Transcript.

Erik: Welcome to the Industrial IoT Spotlight, your number one spot for insight from industrial IoT thought leaders who are transforming businesses today with your host, Erik Walenza.

Welcome back to the Industrial IoT Spotlight podcast. I'm your host, Erik Walenza, CEO of IoT ONE, the consultancy that specializes in supporting digital transformation of operations and businesses. Our guest today is Harry Behrens, founder and CTO of bloXmove. bloXmove vision is to revolutionize urban mobility in order to reduce the complexity of the fragmented industry. They build a protocol to seamlessly provide one-click, hassle free mobility products across different modes of transportation.

In this talk, we discuss digital infrastructure that provides the transactional capabilities required to conduct end-to-end business in real time without the need for a centralized party. We also explored the key benefits of a protocol enabled ecosystem, including unified identities, integration of value added services, distribution and settlement of liabilities in real time, and the automation of secure B2B transactions.

If you find these conversations valuable, please leave us a comment and a five-star review. And if you'd like to share your company's story or recommend a speaker, please email us at team@IoTone.com. Finally, if you have an IoT research, strategy, or training initiative that you'd like to discuss, you can email me directly at erik.walenza@IoTone.com. Thank you. Harry, thank you for joining us today.

Harry: Thank you for having me. Thrilled to be here.

Erik: I'm really looking forward to getting into this topic. I've been, on the one hand, a long-term skeptic of anything related to blockchain, on the other hand, very intrigued by the potential. There's obviously been a lot of financial speculation and so forth. And now we're starting to see solutions that are closer to my space of atoms moving in the real world, and providing value to people. So I'm really interested in understanding now how you’re using the technology to do this.

But before we get into bloXmove and the business model and the tech stack behind it, would be really interested in just understanding a bit more about how you ended up moving from Mercedes Benz over to setting up this company. Before that, you have long history working in software sales, and a number of different also IT consulting, maybe you can just walk us through the path that first got this topic of blockchain in general on your radar. Were you an early advocate or did this come up more when you started working with Daimler?

Harry: It's kind of full circle. So most of my life, I worked for small companies, I even tried my own startup a while back. And basically, my background has always been software. So I got a diploma, which is a master's in computer science, focus on neural networks, I got a PhD in Information Sciences on artificial intelligence. And I've worked in small companies delivering software.

Then for the first time, six years ago, I joined because my wife got a beautiful offer in China. So I joined Mercedes Benz automotive finance which is part what is now the Daimler Mobility company. So it's the service arm of the Daimler group, pretty much like General GE Capital was to General Electric, so the people that take a product and make it a service and the most immediate service being leasing, financing, renting, that's the most obvious one. But anything that is a service that you can build around a car, it will be that group now called Daimler Mobility, which will deliver it. And that's when I entered the automotive industry.

And so for a year and a half, I was in charge of the key systems, the core systems, their wholesale and their retail finance from the IT side plus the data warehouse which they always use. Things leave the transaction systems, and then for post processing, they usually get collected in the data warehouse from where they go, for instance, downstream to SAP, etc, and for business analysis.

So I got to really know how the lifecycle of the vehicle works. And privately ever since basically, Ethereum came out, I was actively dabbling on the technology on the software side with blockchain. And there's been an analysis in the automotive industry which is already by entered research. And in Daimler, there's an acronym going for it, which is called case. C-A-S-E, and in research, they're slightly switching, they call it Pace. So case stands for Connected vehicles, obviously, or devices, autonomous or automated driving; S stands for the whole thing is delivered over services; and E stands for electrification. And then Pace, it's pretty much the same meaning where P stands for platform, so it takes the software or service even to a bigger level, platform economics, autonomous driving, connected vehicles and electrification.

And in such a world, you cannot have vertical silos of companies anymore that satisfy the whole customer needs. When you manufacture a car, and your business model is you sell that car, you build up vertical silos, that's what all big product brands do. You are the final assembler, you have about 30, 40, 50, 60, depends on how good you are. Value contribution, then you got tier one suppliers, they got tier two suppliers, and you're pulling a whole pyramid behind you, it's vertical, and outcomes the Mercedes Benz car. So that is very well doable if the end product is the physical product.

If the end product is not the physical product anymore, and that's the thesis, the end product is urban mobility. Because look at it, I'm not sure where you live, but London is a very good example, but all major cities in Europe. It's basically the times where you take your car, and you drive into the city, you park here, do a little shopping here, you continue, park here, do a little shopping there, those are long gone. Maybe your father knew those times. But it's impossible now. Cities don't want that and they actively make it impossible.

So mobility within the urban space, and that's where all the market is, that's where more and more people are, especially in emerging economies. The flight to the cities is still very, very strong. So, urban mobility is not about that car anymore, it's not about that scooter, it's not about that bicycle. It's about how do I move using many, many modes of transportation: subway, scooter, bicycle, car renting, car sharing, whatever it may be at the moment. How do I move through that city as seamlessly as possible, and ideally, in a one ticket or one credential gets me into everything mode? And that is the thesis that urban mobility is moving towards that.

