CrowdStrike Outage Impact: Resilience and Recovery

Episode Transcript (computer-generated)

Paul Spain:
Hey, folks. Greetings and welcome along to the New Zealand tech podcast. I’m your host, Paul Spain. Great to be with you again and fantastic to have Vincent Heeringa joining us back on the New Zealand tech podcast. How are you, Vincent?

Vincent Heeringa:
I’m well, thank you, Paul. Thanks for inviting me.

Paul Spain:
Oh, always great to have you here. Now, for those who don’t know you, maybe you can fill folks in, or will you fit into this big, wide world of media and other things?

Vincent Heeringa:
Well, I used to be somebody. I used to run a media business. Now I’m a consultant, run an agency, a pr and communications agency. Really have doubled down on sustainability in the last few years. So intersection of tech and sustainability, climate, it’s a pretty interesting space. It’s a real explosion of clean tech in New Zealand. I work with a venture capital fund called the Climate Venture Capital Fund and the Punakaiki Fund, which I think you know. So, yeah, very happy playing in that space of helping cleantech and sustainability businesses get their story out.

Paul Spain:
Fantastic. Well, great to have you back on the show. And, of course, a big thank you to our show. Partners to One NZ, 2degrees, Spark, HP and Gorilla Technology. Now, there’s a really big story this week, which we’ve all heard a chunk about, which is what happened with cloud strike last week.

Vincent Heeringa:
I thought you were going to say Kamala Harris.

Paul Spain:
Oh, well, that’s of some interest on the political front, and I’m sure there are probably some tech angles there.

Vincent Heeringa:
Apparently, she doesn’t mean TikTok.

Paul Spain:
Yeah, there you go. There’s some. It is interesting to see the way that technology and sort of social media is deeply important to political campaigns.

Vincent Heeringa:
Seems to be certainly with the influence of social media on spreading disinformation, but also information. And obviously TikTok pretty relevant for that younger vote.

Paul Spain:
So, delving into the CrowdStrike scenario, I don’t know how you found about this, but, you know, Friday, sort of early evening, I started seeing all sorts of messages popping up on, you know, internal chats with my team. I was out for a meal with a friend who works in cybersecurity. And so that, you know, the discussion on it sort of started over dinner. And then I had a message from my wife saying, oh, you could probably expect a call or two from, you know, from the media. Yeah. We were a few minutes into chatting about it and sure enough, New Zealand Herald called up and said, what’s this thing? What’s going on?

Vincent Heeringa:
What’s going on? I noticed it because it’s happening. I couldn’t get a banking transaction through.

Paul Spain:
Okay, so you were impacted quite quickly.

Vincent Heeringa:
Yeah, well, I was wondering why I wasn’t being paid. And I saw sort of money had gone out of one account but it hadn’t appeared in another. And I was puzzled about that. So I think we were sort of betwixt in between. And then when I went online, I just, you know, the Internet was just full of, you know, the biggest it outage in history. You know, chicken little. The sky was falling.

Paul Spain:
Yeah, yeah. You know, it really was a big deal. And I think for those, that first period when we had heard of it, there was not a clear picture on exactly what was confirmed to have happened. And so I had this initial call with New Zealand Herald and then as we were, we did a little bit more reading. There was one particular media outlet that had a bit more insight than probably the others. And it maybe took an hour or two then for that to sort of hit some of the bigger media outlets in terms of exactly what had happened.

Vincent Heeringa:
Did you think that it was a cyberattack? Did you think of a terrorist or some sort of bad actor?

Paul Spain:
No, I think everything was pointing to a faulty update that had taken systems offline. That was all the indications or that seemed like very much the most likely scenario. But what we weren’t 100% sure about Washington. How hard is it going to be to resolve it? And it did seem very quickly as though this was going to require that manual intervention. And that was a confirmation. You know, we got very, very. Yeah, very soon after that chat with New Zealand Herald. And then, you know, I sent them just a couple of comments over a text message.

Paul Spain:
They’re probably still writing the article because you, you know, often tends to take them an hour or so to get these things published. And so, yeah, so I did that and we delved in a little bit more. And, yeah, we had a scenario where I think ultimately Microsoft was saying an estimate of eight and a half million computers were taken out in some way.

Vincent Heeringa:
Is that a lot? You know, that was described as the largest it outage in history. And I saw some headlines comparing it to the y two k, you know, as if y two k had actually happened.

Paul Spain:
Yeah.

Vincent Heeringa:
I’ve also read that there’s something like 1.4 billion windows enabled PCs in the world, which I was amazed, actually. I thought there was a small number.

Paul Spain:
For a start, but maybe there are more that aren’t fully licensed or. Yeah, I don’t know what those full numbers are.

Vincent Heeringa:
In any case, 8.5 million is not a big proportion of that. 1.5 million, 4 billion? Was it as big as we initially thought, Paul, now that the dust has settled, kind of almost a week later.

