Ep. 151. Interview Amber Baldet
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DB:	Before we get started with the show, we just wanted to say we’ve launched a brand new podcast in the 11 Media Network, hosted by our very own Sam Maule. Connection Interrupted is a weekly show, interviewing some very special guests whose lives were disrupted, and the role that technology played in helping them get back on track. Search right now, Connection Interrupted on iTunes. Go do it.
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SM:	Welcome to another edition of Fintech Insider Interviews. I’m Sam Maule, the Managing Partner of 11FS North America. In this episode, I had a chance to catch up with Amber Baldet, an Executive Director at JP Morgan, and the Programme Lead for Blockchain Centre of Excellence. Amber leads the team at JP Morgan that’s developing Quorum, the opensource code based on Ethereum, that’s designed to address the specific challenges of blockchain technology adoption within the financial services industry.
AB:	Quorum, we actually pulled the name from QuorumChain, which was the consensus algo that Jeff Wilcke and Ethlab created-,
SM:	Yes.
AB:	For the initial launch of Quorum. Yes.
SM:	So how is that going? That’s an incredibly wide open question, right? But-, but if you were to look back at-, at the lifespan of it, how are you feeling? Do you feel pretty good about it?
AB:	Absolutely. I think it’s been an amazing feat, to opensource a codebase like this from a highly regulated institution. To figure out, you know, how to engage with the opensource community, and developers, how to get people excited about a project. How to, even, take pull requests from the public.
SM:	Yes.
AB:	You know, what happens when a central bank from somewhere else in the world asks to make a pull request of some code? Like, these are things that have never happened before. So, in a way, Quorum has certainly been a guinea pig project for what hopefully will be a much larger group of opensource projects over the years, that we’ll create.
SM:	So, this is an incredibly brought statement I’m about to make, but this is something I get really tired of, this hearing about how banks, and we’re generalising like crazy, but how banks don’t understand fintech, or they don’t understand blockchain, and yet you’re giving a great example, right? Of the idea that we can do this. We can do opensource. That tends to go across what most people would think this would be approached.
AB:	Sure. I think-, I think banks get fintech. They certainly, at this point, at least some people understand blockchain. I think even in the blockchain space, I think some people don’t understand blockchain-,
SM:	[Laughter] you see me laughing, right?
AB:	[Laughter] you know, the-, the idea that banks don’t “get” it is probably a little bit outdated, but-,
SM:	Yes.
AB:	In the same-, in the same turn, you get banks that say, “Well, fintechs don’t understand the business. They don’t get the ins and outs, and the underlying down in the weeds every day of what we-, what we’re really managing, and what we’re really dealing with, from, when you look at a business from end to end, it’s-, it’s easy to understand, and I probably-, I’m guilty of this, as well, but when we talk about trade finance as an example of something you want to solve on the blockchain, it’s-, it’s easy to say, in a perfect world, if we snapped our fingers, the entire finance supply chain, physical supply chain, or financial supply chain, would be on the blockchain tomorrow, but a lot of the proof of concepts we saw, early on, looked like, you know, it was somebody’s Masters thesis or, you know, somebody who went to Wikipedia and Googled, “What is trade finance?” and then you create a prototype. So, it’s easy to dismiss things, based on those examples, but the market has matured so quickly, and we’ve seen, I don’t want to call it a brain drain, yet, at this point, but certainly a bunch of people with a lot of experience from the industry, who have been captured by this technology, who are now going and joining startups in the space. It’s a lot harder to make that argument when you’ve got somebody who has 20 years of supply chain experience across the table from you now. Certainly, the-, the rate of evolution, and the-, the maturity of the products that we see now is-, it’s considerable.
SM:	You know, I actually think you have an advantage, too. A little bit. Okay? And this is what I mean by that. When you work for Chase, when you work for JPMC like that, the scale at what they can operate in, in all the different areas, right, you can-, you are doing what is so important, right? It’s that whole-, it’s that proof of concept. Let’s test it, right? Let’s take the small chunks, work these out, and see if it’s actually applicable here, and if it’s not, that’s great, move on, right? But you can tap into the expertise. Whereas if it’s outside that community, right, so if it’s, say, a blockchain only focused, having that subject expertise? That’s tough.
AB:	Sure, and you’re exactly right. The approach that we’re taking is, businesses need to have a transformation agenda, or a modernisation agenda, or a what are the next steps here for the business, and sometimes that includes blockchain, but it doesn’t necessarily have to. It’s about figuring out what are the tools in your toolkit to solve a business problem, and/or to hopefully make the client’s experience better when they interact with us. So, what are the client’s pain points in interacting with this specific business? Is it really settlement time? Is it really trade breaks? Is it really just reporting is painful? Is it that it would be better to be able to have more of a breadth of liquidity management tools? I mean, there’s-, there’s any number of challenges, or ways that we can approach making the client’s life better, and only some of those are solved with distributed ledger.