And that's obviously a fragmented scenario. That is not a world where the Daimler or the Ford or the Toyota company can provide that service conclusively. There's many, many companies. There's many, many players. There's many, many devices. And only a small portion of it is under the control of any company at all. And if you put that together, if you accept that scenario, and put it together with what I knew at that point about blockchain, it's kind of a fit because you got this market, the business talk is called Fragmented, everything is fragmented which translates quite neatly into decentralized.

So you got to decentralize situation and you got to decentralize technology that does one thing very good is end-to-end fully trusted, trusted to the way, take it to the bank trust level technology. And you can now combine the two and think of alright, how about we build a platform that reflects this systemic structure of fragmentation very, very well, and put it to the use so that urban mobility and services related to it can be conducted in a way where it's obvious that there is never a single company that should or can dominate it?

So you need some kind of interaction platform, some kind of network, such as the internet, by the way, has long been that is there for all to use, and they can then conduct their business over it but to an integration level that me as the scooter operator can bundle your car sharing, and your bus services into my customer relationship into what I offer my customer through my app as a ticket. And all of that, through the power of distributed ledger should ideally be handled fully automatically, including the revenue distribution and the booking.

And that was the birth essentially of how I became aware of the possibilities and I managed to pitch that to the diamond mobility board, and then I got that unique opportunity actually unique in European industry, where they told me alright, we believe in essence, but now show us the meat. So set up a blockchain department here in the company in headquarter in Stuttgart, and show us how this can be done. And that was the birth of the Daimler Mobility Blockchain factory, which I founded and headed for three and a half years, and out of through which we developed the actual real software which within Daimler we’re calling the Daimler Mobility Blockchain platform. And that's the origin of bloXmove. That's how I moved into that area.

Erik: It makes sense to me completely. I'm actually here in Shanghai for the past 10 years, so you can imagine for me, mobility is only a service. The idea of buying any type of vehicle other than a bike for my son just so he can have some fun just doesn't make sense. It cost €10,000 year old for a license plate right now here in Shanghai. But I was just going to ask you, it makes sense to me, does it make sense to the boards? And it sounds like for Daimler, it does. But I imagine this is a frightening proposition for companies that have been selling vehicles for the past 100 years. In the three years since you first set up blockchain factory at Daimler, have you seen this concept get more widely adopted, or is it still just a few companies that are buying into the vision here?

Harry: Well, the concept was bought in. So the analysis was there already. And the analysis, in the sense of we say it, we hear it, we say yes when we hear it was there all the way. So, the surface belief was always there. And the analysis is actually because this was not the Daimler analysis. All automotive had come to the same conclusion.

But the problem is one now and that's again, it became an opportunity for us later. Delivering mobility services is, as painful as it is, unprofitable: nobody makes money. That's the short version of it. There is few exceptions. Hong Kong public transport, I believe, makes money, and Tokyo, which is unique in the way they structure things. The Tokyo private lines, they are printing money, actually. The Odakyu line and all those lines, that's money making.

But that's a unique, unique setup, and it cannot be replicated because it's combination of land, real estate, and public transport. But except for that, it's low margin in the first place. It's also transaction size is small and the overhead to run it is very, very high. It's not a demand side problem. You can always sell mobility services, people will accept them, but it's almost impossible to make profit.

Then came also there was a while and that the height of it was about four years ago, I would say, is people really believed that autonomous driving would be a thing of tomorrow. And autonomous driving in cities is a lot more than technology. And it became clear that autonomous driving in cities is not coming tomorrow, it will eventually come but we will first see it in trucks in overland routes, where it's much easier to handle. But having autonomous driving in London or in Munich, that's going to be a long, long way.

So a lot of money and a lot of enthusiasm that went into this kind of disruption or transformation of the automotive sector, which was funded by the automotive sector ended in the first wave like many times in disappointment. So if you were to ask now, what's your appetite for that kind of game? The appetite is a lot reduced. So, now pretty much is let's focus on the core business. We got a major disruption transformation of our hands anyway, which is shifting to electric, so let's shift to that.

In the case of Daimler, the case was clearly made. We are premium. So let's focus on premium electric vehicles. Let's build those, and the rest well, more or less come. So now, if I were to start the same pitch today, I would probably hear yes, this is probably true in the future but right now we're dealing with the present. At that time, it was a slightly more optimistic time within the automotive industry.

The automotive industry, except for Tesla, has been under constant attack in many ways by circumstances, not necessarily by people, but has been under constant siege over the last four or five years. The automotive industry is not a happy place to be right now. And that made it clear that if you want to build what we have been building, and we built it to the level that it was production ready, it became clear an automotive company like Daimler at this point in time, there are so many reasons why, will not be able to really take it to production successfully. And that was the opportunity.

That is when we, so myself and the two cofounders, raised our hands, alright, beautiful, let's make the best out of this. How about we take that software and put it into a startup? So, we do a spin off, in structure it's a management buyout. So we do a management buyout, we take the whole thing that we developed here, we put it into this new venture, it's called bloXmove, and in very good relationships and continuing collaboration, but independent, there's no shareholding of any sort, which is, by the way, very important as you address ecosystem development.

