Podcast #62: Smart Cities, Crypto, and Music: How They All Relate

Good day everyone, and welcome to another episode of the Momenta Podcasts Series, and today we have with us Marc Fleury who is founder and Ex-CEO, JBoss, founder of the Free Side fund. Marc is an entrepreneur, a technologist and a thinker, and frankly one of the most interesting people I’ve had the pleasure of meeting in recent memory. We recently connected in New York in person after speaking a few times, and Marc I’d almost describe you as a renaissance man, because you’re involved in so many different things. But first I want to thank you for joining us.

Thank you, happy to be here.

We’ll dive into some of the things you are doing today but would love to get a bit of background. Could you share what led you into technology, and after that I would love to talk about what you’re best known for, which is JBoss. But before that, let’s dive into some of the shaping forces that influenced your development.

I was born in France, Franco-Spaniard lived in France and Spain, did all my studies in France and came to the United States in the early-nineties to finish a PhD in theoretical physics I was working on in Paris, and did my work at MIT in the research lab with electronics on x-ray lasers etc. What I remember from those days was crossing the Harvard bridge, if you know that bridge between MIT and Back Bay. There were these two guys walking, one was a journalist interviewing what I now know as Tim Burners-Lee, inventor of the World Wide Web, and he was so exciting in the way they were talking as they were walking, about the internet. There I was deep in a physics lab and all I knew was they had energy and I wanted to be there.

When I left academia, I finished my PHD, not a pretty one but I finished it and then went to work for Sun Microsystems in the early Java days, because this internet thing was taking off and Java was going to be the programming language of the servers and whatnot. The second strong force, I’ll mention one, was just the energy of the guys doing the worldwide web revolution in ’93-’94. The second force was again an energy was the people in open source, and that was the days of the Linux server and Apache server, and I could feel that energy, and again I wanted to be a part of it. So, within Sun I specialized in Java, Enterprise JavaBeans which was the standards for commercial applications in middleware, and started JBoss as an open source group, and it grew after starts and fits, a company that didn’t work, and then a company that did work, I managed to publish an open source and attract very bright minds, and then JBoss was a revolution in middleware first, and second in how we did business with open source.

That venture took seven years. Out of Silicon Valley we were in Atlanta Georgia from 99-2007, and then sold to Red Hat in 2006, now acquired by IBM as you know. A lot of the developers are still there and doing great work, it’s a very positive memory. After that, just to finish the personal context, once I sold the company we moved to Spain with the family and I became a dad again, went back to physics, physics research which I conduct now in ontology of quantum mechanics, and music, a lot of art and live programming of electronic music and things like that. More recently because of open source, because of the financial world which I’ve studied during the crisis, and interests me greatly, crypto was kind of a natural thing that introduced into bitcoin in 2011, when I got in contact with the original bitcoin team and they wanted my opinion on the open source approach of bitcoin etc. I didn’t take it seriously at first, but now as you know, I’m back in in that field, a lot of interesting developments, not necessarily about technology, mostly about finance in own opinion. But that’s the arc of 50 years in a nutshell.

How did the germ of the idea for JBoss emerge? As you began the project that must have been at the height of when there was all the excitement around WebSphere and WebLogic, and the application servers for a while. I mean application servers in middleware were one of the hottest categories in enterprise software, but Linux at that point was still emerging from being thought of as this odd project that had some really eccentric philosophy behind it, I’d love to get your thoughts about the origins of what had inspired you to take the open source approach, and then how it evolved, how did it become this enterprise-ready software?

When I was at Sun and doing Java, I was a Java evangelist working on core box etc., I really wanted to join their developer ranks, and because I had a background in physics not in programming, nobody would have me. So, the teams at Sun were like, ‘Yeah, we like you Fleury, but you’re not a programmer’. I tried to join WebSphere and the same story, I remember vividly sitting in Silicon Valley in traffic at a red light thinking, ‘Screw it, I’m just going to do this in open source and do it myself.

At first it wasn’t obvious to do Java in open source, in fact there was resistance on both ends, meaning the people who were making money with Java did not see this open source thing with glee, it was a destruction of sales from the point of view of WebSphere or IBM, and that lasted throughout. By the same token the open source guys were all SELinux, and this Java thing was enterprise software, so for a while I kind of existed in a limbo and I remember vividly a VC meeting with Sequoia Capital, one of the tier 1 VCs in Silicon Valley, and basically it was ’98 and I was pitching the cloud. To me it was obvious that the cloud was going to become a thing, and it did, but underestimated the timeline and the VC looks at the business model and says, ‘It’s not a bad business …’ this was Doug Leonie who was God at the time, ‘This is not a bad business plan, it’s a horrible business plan.

