Host: Rex (⁠Twitter: @LogarithmicRex⁠)
Guest: Brendan Picha (LinkedIn: brendanpicha)

Hello and welcome back to the Strange Water Podcast. Thank you so much for joining us for another great conversation!

A few days ago, I was listening to a crypto news show when I heard one of the guests say “it’s hard to overstate just how much of a bubble crypto twitter is.” That comment really spoke to me, not only because I think it really captures some of the incredibly myopic and extremist views we take for granted, but also because I often find myself lost in the same echo chamber. 

So, taking that comment as a prompt, I decided to call up an old friend from my time at Anheuser-Busch, Brendan Picha, and although that was long before I had any interest in crypto, you’ll hear that he was already advocating HARD for bitcoin and digital currency for the largest beer company in the world… in 2013.

After leaving Anheuser-Busch, Brendan moved to Liberty Mutual to continue with corporate innovation and blockchain evangelism. Today, Brendan is one of the senior leaders of The Institutes RiskStream Collaborative. The RiskStream Collaborative is a nonprofit organization that sits between the world’s largest insurance companies to educate, build products and integrate blockchain based solutions.

Today’s conversation is about reaching across filter bubbles, if for no other reason than to gain perspective on what we are building. For me, understanding how the insurance industry thinks about the purpose of blockchain, the challenges of implementing technology and collaboration answers a lot of questions that we on crypto twitter rarely think to ask. 

But what I found most interesting was how Brendan and the insurance industry view what they are building as completely separate from Ethereum, despite using similar technologies…

… and so, I give him my pitch on how it’s all part of the same story.

That Ethereum is inevitable.

One more thing before we begin, please do not take financial advice from this or any other podcast. Ethereum WILL change the world one day, but you can easily lose all of your money between now and then.

Alright, let’s get started!

Hello and welcome back to the Strangewater podcast.

Thank you so much for joining us for another great conversation.

A few days ago, I was listening to a crypto news show when I heard 1 of the guests say, it is hard to overstate just how much of a bubble crypto Twitter is.

That comment really spoke to me, not only because I think it really captures some of the incredibly myopic and sometimes extremist views that we take for granted, but also because I often find myself lost in the same echo chamber.

So, taking that comment as a prompt, I decided to call up on an old friend from my time at Anheuser-Busch, Brendan Pica.

And although that was long before I had any interest or understanding of crypto, you'll hear that he was already advocating hard for Bitcoin and digital currency at the world's largest beer company in 2013.

After leaving Anheuser-Busch, Brendan moved on to Liberty Mutual, the insurance company, to continue with corporate innovation and blockchain evangelism.

Today, Brendan is 1 of the senior leaders of the Institute's Riskstream Collaborative.

The Riskstream Collaborative is a non-profit organization that sits between the world's largest insurance companies to educate, build products, and integrate blockchain-based solutions.

Today's conversation is about reaching across filter bubbles, if for no other reason than to gain perspective on what we are building.

For me, understanding how the insurance industry thinks about the purpose of blockchain, or the challenges of implementing cutting-edge technology, and even collaboration across a competitive industry answers a lot of the questions that we on crypto Twitter rarely think to ask.

But What I found most interesting was how Brendan and really the insurance industry view what they are building as completely separate from Ethereum, despite using similar technologies.

And so, in this conversation, I give him my pitch on how it's all part of the same story that aetherium is inevitable 1 more thing before we begin, please do not take financial advice from this or any other podcast Aetherium will change the world 1 day, but you can easily lose all of your money in the process.

Brandon, thank you so much for joining us.

And as we'll obviously get to over the next hour, like this one's special for me, man, because like this is a relationship that existed like long before, like, but probably before I knew what crypto was, but like, definitely before I thought crypto was relevant.

And so I think in this like, industry, we're well, and we'll talk about in a second.

But on my side of the industry, where we're all like, kind of brought together through like the magic of the internet.

It's, you get different conversations when you talk to like adults that have like been in the trenches together for, you know, real, real business.

So I guess with that as like a good little preface, like would you, Can we start this conversation off by just giving a little bit about who you are and not necessarily where you're at today, but how did you originally find blockchain in the first place?

There was a website, and actually I think it still exists, slashdot.org.

Yeah, yeah, I don't know if it's still a popular website or not, but I used to go on there every day and just kind of read what the latest and greatest was on tech.