SM:	So, one of the things that was interesting when I was doing some research on you, and watching some of the stuff, is, I went out to Reddit. So-, take a drink-,
AB:	I’m sorry.
SM:	Yes [laughter].
AB:	Okay.
SM:	I’m sad enough that I go out to Reddit to look at stuff. But somebody did make a great observation. So, when they looked at, you know, the Fortune’s 40 Under 40, I’m sure you’re dead tired of hearing about that, but it was interesting that three folks from the Ethereum space, if you will, were there, right? So it was Vitalik, you, and Brian Armstrong.
AB:	Mm-hm.
SM:	That’s not bad, right? I mean, especially when we talk about-, we can sit here, and we can go all day, on all the different protocols and approaches to this, but to me that kind of validates what’s happening with Ethereum.
AB:	I mean, Vitalik, obviously, you know, as co-creator of Ethereum, makes a lot of-,
SM:	My son is going as Vitalik for Halloween.
AB:	Oh, really? [Laughter].
SM:	You know the-, the shirt with the cat and the unicorn?
AB:	Yes.
SM:	I take his hair and I put it all up. He has no clue what this is, but I told him it’s really cool.
AB:	Okay. He’s either Vitalik or Nyan Cat. One of the two.
SM:	And he’s going to have a little accent, he’s going to go on massive rants, it’s going to be beautiful.
AB:	And he’s going to be entirely neutral and welcoming to different ideas, because I think that’s-, that’s part of-,
SM:	Yes, yes, of course.
AB:	Vitalik’s ethos. Brian, of course, creating Coinbase, was initially more Bitcoin focused, but I think he’s said at this point, he holds more Ether, but they’re also doing some projects with creating interesting DAPS that use (? 06.37) and all this other kind of stuff, so they’re definitely focusing on looking at Ethereum. And then, I guess, I represent the more enterprise-y kind of Ethereum, or blockchain contingent. So yeah, I thought that-, I thought that was really interesting, but, you know, I had no hand in selecting that-,
SM:	[Laughter].
AB:	So I guess you’d have to ask the-, ask the curators of the list what their-, what their goals were.
SM:	Yeah, I don’t know how they put those lists together. I’d like there to be a 50 over 50 but under 55.
AB:	[Laughter].
SM:	Because I might, like, have a shot. I just don’t see it happening. You have a quote I love, and I’m going to start using this.
AB:	Okay.
SM:	Alright? At least you’re attributed to this quote, so just act like you said it. “Actual adoption of projects is what we really need when it comes to blockchain right now.”
AB:	Yes. I mean, we need real working, not just prototypes, but closer to production projects. There’s-, there’s a fine balance between something that’s been running in production so long that it’s-, it’s sticky and difficult to manoeuvre, and something that is so early stage that it’s difficult to ascertain what are the key success metrics, and are you actually achieving what you’re trying to achieve with the project? I think within enterprise and banking specifically, we are relatively new to the idea of agile development, and dev ops, and all these things that are baked in to, quote on quote, you know, “Cloud native fintech”, kind of, applications. So, sometimes I like to make fun of us, in a way, where we have an emerging technologies platform that includes Cloud and API strategy, and I keep saying, “These things are not emerging technologies! They have emerged!” [laughter]. At this point, this is just a-, this is a modernisation strategy. We just need to actually start using the tech everyone else is. And so in that way, we need real-, real projects, and not just-, not just projects, but use cases, business applications that are solving real problems, so that we can actually make a call, when we say it’s okay if four out of five prototypes fail. What-, what is the success metric that you look at when you decide whether or not something is worth carrying forward? What is-, what is the real business problem or pain point that we’re trying to solve here? And in a much larger context, from a blockchain perspective, blockchain shines when it really captures a full value chain.
SM:	So, end to end.
AB:	End to end, yes.
SM:	Yes.
AB:	The more comprehensive the use case or the application is, the more it makes sense, and you can see why you need a blockchain.
SM:	Mm.
AB:	Because you have from provenance through, you know, follow on, derivatives or what not, but if you just say, “What’s the MVP, and let’s start from post-trade settlement, and just capture this tiny slice, that we can see whether or not we want to continue with phase two,” you’ll always get someone who says, “That’s great, I’m glad it worked technically, but why did you need a blockchain to solve this?” and the answer is almost always, “Well, you don’t.” [Laughter].
SM:	If Marc Hochstein was here, so the former Senior Editor at American Banker, he’s at CoinDesk now-,
AB:	He just moderated the panel that I was on.
SM:	Yes, so Marc, every time, I was just sitting where you were, and he was sitting here talking to some folks from USAA, and they were talking about blockchain, and they were talking about the insurance side. Every time you mention the word blockchain, I love where Marc starts. He goes, “Why can’t I just use a database? Why does it have to be a blockchain?” He actually could have that tattooed across his forehead [laughter] so I-, I mean, it does seem, as an industry, we just-, when I say “we”, some of those that can control the purse strings, kind of do do that, right? We just jump right to, you know, the blockchain solution and the AI solution, when they have absolutely no clue what they’re actually referring to.