There I was basically way too early with the right idea which became the cloud, but it wasn’t the right time. I remember the VC saying, ‘Well, why don’t you focus on competing with WebSphere, just sell the stuff as-is to enterprises’, and I was, ‘No, I want to host it etc.’ We were both right, and both wrong, and in the end what happened is, I went out with this open source project trying to make a living with it, training came easily, and eventually the VC was right, we started doing what Web Sphere was doing, the same sales approach but with a radically cheaper product to maintain, and some ESO functionality that made it the darling of a lot of developers. So, the way to develop was almost by… I don’t want to say by accident because there was no accident but it really was exogenous, meaning it was the outside that was telling us, ‘This is how we’re using your software. Why don’t you stop dreaming what it can be in five years, and just sell us thisright now?’ And ‘this’ at the time was training, consulting, support, it eventually became a pure support maintenance house, meaning not a consulting house but a pure product play. That evolved because the market demanded it, and by that time it’s a great position to be in as an entrepreneur with a market that is really telling you where you need to go next.

It’s easy to imagine things in your head ahead of time and fail because you’re ahead of phase compared to everyone. But once the vision and the market come together then you have magic that can happen in terms of viral distribution and open source success, and certainly it’s what happened for us. So, it was a non-linear path as it usually is, the mix of us imagining the future and then the market telling us, ‘Yeah, but we want to go there’, and us responding as we could, and scaling, and we did a series A, and very quickly we got basically taken out because it was growing too big in number one market share etc. So, that’s it, that was how that happened.

It’s pretty remarkable. What were some of the initial challenges you may have faced when…? I guess given that the product developed organically you didn’t necessarily face some of the same issues that develop and ship proprietary software companies face, but when you were trying to harness open source development and you had a model that was predicated around adjacencies, rather than selling a product itself, were there some challenges that you found initially in managing development cycles, in ensuring that you were able to get the product out here when you wanted to, or when you were hoping to? Parenthetically I can see how coming from physics, in a sense arms you with a vision that’s not laden down with pre-conceptions, but I’d love to get the contrast of your experience with the traditional way of doing things at the time.

Well, certainly the open source development model was successful by the time we started operating, but what was new was this mix of let’s take an open source project and turn it into a company. Before that you had the Linux model that was really co-opted by Red Hat, IBM, and all those guys pushing Linux on the server side, and it has come to pass it now runs the internet. Apache was big companies doing developments, small companies doing development, here we were really saying we’re going to make money from opens source. So, it was a challenge because everybody was using it, everybody wanted to pay but just didn’t know where to do it.

On the development front it wasn’t really challenging, but it was kind of easy because I never saw a resume for example, and the only guy I ever fired personally in the development ranks was a proprietary developer who wanted to come to open source and couldn’t make the transition. For the most part I hired 30 guys that were all vetted personally before because we had worked on open source, so, the development side of things grew very quickly. The key on the product side was bringing a very early partner Scott Stark who was my co-founder in the later JBoss thing, and he took care of the product cycle, the releases, and then the trainings and the support tagged onto that, and it became a more normal version of approach to software development, albeit with open source characteristics in the development, namely we would develop all over the world and meet twice a year, and getting together all over the world was always a pleasure.

The other challenge, which was also not really difficult, it was adapting the two models together was on the business side. Then we brought in expert people, I worked with Bob Bakle who was a manager at HP, managed the Software Division so he knew the business, and growing a sales and marketing arm we knew how to do that, and that’s what they set out to do. One of the things we pioneered and still remains in the literature was the marketing lead qualification, we had the interesting problem of being one of the open source leaders, so a lot of traffic, millions of people on the Website, how do you go from millions of clicks to 10,000 qualified clicks – ‘Oh this company is looking at this’, or, ’They’ve read this many hours of a doc’, and, ‘Maybe they need help because they’ve been reading about clustering’ etc., and how we would generate the information from the website and pass that, funnel that to a multi-layered sales team that would qualify for the deal, so that by the end you would hit the senior sales people, it was a fully qualified thing. We had very high closing rates compared to the rest of the industry, just because of the open source buzz, noise and visibility, that we had to transform into a more classic sales channel.

So, some organizational challenges because of the open source, but that worked well in terms of people I usually set up, starters, and I never saw a resume and it was still work class development. Some business model challenges like I just outlined, this professional open source; by the way a funny story, it spells POS which means something else! And nobody ever told me, everybody was laughing for five years, and I realized once I sold the company, ‘Oh my God, I’ve been running with this acronym for the longest time!’ But the innovation and challenge was around the business model, getting open source accepted by companies, and now it’s part of the background, everybody does open source it’s not controversial anymore, it’s the way things are done basically.

What was the role that community management played in advancing the product? Certainly, an open source development model allows a project to draw from so many different sources, but you need to maintain the trust and the interest of the community. How did that play a role in the work you were doing with the core team?

One of the misconceptions of open source is that people are going to start working on your project because you’ve put it out there. It’s just not the case, all projects always have a very active core, and around it you have a myriad of people, consultants, developers, independents, big companies etc., and so the role of the community leader which in our case was a company, is to really set the agenda, set the tone, set the road maps, provide the bulk of the effort, it can be 80-90 percent in the beginning. Even in the end it’s probably close to 40 or 50 percent led by a big contributor, even in very successful projects, certainly in very successful projects because otherwise nobody contributes. So, there is a magic to getting the group going, there are certain dynamics that are difficult to incubate or create willfully, but once they kick-in the characteristic of open source developments, the finance of open source developments are very interesting, the financials.