It's very tech-focused, nerd-centric, and the title of the post was, The Most Dangerous Project in the World.

Of course, who's not going to read that click-baity title?

So I started reading it, and it was about Bitcoin.

It was about Satoshi Nakamoto and whatever, and I linked to the white paper, and I read the white paper, and I'm just like, you know, that's just 1 of those moments that a lot of people have had in the early days of crypto and Bitcoin, where it's just like, oh my God, the implications for this are scary and fascinating, and I wanna learn more.

So that's when it first kinda dropped on my radar.

And then I just kind of didn't really pay much attention to it over time.

Like you kept on seeing more and more things in the news about Bitcoin and crypto and Bitcoin ATMs and different things people were trying to do with it.

And so after business school in 2013, we worked for Anheuser-Busch InBev together and we were hired right around the same time.

And that's when I started mining Bitcoin.

So at the time, the best hardware you could get were these ASICs.

And the speed of the ASIC was 333 megahertz per second, which was pretty good for the time.

I got them off of eBay somewhere or something like that.

And I set up multiple rigs and was mining and I was a part of a pool, a mining pool.

And it was just depositing into my, you know, at the time I didn't have a separate wallet set up, so I just deposited straight into the exchange, which you're not allowed to do anymore, but that's what I was doing then.

That's how I kind of got into it and started, you know, really kind of diving in this figuring out how this stuff was working.

And at the time, like Coinbase was still very new.

And so people could either in order to get Bitcoin, they could go to an exchange and buy it or they could mine it.

And a lot of people just still didn't know how to get it if they weren't mining it because the exchange wasn't really that prevalent.

But yeah, then I said, you know, there's an opportunity here for the enterprise and, you know, the company should really be looking at this.

You know, who knows what it could lead to.

And at the time, there was a lot of hype that was being generated around Bitcoin and crypto and unfortunately for more nefarious reasons like Silk Road and stuff like that.

But I actually partnered with Budweiser while at Anheuser-Busch InBev and we did this little Budweiser Made in America pre-party event where if anybody who registered for that event, this 1 was I think in Utah somewhere, they could also register for a Coinbase account And if they did, they'd get $10 worth of Bitcoin that they can then use towards the purchase of a Budweiser at the event.

And I'm just trying to jump in here because like, I think this is a conversation worth like picking apart.

Because so just like for for brief context for our back for our viewers, Brendan, I met again in 2013.

I think we started within the same month or 2 months at Anheuser-Busch in this brand new technology innovation group.

And I was immediately taking it under the wing of, I think it was 1 of Brendan's peers.

And so I was immediately working on these like Internet of Things like putting accelerometers and tap handles that kind of stuff.

But Brendan like I so vividly remember at the time was like already Bitcoin pilled.

And I remember going to your apartment and seeing like your Bitcoin farms, man.

Like I literally have a picture of it that I snuck while you weren't looking to like show all my like Stanford's guests friends like, well, look, this guy's mining Bitcoin.

And now I look at that picture and like cry myself to sleep at night.

But I guess like, like just if you so so the activation that you're talking about is essentially like we created these like you working with external technology partners created these vending machines that would accept Bitcoin and then separately created this like promotional thing with Coinbase where if you sign up during this event, and I think the event was a concert, right?

So like if you sign up during the concert you get the $10 that is supposed to be used for beer So it's like sign up for this get a free beer, right?

So with that being like that was supposed to be the pilot to show like the company that like, you know, Bitcoin or digital currency could be like an important technology for the business.

And like, spoiler alert, like I think you did the pilot and like nobody would ever talk to anyone about Bitcoin ever again until like the NFT craze of like 2021, right?

Yeah, it wasn't, you know, this is how innovation goes oftentimes, you know, people who are, you know, exploring emerging technologies and want to do something with it and sometimes do, it's not relevant for another 10 years.

You're just so ahead of the curve that it doesn't mean anything to anybody.

But there's potential there and you want to do something about it and you want to help the organization You know embrace it in some way or at least Explore it and start to you know be aware of it So there was I can't remember what the numbers were But there was a subset of individuals who registered for the event and registered for a Coinbase account, they received that $10 worth of Bitcoin.

And there were only like 3 or 4 people who used the Bitcoin at the event to buy a Budweiser.