Paul Spain:
I think what was big about it was that it impacted critical services. And so you don’t have to impact, you don’t have to necessarily take down a lot of computers. If you’re breaking services that really, really need the Internet to work, that could be you’re trying to call 111 service. And I’ve been in their call centre in Wellington for police, which I guess is one direction that those calls get diverted to. That was as part of when they were rolling out the system that enables emergency calls to also transmit a location with the modern smartphones back to emergency services. And so, yeah, I’m able to kind of visualize, you know, visualize that as a, you know, a call center where there’s not hundreds of, you know, computers. And even if they were, and they were, you know, you could potentially have hundreds of computers wiped out in one location.

Vincent Heeringa:
One of the things that struck me was there were quite a few organizations that weren’t affected, some that actually had quite good backup systems. St. John’s actually quite quickly went to a plan B and they were operating, from what I read, within minutes, which was pretty cool. Maybe they didn’t have that gps location system working. I’m not sure. Some airlines weren’t affected. I don’t think New Zealand was affected. I think it was Jetstar.

Vincent Heeringa:
That was mostly. Yeah.

Paul Spain:
And so it came down to the companies that were using CrowdStrike as their cyber security provider for the endpoint security on their devices. And so one of the reasons it moved so quickly is because CrowdStrike goal for their clients is to stop them getting impacted by a cyber security incident. And so when they have some new, we used to call them signatures when it came to antivirus software, but new information that gets coded in and fed to their endpoint security software, they want to get that out as soon as possible because there’ll be elements in there that are helping to protect against the very latest attack vectors. So they’re pushing that very quickly.

Vincent Heeringa:
That’s CrowdStrike’s point of difference, right, is the speed to market that they are sending these updates out. And is that where the fault came, because they, what, they didn’t have enough surety that that had been, you know, had it hadn’t been through quality control? Yeah.

Paul Spain:
Look, they haven’t given a clear picture on exactly what happened at their end, but the way it looks from the outside, as though they were so focused on, you know, getting these up, the updates out so quickly that it didn’t go through, you know, any sort of rigorous testing. You would assume and expect that there’s a level of testing, but it’s very hard to get your head around what that testing was when it seemed like any computer that was, that was running CrowdStrike system and was on between roughly sort of 430 and I think it was a, yeah, between 60 and 90 minutes sort of window there on Friday, New Zealand time between sort of 430 and 530 loosely. They likely got that update and they were just taken offline very quickly because the computer crashed at that point and then often went through multiple reboots and so on. So, yeah, that really messed them up. And because there were these key organizations that were very reliant. And we saw even Monday in the US that Delta Airlines had something like around 10% of their flights that were still not able to operate because of the impact. So for them, it fell on a Friday, Saturday, Sunday, still going on the Monday, which I guess speaks to, to the size and scale of it for them. And there were a whole lot of things that were impaired here in New Zealand.

Paul Spain:
Of course, a lot of banks, as you found, were impacted. But there was the difference between the computers that were, say, physical PCs, laptops, display terminals and airports and check in type screens and so on. And then the, the servers, which are able in most cases or in a lot of cases, to be addressed remotely without getting in front of them. But we saw pictures of it, engineers standing on ladders and airports to get up to a tv display that would show you flight status and so on. You know, must have had windows, you know, a windows computer attached to the back of it or embedded in some way. And so there’s, you know, there were all these folks that were just working through, and no doubt there’ll be some, you know, continuing for a period going forward that are doing that hands on. And then there were other ones where I was reading from people saying, oh, look, I’ve been up all night and, you know, I’ve got through this many, you know, hundreds or thousands of machines that they’ve been able to do in a remote basis because they were virtual machines and so they didn’t have to physically get in there and reset them and be physically on that keyboard. And so, yeah, we saw that.

Paul Spain:
And then there was varying guidance and Microsoft even released a tool to help address it. But, yeah, a pretty painful incident.

Vincent Heeringa:
It was painful. And there was a lot of fury directed not at the perpetrator but at the people the organisations that are fronting the airlines, banks, insurance companies, retailers, a lot of retailers were down on the Saturday. And you can kind of understand the frustration and anger, particularly as, I suppose, as consumers. We’ve been trained now to shift our spending and our habits into an online, into a cashless economy, using our smartphones, using apps and so on. And so when those things don’t work, it’s understandable that you would get angry. And I don’t know if you’re stuck at an airport, it’s completely irrational to have a reaction to that. I guess my question. I’ve got two questions.

Vincent Heeringa:
How will CrowdStrike come back from this? Are they ruined? I looked at their share price. It’s not as low as I thought. They dropped about 25%, and there’s a bit of a bounce that’s come back. Then they’re still per share, about 260 odd dollars per share, which is way above what they listed at in 2019, as far as I can see. Will they recover from this?