So, there was a lot of community managers and thinking about who was on our mailing list and became one of the biggest contributors. Scott Start was animating a lot. I was a lot in community management as well in community communication. Those challenges in terms of who manages the road, it’s not chaos it’s just people who vet who comes into the CVS tree, the repository, the GIT hubs etc., so it’s managed chaos in a way. Once that thing starts cooking then it’s really a different dish, and proprietary development because you can buoy with less barriers, and the code gets through developers etc., so it’s a good business model once its functioning.

That’s great. I’d like to move onto your interest in smart cities, and what has been your interest and what has attracted you to the business problems and opportunities that fall under this broad umbrella we call smart cities.

It is a broad umbrella, I come from the background of IoT under that umbrella. Once I’d sold JBoss I took a couple of years off and played video games. Two years after the first thing I did is I studied an open source project called OpenRemote that at the time dealt with automation, home automation. We did a lot of work out of Philips Research in Eindhoven, Netherlands, the mothership of Philips basically, and the OpenRemote was incubated in the Philips labs. It’s now a fully-fledged open source project and a successful one, they’ve been selected by the EU Commission as an IoT platform for EU projects. There’s a lotof smart city in the EU, we have 10 smart city projects from big cities – big project, for example OpenRemote powers Schiphol airport military passport control, so its Ministry of Defence project, we provide integration and some software, to, small cities, 50,000 people that want to revamp their lighting, their security, and their cameras, and they don’t quite know how to go about it. So, for the past 10 years basically OpenRemote has evolved from home automation which is difficult and really a niche market for rich people, to smart city infrastructure which I find personally a lot more interesting because we’re dealing with sewers, medical applications, and whatnot, and that’s very real in infrastructure, a little more discrete than what people understand as IoT buzz.

The second characteristic that I find interesting, even if a bit difficult is, even though there’s many products, to me it’s not necessarily the smart city IoT or connected world, it’s not necessary a product play. What I mean by that is you have 10,000 products in the field already and new ones coming, it’s difficult given the amount of products in the market to make a niche for yourself, unless you come with some genius design say like Nest have done with a UX that’s really cool for thermostat etc. By and large in the industrial world it’s a very anonymous world from the product standpoint, any city project we get involved with, and we have about ten in Europe, we deal with what’s existing, we’re not recommending products per se even though we will. Usually we come in and there’s already a vendor for the lights, and there’s already a vendor for the automated parking meters, and there’s already a vendor for the cameras. It’s mostly a problem of middleware protocol integration which was very close to our JBoss background, and then UX and used cases.

But lately, just to wrap the intro on that, what do smart cities need? They need the products for sure, but we don’t have a shortage of products, we have a shortage of savoir-faire of how do you accompany a smart city through the process of deploying studies to assess what hardware needs we have, so we can know the capital requirements, because as you know smart cities are usually in later stages verycapital intensive. And how you go through the process of becoming a smart city, a green city, is usually what we find as the demand of that and financing. It’s mostly a cry for help that we see now from the smart cities that say, ‘We have these products, we don’t want to sell it between 10,000 products, we have too many vendors, can you please integrate and give us UXs we can use?’ ‘How do we finance it?’ etc. etc. and that’s where crypto comes in.

That’s a really interesting lead in, I’d like to come back to some of the challenges around smart cities, but how do you see a crypto as playing a role in advancing the financing for projects?

About a year ago as OpenRemote and as the free site hedge fund, we answered an RFP coming out of Atlanta for about $350 million-worth of equipment and whatnot. It was an interesting RFP in the sense that they said, ‘We don’t know what we want. We don’t have money; you need to finance it and it needs to make money for us’.  At the time nobody wanted to touch it, I talked to a lot of infrastructure players that said, ‘It’s too fuzzy for us, they’re looking for a financial partner but they don’t know what they want’, and it’s a cry for help that we recognized from Europe, it’s always the same story, it’s always the same story; it’s, ‘We don’t know’, ‘Help us navigate’, ‘We want to be a cool city’, ‘We hear there’s savings, the potential money, how do we do it?’ So, the savoir-faire part doesn’t have to do with the crypto.

The second point of it is on the crypto front, and this is not a crypto focused talk but there’s really two proof points in crypto that I think are historically valid, there’s a lot of noise for sure, because we call it money and everybody loses their minds. The first killer app is a store of value function, bitcoin, meaning it has an intrinsic value, it’s a database record but we all assign it psychologically a value, like gold. So, it becomes a store of value like gold, in fact traded and regulated like gold placed in the United States.