And I think the event was around, the attendance was around 2, 000 people, so it wasn't a very big 1.

It said that, you know, either A, people just want to keep the Bitcoin because, hey, Bitcoin.

And B, at the time, in order to purchase something with Bitcoin, you'd have to present your QR code, have it scanned and then attraction.

You had to have the Coinbase account on your smartphone.

And, you know, so it was a new user behavior type of thing that just so but it was a great experimentation.

And, you know, if you look at AB InBev, I can't remember how long ago this was, maybe like 2 or 3 years ago, you know, they started jumping on the, the blockchain crypto NFT bandwagon.

If you remember all the stuff that came out about that, you know?

And honestly, look, man, like let's, let's not kid ourselves.

Like the stuff they're doing now is not has nothing to do with blockchain.

They're literally just like jumping on a fad that happens to be in our space.

And like, throw, you know, again, my when I was director of finance for Bud Light, my yearly marketing budget was how many, like over a billion dollars.

So like, you know, they see something go viral, they're going to do it.

But I guess, to drill in on this, you introduced this company that is, I believe, 1 of the most perfect examples for the power of crypto, just in terms of multinational, cross-border, super, super capital efficient, super low cash balances.

And yet, when you introduce this technology to them in 2014, like literally the message to you, I remember I was there was like, Brendan, shut the fuck up.

And so like, I guess like my question to you now that like, you know, as much as I like probably was contributing to that now I'm like, holy shit, I was wrong.

Like, what is your takeaway from that experience?

Was it like companies need to like be more forward thinking?

Or is it that like, it doesn't matter how good the technology is.

Like if the world's not ready for it, it's not, it doesn't matter.

Like where do you kind of fall on that experience?

Well, having worked in innovation for multiple Fortune 500 companies, I know that no matter how good a solution is, even if the business case is solid and you're saving millions of dollars, making millions of dollars, if senior leadership isn't bought into it, it's not going anywhere.

And when I say senior leadership, I mean senior leadership of both the organization overall and also the function that you're trying to help.

So if they're not sold into it, then it's just, it's not gonna go anywhere.

And this is actually a problem for a lot of innovators out there.

It's just, you know, you'll put the business model together, you'll create a proof of concept, You'll run a pilot, you'll prove that it's viable, and you'll pitch that.

And still, it's like, well, we don't really want to disrupt the business.

And if you move a small lever in 1 of those business processes, it could equate to millions of dollars in cost or millions of dollars in profit, depending on if it's a top line or bottom line type of approach.

But little differences in that process makes a big, big difference, especially when you're interacting with millions of customers or clients.

So there's a big hesitancy to change process, especially if the process is new, hasn't been totally proven out.

So it's just 1 of the many challenges of being an innovator in corporate America.

And I guess, you know, I like there's no real generic takeaways you can like walk away with, right?

I mean, I guess it depends on like the company and like the industry that that company is or something.

But I mean, like if I just made you like King Brendan of all CEOs, like, and you just like had an opportunity to change the way American business was done.

Like, do you think that we're too conservative?

Or do you think that like, the innovators might actually be like a little too aggressive and like the conservatism in the CEOs has a point.

You'll see in some organizations that are all over innovation.

The CEO is making sure that his people are failing fast, that it's okay to fail, that you've gotta try new things, you gotta get out there, and you've gotta have a budget for it in order to try these things.

Other companies, they have a budget for innovation.

Maybe they have a small group or a function and they want them to go off and kind of explore new things and test the waters.

But at the end of the day, they're more conservative and they don't really want to disrupt the business or change it for the better.

It just depends on the appetite, the budget, what kind of impact it might have, and whether you're interested in exploring new and different approach to business.

This conversation is probably a dead end and like unless you specifically want to talk about Anheuser-Busch and I think like their problems are much more about the culture war than it is about technology right now.

Anyway, so all right, so we like, our careers like split off in like 2015 ish.

And then I know that like, just like kind of fast forward through background.

So you found yourself first in the insurance industry, like believing still in this technology and evangelizing blockchain.

And then eventually you found your way to the RISC Collective, which is where you are today.

So, you know, just, can you like help us understand that journey and then like, what are, yeah, what are just like the key important parts we should know as we enter this next round of conversation?

Yeah, no, I, you know, throughout my journey, I've always tried to bring blockchain into the enterprise in some way.