So in very cordial, but totally independent manner, we take the software, we take the concept, we are a startup, we have no legacy to protect, we have no unions to keep happy, we have no fear of cannibalism because there is nothing to eat away, we're just starting, and let's do it that way. And that was ultimately the argument that won the day.

So yes, we have developed it within Daimler. It makes an awful lot of sense. It's a play for the future. Nobody in his right mind will tell you when at what date you will see your return on investment coming in. You have business models. You have business cases. Everybody knows that they're based on assumptions. The play is a strategic play, it will be profitable when this becomes valid, and applied model. We are fairly confident it will become a valid and applied model.

But the art is now in getting the timing. And it's all about the timing. And this is where a startup can win because a startup that is funded by investors who have different horizons between 1, 2, 3 on the one side and up to 10 years on the other side that are willing to fund such a model, which scales very beautiful is probably a better way to bring it to market than within one specific automotive company. And that kind of gives you now the cycle is moving. We're now basically at the rationale of why the spin off, why even create bloXmove, and what's the purpose, and why would Daimler let that go?

Erik: The story is just getting more and more interesting here. I think for this to survive, I can completely understand why it would need to be an independent entity and venture-backed. The timing it's interesting that you bring this up. We have two perspectives here. So one, your token is set to launch quite soon. So on Friday, October 22nd, which by the time this podcast is launched will be just in the recent past; right now it's in the near future. So it's launching basically in October. And then I guess there's a few other horizons that you have when you look at what might make this or the near future the right timing. What are the critical elements that need to be in place for this utility token to scale up and begin getting really practical high volume use in the world?

Harry: Not the token to answer the question. Think about the protocol because that's what the point is about, and it only about one thing and one thing only. Companies in our case, because we're a B2B proposition, how many people do you get on your ecosystem? It's building the minimum viable ecosystem then nurturing a minimum viable ecosystem until this kind of tipping point where you achieve natural network effects which become this cascading dynamic, which kind of feed on themselves when you've got this virtuous loop.

And then you achieve if you are the one or one of the two that is chosen by fate in this platform economics to be the one of the last companies standing, you then achieve incredibly scalability. So something like this which is meant as a shared infrastructure, as a distributed platform will fail or will win purely by how many companies adopted in what time? Will we be the fastest, or at least the second fastest company, or protocol, will we be the fastest or the second fastest protocol for decentralized mobility? If we can do that, we win. If we cannot do that, we fall by the wayside. It's that simple.

Erik: I think these protocol business models are complicated to think through because as opposed to other business models where you basically say, here's our small set of services, here, you're basically providing an infrastructure that people can build services on. What would be an analogy that we could use? In industrial, there's OPCUA, but that's more of a nonprofit approach, maybe Linux or there's also HTTP, but that's also more of a nonprofit. What would be an analogy for a business built upon a protocol that was basically providing an infrastructure to enable new business models?

Harry: It's almost a contradiction in itself. We're operating off of two models. We're operating off the pure raw, crypto native protocol in which essentially, and that first answer to your question, a protocol is, per se, not an enterprise anymore. That's why you call it the protocol economy.

And that might surprise you, the closest analogy would be decentralized finance. So we would position ourselves as decentralized mobility. And if you look at decentralized finance, you've got very real services there. There's nothing unreal about them. You know exactly what you're paying for. You know what the tokens value is. You know what the token does for you. And you know basically these services, they're very tightly controlled. The security is vastly above anything. The quality is vastly above anything commercial banking in New York, or London can give you.

We have a problem with the gas fees in Ethereum, which will be addressed eventually. But either way, you're not dealing with companies, you're dealing with a protocol. Who is Aave? Who owns Aave? Point to it, you'll have a hard time pointing to that. Point to who owns Uniswap, or who owns PancakeSwap. Try to locate it. It's not a company. It's not an enterprise. It's something amorphous. And the only way to capture is call it the protocol which is fueled by the token. And that is how the protocol economy will look like as long as the regulator's don't kill it. And that's a big if, by the way.

But if you apply this now into regulated markets, and obviously we in Germany, and Netherlands, which is a very positive market for us, and also China, actually, China will be our third market probably, I joined Daimler in China in Beijing. So if you look at those markets, obviously, raw protocol economy is not possible. You will have to accommodate a world where your business partners have bank accounts in fiat currency, where all liabilities and all tickets and all products and all services are denominated in Chinese yuan, or in Euro or whatever. And this is alien to blockchain, you will require accounting.

Because raw blockchain is the end of accounting, you don't have bookkeeping anymore, because you got instantaneous settlement by the coin. So who the hell needs accounting? It's about possession, not about ownership. And accounting is the difference between ownership and possession. Possession is the cash where's the money and ownership is what the book tells you. And however, in the crypto world, so there is no more accounting.

So in this hybrid model, what we do is at great architectural complexity, but this is where our legacy from Daimler greatly helps because we know exactly what is needed. We adapt it. So we take existing systems, and we design API's and message buses in a way that each company can integrate their back end system, their transaction systems, or their contract management systems through a lean layer of API's, connect through this shared blockchain. At the core of it, it gives you now not so much token utility because a regulated company in Germany, it's very hard for them to even touch a token in the current regulatory framework.