The second killer app of crypto has been ethidium and the smart contracts which have enabled several things in the fund formation approach. It was revolutionary because…

• The limited partners in the fund were now immediately liquid, and that’s a trend that we still see going in the organization of funds, whereby even though you’re investing in what usually would be in a private placement memorandum with lock-ups, with the presence of a crypto layer you become liquid in the markets, and that is very

• Once you mix the store of value with the liquidity with presentation, as has been proven by bitcoin and Ethereum, then you have a funding mechanism. In the past we’ve seen this fund formation mechanism explode, you can think of it as the future of crowd funding, even though I find that limited. What happened with the ICO phenomenon was a crowd formation like we’d never seen before, I think we reached $50 billion wiping out usual seat stage VC funding out of nothing, because there was nothing backing up 93 percent of the ICOs, and they’ve died since then.

Even in the crypto world I find it always interesting, we had this conversation when we met in New York last time Ed, it’s the fact that most people now in the bare market of crypto have completely bashed ICOs, saying there were scams, there was nothing behind it, and it’s easy to have that negativity and certainly it’s very valid, it has crashed. But let’s not forget that for a while almost two years we had unprecedented levels of capital formation for all kinds of crazy ideas. Here we could go and say, ‘Okay, what is the real pain point of smart city? Methodology, I mentioned but that’s soft core, and then financing, ‘How do we finance it?’ So, right now I’m pushing hedge fund ideas on how to leverage any investment so we can go with crypto store value vehicles that will enable us to co-deploy with cities, who invest with cities but with a crypto treasury, and sort of applying these fund formation characteristics that extremely advantages to limited partners as well as the target cities, because we’ll say, ‘Look, we can come and finance probably 60 percent of the project, with maybe another VF partner, and then we could offer follow-on token offerings for the city’.

Now, all of what I’ve described by way of wrapping up that bit, and opening another Pandora’s box is, all that I’ve described is financial. This is about the financial characteristic of those coins, those stores of values, and applying them to the financing of smart city which normally falls a little bit outside of the normal banking system. There’s a lot of financing specifically with 5G but there’s a lot of room for improvement, and when you talk to specialists, when I talk to your Momenta Partners for feedback on OpenRemote it was, okay you guys are indeed targeting the main pain point of smart city deployments today which is the financing. It is not about the tech, you can talk about Iota is the blockchain for IoT, and that’s about the tech, and why would we put all the data of the sensors on the blockchain? There’s very little use case for the technical use of blockchain per se on the open source ledger, but there’s tons of applications in my opinion that’s where I spent time on, on the financing of smart city, which is as you know one of the biggest pain points of the industry.

This is such an interesting point that you brought up Marc, because when we were talking about this, I think the ability to offer say a crowdfunding solution, or what would actually be a role 144 offering because, at least if you’re talking about states in the United States there are exceptions to the SEC filing requirements if you are targeting investors that reside within a single state, but below certain thresholds of investing, and you’re able to solicit investment from investors that don’t necessarily meet the accredited investor criteria. This is what I thought was so interesting when we were talking about this earlier; leaving the regulatory challenges of today aside, how would you see a crypto funded, or crypto crowdfunded smart city project unfolding in the future, say hypothetically? What kind of role could crypto play to open up some opportunities for funding, that couldn’t be done otherwise?

Again, the main function that is interesting for us is the store of value function of the crypto, because that is an inherent leverage, and it gets exceedingly technical, almost hedge fund talk, but it’s a way to leverage as, if you give me one dollar, I can create 12 of crypto. What do I do with those 12? I put it in the 147a exception, it’s not 144, it’s 147a. We can do a Reg D for accrediting investors; we probably would shun US investors although we’ll target them because you have to if you want to do it seriously. But start with a Reg S meaning international investors that want to be exposed to the smart city category, because it’s a proxy for real estate and infrastructure in the United States, meaning one of the most attractive asset classes in the world.

So, having crypto leverage 12 to 1 allows us to take Reg D – Reg S accredited investors where the little guy like you just said, is not invited. But what do we do, we leverage it via crypto, and what do we do with that crypto, unlike the other crypto that was released without any backing we say, ‘Look, this crypto is going to be released into the wild, when and only when we have a natural smart city project, and for that smart city project we would probably bring our own treasury to bear, just like project financing houses do today. But we would also invite the local participant via the 147a exemption to participate, and by the way, not only do we not need them to be accredited, but they’re also immediately liquid. That’s extremely interesting, because from the regulatory standpoint, now you have a fully liquid instrument that you can put on an exchange, provided you make sure that it remains interest-state and things like that, which is what we do with the securities token, and the whitelisting now, as you know. This is closer to a discussion we had prior, but it is close to the airdrop mechanisms of pure crypto place, whereby you need to get your tokens in as many hands as you can, if you want to create true market liquidity.

So, at the end of the day as a hedge fund, right now I’m focusing on two things…

1) For information where I can leverage probably 10x as a hedge fund what’s coming in, so from an LP standpoint it’s a very leveraged play, almost would have characteristics close to its treasury. So, we’re far from an equity play in a startup here, we’re purely in the hedge fund leverage realm.

