Ben Golub, Storj | CUBEConversation, April 2018

[Music] hello everyone welcome to a special cube conversation here at the cubes Palo Alto studios I'm John furry join with me for this special cube conscious too many men with witty bond and the cube co-hosts as well just up at Amazon Web Services summits do great to see you again our next guest has been Gallup who is the executive chairman and interim CEO of storge pronounced storage so it's a it's a really hot cryptocurrency blockchain based storage solution I should say decentralized store resign the same things but tokens are involved yeah encryption good to see you great to see you doctor CEO and now advising it may feel fun it's a venture partner and also interim CEO of a hot ya really exciting company and I think I really couldn't talk to you about it today let's just jump into it so I'll see the IC o—- crazes is awesome and you know we've always speculated that you know the blockchain and the decentralized the applications are coming is going to be the real action but yet the it's gonna create efficiencies where that's inefficient sure and our venture capital is one of them and that's why the IC o—- crazy is gone people are raising a boatload of money that they probably wouldn't have got wouldn't have gotten yeah no dilution things like that so it's interesting yeah it was an update on store J or storage yeah how much did I see oh they raised the white papers out there its peer-to-peer give it quickly a minute to explain with what the company is doing yeah well I guess I probably start by saying that I think that blockchain is bigger than just cryptocurrency and decentralizes is bigger than blockchain and and storage is primarily a decentralized George company right so we're about to centralize the apps and the whole thing would absolutely work even if we were just using dollars but I think it does make it a whole lot more exciting right and so the the company kind of unique in the now unique in the sort of crypto space and that we actually had a running service that was providing real value before we did the large token sale and the token sale raised about thirty million dollars unfortunately they took about ten of that and about ten of that in aetherium and bitcoin which rose up so you know there's a good deal more than that right now to convert the Fiat car and then they converted to Fiat along the way I have twenty thousand seven thousand see yeah yeah so you know you didn't sell everything at the peak yes so we we having mini blockchain and yeah crypto or token based economic kind of things but the real real question is okay what's happening now we know the actions been on the infrastructure side if you look at all you know all the top hedge funds poly chain a amongst others they love these deals because it's infrastructure yeah is that where the action is and and and how are you guys looking at that because at the same time there's a wave of decentralized applications also known as d apps coming right so there's a there's a relationship going on between how fast the infrastructure can go right and then how applications gonna work with your on chain or off chain dynamics sure sure so may be may be helpful to sort of give you a sense of what is that we do because I think that if you if you do that then I think it makes sense in the context of decentralized infrastructure decentralized apps but also actually traditional infrastructure as well so you know I've always been searching for a company that I could describe at Thanksgiving you know I've never succeeded so I always end up saying that I'm in computers and fixing somebody's printer but you know I guess I guess you know if I were to describe storage at Thanksgiving I'd say it's basically the Airbnb of storage or the Airbnb of disk drives so you know Airbnb people have lots of you know condos or vacation properties that aren't being used all the time and so you know Airbnb brings them together people wanna rent those and yeah there's a largest hotel company in the world without owning a single property and we're kind of doing the same thing with storage and that there are you know there is first of all there's this explosion the amount of data that's getting created you know would fill a stack of CD ROMs to Mars and back this year yet the price of cloud storage hasn't come down and 90% of all the disk drives that are out there I'm sorry are only about 10% utilized so seems like a like solution it was a problem that needs a solution and that's what we've done we basically brought together a very large network individuals and companies that have spare storage capacity and match them up with people who need storage the really cool aspect or the main cool aspects about it but you know one of them is that basically if you want a store on the storage network we take your file you encrypt it so we never hold the keys you encrypt it it's all scrambled up we break it up into you know between 20 and 80 pieces and we spread those out across the 150,000 or so nodes that we have in our network so it's super cheap but it's also super secure great performance because the data is way out at the at the edge and super available because you know you know there's no storm or power outage or you know idiot tripping over a power cord that can take out take out your storage so Ben you touched on you know first question I was gonna ask of course you know trust in security storage I absolutely have to worry about so sound like they let that to the core but there's a number of dynamics coach yeah yeah yeah you know object storage was you know great let's you know we spread it out let's make it more decentralized but most of the kind of core storage industry it's you know speeds and feeds and latency super important when you start getting to distribute it architecture I worry about that latency so what are the kind of the use cases what are some of the that the key customer issue is is price a big piece of it or you know what what solutions does storage solve that well you know I you know I always said that said when I was at cluster which was a storage company you know that there are sort of four things that mattered in