So you would have to do translation through internal value units, which are akin to walled garden stablecoins, and basically provide the platform as a decentralized transaction network. So the focus is simply it's decentralized so it's very easy. Everybody integrates only to the common platform, like a plug and play. The common platform, everybody can basically share and do business with anybody else on the common platform. It handles everything at the security of blockchain based on highly secure consensus. It is now hybridized to the level that it has a bank adapter.

So we work with two banks to precisely do this regulatory safe, convert cash into internal value units which can be used internally and then once you want to redeem your internal value units, which are an internal token, you have a bank partner that redeems it into fiat currency, and you have thus satisfied the regulator. Because anyway, where the e-money is touched, it will always have to be a bank.

And for accounting also, no company in the world cares about the cash. So the final, final location of truth is not where is your money? It is in your SAP or your ERP system in what's called your general ledger. So, until it's in your general ledger, it's nice to have, but it's not true. So that's the other part which you need to do in order to bring this in a hybrid scenario, to bring this what the protocol economy should do raw and pure. To bring it into regulated economies, you have to connect it at least to the accounting systems, and you have to connect it to the banking system because otherwise you're not allowed to touch cash. That would be in Germany, in the Netherlands, and in China.

But if you jump ahead now, and I'm not sure how long you've been in the industry or general around, so mobile payment was invented where, in Kenya. And there was very good reasons, at least now with the benefit of hindsight for that. They had no incumbent banks. They had no strong lobbying. They had, compared to Western Europe, not very well developed fixed line telephony system. So they had nothing to prevent a very radically beautiful idea. How about I do mobile banking by essentially secure SMS? Should be possible!

As long as everybody keeps track where these secure SMS comes from, and you have a security protocol that makes sure they represent cash, and you've got some custodian and clearance that counts, who's just sending what how much, you can do that. It's not too hard to think. But it would be completely impossible to even propose in London, Shanghai, or Germany, because your lawyer or your compliance engineer or your regulatory adviser would laugh you out of the room if you would come with that.

And this is however, where the future lies, this leap frogging. And we see the future of decentralized protocol economies in the emerging markets. So there, we will see the true transformation. So just like DeFi is very hard to operate in Western Europe, and it's basically handling the gray zone, and it will become however commonplace in countries like Nigeria, and in countries where the regulator is not so strong, I see there's going at two speeds.

The full protocol economy, we will not act as companies anymore. It's a protocol. And as long as the regulators in Western Europe are still protecting the incumbents because that's essentially, in my opinion, what the regulators are doing, then you have to play by different rules which will also mean the technological advance actually will be less fast in the regulated countries than it will be in the less regulated countries. Because the less regulation, the more the benefits and the bang for the buck that this incredible new technology bring can come to play.

The more regulation you have, the more you need to hybridize it; the uglier you make it, and the less flexible you make it, the more compromises you make. So the less pure play it is, the less perfect it becomes. And that automatically means the less efficient.

Erik: I've been here in China for going on about 11 years now. So you see a similar thing here, as in Kenya, obviously, China is significantly more regulated than Kenya, but they still lacked that financial infrastructure of credit cards and so forth. And then also just the brick and mortar shops, so that obviously incentivized ecommerce and allowed it to grow much more rapidly than Europe or the US.

Harry: Yeah. And financial would have been impossible in Europe. And financial, just it blindsided everybody because the banks didn't pay attention. Yes, good example, actually.

Erik: And the government, I think, they had a policy of saying we'll tell you when this is an issue. And last year, they told them, it was an issue, but they waited; they allowed it to grow, which was in retrospect, also good strategy for the nation because it allowed them to take a leadership role.

So we can look at this from a national level. I guess, we can also look at it from an industry level because in theory, many, many different industries, everybody from the operator of a paid road to a logistics company to a freight forwarder to a retailer to many, many different people could be building business models or transacting through a platform like this and using this to reduce the operational cost and complexity of transacting with partners. But I suppose there will be some industries that are easier to move forward because of some of the topics you've just raised around regulation, around industry, how open that industry is because of the dynamics internally. Are there particular industries or user groups that you see as the first movers here because of the underlying dynamics?

Harry: Well, we were brought to our market purely by, in a way, just stick to what you know. So we were in Daimler Mobility, so we understand the mobility market very well. So that was purely the pragmatic, some might call it opportunistic choice for let's focus on mobility with a slide view on logistics, which is, in many ways similar to mobility because that's where we understand the market.

If I were to apply this in general because it's a much more general framework, so what does a protocol like that actually do if you are abstracted? It's a very, very simple thing, actually. All it does is it does access management. It does fully controlled access management, including the check-in, check-out, and making sure you get paid for checking in whatever service you have here and checking out whatever service then it gets paid. So anything essentially that's got a smart lock can be handled in that way.

So you could do home offices. You could do locker rooms. You could do containers. Because the basic model of how do we do handle rental is very simple. You identify your vehicle, everything has an identity in this, the whole thing is very strongly predicated on what's called decentralized identifiers which you need to prove factual truth, so not record truth which a blockchain can keep. So blockchain can prove to you only “that the record has not been tampered with”, it cannot tell you anything about whether that record is true. Obviously, because I can book whatever and then the blockchain will keep it.