2) Then offer airdrops everywhere per projects, when those projects become more concrete, so that you have a legal airdrop with an asset back mechanism that comes back into the token.

So, just to wrap all of that up, the focus on my end right now is on the exchanges, I’ve invested in a bunch of exchanges in the market, you have your Coinbase’s, you have your Binance, your Crackends, but really we need new exchanges that bring these hybrid products to market in a more controlled way, so that the investors know what they’re buying. They probably won’t be as regulated as an IPO, but not as wild as an ICO so to speak, but somewhere in between I think the financial fund formation aspects of crypto can be applied to that problem. Right now, I know I talked to you when I was approaching it from the point of view of OpenRemote, and in equity in a company, but really, I’m thinking now it’s a pure financial structure existing in a foundation that operates as a hedge fund.

That makes sense, and in many respects I think a lot of people that have been focused on smart cities to-date have been really addressing some of the big technical challenges, and organizational challenges, because you need to orchestrate multiple interests and multiple types of decisionmakers with different priorities, to integrate operational and proprietary information systems together to solve problems. But I think the point you make that there really needs to be a creative approach to funding gets to the huge pain point in the space.

I’d love to get your thoughts on any interesting topics that may have emerged, as you were just in New York at the Smart Cities Conference and had a chance to compare and contrast some of the thinking that was going on in crypto. I think when I saw you, I was at Consensus and you had just done a day at smart cities, you’d been at Ethereal Summit before; how would you asses the state of the market as far as blockchain technology, and expectations today, versus a year ago? Then compare and contrast that with what you’re seeing in the discussions that are in the smart cities communities.

Well from the crypto front I was at Ethereal, I went Fluidity etc. What’s going on is very interesting, there may be a rebirth of crypto very soon, I think it’s coming back. The ICO information mechanisms in a different form with more legal, more transparent, but it will come back once it’s applied to things that have real value as opposed to just another ICO tech. Whereas, there’s a lot of tech in blockchain, my personal focus is really on the applications on the financial front, and I don’t get that vibe from the crypto world, and I don’t want to get flack for it, certainly as a technologist as an open source pioneer I’d rather take the credit than the inace here. But to me crypto is not about the tech, in fact it’s been 10 years of the tech, once you have 10 years it is done, you either have something to say or you don’t And, why is it still going? Why is bitcoin in its infancy, because it is not about the tech.

It is about the tech of course, it’s about blockchain, but the big picture to me is financial right now. There’s other applications, even philosophical of open source ledgers, such as the identity should exist, their medical records should exist there, but in the short term a lot of people think blockchain is about the tech when I try to apply it as a financial tool to a technical problem such as smart city. So, I also went to the Smart City conference and I found it a lot more focused than what you can see in the crypto world where there’s a little bit of blue-sky thinking still, it’s all going to be unicorns, and peace and love, it’s going to be great! And this is not 2017 anymore, and some people still want to leave that, and we’re going back to mooning and all that. I think it’s certainly going back, but its going back with applications from the real world, not just blind speculations on ICO scans. But ICO smart city I want to see that led.

There’s other projects, even in science I work on some projects there with funding, but on the Smart city front I found the conference actually very focused, everybody’s in 5G right now, and you can go down the rabbit hole of 5G financing. You’re absolutely right there is a methodology problem getting the partners to talk etc., who is leading, usually it’s got to be consortiums. I think everybody’stired of hearing product pitches, or platform pitches, there’s 30 platforms out there – who cares? It’s not a product problem, in fact I think people pursuing products are finding it very hard because you have to spend so much money to stand out of the Tsunami of little products, why are you censored? Why this sensor, why not the other? That’s not what’s important right now. To your point it’s getting all the parties together, what are they doing? What’s the methodology? Where are the stakeholders, how do you get them to align?

The one thing I haven’t talked about because that’s still in the books for me, what happened in deployment stage is that crypto in 2017 also showed that it has something to say to gamification of economic communities. What I mean is, how do you represent the states of every stakeholder in endeavor? Well, you can do equity but that’s a very rigid monolithic constraint, ‘Here’s some equity for you’, ‘Here’s some equity for you’, and the developers get some, and investors get some, but the token approach is much more fluid and liquid in the sense of market liquidity, instrument rather than private equity that is a liquid mostly. So, I think crypto even has something to say to establishing incentives on a per city basis; let’s say that a city wants to reward you taking the bus, who wants to reward your car pooling, or wants to reward your using e-scooters, whatever the case may be we can represent those rules in a game with crypto, so you get paid in crypto according to your collaboration.

And to each according to their capacity in the Karl Marx’s sense, not to plagiarize Karl, is a notion that is do again; how do you reward everybody for their participation in a community that is most loosely connected? Suddenly we pioneered many ideas in open sources, you asked and we discussed previously, how do you reward open source developers was certainly the core of my thinking 15 years ago when I did JBoss, and I wish I’d had something like tokens. Had we had bitcoin in 2000 I would have done it with a token, that’s the answer, a very fluid approach to incentivizing stakeholders, and making sure everybody’s aligned in almost in again a theoretical way. Crypto is more about psychology, game theory, and financial applications, namely store of value information as I hammer today. But they’re very obvious, they’re kind of hiding in plain sight.