Paul Spain:
An aspect of it is quite fascinating. And in some ways, an incident like this puts them on a whole lot of people’s radars.

Vincent Heeringa:
Right.

Paul Spain:
So there’ll be people who have never invested in CrowdStrike before. They’re like, oh, this is a stock I haven’t seen. Oh, that’s interesting. And I wonder where they’re going to go from here. Looking at other cybersecurity firms, actually, we tend to get some pretty good growth. And yes, they might be at a big multiple right now, but look, if they come back from this, well, and they’re now a very well known brand for all the wrong reasons, but these things can still stick in people’s minds. And we look at. Look at other companies, you know, meta, that have made some serious, you know, serious missteps.

Paul Spain:
And, you know, I would, yeah, I could say all sorts of things about meta yet. Yeah. With, with their ups and downs, you know, they’re, they’re an incredibly, you know, valuable company, you know, today. And, yeah, you know, could we have predicted exactly where I. Where meta could go? So if we’re looking back to late 2022 for meta, they went down to $113 a share. What are they at today? Well, they’re up to $488 us. So they’re nearly one and a quarter trillion us dollars. So in the direction of NZd2 trillion.

Paul Spain:
And so, yeah, you get these things where we really, we hate on companies for things that they’ve done wrong and missteps, they don’t necessarily fully redeem themselves, but there’s still that excitement around where they go from varying investors and they head north from those positions. I remember discussions around Netflix when, you know, they were struggling a bit and took a hit. So, yeah, they were up, what, 600 and in the direction of nearly $680, and they dropped down to 180. So a massive, massive drop.

Vincent Heeringa:
This is post Covid.

Paul Spain:
Yeah, 2022. When they. Yeah, they, they. There was different things going on, but it was off. This is the first time we’ve seen Netflix not growing. Right. It was actually a bit of contraction.

Vincent Heeringa:
Yeah.

Paul Spain:
Now, they haven’t gone back up to those heights, but they’re, they’re, you know, they’re still in a. Well, maybe. Yeah, they’re pretty close to those. Those heights. Or. Oh, maybe actually, I’m just looking at this one. Maybe. Maybe they have actually topped some of those figures.

Paul Spain:
So, yeah, I find it really hard to actually get my head around the potential for these sorts of companies and the way that we value some of these businesses where they have crazy big multiples. The cybersecurity industry has been one of those areas, and I’ve had a little bit of a dabble in. In this area. And one particular stock, palo alto networks. Now, it was an absolutely tiny investment, but I was just kind of curious, and I put in a little bit of money and it went up 100%. And I’m sitting there going, oh, I should have put all on red. I should have put it all on red onto it. But I still look at a lot of these stocks and, yeah, I struggle to get my head around what is the right valuation.

Paul Spain:
Now, there’s all sorts of reasons why we would expect these cybersecurity companies to make increasingly bigger returns over time. And look, I think CrowdStrike. Yeah, still have a big potential based on. Based on what investors are doing, which is they haven’t all bailed. And I was actually quite surprised. You know, we heard about it Friday night, and investors in America woke up on Friday, and at the end of the day, I think the stock was only down about 10%.

Vincent Heeringa:
Well, it continued to slide over the weekend, but it has had that kind of dead cat bounce in the last few days. But I looked at it from a PR point of view and a comms.

Paul Spain:
Point of view, and this is what I’m interested in. Tell me what your viewpoint is, because.

Vincent Heeringa:
This is George Kurtz, who’s the CEO. He was initially criticised for his comms. He came on quite quickly with, they talked a lot to media, they issued press releases, and he posted directly onto certain socials. He did almost everything. Right. But he got criticized for one thing. So he was very. They were transparent, they were accurate.

Vincent Heeringa:
But do you know what? The one thing they did wrong, and he really got piled on.

Paul Spain:
I’m curious. Cause, yeah, I did an interview with Sky News Australia.

Vincent Heeringa:
Well, I could tell you what he did wrong. It was a rhetorical question. I’m sorry, Paul. So I’m gonna talk over you. But what he did wrong was that magic thing. He didn’t say sorry. You know, when you screw up.

Paul Spain:
Yeah.

Vincent Heeringa:
You’ve got to be contrite. He actually did well. He owned the problem. He articulated a solution. He was accurate, but he was cold. He was a very wealthy guy. He’s been paid a lot of money. He has a lot of stocks.

Vincent Heeringa:
He’s been very successful. We wanted to see contrition. And because he didn’t do that, people really piled into him on social, and he got a kind of a d rating for his comment.

Paul Spain:
Interesting.

Vincent Heeringa:
And so you gotta.

Paul Spain:
But he turned that around, didn’t he? Well, he learned very quickly, I saw was that he was saying sorry, and that had quickly became part of the playbook.