AB:	Mm-hm. Well, it’s-, when you’re working with something like machine learning or AI, or data science and analytics, you can look at a specific product, or a specific dataset, and you can-, you’re creating something, I don’t want to say in a vacuum, but it’s something that can be vertically integrated. You can solve something and see right away that you’re getting actionable analytics out of it. You can do it without asking anybody else, you can provide a product to clients, get feedback from them. You can make all the changes, you’re really the-, the master of your destiny, in that product. When you work with distributed ledger technology, it’s as much about network coordination and understanding the marketplace, that will eventually use this sort of product, as it is how well you understand the pain points, or your success metrics, or whatever it is, what have you. So, you can get everyone at the table, but unless you can actually convince them that there’s a reason to participate, and incentivise everyone, in the same way, you know, it’s funny that, you know, people thought that by working with permissioned blockchains, that somehow we were removing the incentives problem, to need to-, to get people, you know, excited-,
SM:	Right.
AB:	To work in the system. It doesn’t remove the incentive problem at all. It just changes the sort of incentives that people need. So, instead of just needing to be, you know, paid for your time, to validate blocks, for example, you need to be incentivised to need access to your counterparties. You want access to the liquidity of the market. You need-, you want to drive down your middle office cost. You want to completely revolutionise the way that, you know, cybersecurity, or key management, or encryption, works within your institution. It’s a completely different sort of incentivisation model, but people don’t do things just because altruistically they want to see if the tech works. There’s got to be more to it than that.
SM:	So, I’m-, I’m going to hope I’m the first person to ever ask you this next question. Okay?
AB:	Sure.
SM:	You took over as the Blockchain Lead for Chase, 2012? Is that about right?
AB:	No, I-,
SM:	When was it?
AB:	It was 2015.
SM:	2015. Okay, so about three years in?
AB:	I guess.
SM:	So, looking forward, lifespan-wise, does there come a point when you move on to something else?
AB:	Um-,
SM:	Or have you even had those thoughts? Because there’s just so much happening within this space.
AB:	Yeah, there’s so much going on right now. There are so many things that I would like to achieve, not the least of which being actual production code-, [laughter].
SM:	[Laughter] please, just to shut some people up, that would be nice.
AB:	Yeah. So, there’s a lot of things to do before we wave victory, I think, and you know, I-, I might lead the product and strategy for JPM, and I might be our-, I like to say I’m our Disney Mascot of blockchain, but there’s an incredibly qualified and motivated team, both on the product side and the engineering side of JPM that, you know, I could get hit by a bus tomorrow, and it would continue on.
SM:	You know, that’s a good point, by the way. Because I’ve had some interesting conversations, say, around Ripple, for example. 
AB:	Mm-hm.
SM:	Right? Stefan Thomas is, you know, he’s ridiculously smart, and-, and you do say-, you pray to God he doesn’t get hit by a bus. Right? Vitalik, the same way-,
AB:	Right.
SM:	Right? I mean, we do have some-, and I include, and I include you in there, right? That’s me sucking up right now. But we do. We have those folks, but it’s so important to have that team behind you, right? I mean, that’s reality.
AB:	Yes, I mean, in curating the team, you hopefully ensconce some of those ideals-,
SM:	Yes.
AB:	In people, so that they-, they would hopefully carry things forward in a way that you would have liked [laughter].
SM:	That would be nice.
AB:	But, of course, you don’t know what they’re going to do, if you weren’t helping shape those decisions, but you know, that-, the team is very forward- thinking, and it’s really our job, in the Blockchain Centre of Excellence at JP Morgan, to try to be ahead of the curve, and to be disruptive, and to,  you know, ruffle a few feathers, and to challenge people, you know, why does your business exist as it does today?
SM:	Right.
AB:	Or, what is money? Or, why-, why custody? What is custody, if we have blockchain technology in the future? And at first, there was-, certainly there’s some organisational resistance, and getting in the door, and then there’s people that are very excited to whiteboard things, but then they’re like, “Great, we whiteboarded this. We’re done with it.” Then there’s other people that, you know, they just become captured by it, and it’s about creating that spark. It’s about scaling the ideas, and the-, the will to be transformative within the organisation. We certainly can’t do it alone, and we certainly can’t change a massive institution, like JP Morgan Chase, from a tiny office in Brooklyn. The best that we can do is to sit with people, and get them to bring their expertise in, and have them solve their own problems, but with these additional tools in their toolkit. And that’s what we work to do. 
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SM:	And on that note, this wraps up another great interview show. A big thank you to Amber for coming and chatting with me at Money 2020. As always, if you want to get in touch, you can find us on Twitter @FintechInsiders, or on Facebook, on our Fintech Insider page, or on YouTube, for exclusive content. Or, email us at Podcasts@11fs.com. If you like what you heard this week, don’t forget to subscribe to our podcast, and please leave us a review on iTunes. That’s all for now, thanks for listening.
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