Just to finalize this long rant and repeat the answer to your question, I think the crypto crowd is either lost in the parties which is great, because they’re great parties and New York was similarly out there. Or, still thinking it’s about Silicon Valley, and it is, but it’s not, it’s more about a city of 200,000 people somewhere in the Mid-West that must do this infrastructure, and can we float their offerings? That I find very exciting, and that’s the future of a lot of things here, and I think the folks in smart city are almost there. I started talking about crypto a little bit, and the specialist are already on that wavelength. ‘Yeah, yeah, we get it, we know; how do we do it, who does it?’ Then the who does it is very important, I think as a hedge fund we can create the perception at least at first, and then the reality in implementation that we would, not control, but steer and guide this process which is always a consortium process; city by city it’s a consortium process; a city will put down an RFP, and they already have their lights and their vendors for the street lights, and their vendors for the security, and their vendors for the parking meters, the vendors for the sewers, and you have to deal with that consortia and make sure everybody’s happy, and you need somebody neutral on the product front. Really, if you read the RFPs right now, they want as you said two things, they want how do you get everybody around the table, that’s the process, that’s the methodology, and there’s ways to go about that, and secondly, who is the financial partner? Who is going to make sure that these funds are well-invested by the cities? Because cities can have dodgy reputations in the US, that’s also something that scares potential investors a lot.

No question.

But smart cities is very advanced and I think right for that information revolution, be it crypto, and as you know that’s where I spend a lot of time.

Yes, that’s great perspective Marc, I think you’ve really outlined what is special and what’s different about these streams of thought, these trains of thought that I think some of the new technologies are enabling, but you’ve outlined it beautifully. I’d like to switch course a bit and ask about some of your other interests, how physics and music fit into these interests that you have in finance, tech, and crypto, which would seemingly be very different on the surface. Talk a little bit about some of the work that you’re doing in these other parts of your life.

This is where we go magic. Basically, it’s all one big unified I call the Church of Space, and the Church of Space is a lot of physics, a lot of arts, its theatre troupe, it’s an electronic music act, I have live called Friends Electronique, and Church of Space, and we have a residency at Moog Fest, and whatnot. I’ve just come back from Paris from an Institute where we conduct analogue experiments on walkers, and we study quantum mechanics, and try to understand quantum mechanics. The unifying thread in the Church of Space is this anthology on reality, meaning the ingredients that go into our physical reality which in this case is an ether, the ether of the 19^thCentury philosophers which disappeared when Einstein introduced special relativity and the environs of the speed of light asemantically into our systems. We couldn’t reconcile it with a luminosities ether which was the dominant mind model all-natural philosophers used, and all shamans, magicians. The magical tradition has survived in music, and in music I encountered acoustics and the study of pressure, and that ether is manifest as above or below is another precept of hermeticism.

It doesn’t sound corny because we publish academic research both in music and physics, I collaborate here with Professor Gerber in the music department of Georgia State. What informs the two is these fields, these resonances of the fields, the acoustics of a cavity, the acoustics of a room, the particular frequencies that work in a particular room, and both in physics and in music I find inspiration in both. From music for example I’ve studied the beating effects in the Buchla instruments which arises when you shift a frequency by a little bit, let’s say you have a signal at 200 Hz and you shift the frequency to 202 Hz, and you sum it together, and when you sum two co-signs that defer a little bit by an epsilon you factorize it, so you have a beating effect at the factor of the difference, the two hertz in this case. So, you have a very slow… boom… boom… boom… in the middle of otherwise 200 Hz noise. Those structures actually appear in physics, verbatim, exact, as above or below, as the bridge between quantum wavelength, which is the intrinsic oscillation of matter, of the electrons in this case – to the Debreu wavelength which appears in quantum mechanics, and we observe in the fraction.

So, they’re very disparate on the surface, they’re very different modes of expression; one is definitely left brain, the other one is definitely right brain, and I know you love your instruments and your jazz playing, so you know what I’m talking about. Mixing this intuition with a very strict, rigorous framework, in which to express the ideas, but letting the mind wander through senses, and exploration, and chaos, is a very rich approach to what can otherwise be an intellectual dead-end, and I’ve certainly found a lot of pleasure mixing the two.

And just to wrap-up and wrap crypto in, the Church of Space really became a philosophical house. I fund research, I finance experiences, I work on propulsion, that’s what we do at the Lans Veigné in Paris, beyond Elon how do we move without burning dinosaurs etc.? Well, there is a force, there is Star Wars, it is true we can serve the waves of space, we just don’t have the tech, barely the physics with what we’re working, so it’s a philosophical program which you arrive very quickly at, ‘Well, look the sun is going to blow up in 4 billion years, therefore either we leave the planet’, which we don’t, this is about planet earth and EDs and smart cities, and green planet. Then we take care of earth, and then technology and the progress of technology is what ensures the survival of the species and its DNA.