Vincent Heeringa:
Yeah. So he’s actually, as a company, from a PR point of view, they’ve done quite well. And if you look at it kind of from a textbook point of view, what do you do in a crisis that allows you to recover? And there’s three things. And he did almost three. He did two out of three, which ain’t bad. And then he recovered. So the first thing is speed. You have to front up really quickly, because if you don’t front up, you create a vacuum that gets filled in with speculation.

Vincent Heeringa:
Your competitors will pile in. So, speed to market. The second thing is accurate, truthful, accurate, reliable information. Again, he did that quite well. And then the third thing is emotion. You’ve got to empathize. You have to have a. You know, we’re dealing with humans.

Vincent Heeringa:
Yeah. You know, people’s finances, they’re stuck in stores, they’re stuck in airports. They want to see some empathy from you. And he failed to do that, but he quickly recovered.

Paul Spain:
I didn’t see that empathy coming through in any of the stuff that I saw.

Vincent Heeringa:
That’s right, that’s right. And so that was on the comms side, and then on the actual delivery side, it seems that they found a patch or a solution really quite quickly.

Paul Spain:
Right.

Vincent Heeringa:
And they worked. Just reading the analysis from the tech media, they work really closely with their clients over the weekend, and as I understand it, and got that solution working quite quickly. So they kind of got their comms right. They got the response right, which from a textbook point of view you would say they can recover because you know you’re going to screw up in business and in life.

Paul Spain:
That’s true.

Vincent Heeringa:
The screw up is unfortunate. You want to avoid them, obviously, but it’s almost more important about how do you handle the screw up? Are you honest? Do you front up? Do you find a solution? Are you contrite? Those are the elements that will give them the basis for some sort of recovery. And I wondered if that’s why we’re seeing this little recovery in their share price.

Paul Spain:
Yeah, yeah, it’s interesting. Yeah. In terms of them helping their customers, I think, you know, they work to help their customers with. Here’s the guidance, here’s how you fix it. Of course, in cases where customers were taken offline, that was going to be very time consuming and your customer was really going to deal with the brunt of that. In terms of resourcing it, there wasn’t so much, I guess, that they were able to do. Interestingly, Microsoft ended up coming up and Microsoft were in the firing line as well. So Microsoft had their own pr campaign.

Paul Spain:
And I’m pretty sure I got quite a quick email from Microsoft in those regards. It was very thin. I could probably look it up and read it out, sort of like a one or two line statement of like, hey, this, I’ll have a look and see if I can find it.

Vincent Heeringa:
And in the end, you know, people don’t care about who your suppliers are. If you’re at the airline desk waiting to catch that flight to see your newly born grandchild or whatever, you’re full of emotion, you’re full of disappointment, frustration, having someone blame their supplier, oh, it was, the it provider is not going to cut it. So all of those organizations, whether Microsoft, whether Delta or Jetstar, they all had to have their own response which was, you know, should have been fast, empathetic, accurate.

Paul Spain:
And look, this was one of the interesting. Yeah, there’s some interesting aspects here around. So Microsoft kind of were, you know, considered sort of guilty by association.

Vincent Heeringa:
Yes.

Paul Spain:
Or however you want to put that, because it was Windows that was going down. Yes, that’s right.

Vincent Heeringa:
I, as a Mac user, I really didn’t care.

Paul Spain:
So, yeah, there was an aspect there and they wanted to sort of say it’s not us. And then since we’ve had the pushback saying actually this wouldn’t have happened if the EU hadn’t have put pressure on Microsoft. And whenever it was 2009 to open up and to allow these endpoint security companies to get so deeply in the system that a failing from a crowd strike would take Windows down. So we’ve now seen that sort of further pushback from Microsoft because some of the coverage was, or in fact, there were a lot of headlines that were basically saying, this is a Microsoft problem. Microsoft is down, Windows is down, and so on. Yes, it is. You could also say it’s HP, it’s Della.

Vincent Heeringa:
Were they all operating using Windows operating system?

Paul Spain:
Right. Yeah. So there’s a whole lot of ways that you could, you could look at it. But, yeah, it was quite messy, I think.

Vincent Heeringa:
Absolutely messy. Yeah, absolutely. Miss. And I said there were two questions. So one was about this, was the ability for crowds strike and others to come back. But the second is, does it expose, Paul, the lack of resilience we have in our global it infrastructure that what was a pretty small bug, I don’t know if you could call it a bug.

Paul Spain:
Somebody made a mistake at CrowdStrike, and it kind of made the whole world sick, sort of.

Vincent Heeringa:
Yeah. Someone tripped over the cable to the Internet and the whole thing shut down. In our determination to go for speed, efficiency, scale, do we lose resilience? It is not the only industry that this is happening in food, in insurance, in banking. There’s a real concentration of shareholding into a smaller number of much, much bigger companies. Shipping is the same. The number of ports, these kind of mega ports. So the number of ports is reducing, but the size of the ports are growing. And it kind of hints at a direction of travel that suggests much more efficiency but much less resilience.