storage right you know there's certainly price there was security as in I don't want anybody able to access it there's availability and I'd never want to drop or lose files and finally there's performance you know how fast I can get it and so for a huge range of use cases that involve files basically everything that object storage is kind of used for today the design of our system is actually much better right because you've you know because we've encrypted it locally and then spread it out you really can't attack it right I mean first of all you'd have to figure out some would-be attacker who want to find one of your files in the storage network would have to figure out which of the 80 or the 20 nodes out of 150,000 it's located on if they found one of those and they got got you know the the small portion of the file that's there they wouldn't able to do anything with it cuz it's encrypted even if they were to somehow able to decrypt it by stealing the key from you not from us so encryption and immutability and immutability right right so you get you get all of that and so for the security piece it's great for the availability piece ie you know never lose a file it's really really good right because if you just look at the math right the chances that somehow you could basically lose 10 out of 20 nodes and still be able to recover your files and you know all of our nodes are run by different people different power supply Hey so then you guys how many nodes are in the network now you said 150,000 now run by 70,000 farmers is what we call them right they're not miners because they're not just solving math problems they're actually producing something of value right 70,000 farmers and then we have on the network right now over 50 petabytes of data which is a really large amount and yet we don't run a single datacenter as you guys have raised any venture at all is it all ico problem so there was a small seed round that was done sort of before the crate but other than that it's uh it's all how many people are working on the company about 225 so you guys are like a classic startup and no the working product yeah how does that look like now is it yeah on the blockchain is it off the chain how is it yeah yes anyone so well so yeah so describe to what the product does right and so far nothing that I've described to you involves blocked in the way the economics work is that as as a as a user somebody wants a store on our network you know you can we quote a price in dollars if you had to pay us in dollars or in the storage token and as a farmer you get compensated with the stored token and that's done of course using using blockchain we're actually part of the etherium and we're an EEOC 20 gr c 20 yeah at the air c 20 token there are also interesting things though that we are working on using blockchain for things like you just mentioned right data integrity so I can make sure that let's say I'm doing a snapshot of a data and I want to make sure that it was exactly what it is nobody can tamper with it etc then that's a perfect use of blockchain but using blockchain for this stuff I was talking about before like figuring out where the shards are and making sure that their uptime in row level that's actually stuff where blockchain isn't the best answer yeah Ben tell us a little bit about kind of the customers that you find them because you know storage administrators yeah that role has been changing a lot but the typical storage administrator if you tell them oh yeah I'm doing some you know distributed things somewhere else paying in cryptocurrency they'd be like are you kidding me I want this thing that I can lock and hold there's you know I think I think this is like any anything else that there's there's there's an adoption curve right and right now it's clearly very much early adopters and actually sort of similar to docker and similar to cloud in general its developers were leading the way right right so developers are saying oh wow I can write to the storage network in the same way that you know I would have written to s3 only it's cheaper for many use cases more performing and and not centralized right so I'm not trusting you know one cloud provider so for certain use cases this is another certain cloud native apps that you're finding you know have strong affinity here yeah so basically what what we we have affinity with right now let's be clear this is early right this is early days so you know I wouldn't recommend that people store their most sensitive data on this as in but not oracle certified yet as well maybe yeah yeah but but basically anything that's involving a large file that you're not writing to very frequently but you're reading a lot right or that's getting read by lots of people around the world we're a really good solution there's one of things I think I imagined you so we've got a hundred fifty thousand notes they're located in I think it's now one hundred and eighty countries right and all over the US right so so that if you want to get your data close to the edge like if you're if the people who are consuming your data right or really close to the edge this is actually really good and because it spread across so many you get the benefit of parallelism so it's super fast in addition to musing for safe and super secure how's the farm how does it work for the farmers because yeah you know one you know we have video files so we would love to like spread our video files on the storage a network storage network so I do a special deal for you of course yeah get a little token action going on both sides poins yeah but yeah the availability things concerns it whose computers are being stored on is it yeah extra capacity is it servers is my yeah yeah I mean pewters and no what's that is that kind of model or sure so so basically yeah we we you know just as Airbnb measures reputation we measure reputation – right and so you don't have a good reputation in certain characteristics we won't we won't send data to you and so what it basically means is you know you've got to have you know dedicated hardware and a dedicated connection right so we do have people who are you know who are running things in their home