So if I have a blockchain as a transaction system which I use in a form of decentralized accounting, then I also need to make sure that what I put in as a record is proven to be true. Just like traditional accounting, which always means that I have a double signature paradigm. The double signature being here is an offer, do you accept it? I collect the signature of the offering party, I collect the signature of the accepting party, I notarize that on the blockchain by timestamping it and putting it through the consensus engine, and then I have proof that indeed this was the agreement that everybody agreed to, and there was no way out of it because of the double signature.

And the same, you know this every day in your life, you pay, you get a receipt. So if you pay, then you get a receipt. If you check out, you claim you have checked out. And then the other side, the vehicle checks, am I in a geo zone where I'm allowed to be left, is my window closed, is the door closed, etc? And then it signals back to mama, yes, I have been left in a place which is okay. And then it's again, I have left the car, the car reports, yes, I'm okay. The rental is done.

So you got this double signature. But for that, obviously, you need to be able to prove that the signing parties are indeed the signing parties you claim them to be. So if you think this through, it will come boiled down to three roles of identities, we call them Company Customer Car, because it rhymes nicely, CCC, but it essentially enterprise, user, and device. And those need to be given identities in this whole framework. And as long as you can do that, then all you're selling is access control to identified parties two identified devices, which are essentially you need to check-in check-out mechanism to make this really work.

So I would imagine that office space, lockers, containers, Airbnb, 3.0, that is where this type of protocol will apply on a much larger scale, then what we are doing now. And I foresee probably small scale scooters, small scale access to our hotels, or stuff like this. This is where I believe those would be the industries that would immediately embrace it once it becomes mature enough.

Erik: There's two ways that at least I would look at this. One is from the user experience and the second is from the operational process for the customer. So if I look at it from the user experience, I would say at least here in China, which I think is actually quite different from in other markets, to some extent, we have some version of this, where my phone has a unique entity because it has a number, that number is highly controlled. It's tied to my passport, so that number is tied to me, and that becomes my unique entity and I scan a QR code. Maybe we can use other biometrics that might be more convenient.

But from a user experience, that user experience actually works pretty well. I think that doesn't exist in a lot of other markets as it does in China today. Am I correct but that would be one aspect of making a smooth user experience as you interact, and they basically rent different things around the world? And then the second would be the operational of two companies figuring out how to work together. And that is probably a bit more complicated because then you have legal teams, so then making that interaction more plug and play so you don't need a lot of white collar labor to figure out how to integrate two different businesses. But would those be the two perspectives that we would want to be optimizing or making more efficient…

Harry: If that would be the two gates you have to open, yes. And China, one is correct. You have so the fact that you have this very tightly controlled, and for Android phone, you even got your digital identity card straight in it with the Chinese EID. So here, China is smoother than other countries to enter. And you said you're in Shanghai, so if you got time on the 27th of October, One Shang Blockchain group is going to be exhibiting at the Shanghai Blockchain Week. So we have a keynote speech there, where we will exactly explain how the Chinese EID system is actually an enabler for such business models because you do not need to worry about the verification. There is no KYC problem anymore in China. The KYC problem has been solved in China.

And then you need also now two more things. The one that you mentioned, you need to make sure, alright, how do I get companies to be able to connect to the platform legally? But because this is a platform game, it is not an A-B-C-D-E, so you don't need to have this combinatorial explosion of legal frameworks. You need one legal framework which is the very same legal type of framework that how do you connect to Amazon, how do you connect to Ali, how do you connect to Jingdong? And that is basically one set of contracts. And that covers how do businesses connect to the transaction platform?

And once you have that in place, also you've done your job because that determines what is the framework by which an individual company interacts with this shared transaction platform and what in both directions in the direction of as a company I am demanding services or as a company I am supplying services, and both obviously being then the mirror of that very same set of parameters on the other side. So as I supply services, and they will become the demand of another company.

So once you figured that out legally, that's a one-time law office getting a nice chunk of project. This will cost tens of thousands of euros to basically just figure out and smooth and make it safe. But once you got that, you got that one settled in an IoT podcast.

And there is another quintessential element in all of this which needs to be in place for this to truly work end-to-end truly automated where you can truly say we have no operations. So when somebody comes in says how much operational cost you have, you want to be able to look at them with open eyes and say, operations, what is operations? That's where you want to be in using such technology.

And that part is you need your devices wired up. So whatever physical device you are building your service on, be it the car, be it the charging station, which is a very big play in our world as well, be it the charging station, be it the lock to the office by the hour, be it the smart lock, whatever you else you can imagine, you need to be able to locate the device, you need to be able to give the device an identity, it needs to be secure. So signatures that data can be signed, which means the data becomes tamper proof. And it needs to have this check-in, check-out, so open-door, closed-door, open, or start, stop, however you want to abstract it.

But the moment you got your devices wired up in this way, you are ready to go. But those three are key. It's always along the three identities. You need to think about all three because in the end this is a mantle machine economy. The true protocol economy because it's always that is where it's different from DeFi. DeFi is purely virtual. There is no physical anymore. So it doesn't have to deal with things you can touch. But obviously, mobility, you're moving physical bodies and physical things are moving physical bodies. So you have real things in the real world you know that you touch that have haptics, which you need to wire up and those devices by nature are done digitally. They're not thinking. They're not software.