Vincent Heeringa:
Do you worry about the resilience of our infrastructure? Are we now so dependent on a few number of players that if someone makes a mistake, it all goes down?

Paul Spain:
Look, there’s probably a whole lot that we could sort of come back and delve into here because there are issues with the size and scale of, I think of some of these really, really big companies, largely tech companies.

Vincent Heeringa:
They’re american for now, but one day.

Paul Spain:
There’Ll be Chinese, the Amazons, the Microsoft’s, the Googles, the apples, and so on. I mean, there is so much in their hands. And so there are some genuine concerns there when we sort of try and plan for how do we make an organization resilient? How do we make an organization able to come back from a disaster and so on? There’s a huge amount of work that goes into that sort of business continuity planning. And most of the time, it all just works out really, really well.

Vincent Heeringa:
Yeah, most of the time I would be prepared, as a citizen and as a consumer, to trade off a little efficiency and speed for resilience. And I think about it in food systems, it systems in banking. I’d be prepared to wait a little longer, to be a little bit slower and maybe a little clunky. I promised I would talk about Battlestar Galactica, didn’t I?

Paul Spain:
Yes.

Vincent Heeringa:
You know, the reason Battlestar Galactica survived is because it wasn’t networked with the rest of the fleet. And when the Cylons infected the whole fleet with a virus and took the whole fleet out, a handful of ships, including Battlestar Galactica, survived because they were legacy systems.

Paul Spain:
And this is a real world scenario.

Vincent Heeringa:
It may well be science fiction, Paul, but I think the analogy works, that there is a trade off with efficiency and speed and scale, to resilience and independence. I see it as a metaphor, not just an it, but I see this trend elsewhere. And I guess it worries me.

Paul Spain:
Yeah. And it sparks up quite a number of thoughts and conversations. Just your involvement in the food world. I’m just kind of curious to hear a little bit more around that parallel with sort of, you know, food safety and supplies.

Vincent Heeringa:
Yeah, sure.

Paul Spain:
Would get us thinking a bit.

Vincent Heeringa:
Is being concentrated in the hands of a smaller number of large companies, not just in New Zealand, but particularly in the US. So, you know, we rely now so much on processed food to get our nutrients. You know, the idea of being close to a farm is kind of ridiculous. You know, it’s actually a system, and there’s been a concentration of power at the very top of the. Of the nestle’s, of craft, of general foods, owning so many of the brands that we like and use and rely on. But actually, there’s only a handful of large owners that’s coinciding with a concentration of freight around a smaller number of ports with bigger ships. And it makes complete sense from an efficiency point of view. Yes, there are so many operational improvements that you can have when you own a whole lot of brands, you can reduce overheads, you can take back end services and consolidate them and so on.

Vincent Heeringa:
All makes complete sense. Until you get a disease, until you get a war, until you get a storm event. And that critical infrastructure is now no longer distributed. It’s concentrated in a few areas, and that really affects the resilience. And a good example is, remember when the boat got stuck in the canal in the Suez, and it completely affected global trade? Now there is only two canals. There’s Panama and Suez. So that’s not going to change. But you know the reliance we have on Singapore as a central location, the reliance we have on Rotterdam and Hamburg.

Vincent Heeringa:
Anyway that’s the story around the world.

Paul Spain:
And we saw that have a flow on during COVID Right. You know there were issues with shipping and talking to sort of importers and exporters and hearing how the price of getting something from one port to another have gone up by not just twice as much as expensive as was before.

Vincent Heeringa:
But you know that’s right and there’s so many industries that we’ve lost from New Zealand for good reason. We don’t have a manufacturing industry really anymore in New Zealand because we do. But it’s much smaller than it used to be. It just makes so much sense economically to have a networked globe where it’s so much cheaper and more efficient to build things in China and have them imported. But what do we lose in that? And when we get something like a Covid or a Ukraine war and you realise that something like 40% of the world’s wheat comes from one place where there’s a war and people are starving as a result. The resilience question is super interesting. It doesn’t fit the usual model of efficiency, profitability, it fits a different model around security and independence.

Paul Spain:
What I hope when we see things like this is it gets us thinking, gets these sort of discussions going and one of the points that multiple people have raised it probably hasn’t had too much attention in the traditional sort of tv and radio type channels is do we rely too much on Windows? Now I’m sure Microsoft would have a very very very quick answer to that but it does fit into that picture of players getting very dominant and if Windows get sick or et cetera and so. Yeah, I’ve heard of that.

Vincent Heeringa:
Well what have we got? We’ve got Linux, Windows and OS and.

