THE GREAT REWRITE: E Pluribus unum and THE BLOCKCHAIN
As consumers, we live much of our lives digitally. As citizens, that’s not always the case. When we interact with government agencies — in person, by mail, on the phone — we brace ourselves and anticipate delays or mistakes. The conveniences that online retailers have built — websites that remember who we are, what we did before, our preferences — may be uncommon experiences when we try to access government services. Most old-fashioned paper checks that are still written today are payments to and from governments. The blockchain has the potential to change that. “Today as citizens we expect to deal with government the way we deal with every other part of our life. Governments can use blockchain technology to move the needle,” said Lorna Stark, national advisory industry leader for state and local government at KPMG.
In the simplest terms, a blockchain is a shared database that’s distributed across a network of multiple sites or institutions. More specifically it’s a distributed ledger, a shared but secure way to record transactions and ownership of assets. That may not sound revolutionary, but consider how the World Wide Web standardized the way documents are linked and easily accessed on computers anywhere in the world. That wasn’t possible before, and only a few visionaries imagined the vast transformations that linking files on disparate computers would bring. Blockchains could create a secure, universal record of who owns what, and the possibilities, similarly, are boundless.
Governments around the world have begun to experiment with blockchain technology projects to rewrite the way they manage information and serve constituents. The implications are big and small.
“Just think if you could put all of your required information into one government portal, into the blockchain,” Stark said. “Your name, your address, all that pertinent information. And then you don’t
have to re-enter it 10 times to get your driver’s license, to get your CPA license, to record your title transaction, to pay your taxes. Imagine that world where you only have to give the government your information one time.”
Ironically, blockchain technology was devised as a way to avoid central governments. The anonymous inventors of the digital cryptocurrency bitcoin created the methodology as a way for the community at large to maintain an agreed-upon, immutable record of who owns how much, without having to entrust recordkeeping to a single authority such as a government central bank. All participants in a blockchain network can access identical copies of the ledger, and updates happen almost instantly. Digital “keys” and signatures cryptographically control who can update and view records. The assets tracked in the shared ledger can be physical or electronic, and they can be “smart” — containing computer code that can self-execute new transactions when set triggers are reached (for example, a bond that disperses its own coupon payments).
The State of Delaware embraced blockchain in 2016 when then-governor Jack Markell launched the Delaware Blockchain Initiative. The state has unique record-keeping requirements, but its efforts merit attention. “The more we learned about it, the more we thought there’s something here for the state,” said Andrea Tinianow, director of the Delaware Blockchain Initiative.
Delaware’s interest began as a way to bolster the business it does in company incorporations. Thousands of businesses, including about twothirds of Fortune 500 firms and more than 80 percent of American IPOS, are incorporated in Delaware. A requirement is that companies tell Delaware how many shares they have has issued and then track who owns them. Some corporations have expressed interest in using blockchain for that, in part to avoid record-keeping errors. The number of shares a company has issued often doesn’t match the number it has registered with the state, and when a material event such as an acquisition occurs, there can be disputes. Recordkeeping using a blockchain — a single “golden record” — could eliminate inaccuracy. Delaware is amending its laws to make it crystal clear that it is legal for a company to issue and track its shares on the blockchain.
At the same time, Delaware is testing blockchain internally to organize the Delaware Public Archives, which contain everything from historic photos to moun- tains of public records. Older documents are being digitized. Databases and spreadsheets from disparate divisions are being migrated to a new distributed ledger. “Smart records” would automate compliance with state laws that dictate retention and destruction of documents. Ultimately the system will make it easier for agencies statewide to submit documents to the archive and residents to find information.
Records in the blockchain can be any asset, including physical property. California company velox.re, along with the International Blockchain Real Estate Association, has been working with the government of Cook County, Illinois, to create a legal blockchain version of a property deed. That could someday replace paper deeds and create a universally acknowledged, “golden record” of who owns what property. It would eliminate the need for things like title insurance. For governments that register land transfers, blockchain property records could minimize fraud committed with counterfeit deeds. “With blockchain, you can’t Photoshop a fake deed,” notes Ragnar Lifthrasir, CEO of velox.re and founder of the association.
Elsewhere in the world, the United Kingdom’s national land registry said it will test a blockchain-based program that “would enable the ownership of property to be changed close to instantaneously.” In Singapore, the central bank has completed a trial of distributed ledger technology for interbank payments, creating a digital representation of the Singapore dollar.
One model for where things may be headed is the little nation of Estonia, which became newly independent in 1991 and built its new government to leverage digital technologies. The Estonia ID card, a digital identity card pegged to a blockchain-like infrastructure, gives citizens access to a broad range of public services, acting as a driver’s license, passport, credit card, transportation pass and more.
None of these government projects are without challenges. Culturally, agencies that aren’t accustomed to sharing data easily may need to discover openness. Migrating legacy data to distributed ledger systems can be costly. Citizens will have privacy and security concerns.