but it's you know it's not a laptop right it's not a long a laptop it's not on your phone right but you know but if you have a disk drive that that's connected with reasonably high capacity and reasonably well connected right then you'll establish good reputation but we are saying is we're addressing a lot of universities a lot of small businesses some data center operators who have spare capacity and actually or just want to use us like as be both a farmer and a user right so backup and get stuff on their capacity that is a good idea and interestingly enough we also are getting a lot of people who were Bitcoin miners and bought equipment which is good quality equipment but there's such an arms race in doing that right they're banned because it's too hard for that's make it too hard to make money right and you know very expensive specialized equipment and in our case basically high quality you know general high quality equipment works well what's the profit model what's how do they have farmers make money so if I'm gonna say my take our videos as NZ yeah yeah yeah so I paying you guys and you're paying us again you're paying us either in dollars or or or tokens and then farmers get compensated in tokens and right now about 60 cents on every dollar goes to the farmers and you know farmers get more get more storage based off of their reputation and you know we charge people based on both how much you're storing as well as how much bandwidth egress that you're doing and we compensate farmers exactly the same way that's the panel throw through consensus protocol you guys have yeah yeah yeah so the payment is and and the payment and assessing reputation we actually use sort of just good distributed blockchain as well there right so he so you're not counting on on storage to to to be in the middle there now with the remaining 40 cents which i think is actually a really interesting part so obviously you know we keep some of that we put some of the pack into the network but what I'm excited about is that this is now a way for us to economically empower demand partners as well right so first we announced was FileZilla but you know we have lots of other open source projects waiting in the wings and we're happy to to share with them right so as opposed to centralized cloud we really hard to make money as a as an open source company or a source project in our case right we're happy if you're sending us users and data to give you a really meaningful percentage any kind of freemium model you guys playing with them I can imagine this being pretty interesting because s3 democratized and lowered the cost barrier obviously has been great for many things you know how low are you in terms of the disruption you guys are gonna probably have to come in and undercut as three is that the strategy or is that well I mean I think I think video what I learned from from my time in storage is price is important but you have to be really safe and available and reliable right because because people's data is really important but so you know but we looked in an across a pretty broad set of use cases you know I'm comparing us to the traditional cloud providers you know we're probably a third and and we could go lower what I think is really interesting in our case is that the Utkin economic just worked really well so for if you're a farmer you've already got you know it's a spare capacity you don't need to any more electricity to run this thing yeah you know you've got your bandwidth right you don't need to hire more people so it's almost pure margin for a farmer which is great for them and so we can give economic value farmer to give economic value to our customers we can give economic value to partners and any kind of like economic models you can share in terms of like what someone would make let's just say that you know I had you know this music library that's not you being used anymore and I had well I mean as a customer of course if you if you've got data that you're on our network Greg you'll you'll save a lot of money right probably you know a third of what you might pay for is there any kind of like trip I'm a farmer I want to join them but if you're a farmer right am I gonna make so it really depends on how much you're storing and how much you know and how good your connection is but you know as a farmer I think you can you can make decent money I mean you know this could probably be man off the top of my head for there you know twenty thirty dollars a month per for drive which isn't bad and certainly much easier than making money okay depends like the Airbnb models but oh well you're you so well you're used right I mean you know so some people were unless if it will earn more and and again for most of the farmers this is pure true margin great we've got a couple back back rooms – we should get some drives up there and get the cameras yeah yeah and look I mean I think for videos I think you guys are going to be a perfect use case for you know with a lot of stuff that's gonna be coming out later this year right it you know you get both storage and sort of see the end like things for free right in the sense that's because really glad you brought that up I want to ask about the ideal coin cuz Halsey miner has video coin another ICO he raised 50 million yeah we covered that on silicon angle but he's trying to democratize like echo mine yeah yeah I mean look at similar to what you guys are pissing you say yeah we're we're we're further democratizing object storage right so democratizing the s3 but you know I think we can also democratize Akamai they're sort of you know price ISIL 100 other really exciting things here what other services you mentioned CDN so it's not just storing the information but that global dispersion well it's yeah I mean the night you know used to be I think that people had a you know there's really big difference between archive wall which is you know slow hard to get at and see yeah right and you know and put actually given the way we're doing this thing we can be pretty seamless right you know pay our caramel-like for stuff that's staying in archival but you know go up market if you're gonna be you know having