So somehow you need to bring them into the software world. And you do that by hooking them up with modules that consist of a communication unit that consists of an identity layer, which will need a secure enclave to basically protect your private keys in order your identity can be safeguarded. Then if you say blockchain is the platform which you will use, it will then need something like a blockchain client, so something similar to a Web 3.0 client in the device.

In terms of the volume of software, this is all very lean software. So you can put this into anything more or less any device, whether chipset, it costs more than $5, roughly speaking, you have enough space to put that in. Once you shrink below that, you have to do some magic and abstract things. But anything where you have chipsets in the range of $5 or more, they have enough intelligence to incorporate that.

Erik: So I think that's pretty clear. And I appreciate it tying that back to IoT, I think this is a machine-to-machine transaction is very interesting element of this. I also appreciate that you started with a focus on the protocol because I agree that's really the critical thing here. But I'd also like to touch on the token itself. Because to some extent, I guess it's turning on the lights. It's saying, okay, the token is now alive, so you can now interact with this ecosystem, at least that's how I interpret this. And by the time this podcast launches, that will have happened one or two weeks in the past. So it's kind of an interesting time for people to be able to interact with bloXmove if they're so inclined.

So first of all, is my interpretation right, that when the token launches, it's then possible for people to interact with this protocol ecosystem? And then second, if so, what does that process look like for somebody to begin to offer services on the bloXmove?

Harry: So the answer to your first question is yes, but, or no, but. So the token we are selling now, it's essentially a wrapper token. So it'll be you can acquire it either on Binance Smart Chain or on Ethereum. In Binance Smart Chain, it'll be a BEP20. And on Ethereum, it will be an ERC20. So it's a token which gives you access which gives you the right to own it. And then in the meantime, we are working towards taking the protocol on the mainnet. We are currently considering four different mainnets. And once that mainnet has been chosen, that token which you are holding there will be exchanged to a real token, which is then the actual utility token, which you use to pay for mobility services, to pay for transaction fees.

As you will buy it on the 22nd of October, it is purely a token giving you the right for the future mainnet token that will be coming out, 6-9 month is my conservative estimate here.

Erik: And then the protocol itself, is that then set to be launched together with the mainnet?

Harry: Correct, that's what the definition. Basically, when I use the word mainnet, I mean the blockchain on which the actual protocol will be live and running and able to consume bloXmove tokens. That's, for me, the definition of mainnet from the eyes of bloXmove.

Erik: Let's choose maybe one or two example situations and customers and walk through the process. So whoever you think would be a relevant enterprise user, what would the process look like from defining a solution, getting onto the protocol and then bringing that solution to market?

Harry: Well, for an operator, that is already happening. So again, remember I mentioned earlier we're doing this along two tracks, the pure native play, the protocol economy, where essentially there is no more companies as very much as in DeFi, and then the hybrid play where you're actually dealing with real companies in regulated markets.

So we have now in Germany and in the Netherlands, we have signed up 10 industrial partners, corporation, FlixBus is one of them, Tier is one of them, Athlon is one of them. So these are all very blue chip industrial partners with whom we've signed up and with whom we will now work towards going live on our platform.

And in that case, as I mentioned earlier, this is a regulated world, their end users will not be using the utility token. The utility token will be used internally for value offset. But here the onboarding is relatively simple to explain. So, each one of them has their back end system. So FlixBus is a long distance bus company. They have their back end systems. Tier is a scooter company, they have the back end system. Athlon, essentially, a fleet and financing company, they have the backend systems.

The indoors backend systems, you identify the key events, which are relevant to operate the business. For instance, identify car, reserve car, book car, return car, the standard roughly 10-15 business events that are needed to conduct mobility. You then provide an API so those backend systems are in sync with our blocks move platform, and you integrate them.

In case there has been already worked done such as in the Netherlands in the context of the Dutch mobility as a service ecosystem, they have already gone ahead and define the standard API, which already exists. So then you already have a standardized API. So any mobility operator that wants to be part of the ecosystem needs to first façade, basically wrap their services in this standardized API. This API is obviously designed in a way that fits the business, so it's a natural fit. You put it on a suit that fits you, because it's been designed for that business.

And then they all have the same API so you only need to integrate once which we have already done in that case, and then you just plug it in and start operating. Then you only need to provide two more layers. The one layer, which in China is not so relevant anymore, you need to provide the identity verification layer. Because in Europe, we don't have this digital identity for that level yet. Plus, you need to also be able to provide the financial management, meaning the cash, the bank accounts, or the payment operators on the one side, and the accounting on the other side. Those are the three integration vectors, which you have. And that is what we're doing with each one of our operators. We're basically plugging their systems along these three integration vectors, connecting them to the platform, and then hooking them on. And once that is done, they can go live.

Erik: In Europe, what do you imagine the identity for the individual would be? How do you imagine this being most conveniently implemented?