And so I worked in the same function, but different industries, so innovation for insurance.

And there was a brainstorming session 1 day, how we could use blockchain for personal insurance, specifically personal audit.

And I came up with the subrogation idea, and basically carriers are sending billions of dollars to each other on a claim by claim basis, or sometimes even a line item basis in a claim.

And so they're in some cases literally printing a check or writing a check, putting it in the mail and sending it out.

Other processes involve like a central bank or a clearing house that is managing some of that for them, but they're still doing it on a claim by claim by basis and sometimes on a line item basis.

So the overhead for this is very expensive.

So what if Liberty Mutual and Geico decided every month we're gonna settle up and we're gonna put everything, all those claims, all those line items into 1.

And either I'm going to owe you something or you're going to owe me something and we'll be done with it and we'll be square.

So basically we built a proof of concept using a private Ethereum network and put a little front end in front of it, a UI, and shopped it around to various carriers, State Farm, Allstate, maybe even USA, I can't remember.

They all thought it was a really, really cool idea, and so much so that eventually State Farm and USA would go on to build their own subrogation application together.

But at the time I was liaising with Ristream, which you referenced, which is the insurance industry's largest nonprofit blockchain consortium.

And I was in the working group for RISCstream on subrogation because we had, as Liberty Mutual, we had given over the idea and the concept to RISCstream to carry forward.

And the reason we did that is because even though we showed this to other carriers, nobody wanted to work with us because we were competitors.

You've got to work collaboratively on it.

And any 1 carrier can't bring an idea and own the idea and expect people to work with them on it.

And so that was brought forward within RISCstream, worked on for a while.

And eventually there was an opening there and they wanted me to come over as their head of product to start working on basically more insurance ideas on blockchain for the industry and not just 1 carrier.

And prior actually at Liberty, it wasn't just the subrogation stuff that I worked on, but also worked on digital auto tiling.

So putting basically, It was before NFTs, but basically putting an auto title on to inside of an Ethereum smart contract.

So basically putting the identity of the vehicle onto a smart contract.

And Also there was another idea that we were working on for homeowner's insurance and being able to not only have the property title on blockchain or on a smart contract, but also the entire history of anything that happened with the home.

So, if repairs, updates, and so this was an implication for title insurance.

So when you buy a home, you have to get title insurance, making sure that the title is the record that it is supposed to be before it transfers ownership to the new owner.

So there were a lot of implications for insurance.

And so then went over to Riskstream as their head of product for a couple years, stood up the product management function, and worked on exploring a bunch of different opportunities across different product lines for the insurance industry using blockchain.

Commercial, personal, we're now working on some stuff for inland marine, some stuff for parametric insurance for homeowners.

So there's a lot of different applications out there.

So, okay, just a couple like clarification questions.

So first and foremost, dum-dum here, subjugation is essentially settlement, but for insurance, right?

What you're saying is first when you're at Liberty, you were in this innovation role and you were saying like, okay, like, here's a ton of different, like interesting applications, like we can put auto titles on there, We can do like home repairs and home titles on there.

We can like do all this like crazy stuff.

And 1 idea is we can do like essentially, I'll say it for my audience, we will do settlement, right?

And like that actually became like super interesting like because it sounds like there's a lot of business problems behind it.

But the problem with somebody like Liberty Mutual being like, Hey, why don't you just like, trust us to like, keep track of everything.

And then at the end of the month, like, we'll tell you how much money you owe us, or we'll let you know we owe you money, but like, we'll see.

Yeah, you can see the problems with that, right?

And so like, what is the product of like, blockchain?

It is block space, but like, that's a little esoteric for this conversation.

Like the product of blockchain is block space that is credibly neutral, right?

And so like, it is like if you know anything about the point of crypto, like it totally makes sense that that this like, this is what it's for.

But I guess my question to you is like, before we talk about your time at Riskstream, like why was that the idea that Liberty Mutual saw like merit in and decided to like, see if there was like interest in as opposed to like any of the other ideas that like to me make just as much sense for insurance to start looking into blockchain.

I mean, why do we focus on subrogation to start?

Yeah, yeah, as opposed to titling as opposed to like repair tracking as opposed to like any of the other things that it

was a sheer It was a sheer opportunity of potentially reducing the cost associated with that.

So out of everything that we looked at, that at first blush, subrogations can make a really good opportunity.