Paul Spain:
Mac OS and Android for some systems and so on. And look, generally organizations will tend to standardise and there’s efficiencies and simplicity.

Vincent Heeringa:
There’s so many good reasons for it.

Paul Spain:
That come with that but now I think this is probably a question that we haven’t usually spent too much time thinking about.

Vincent Heeringa:
There’s another topic that’s kind of related to this and that is the announcement. There’s a new data centre opening up and I. What are the words they use? A hyperscale data center which is boasting New Zealand’s sovereignty insofar as it’s going to retain. It’s based on an oracle system isn’t it Paul? So it’s called Team what?

Paul Spain:
Team cloud?

Vincent Heeringa:
Team cloud.

Paul Spain:
Team cloud. Yep. They tout themselves as New Zealand’s first sovereign hyperscale cloud service provider.

Vincent Heeringa:
Yeah. Great. Does hyperscale actually mean something? It sounds pretty cool.

Paul Spain:
Well, usually when I hear the term hyperscale, I’m thinking of these really big global cloud providers with data centers in many, many locations around the world. So the AWS, Microsoft, Google. Yeah. Then there’s a few other sort of ones that are not probably as front of mind, but have fallen into that category.

Vincent Heeringa:
So really big. And the sovereign thing is interesting, isn’t it? So that kind of relates to what I was just talking about, that in some ways it’s kind of stupid. I mean, data can move anywhere around the world, right? It’s completely frictionless. So it’s a nonsense to think that you can store data and you should store data in one geographic location. Just store it anywhere, man. It’s the cloud. Right? So put it in the cheapest, you know, most efficient place in the world. But actually there’s a really good argument to locate data in a sovereign state when there is so much data that relates to us as a nation.

Vincent Heeringa:
That’s kind of personal information around your health, your banking and so on, but it also relates to us as a really unique country. And I’m thinking here of a Teomori lens where I mori is saying, you know, actually maybe data is part of our Tonga. You know, maybe that’s part of our story of being absolutely a proud, independent people that, you know, we have native species, we have our own kind of ethnic identity. Is data part of that same sovereignty story? That’s what I guess team cloud are playing on, right? That sentiment. And it’s not, I mean, there are.

Paul Spain:
Probably some benefits of having your systems closer, right? So there is some of that, but yeah, it’s a good point. And look, they’re leveraging Oracle’s Oracle alloy, which is a platform for cloud infrastructure. So I guess there are others running that sort of technology around the world. So although team cloud, something local, they are tapping into a kind of international platform that can be utilized anywhere. But yeah, it is an important point and it has been coming up more and more recently around that aspect of our data being very important and yeah, being able to be thought of as tohong or as a treasure to our people.

Vincent Heeringa:
No one else gives a damn about New Zealand, so we actually have to look after ourselves somewhat. There’s another aspect to, what were they called? Team data.

Paul Spain:
Team cloud.

Vincent Heeringa:
Team cloud. That’s it. They’re claiming to be net zero which is great. Or is it?

Paul Spain:
Well, that’s your area of expertise. So, you know, I mean, what did you, you looked it up. They’re certified net carbon zero.

Vincent Heeringa:
Yes. So they’re certified.

Paul Spain:
What does that actually. What does that mean?

Vincent Heeringa:
Well, good question, Paul. What does it mean? They’re certified net zero with toy two, which is a very credible outfit. But it can mean one of two things. It can mean that they are just operating as business as usual and they bought a whole lot of carbon credits. If that’s true, that would be disappointing. Carbon credits are increasingly viewed with suspicion. In fact, there was a bear Guardian survey last year that’s been updated this year which shows 33 of the 50 largest companies in the world are using junk credits. So these credits that they are claiming for offsets turn out to be largely kind of rubbish.

Vincent Heeringa:
Forests that don’t exist, forests that are counted twice. Projects that claim emissions reductions that either don’t exist or haven’t, you know, can’t claim what they are doing. So there’s a huge amount of suspicion around carbon credits as a credible offsetting tool. What I hope they’re doing is reducing their gross emissions by the main source of emissions for data centers is energy use. And we’re so blessed in New Zealand to have on any one day we have somewhere like 86% of our energy comes from renewable sources, largely hydro, but geothermal, increasingly solar and wind. It’s not clear from their website what those claims are. I couldn’t find any information. Be great if they could front up, but the question would be, are they reducing their gross emissions by sourcing renewable electricity or are they just kind of polluting as usual and buying offsets? In which case, are those offsets credible? They should tell us more.

Vincent Heeringa:
The website’s really thin. I couldn’t find anything on Toitu’s website either.

Paul Spain:
Yeah. Okay, well, we have the opportunity to have them on an episode, so I’ll see whether we can, whether we can fit that in. Sort of scheduling, but good on them.

Vincent Heeringa:
For investing in New Zealand. Well done. It must be a huge spin to build something of that scale.