Harry: I mean the answer is actually simple because you don't need to think to digital here. If I go to a notary, just ask yourself what identity is used when you go to the notary, and there's your answer. The notary is only going to be looking at your personal ID document, passport, or national ID document. Everything else is completely not interested in. So that will always be the identity when you deal with legal frameworks.

Because as an accountant, I'm not allowed to use any other identifier. If I sell you a house, if I make a contract, it must be the signature that is on your national ID document referring to your national ID document and I need the number of your national ID document in my records. So there's no way around that.

So the question now is, and China has solved that, how do I now get the verification that you are indeed the owner of this national ID document into a digital form? So you will have trust providers that will have to do the KYC which consists roughly of looking at three things at the same time, and then signing off on that with a timestamp, looking at your face, looking at your national ID document, and looking at your public key.

Taking those three saying I'm a registered trust provider, I hear with confirm, I've seen this public key. I've seen it at the very same moment over the very same as I've seen his face. And I have seen his national ID document and his face. And the national ID document matched, and therefore I can now say this public key is indeed linked to this national ID document. So whenever somebody with that public key comes and signs off on a document, I can take it for granted that this person is indeed legally valid [inaudible 49:07] holder of this national ID document. And that is a standard process we’re just digitizing.

Erik: So seems I would not say straightforward, at least, from my layman's perspective, but it seems like this process it works end-to-end. What do you anticipate to be the challenges here? Are they more they regulatory? Are they communication or education around the market? Are they technical? What do you see as the challenges to having whether it's bloXmove or another solution building this at scale?

Harry: For the challenges build up an ecosystem. Everybody loves the word ecosystem. Everybody loves the word platform economics network effect. It sounds so gorgeous, fast, get-rich. But unfortunately there's another side to it and nobody likes chicken egg. But chicken egg is very much part of the same model.

So in the beginning you have the chicken egg. It's not that in the beginning, you have the network effect. In the beginning, you have chicken egg, which is the ugly side of network effects. So ask yourself the following question.

Imagine the telephone had already been invented, the lines had already been laid, and you get exclusive rights to sell telephones for a small within Shanghai. You would know you’re rich man, right? You would know once this has pass through, you would be rich. Now go to the first person and try to sell him the telephone. Imagine the logic here, because that person will tell you what value is that telephone to me? And you will have a hard time explaining if you're halfway honest. Because you will have to tell him it has no value as long as you're the only one holding a telephone.

Once I've done my job, I am rich, and you're happy because everybody has telephone so life has become much easier, then you will see the value of it. But it takes that belief step. And if he doesn't believe you, you need to incentivize him somehow because you're taking space off his desk by putting a telephone there, by which he can call nobody but himself. Then you go to the second one, and it's still kind of hard. Because either the second one is the wife of the first one, then she will see value in this. But otherwise, there is no value in the second phone either.

And then it starts getting interesting. If you're in a village, alright, you got the factory owner, you got the priest, you got the mayor on it. At that point in time, it starts getting interesting that people start calling you, can I also have any one of those? And translating that back to ecosystem development, that's the natural challenge of trying to build up an ecosystem. How do you get across that flat part of the hockey curve because that's what it is. How do you get past this life cycle of the ecosystem where seen as a single transaction, if you take every operator joining your platform as an isolated transaction, that transaction is not justifiable by business turns. Buying the first phone and seeing it simply as the transaction of buying that phone is not justifiable. It's waste of money.

Going onto a platform that is predicated upon the fact that it's a platform economy, and it will live off the fact that the more people are on it, the more useful it will become, going on there as the first or as the second needs to be heavily incentivized. This incentivization can be that you believe in it. It can be that you are invested in it. Or it can be that we somehow need to incentivize you. So as this becomes successful, you get direct financial benefits. Somewhere along those lines, you need to work yourself to that flat part of the hockey curve until that sweet spot happens where the phase transition goes and it becomes the steep part of the hockey curve where finally everybody's getting happy and rich.

Anybody who's in the ecosystem business will be having that very same challenge. It's always the same.

Erik: I guess we have some examples of companies like Uber that has basically paid their way through this, burning hundreds of millions or billions of dollars. Is the idea that the token will to some extent provide that incentive for token owners than to engage in this ecosystem?

Harry: Yes. To some extent the token finances will help feed this, yes. We will also again, here we're doing parallel tracks. We are still being quite stingy with our equity. So far, we are completely founder held, which is a beautiful thing to have. We are funded for two years or so at least. We're completely founder held. But we will go into around A sometime early next year or so. So after the first pilots are live, and you know there can be touched and you see those business on them, then we have a position that is strong enough to enter around equity shares investments. But yes, the token will fuel to some extent the expansion of the ecosystem exactly.

Erik: And I see some numbers here on the token distribution, also foundation seed, private investors sell etc. It says public sale 1%. So when you launch on October 22nd, is that basically putting 1% of the tokens on the market?

Harry: The biggest share is the foundation where the governance will happen. So that's the 54% you see in front of you. That is the organization. Let's say in two years, it should become a DAO or semi-DAO. Right now, it's just the foundation in the sense of a Singapore company limited by guarantee. So a self-governed organization that is not allowed to hand profits out. It's completely self-regulated, and it owns the tokens. And by selling off the tokens and managing the tokens, it basically funds and fuels the development of the protocol.

