few thousands of dollars? Tens of thousands of dollars? Maybe hundreds of thousands of dollars? Okay, and now next question How do we incorporate a company today? Okay, we're going to go through the questions So I'm going to go over to bq.co Log in Let's see Actually I'm going to Okay, I'm going to log in so I'll just go to the dashboard I'm going to need your help a little bit though I'm going to hit incorporate a company Okay, first thing, this is just Delaware We're going to do a corporation but we need a name That's a great name Okay, I'm going to submit that It's Delaware, right? It is Delaware, yeah So The process of doing these transactions is very messy There's lots of negotiation There is a lot of friction And so the aim here is to try to course this into a simplified automated process So we're going to have an incorporator Since I'm going to sign it I'm going to be the incorporator And I'm in New York Okay, now I'm going to make up an address really quickly 75 am first Just at the top of my head Boston Massachusetts 345 And add that contact Okay, I'm going to just use the same contact information there Okay, now we've got basically just about all the details that we need. I'm going to leave all these the defaults A thousandth of a penny par value 10 million shares authorized order certified copies and good standing and we'll get priority with it I'm going to pick a registered agent These are the ones that they've set up relationships with so they can automatically receive the information and email it to them but it's done automatically So what's going to happen now is that a document is going to be generated with all the data in it So as we move forward in these transactions, much of the world still wants to see their documents and it's like PDF, Microsoft Word Delaware requires you to mail in things or fax them in They don't have an API So a lot of the effort here is to make the technologies or implement new technologies that integrate with the older technologies So we generated this document over here You can see the name of it You can see the information is in here My name is down at the bottom, the address is there Okay, and we're going to sign it Okay, I'm going to have a new signature block Just do this I'm going to sign it Stop here briefly and talk about Let me do this as well Okay, verify the number One, six, seven, four, five, eight So there's a lot of things that have happened here that will make up this transaction We've entered data We've selected a number of shares We've said who's involved We've generated documents I recorded a signature You can see the signature over here Each of these pieces can It's evidence If I hover over this, you'll see also I know the IP address of what signature is reported I know what machine it was reported on And the other kind of information here Much of this information can run through hashing algorithms What that does is you take the file or you take the information Put it through the algorithm The algorithm gives you a shorter string You can take that string and you can say This represents this file No other file could generate that string So that's evidence That was the actual file that was signed at the time here So you can see this information So this is the SHA 256 algorithm This is the number that represents the document The word version of that document Here's the PDF version of that document You can do the same thing for the underlying signature You can do the information for Here's the leader block that said you're signing the document You can hash that as well You generate a security And you record that on the ledger Information about that security can also be hashed So Let's move on from there Okay So this is one transaction How am I doing that? Can I just ask since you look Who knows what SHA 256 is Which is not sure what that means Great So Let's say the play will do a little color Because it's monitors Demo, demo, slide, slide Numbers don't know So this one I want to highlight Is Good change There's a lot of sign And lots of other great companies That are doing great stuff Which is needed for electronic signatures And contracts In perfectly good ways Something that's different about this When it looks for Harbingers of What I would call The primitives basically This is like the amino acids Of the proteins of the DNA of life Of this thing The signature Of the hash of each of those items Of course Word document which is what the reality is For most lawyers and business people The PDF The underlying data and XML When you said the header block for signatures Like the words that the person saw Clicked, I agree For MTC, consumer protection Replant something in court Where you kind of understood you understand These are the fundamentals Of what you need to Preserve evidence of what occurred Not just a part of law But just as a matter of code As a matter of course The kinds of practices you would need The building blocks for them Were laid out pretty easy to use here But the reason I want to highlight Are these days A freshman that can help me make a big picture That is just showing What each block is and how they're chained It's all about those little hashes Like the SHAR256 thing, the message digest Resulting from the algorithm Is fundamentally what each transaction On each block is comprised of And how you stitch each block Together with the hash of prior blocks And put it in one of the Feelings basically in each block And just stitch them together that way If anything's been tampered with or changed Sure that it hasn't been, in fact That means what we have here is an Apples to Apples We have the same kind of thing In terms of like the data type The string type and what it represents Now for back 40 Kind of like stuff for under-corporation To Delaware or any state Contracts, just this moment Unstructured transaction to wrap alone Auto loan, get last week Of a mortgage Whatever What you would want to put on a blockchain Or point to from a blockchain And how to get the cryptographic Security and integrity for evidence Of what happened and then some of the automated Processes that you can do with smart contracts Are now Adjustable forward and backwards And so we haven't fully done that There's no company that... There's actually some startups that do stuff like that I think this is what I wanted to highlight this part to you So as we start looking at What Congress is saying and what other just things are investing And what we'll see at Media Lab At MIT for the digital currency initiative It's basically that we knew life would Firm and DNA would occur here pretty soon We had all of the primordial Lose of the last few years We could tell it was ready for this to occur And now like you're seeing Lucy, basically This is what it's going to take to integrate Blockchain and take the capabilities to a business In a contract Really really trying to get the best So So I'm really trying to understand How And or what are the fundamental differences Specifically To an Adobe Ecosign Electronic signature secure document That also has an audit trail Appended either Which is also provided In a step by step Type of piece So I'm really trying to understand That big big big difference