Paul Spain:
Yeah, look, hyperscale. What we’ve seen is that it seems to be a really smart investment and the values of these data centers for hyperscale or cloud data centers seems to be very smart. Seems to work out well.

Vincent Heeringa:
Someone’s investing in New Zealand and they haven’t all moved to Australia.

Paul Spain:
See how that plays out and how the partnership with, with Oracle works. But look, I think for New Zealand, having this happen locally, and look, they’re saying, hey, we’re the first. We’ve been waiting on Microsoft. We’ve been waiting on AWS and Google to open their data centers. Hasn’t happened yet. And now team cloud are like, hey, we’re here. So look, full credit to them, two privately located data centers in the North island as their reference. The second data center operational early next year.

Paul Spain:
So, yeah, let’s see how that plays out. I’m certainly keen to hear a little bit more. So, yeah, nice to hear that news today. Yeah.

Vincent Heeringa:
Good. In the time that remains, can we talk about glasses?

Paul Spain:
Smart glasses, VR, ar. There’s, I guess, a bunch of sort of somewhat crossing over categories and spatial computing, as Apple call it. Yeah, we’ve been reading around Ray ban with their smart glasses, which they’ve launched with meta. Now Google are trying to kind of inch in on that spot, trying to.

Vincent Heeringa:
Buy into that brand deal.

Paul Spain:
So we’ve got that going on. And then we’ve just had in the last couple of weeks that Apple have extended the reach of their spatial computing with the Apple Vision Pro. And so that’s now out in Australia. So another chance for me to throw stones at an international tech vendor and say, why are you launching in Australia and not New Zealand? Now, you could probably pull the dots together on that reasonably quickly. We’re a much smaller market than Australia. And look, this is a product that probably hasn’t sold at maybe the pace that some Apple investors might have hoped for, but they’re out there expanding their reach and that they’ll certainly sell some more in Australia.

Vincent Heeringa:
You’ve got to give the whole industry points for trying to launch and relaunch a failed category. How many companies from Google Glass onwards have tried to make eyewear, computing eyewear work? Nobody has cracked it. I mean, even Apple, who you’d think would get it right, it just does not seem to be getting traction or uptake. And I’m reminded of Scott Galloway, who’s a tech pundit and regular podcaster. His point is, why would you invest in a technology that makes people look stupid? Humans are wired to make themselves look cool, make themselves look better. Any technology that makes you look like a complete moron is never going to work. But I looked at those rayglass. Sorry, those ray bans glasses, you know, Ray ban are the definition of cool.

Vincent Heeringa:
You know, they’ve always been cool. And there’s no one that regrets buying a pair of ray ban glasses. They certainly have regretted losing them off the side of a boat. I may know someone that’s happening to, I guess is this the first time that someone has made a spatial computing, or whatever kind of b’s term you call it, a cool invention? And I’d say, no, Paul. And for one extra reason, that even if on your face they look cool, they are really insulting to the person you’re talking to. And you had a nice anecdote about someone coming into an office wearing these glasses and wondering, should I tell this person to take them off? Is he recording me? We’re in a private office, there’s client information. There’s a fundamental human connection that happens when we see each other in the eyes. If we have some sort of media in between us that is recording, processing, undressing, whatever it is broadcasting, whatever it’s doing, it really interferes in that human connection.

Vincent Heeringa:
And I think for that reason, they will continue to be a niche product. This could be the moment where I’ve crossed generations, Paul, and I’ve lost credibility. But I think for human connection, that these glasses will fail.

Paul Spain:
And I wonder if there’s any crossover with 3d television as well. So for 3d tv to work, everyone had to put on a pair of glasses. The actual experience was pretty good. And look, when you go to cinema, IMAX or something, you have to wear something, you know, that’s okay for a sort of short window of time.

Vincent Heeringa:
Yes.

Paul Spain:
But, yeah, the 3d tv, I mean, there was probably a whole lot of other aspects to it, but part of it was everybody in the room had to have the glasses and so on, and it wasn’t that much of a lift that it really mattered. You didn’t have the content. Yes. You know, I wonder, have we got the content if we. So, looking away from the smart glasses, which. It’s odd that Google would apparently be taking so much interest when Google Glass kind of fell over because everyone just hated the privacy aspects of it.

Vincent Heeringa:
What’s so compelling about it?

Paul Spain:
And the term glass hole came out.

Vincent Heeringa:
Why did they keep returning to this trough? I don’t quite understand. There is a huge application for accessibility for blind and poor sighted or low sighted people. And my blind friends are excited about this technology because it completely opens up the world for them in terms of what they can hear. The world can be reinterpreted with different senses, both hearing and feel. So I think there’s the simplicity in.

Paul Spain:
That case compared to what you can do on a smartphone and just. And that you’re wearing it.