But governments were early adopters of computer technology, and the potential is there.
“In the ’50s we had the advent of the supercomputers and in the ’90s the explosion of the internet,” said KPMG’S Stark. “And now, government could harness the potential of blockchain to leapfrog in the public’s perceptions of efficiency, transparency and trust.”
“Today as citizens we expect to deal with government the way we deal with every other part of our life. Governments can use blockchain technology to move the needle.” LORNA STARK, NATIONAL ADVISORY INDUSTRY LEADER—STATE AND LOCAL GOVERNMENT, KPMG
even vacation together. “I’m a businessman, but we trust each other,” says Skonnard at Pluralsight. “There’s a shared vision for Utah that unifies us.”
UTAH’S CLOUD-BASED SURGE remains contingent on one thing: more outside talent. Which is why, ostensibly, Smith and James find themselves at Oakland’s Oracle Arena, at the clinching Game 5 of the NBA Finals. Yes, they love hoops. But they love recruiting more, especially from the Bay Area, including shelling out $10,000 per seat for the hottest ticket of the year in a region smitten with the Golden State Warriors. After spending the day interviewing candidates in San Francisco, Smith works the crowd, all the way down to courtside, like a seasoned politician.
James is here to treat his new chief marketing officer and to woo the business-operations executive at a direct competitor he’s spent weeks trying to recruit. “We’ve talked on the phone a few times, but this is the first time we’re meeting face-to- face,” says the veteran software executive. It’s certainly a memorable one: The executive got to be a hero by bringing his son as well, and they sat one row behind Lebron James and the Cavaliers’ bench. “It’s an offer you can’t refuse.”
Like the companies themselves, the pitch often comes down to lower costs: a flat 5% state tax and a cost of living in Provo that’s 30% less than Seattle’s and 41% less than Boston’s—and half that of the Bay Area, despite the fact that salaries are only 27% smaller, on average. The Utah cloud companies have opportunistically brought back BYU graduates who had left the state, such as new Qualtrics chief operating officer Zig Serafin, who had spent 17 years at Microsoft as head of what became Skype for Business and as president of its Tellme unit, and Pluralsight’s new CFO, James Budge, who plans to move his family from California next year.
And these companies have shown the flexibility to attract others from out of state, as Qualtrics alone has relocated 160 people to Utah so far this year. Want upside? Pluralsight’s Skon-
nard got Budge, the CFO of Anaplan, to jump by paying him entirely in stock (and $1 in salary). Internal chatter at Amazon Web Services about their hottest customers helped Domo hire its chief strategy officer, who became intrigued by the startup’s prospects after noticing it spending more and more with AWS.
And Utah has developed an efficient commuter rail system that connects Provo to more cosmopolitan areas of the state. As recently as a year ago, Qualtrics operated one shuttle from its campus to the train station; the company has increased that to five as young relocated employees like Jesus Perez, an account executive and Penn graduate, opt to live in high-rises in Salt Lake City—which has a gay mayor and reportedly nonMormon majority. Heather Zynczak, Pluralsight’s CMO, says she loves the size of her house in Park City, the ski resort town where non-mormon tech executives bump into each other getting coffee or dropping their kids off at the lifts. Milind Kopikare, a Qualtrics product manager, chose Draper, a suburban town with a burgeoning Indian-american population. “There’s a big Indian temple there,” he says. His neighbors work in nearby tech centers for American Express and Goldman Sachs.
Expanding offices in Europe, Seattle and cities such as Chicago allow the Utah companies to increasingly hire executives
who work remotely or commute. Pluralsight’s head of sales lives in New York. Domo’s CFO and chief strategist and several other senior hires commute to headquarters two or three days a week from out of state. And Insidesales’ chief revenue officer, Lindsey Armstrong, helps keep the company moving from London. “I travel all the time, but not necessarily to Provo,” Armstrong says. “I like to maintain that at almost any given time someone is pissed off at me for being in the wrong location.” THE COLLABORATION BETWEEN Utah’s cloud founders extends past their regular all-nighters. When Goldman Sachs re- cently hosted Smith at a golf outing at the famed Shinnecock Hills course in the Hamptons with other tech executives, he noted how rare it was that he would do something like that without Skonnard, James or both. “The banks will ask for the ‘Utah guys,’ ” Smith says, “because they know then we’re more likely to go.”
The “Utah guys” are all likely to go public soon, though “soon” is a relative word for companies whose life spans far exceed the typical startup story. Smith says he left money on the table when Qualtrics reached a $2.7 billion valuation in April (it was widely reported as $2.5 billion, which suited him just
THE REWRITERS: Andrea Tinianow, director of the Delaware Blockchain Initiative; Ragnar Lifthrasir, CEO of velox.re and founder of the International Blockchain Real Estate Association