So, within Church of Space there is a whole philosophical programme that’s a survival technology, and crypto plays a central role in this, and without the fund formation financial aspects which is what I harp, on in the immediate future, as I know you do, I think there’s a lot of interesting philosophical aspects on the social front. But I think Open Source ledgers will one day command the records of identity, passport, bio-metric what we call UBI the Universal Biometric Information, will cover voting records, will cover medical records. It’s insane that the medical records in the United States has a property of a private monopoly namely Epic Software. The heart is in the right place, and they invoke Harry Potter on campus, and there’re magicians, it’s all good but it’s a private monopoly for god’s sakes. In Europe it’s the property of the government, philosophically you can argue with Richard Stallman and FSF that your data is your data, and it belongs to you, and how are you going to store it making sure it belongs to you, an Open Source ledger fits the bill.

So, in my mind I have no doubt that in 100 years, probably five to six data categories, including those I have mentioned and a few others will live in open source ledgers. How we get there I don’t know, I’m not super-interested in it now, because I don’t want to repeat the mistake of JBoss of inventing the cloud 15 years too early, and not going anywhere because I’m 15 years too early, but I know it will happen. And so, to me FSF, the fund is sort of the financial arm of the Church of Space, whether the Church of Space is Focused first on physics, and then on the music expression of these ideas and that psychology. But it’s one cohesive group of four focuses, even if it’s just in my mind, it’s very coherent to me, it’s sort of an individuation to speak, Jungian philosophy.

It does make sense, and I think if we were to dive down into that we could spend many rich hours exploring the implications, really, it’s fascinating and I love hearing you share your vision and philosophy there. But within the limits of a podcast I want to just move on to discover a couple of more things about you, one is just to get a sense of what you’re most optimistic about, and what your key worries are. As we think about back toward technology and away from without getting too exponential, what gives you a lot of hope over the next decade or so, and some concerns that you have?

Well, its funny that we’re reaching the age of abundance that Karl Marx used to call third stage abundance, meaning the machines do all the work, the AIs do all the work. It’s always interesting to me to hear leading thinkers, be it Elon or Basel’s, have rightfully-so a very dark reading on what’s going on. Certainly, we’re reaching the very interesting paradox of the tools of capitalism have created this abundance worldwide. And because we’re still stuck in the work for pay, work to eat mentality, this is not per se capitalism, it’s just the modern world where you have to work, there is a bit of a paradox here of the machines do the work, so we don’t have to work, and therefore we cannot eat the produce of the machines. I know you don’t want to get existential but I view crypto as directly addressing parts of that. Well, let’s give the smart ones the capacity to create their own money and their own value, and create more abundance.

One of the things that makes me very optimistic, besides the state of tech, but I think the state of tech maybe has lost a little bit of its intent, both the bright and the dark intent. What I mean by dark is all the palm-book, the hardcore libertarian, even honor kiss components of open source, and I don’t mean dark negatively, I mean just the more deconstructive aspects of crypto. Also, the very positive aspects of this new community base innovation with crypto, and what I love in crypto is the energy, they’re young, they’re excited, they meditate, they’re scared of the future, they’re excited about the future. It was the same energy I loved when I was a young guy and I wanted to do internet, it was the same energy I loved in open source, and I find it in crypto; the 30-year-olds, the millennials, they’re all about their meditation and their manifestations, and I like that and it makes me optimistic because it’s a certain mindfulness, a certain thoughtfulness that they take advantage.

So, I’m going to go existential for two seconds, but we’re really witnessing the impact of the internet on our psyches, away from the centralized media of 20^thcenturies where we get a lot of abuses in propaganda in the first-half, and then mindless consumerism in the second-half, and I’m not criticizing the mindless consumerism, it’s that now you see a yearning for meaning, almost a religious need, the community need a sense of purpose, vision, and belonging that people develop individually and at the same time in a group. Crypto certainly shows that in spades, when you ask a young one, ‘What do you do?’ Well you in my generation or our parent’s generation, they would work for GE all their lives, and you and I, our generation we’re 50, it would be, ‘Well, I work with this company now’, and now it’s that but vaporized, the kids have five projects, and they’re freelancing, and they’re happy doing it, and that makes me an optimist, and fundamentally almost naively optimistic that maybe not us, meaning you and I, but the next generation or the generation after will figure out this transition to this world of abundance without the existential angst of survival around abundance.

Let me tell you, no animal has ever died next to a source of food and water, it will be the same for us. I think crypto will play a big role in that post-nation state, post-capitalist abundance sort of approach to things. What shape it takes, I have no idea, but we’re really witnessing the psychological impact of free flow of information, open source communities on our society, and we’re starting to see the legacy institutions not just nations state, but even World Bank, IMF, UN, they’re getting a little green around the gills. What are more modern fluid constructs that people can trust? It’s not the IMF, maybe it’s the new China Silk Road.