Vincent Heeringa:
That’s right.

Paul Spain:
Absolutely brilliant.

Vincent Heeringa:
So another. You know, but to be fair, probably a niche application, maybe in entertainment settings where, as you say, you know, the kind of the experience of VR gaming or exercise or you know, again it’s sort of a one on one experience. Look, I think in terms of human interaction, which we’re social animals, Paul, you know, it actually matters for us to have human interaction.

Paul Spain:
Look, if this was coming out and we were all in lockdown and you could have these amazing social experiences with them on, oh, that could be quite interesting. Look, I don’t think the book is completely written on this yet, but as I said in this Sky News Australia chat, you know, I just, I don’t see the momentum being there at the moment. I don’t see there being a lot of people wanting to spend what is 6000 australian dollars, which equates to about 7000 in the direction of NZd7000. Especially with our GST being a little bit higher here if and when they do launch locally. And part of that is the lack of the mind blowing apps, games, content that draw you in. Because if this was something that was just like, whoa, that’s absolutely, you know, mind blowing. But you know, we heard stories of people that go out and buy the apple vision pro and then days later we’re returning it. Now there certainly are people who really, really love, you know, love the technology and they’re really interested in where it’s going.

Paul Spain:
They’re happy to drop down that cash. But at the moment it seems to be a smaller percentage of, you know, of the, of the, you know, I guess the broader tech community. And so yeah, I don’t see this moving very quickly, but I’m open to the fact that some things may land that completely transform that picture over time and you could compare it with a whole lot of other things. But yeah, to me it’s a bit of a waiting game. You make some really good points around that. The way it makes you look right and the way it is a blocker to normal social interactions. And if we were recording this podcast and we had these things on and we were sitting next to each other or at a distance, it would be a different field from being able to, you know, look you in the eye, Vincent and so on. In a real world scenario, there is.

Vincent Heeringa:
A large, and always has been a large industry in making people look good, making people look stupid. I don’t see a future in it, but, you know, happy to be wrong and I’m not, but I’m pleased. I’m not throwing billions at this particular solution.

Paul Spain:
Well it’s interesting you raise that because what I tend to notice around it, around Apple, who are the ones that have probably invested the biggest bucks in this is that they generally make pretty successful calls when you end up looking at the financial aspects. Now, yes, they’re trying to expand out their revenue streams and it’s still, the iPhone is such a key part of that revenue stream. But I do wonder, if Steve Jobs was still about today, would Steve Jobs have rubber stamped the launch of the Apple vision Pro at this time? Would he have waited longer? Would he have never allowed it to launch? And, you know, I’d say the jury’s still out on that. We probably got a little way to go. But, you know, Apple often have come later and they have come later in this case. But I wonder, is it still too early? Is it right?

Vincent Heeringa:
He was so good at picking the next big thing and he was prepared to wait, wasn’t he? You know, they weren’t first to market with a smartphone. They weren’t first to market with sound system or even with a digital music subscription service. But whatever he did, he did it well. And he just had this uncanny ability to pick the next big thing. They didn’t do well on cars, did they? In fact, they’ve abandoned, haven’t they? Abandoned.

Paul Spain:
And they never got as far as launching. But I guess they made the call. They made a call. We’re going to invest. We’re going to see whether there’s something here. Have ultimately, I guess, decided, no, there’s not something here. We’ll move on to the next thing. Yeah, very good.

Paul Spain:
Well, that probably wraps us up for this episode. Really great to catch up, Vincent. Always good.

Vincent Heeringa:
Nice to be here.

Paul Spain:
Now, folks who are interested in delving into your podcast, maybe you can share a little bit about that.

Vincent Heeringa:
Yeah, sure. So it’s called this climate business. It’s been going for a while now. I think we’re into year three. So thank you, Paul, for your support with that. It’s all about interviewing experts and innovators who are getting us closer to that net zero future, 2050 future or even sooner. There’s so much innovation happening in that space, Paul, there’s an incredible crossover with the tech sector. As I mentioned before, there’s a huge amount of vc money piling into that sector and we see it coming through.

Paul Spain:
At the high tech awards.

Vincent Heeringa:
Yeah, yeah. So, you know, the same excitement I used to have around digital, the digital revolution when I was running a media business, I now see happening in sustainability and in climate tech and some great New Zealand companies coming to the fore. So, yeah, it’s a great space to be. And the show is every week, sometimes I might miss a bit when I get busy. But largely every week.

Paul Spain:
Yeah, fantastic. Fantastic. A recommended listen, quite a broad variety of guests and topics that you cover. No, that’s great. Well, thanks for joining us on the show. Of course. A big thank you to our show partners. Gorilla Technology, HP, Spark, 2degrees and One NZ and we’ll catch everyone again next week.

Vincent Heeringa:
Thanks for watching. Cheers.