Erik: Because I have a two week head start here to purchase tokens before I suppose they appreciate when this podcast goes live to all of our millions of listeners, what's the process to acquire tokens? I understand you can't just purchase them with USD or RMB, you have to use an existing Ethereum or something else, what would be the process for an individual to purchase on the public…?

Harry: So we are going through what's called the launchpad. So it's actually a two-step process. You first need to get yourself some cryptocurrency. So you need to pass that gateway somewhere. So you need to have USDC, USDT, or Ethereum in a wallet. That's the starting point. You need to somehow get there.

So if you're in China, it would be hard for you to do. We're obviously here on line so I would not want to tell you how to do it. I have heard that people who are really bent on doing it, they find the solution. That's all I can tell you. If you then have a to any valid token and Ethereum, USDC, or USDT in your hand, you buy yourself a set of tokens by our launchpad, they're called paid, which basically the public launch is fixed price, and because it's fixed price, it must be lottery. This 1% of token is allocated to the public launch at the fixed price of $0.80. So it is not market-driven, it’s lottery-driven.

And once you pass through buying a token, which gives you access to the lottery, by the launchpad, you are then part of a lottery by which you basically can acquire allocations of these tokens. You buy them at $0.80, after which they will be traded on what's called decentralized exchanges, so PancakeSwap on the Binance smart chain, and Uniswap on Ethereum, and that is where the market will start to get active. So that is where then the market will determine the prices going up, going down, going sideways. So as soon as you have then acquire tokens, you are free to sell them and buy them on what's called decentralized exchanges, Uniswap and PancakeSwap.

Erik: Harry, I think we've covered a fair bit of ground here. Anything important that we haven't touched on yet?

Harry: Well, not just one thing. Two points that are dear to me in all of this is the approach we are taking here where we're bringing decentralized platforms to one market, I believe this to be much more important than even our proposition is. We are fairly big and ambitious proposition. We aim nothing less than revolutionizing the way mobility is delivered. But you live in China, so the DD story which is going on now.

You saw how voracious and predatory centralized platforms can be, how much power they acquire, and how much power to one organization they acquire, leaving everybody else as minions, basically just being cogs in their machinery. That is a very unhealthy byproduct of platform economics. And I firmly believe that decentralized platforms bring the sorely needed balance back to something that we all want. We all want to scale at the speed of software because that is the healthy way to go, and it ensures cost efficiency and ensures comfort.

But it should be done in a way that it's not just one company that acquires all of the customer relationship, all of the market power, all of the data, and gets to become a rent extracting monopoly. So that is at the metaphysical level.

My pitch, which I always try to think of decentralized platforms as balancing or liberating in many ways, because platform economics has brought us a lot of good, but it has also brought something that 100 years ago the trustbusters would have needed to come in and undo this. We are at the level of you need Standard Oil here in the digital world and that needs to stop. I firmly believe that. So that is the one message I always like to leave.

And the other message is if you think about what this technology can do, and somebody who's in it has to tell you that he believes that the true value will only be added in the emerging economies because the economies we are active in are so heavily regulated that it's simply impossible to bring this technology to its best, that's an indicator that something is not right. Because what it means is that person is telling you I live in an environment that stifles and inhibits innovation. That's essentially the result of what I'm saying. And I believe that only countries that because they haven't reached the level of wealth and incumbency that we have, and therefore are less regulated. That is where the true revolution in service design will be.

And that is something which should make regulators think a little bit and wake up a little bit. Why is that so? And is that truly desirable? Is it truly desirable to keep on always protecting the incumbents at the cost of what this disruptive technology can bring? Or should we not allow a little bit more of creative destruction into our economic systems to not be overtaken by those that will go down that road?

Erik: This is a very positive vision, although maybe with a bit of a thundercloud overhead. So I certainly hope that some of these markets, whether it's Europe or China, or the US, make some progress there and hopefully then put some pressure on the other markets to do that. I think they all have their own unique challenges in resolving this incumbency issue right now.

Harry, I really appreciate you taking the time to share your thoughts with us. I wish you and bloXmove a lot of success, not just personally, but I think it would be a great example for the adoption of decentralized systems more generally. We really need now a few really effective examples for other people to emulate in other markets. So I wish you a lot of success. And again, thanks for taking the time out of your day to day.

Harry: Yes, and let me know please ahead of when the podcast go live because I would want to share it with our marketing team. And let's make sure that as you post it, we cross-post it and vice versa.

Erik: And Harry, actually, last question, and this is maybe more for our audience. What is the best way for somebody to either get in touch with you or with the bloXmove team if they're interested in having a deeper conversation?

Harry: Just write an email to team@bloXmove.com is the easiest.

Erik: Great. Thanks, Harry.

Harry: Thank you. Have a nice day.

Erik: Thanks for tuning in to another edition of the IoT spotlight podcast. If you find these conversations valuable, please leave us a comment and a five-star review. And if you'd like to share your company's story or recommend a speaker, please email us at team@IoTone.com. Finally, if you have an IoT research, strategy, or training initiative that you'd like to discuss, you can email me directly at erik.walenza@IoTone.com. Thank you.