to get that Maybe I'll take that Using an e-signature integration That you could just integrate into their API And go through the steps and it's very nice It's definitely a great UI And the process is very smooth But if you have access And push transactions through an e-sign Engine What is the core difference between an e-signature Document and a blockchain I don't think there's a lot of difference This piece of it is e-signature And it's not Different from what you're seeing from Ecosign I don't think we have a Blockchain implementation as well But that's the illustration here So what would be the So what's the difference between An audit trail of an e-signature Document and the blockchain transaction What is that difference Well they're not mutually exclusive An audit trail is Basically At what point did the document Get created, at what point did it get Looked at At what point did it get signed What point did it get downloaded That's the audit trail Correct At what point was it put in the blockchain That would be a piece of the audit trail Okay So you're asking the right questions The reason I highlighted that Was because I don't think it is different in kind Something that's a little different when I've done E-signatures, solutions, commerce Or open source things Sometimes I'll have the hash I'll create it Or I'll use other technologies But this is the basis of the standard Where legislation and regulation Eventually indicated that Whether you have a hash like the document Say a chain of custody or audit trail Depending on the context or other things It's available on a blockchain Like the statute in Vermont that David Trier mentioned earlier It changes the evidence code If you can show evidence of a fact Based upon its entry into the blockchain It's self-authenticating In the rules of evidence of the state In the federal rules of evidence You skip some real costs in terms of expert witnesses Improving the technology Understanding idiosyncrasies of that system Opening up yourself to who knows what's going to happen next With the other expert Just self-authenticating What was the temperature on September 13, 2016 XYZ If you enter certain things with enough reliability And proof behind them We can take them as fact I believe that Here's an example of an easy way to do the integration Which we'll show you And then all the vendors can do that New vendors now have the basics of a competitive Open market The ability needed under regulation To perhaps transform some things So we needed some subsets Slowness now And to perfect A potential movement Of relationships Perhaps going much faster In a way that doesn't reduce Security or reliability Potentially, usually someone as faster is more dangerous This may not be a time That's my only mistake on it Okay Oh, you already have one I'm going to finish this up here I'm looking at send I'm not sure if I could Either we have to resolve I'm not going to pay for it either But since that's a transaction That's going to improve the work I put it together to do it that way But there's a lot of transactions That should be done this way And unfortunately, you can't Reforce the mod The tools that make it easy To put together Your own transaction So I'm going to do Very quickly what The first part of what this might look like So here's a base contract It's a contract for sale This is the way layers maintain their forms And search for backings And replace that with real information So turn this into An automated contract here The trick is just to name everything In the field and separate it with underscores Okay, so what I would do Is I go vfield date Go vfield Name of seller Okay, and I can go through that With the rest of it The way you would do a signature Is you would just call it dc You would do it Fired You can also add a few things in here Let's say we put chained Tables These are examples of name value pairs So we had a two day conference on electronic contracts Like a few weeks ago Where there were slightly different syntax in the other project But the same nature of the thing Which is what allows you to turn these contracts To data And workflows that are interoperable So this is many value pairs And it's like the rudiments of how to cause Intertable blobs of data Locked in a document to be Free and computable So I'm not going to finish this one I'll go to one that's already finished Or prepared You can see again It's just a Microsoft Word document There's a buyer, seller, number of errors There's a list Of reimbursements There's an indemnity clause By wrapping it in something that ends in applicability That makes it So you get a yes and a switch You can take the entire pair of that amount By saying no to that So what I'm going to do is I'm going to Pull this onto the application Over here And the software will Read that document, pull out everything that says V field and V sig, figure out what the structure is It will generate Dynamic code for hiding and showing That It'll make it so you can push it through the signature Solution as well So here's So we've got these fields This is for our date The name of the buyer is Seller We had a list here Of reimbursements We can add as many as we like in there So I'm out of time So I'm not going to take you through the rest of the steps You can take it through the data room Company name gets filled out Can you just describe the punchline? Yeah, so I'm going to move back over to Business So if we go back to this This certificate incorporation That you just saw That would be up here The electronic signature would show it as well And once it's signed You'd get another certificate that looks just like this Okay So let me download The document here I've got a URL for this This will give me a PDF copy And I'm going to save that to My desktop That's called blockchain corporation Okay And I'm going to go over to I'm going to go over to a website called Stanford IL Stanford uses a different algorithm than I use I use SHA 256 There's a number of these algorithms But what they're going to do is I'm going to take that contract Again, you can see Okay, I'm going to pull it onto their site And What they do Is they run it through that algorithm They give you a number right here So they gave us This is the SHA 3512 algorithm They give you that number And they record that immediately With the blockchain Or at least they send it immediately The Bitcoin blockchain takes a little bit longer You can see it's not here yet But the Ethereum one is here Let's take the name of the transaction I'm sorry, the transaction idea We'll go over to another website Ethereum Explorer We'll type in that transaction Okay, so here's the information This is actually a distributed blockchain That's on everybody's computer Everybody that has a copy of the blockchain Would have this information Now And I can throw a little piece of it So it's easy And you can see that the number down here Up to about there Is that same number recorded So that's what it means to So we have that fingerprint The fingerprint is now irrevocably stored Into the blockchain And you can point to that and say Look, I got the document I'll show you, I'll run it through the algorithm And I'll show you on this d