And so when you're like shopping around this prototype that you made at Liberty Mutual before it's like third party credibly neutral.

And it's this like kind of skin on top of a sounds like probably like the JP Morgan, like now it's called Onyx.

But like, it was the it's like a skin behind that, Like when you're talking to like, let's say Geico, like, are you shilling them on like what blockchain is and like what proof of like stake is and how like any of these consensus algorithm works?

Or is this really about like subjugation sucks?

They know that subjugation sucks and that it's a big cost driver.

So I would say that the conversation opens with, obviously this is a subjugation application.

This is what we think the potential is for it.

And because we're working with other carriers, you know, we know what the debits and credits are with that particular carrier is in relationship to Liberty Mutual.

So we know it's a problem for them as well.

But then, you know, if they're not up to speed on blockchain, and at the time many people weren't, we would have to go into the nuances and the technicality of why this was important, why this is trustless, why it'll work, and why it won't cost very much to run it.

So you get into the business case modeling a little bit deeper, especially when you're talking to people and trying to ask them to work with you on blocking these products.

Yeah, well, and I really like, we'll move on with the narrative, but I really just like want to hover over this point of like, okay, you can approach building companies or products in blockchain, like from 2 ways.

1, that this can be a blockchain company, and like, you do something on the blockchain, right?

Or you can have a chain company, where you do something on the blockchain.

And I think the further away you get from crypto Twitter, the further away you get from DGens, the more it becomes about what are you actually trying to do here and why?

And less about like, hey, we have like included these features that are like really trendy right now and like not really thinking further than like everyone else is locking their tokens, we should have locked tokens.

Yeah, I think first and foremost, it's the utility of what the product can do, regardless of what the technology is.

Forget about the technology, forget about how the black box works.

Just say, this can do X and to this degree.

And if that degree is enough, then it's going to pique people's interests.

I think at the end of the day, when it comes to enterprise blockchain, blockchain's just gonna be another type of backend infrastructure for organizations to use and leverage and work together on.

I think most notably, it's network-based, so you're gonna have collaborators typically, which is kind of how we're set up.

We've got this canopy network and every member on the network has a node and the applications that they're using interface with those nodes over the canopy network to communicate with each other and share data.

So if you're looking across the insurance industry, any opportunity where there's a high volume of transactions and where multiple parties are sharing data, that's always a good opportunity for blockchain.

And like the way you just phrase it right now, made this thought pop into my head.

But like, as you're selling to people who don't give a shit about tokens and about like technology, like the way to kind of frame this is like, look, today you have your stuff on the cloud, right?

It's like the Amazon Cloud, the Google Cloud, the Azure Cloud, like they're all the same to you.

But like maybe in the future, like they're not the same.

And like the difference is, is like you have the credibly neutral cloud or you have the company cloud and like different people will opt into that for different reasons.

I just think that when you use the cloud today, like you don't think about the technology.

You don't even think about the companies.

I think, I think 1 of the bigger, 1 of the additional concerns there is, is security and where am I, where's my data being housed?

Is it on premise or is it in the cloud somewhere?

And if it is in the cloud somewhere, where are those servers located?

Hopefully, in our situation, they're in the United States, but if they're in other countries, we're gonna need to do a thorough security analysis on that and see what the risks are and how much risk we can tolerate.

So, you know, I think the cloud is a good comparison because it's pretty similar.

However, with that, you know, if you are truly using something that's decentralized, like Ethereum, if you will, you know, it's not going to...

The question of where does the server exist, that question doesn't exist.

It doesn't work with Ethereum because it's everywhere.

And I don't think companies are okay with that.

They wouldn't put claim data on Ethereum.

They would have to keep that house somewhere.

There's different risk tolerances based upon whatever technology it is you're using.

I think the furthest, the most I've seen in terms of insurance companies being okay with data being on a decentralized infrastructure is like, you know, Oracle data, weather data, stuff they can use for a smart contract, parametric type insurance, that kind of thing.

And I also think maybe driving conditions, right?

I have seen some instances where cars are reporting driving conditions if there's a pothole or something or if it's slippery and aggregating that data en masse so the insurance company can say, all right, you've just logged into Google Maps, you need to go from point A to point B.

There are 3 ways you can go to point A, or to point B.

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SW 18 - Blockchain in the (Trad-Fi) Insurance Industry