Episode: 68 - "Blockchain Made Easy" with Michael Ly

Michael Ly, CEO and Founder of Reconciled, came to Vermont as a native of Arizona, the son of Cambodian refugees. He moved to the 4-season state and learned slowly, that winters are long, New England is not a state with Boston as the capital and lastly, Vermont is not a town. He knew no one, save his wife and decided to put his degree in Accounting and Finance from Arizona State to good use by helping companies with their book-keeping.

As he got to know the biz community, almost every business he went into, the book-keeping was a mess.

Most businesses in Vermont are small w/ 13 or less employees, so Mike found himself
as a VERY expensive book-keeper. He needed to change his strategy if he wanted to scale, so he hired his own book-keeping team, scaled the business bigger in the fall 2015, and now, he owns Reconciled, voted 2018's US Firm of the Future as one of the most forward thinking companies in the world.

What Makes Reconciled an Intuit Forward-Thinking Company?
According to Michael, "there's a huge change happening in the accounting industry." 4 Factors attribute to this big shift:

- AI (Artificial Intelligence)
- Machine Learning
- Block Chain
- Cloud Accounting Apps

Most of the accounting industry moves very slowly, while these technologies happen instantaneously; in real-time. How do we take manual data entry and automate? Will business embrace eliminating the middle man?

Speed of Now
Instead of waiting 15 days into the next month, Reconciled is able to update real data in real-time,
allowing easier access to funds and nimbleness within a business and cash flow. They're one of only
10-15% of firms in the industry leveraging apps and technology in the accounting field.

Security?
When I asked Michael about security concerns for cloud-based transactions, he mentions "Intuit - Amazon - are investing in security far more than an individual company could ever do." He mentions their worst security vulnerability is not in the cloud, but rather, in their clients' computers. "A desktop connected to the internet is far more vulnerable than cloud-based applications." Poor passwords from clients are the biggest vulnerability. We chat about LastPass, one of my favorite programs to keep tabs on all my passwords securely. (No, it's not an affiliate plug - yet. Yo - LastPass, I'm looking for another sponsor of the show... 

What IS BlockChain? (De-Centralized Ledger Technology.DLT)
Michael says at its core, BlockChain is a data technology similar to Access, but not centralized on any one computer. "So imagine having access, but unlimited amount of people own it,so if 1 person were to lose their credentialing, the structure of Access would still be there." So basically, it's like having your ledgers, your accounting in the cloud. Multiple people can access securely.

Challenges:
1) US is farther behind on block chain than the rest of the world.
2) AOL days - fighting for standardization of who will become the stand of the internet.
3) What should be the standard of blockchain?
4) Who governs what that standard should be?
5) Should a government entity be the one who has the say on how blockchain runs?
6) Which country should own it?
7) Blockchain has flourished where they have a less stable government system.
8) Incentivise
9) Blockchain as a book, bitcoin are the page numbers in the book. You reward people
who add pages to the book w/ cryptocurrency. Capiche?
10) Block chain is allowing transparency within your biz.


Man, call me old fashioned, but I'm not super keen on everybody and his brother seeing my books, how about you?

Michael brings up our transactions are already being tracked by Reward Points in the local grocery store,The store exchanges rewards for data. Yep, I've got my Hannaford Rewards card right here, so yeah, I guess everybody and his brother can ALREADY see what I'm up to... so... how will blockchain change industries?


BlockChain Disrupting Industries
Real Estate - Vermont is one of the first places in the US to have a blockchain-based Real Estate transaction happen. The completed transaction happened in a week instead of a 2-3 mo process.
How do we take archaic records and speed up the process? By removing the middle man. And therein lies the rub - swapping efficiency for manpower.

Accounting
When Michaels talks about the accounting industry, he points straight at auditing - a multi-billion dollar industry. Validating that 2 people that did a transaction were either honest or mistaken lies at the core of auditing - affirming or confirming honesty or mistakes. In my Jerry Ford interview, Jerry mentioned that the accountant is only as smart as you are. If you ask the question, the accountant will
answer, but will not volunteer the information. Michael acknowledges that this is how the training for accountants is -only answer the questions - don't volunteer the answers. Michael feels blockchain can shift those mindsets from bean counters to consultants and strategists which could really be a boon for business.

Taxation
Auditing and taxation? All of that's gonna be eventually automated. Technology will do away with the work that needs to be done by a human being and shifting to advising - how do we really help small businesses take the data and grow?

Voting
Can you imagine validating your vote by a thumb print on your smartphone? When I asked about the vulnerability of someone hacking into the system, Michael pointed out, "We already have hacking and tampering in elections now. It's not the best system, but everyone should have the right to know that their vote REALLY counts, even if it's not the way their state's voting, they count and it matters statistically."

How do we validate overseas votes? Voting by Mail? Making sure the US Postal Service got the votes in on time. That's all old technology - imagine being able to self-validate
without an intermediary.

My take on blockchain? It's expediting processes, giving more transparency, trust and consensus. And it scares the heck outta me. But it also intrigues me...

Michael goes on to say blockchain offers Transparency - giving access to the right parties for the right data at the right time. and trust - allowing me to build trust with clients faster- even if you've never met them. " Even if you've never met them? Hmm... Michael makes a point in that, "Why do you trust Amazon? Because they give us what we asked for - they validated themselves in our consumer eyes."

Credit - Banking
Michael really captured my imagination when he talked about Credit Scoring happening at the transaction level - did you pay your groceries, Your gas? How often have you done that?
Can we give credit scoring more at the micro-transactions not so much on loans and credit cards?

How many years away are we?
Vermont is becoming a hotbed where more and more block chain companies are coming because
Vermont is one of the few states that has passed legislation to encourage block chain companies starting.