Anyway, everything is moving in a big way, and I think the psyche of individuals is rapidly evolving with this internet thing, and this AI we call Google, because I like to think the singularities has happened, it’s called the internet and what it’s doing to our psyches, we like in angst, but if we focus and manifest what we want to manifest, it could be paradise. Hell, let’s do those smart cities, let’s do those green cities, you want to work in your 50,000 people village where you have several generations of people, and it’s not this mindless rat-race where the kids are not looked after. That’s a vision people want to feel fussy about, and I like that, that makes me happy.

There’s no question, I think that is what had excited so many of us about the opportunity to rethink the world again, and that was what we saw in the first internet bubble, you really had people reimagining how every business could be refactored, rethought, and it’s the same sort of energy today, and you combine it with some idealism, and some very smart technological people plying their chops.

That’s magic.

Yeah, a lot of things are going to fail of course, but it is interesting, I heard George Gilder at Consensus say that blockchain really solved two major problems, one was the issue of the fundamental challenge of the lack of security and trust on the internet, based on the architecture, the open architecture of the internet, and the other is the problem of money, but that’s of course another subject entirely. For the first time you have all of these forces coming together and it really is an exciting time to be exploring so many possibilities.

We’re coming up to the end of our time here, but I always like to close-out with a final question which would be, any recommendations you might have for a book or a resource that you feel passionate about, the type of thing that you would give to somebody to help them see the world in a different way?

Well, two books, I’ve finished one and I’m almost finished with the other, the first one is an old one, it’s Carl Jung, ‘Memories and the Process of Individuation’, meaning how ideas get birthed and your psyche sort of have to deconstruct it to reconstruct it to the new circumstances, which is, you can see in the world of crypto, the world of crypto is going through individuation opposed to institution,  opposed to the existing protocols, or opposed to the existing groups. And in this strife and opposition you have to define a new reality, and Jung went through this without the modern internet and whatnot. This is more about psychology.

The second one I’ve just finished reading is called, ‘The General Theory of Love’, and it’s a psychology book by psychoanalysts and neurosurgeons. It is very well written, it’s a very erudite book, very clear minded, very illuminated book, and it’s always a pleasure to slip into somebody else’s mind and turn off your own for a while, I always get pleasure out of that. ‘The General Theory…’ which you can find in most bookstores today is that the brain is really three levels; physically you have the reptilian brain, a stem which controls the basic functions without you knowing. You have the neocortex which is where we think and what distinguishes our specie in terms of speech and reasoning capabilities, mathematics, and advanced thought. But in the middle exists this limbic brain which we engage when we dream subconsciously, or we engage subconsciously. And the theories that emotions really emote, literally emote electromagnetism-wise from the limbic brain, its an electric quantum emitter. The theory is that people naturally connect emotionally first, through the limbic brain without words, mentally, psychically, and sort of align through this intrinsic intent.

I found that very pretty, almost poetic, very romantic, the idea that the bond between a child and the mother is limbic. The bond between people is limbic, so that you and I first communicate subconsciously and when that is in alignment you attract what you like, you attract what likes you, so the memes come from the limbic layer, they feel natural and second skin, and this meme propagation is a limbic thing. The book is very well-researched, academic, medical, but also psychoanalytical practitioners away from Freud, Jung, and all that old clique, almost modern saying it’s the limbic system that is struggling right now, that is anguished, that in its dreams has nightmares, and it’s really at the limbic level that we have to apply some kindness so that the limbic connection can re-awaken and we can connect intuitively to each other, or as a group. I don’t mean everybody, I don’t mean  Earch peace, saying we may not have peace the war machine is too important in our psyches. But at least at the group level, crypto certainly has that, the strong community, music is very strong in that. Yes, I think those emotions play a very-very big part there.

We’ll link to those in the show notes. That’s fantastic, I’m going to pursue that. There’s a great book on negotiation written by Oren Klaff called, ‘Pitch Anything’, the first thing that he talks about is that when you’re looking to sell something, his perspective was an investment banker working for a small boutique shop, pitching against big established bold-bracket firms for financing deals, he said that the key was that most people make their minds up in five seconds, because of their limbic system. You either eat it, you want to flee, or you want to how shall we say? Love it. Those are the reactions that come from the limbic system that are innate, and if we understand those at least better, it can help us be much more affective in articulating and advocating, and our passions and our ideas more broadly across the world, and hopefully for good as well.

I think that’s a terrific recommendation and thanks for bringing that up. I think we’ve run to the end of our time, again this has been Marc Fleury, founder, technologist, entrepreneur, thinker, philosopher, we’ve covered so much ground in this conversation. It’s always a pleasure talking to you Marc.

My pleasure.

Again, this is Ed Maguire, Insights Partner at Momenta with another episode of our podcast. I’ll say once again, thank you so much Marc for your time, it’s been fascinating.

Thank you.

[End]