like you'll read it so I gotta ask you about the hacia security you look at the traditional services around redundancy I can see that yeah I think being a nice head for you on a personal note you've been involved in a lot of industry companies that have done very well yeah yeah entrepreneurial success why am i dumb this is I mean I can tell you having fun we yeah how could you not have fun it's yeah whole nother whole new generation of innovation disruption coming at a whole nother price point so you know I'll see what's it like you having fun and and if you hit if you could talk to your 22 year old self right now because I wish I was 22 right now and this is more saying I'm not 22 how do you explain a mystic and when you go to parties even in the valley and people say Dan you're crazy it's a freaking scam out there how do you explain to them this revolution because this is like a special unique wave yeah what's your how would you know I mean actually I describe it the same way that its people in the valley right or the same way that I described at the beginning right which is that you know blockchain is bigger than cryptocurrency and decentralized is much bigger than blockchain and storage is first and foremost decentralized it's about decentralized computing the centralized storage supporting decentralized apps keeping the you know Internet from ending up in the hands of just three people right which is which is yeah three companies what I think is really important but also I feel very good that to the extent that that storage does touch on cryptocurrency that we've done it the right way you know we we had the service working first before we we did the token sale we raised what now appears to be a modest amount in the token sale right we'll try to be very transparent and at the forefront it's gotten more if you wanted to probably right we're trying to be at forefront in terms of governance and transparency and and look I think that you know and probably a good thing if you know just as what kind of a good thing that that the bubble burst in the late 90s right and you got rid of a lot of sort of not such great companies and that's such a great operators you know I think that you know the current Corrections or whatever in the crippled market I think will this calm is gone but dogecoin still exists so right yeah yes I'm look I'm sure that somebody has a crypto base pets.com right Webvan lurking in the wings somewhere but kodak just if it you cuz yeah you're super smart you went to some really good school think Princeton Harvard Business School yeah yeah so you got a good education yeah so I get your take on the whole token economics vision cuz this is I mean if you look at outside the text friends there's actually new economic models that are coming out right if you got the token is economics knew liquidity on the one side you got sovereignty you got consensus these are not just tech issues it's a society issue so no not what's your vision around that how do you how do you how do you viewing it what's the upside how is this shaping the future yeah look I mean I think I think if you're talking Network you sort of have to have some central bank chops as well right and we actually we have a central banker we have a chief economic officer so we don't know we have advisory I did degree in public policy at one point but but no I mean listen we need to think about you know the tokens apply the same thing about the money supply right we're we're backed by something real so it's sort of like having you know currencies backed by gold right we you know we need to make sure that the the market grows right in the network rose and my my fundamental belief is that the more the network grows the more people use it the more value that we were able to provide that'll be good for token economics in the long run in the front run though I mean what we've done is again we price we price based off of dollars and we compensate farmers based off of the token based off the spot price right so so for farmers we've sort of tried to remove any need to worry about volatility or reaction so I've said on the cube or the price right I said on the cube a couple multiple times that in the old days of venture startups the CTO is everything how to get great CTO our VP of engineering and great senior executive team on the entrepreneurial team now it's almost like the chief economic officer is a clue because you got public policy intersecting with economics you got new kinds of math that's not technical Algar but it's kind of matter those business algorithms it is it's both business algorithms right I mean you know just like any economy right I mean you know the money supply matters right and people's trust in that in that money matters right and the supply matter is all that sort of stuff like that and and stability matters so I think I think absolutely this new breed of of network based token companies will have to worry about that and probably should think about it chief economics officer but it doesn't mean you don't also have to grate CTO and great technology and think that because that's how you make the network valuable and grow and you know I one of the reason we that sort of gave me both excitement and comfort about going storage is that the economic model works fundamentally even if the Crypt is not there yeah because technology is just decentralized a centralized storage makes sense even if you're buying and selling it with dollars or pounds or rubles or whatever oh been great to see you thank you coming in and sharing the gonna soon got the Ben Golub School of Economics public policy for tokens giving classes Stanford on that soon and all that's the different competition school maybe yes great to see you hey congratulations make you door J pronounced storage great successful ICO hot start up really an example of the infrastructure opportunities of a new decentralized infrastructure that can be and will soon we think it will be critical infrastructure in a whole new way great that's great to see you really cute conversation I'm John for ass to mini man thanks for watching [Music] you

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