Exclusive Interview with Vechain Founder Sunny: From LV to Crypto World, Web3 is the Perfect Answer for Sustainable DevelopmentInterview with Sunny, Vechain Founder: Web3 is Ideal for Sustainable Development - From Luxury to Crypto
“From the beginning until today, Vechain’s vision has never changed: to bridge blockchain technology into the real world.” – Sunny Lu
Whether it’s Web3, Blockchain, or Crypto, one of the most questioned aspects is that it seems to exist only in the virtual world, it is a simple financial game of money, and it emerges in a story of getting rich or losing everything in the volatility of the K-line chart. As the current hot topics change the narrative direction, what has it left for this not-so-good real world and what has it changed?
Perhaps there is an exception, a blockchain project that has been steadfast in its path and direction since 2016 – bridge blockchain technology into the real world and execute it firmly. Its name is Vechain.
Since 2016, Vechain has been active in the blockchain field, and its Proof of Authority (POA) mechanism makes VechainThor public blockchain more suitable for enterprise use. Unlike Web3 projects that serve the virtual world, Vechain has always focused on applying blockchain to real life through commercialization. So far, Vechain has been applied in different industries, including luxury clothing retail, textiles, food and beverage, energy, automobiles, professional services, and has worked with partners such as Givenchy, Walmart, BYD, and the San Marino government.
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In early 2023, Vechain and Boston Consulting Group collaborated to release the third white paper “Web3 for Good”, which detailed its four strategies for applying blockchain to sustainable development.
With curiosity and questions, Sunny, a TechFlow reporter, interviewed Sunny Lu, the founder and CEO of Vechain, in Austin, USA. Sunny humorously introduced the story of creating Vechain after resigning as Chief Information Executive of LV in 2014, and also shared his conversation with Vitalik in 2015, as well as the trip to Paris in 2016 to reach the first transaction with Givenchy.
TechFlow: Welcome Sunny to introduce yourself. How did you decide to create VeChain after leaving Louis Vuitton (LV)?
Sunny: Actually, I started to get involved in the cryptocurrency or blockchain field in 2013, so this year is my 10th anniversary.
At that time, there weren’t too many chains, only various currencies such as Bitcoin, Litecoin, Dogecoin, etc. The others were obtained through the return on investment of Bitcoin, whether it was through mining or trading, you could indeed get quite good returns.
I also began to understand the technology itself. The more I learned, the more I felt that this was cutting-edge technology, this was the future.
At that time, I had been working in information engineering for about 20 years, and I had been thinking about how to use blockchain technology to solve real-world problems.
But at that time, even now, 90% of the applications are related to financial applications, but I personally don’t think this is very interesting.
I have been trying to explore how to use technology to solve real-world problems. We tried different methods. The problem is that Bitcoin’s design is very simple and streamlined, with only a few hundred lines of code, and its encoding is very streamlined, so it has some limitations.
As early as 2013 and 2014, we actually tried different types of technologies, such as colored coins, which you may never have heard of:
You can think of it as assigning different colors to specific bitcoins for different purposes.
In addition, you can write a script, similar to a smart contract, but it is an offline smart contract for executing some automatic Bitcoin transactions, realizing more complex applications than simple accounting and single transactions.
It wasn’t until 2015 that I had a very interesting trip with Shenbo and Vitalik, and we stayed in Shanghai and Chengdu for a few days.
During the trip, we had a lot of exchanges. At that time, Vitalik shared the white paper and smart contract concept of Ethereum. Even before Vitalik released the Ethereum white paper, the concept of smart contracts had already existed. He was the one who made it possible and realized it.
Then, this really opened up my thinking. As you know, the smart contract platform is the perfect answer to solving those complex problems or building more complex logic on the blockchain. So, we can do more!
Simply put, if Bitcoin is like Excel, smart contracts can be equations on the blockchain, so I started thinking, can Bitcoin make data immutable, and can smart contracts really make activities immutable.
This is really the technical direction that I can realize all the ideas I have been thinking about and solve real-world problems!
In fact, Vitalik is one of the three founding partners of Fenbushi Capital and the first angel investor in Vechain.
On top of the EVM smart contract framework concept or framework, we have made great progress and improvements, making it faster, more scalable, and maintaining the same level of security.
I can say that Vechain is more suitable for enterprise adoption because we have stuck to our vision from the beginning to now, which is to bridge technology with the real world.
Even in 2018, several years later when we launched the Vechain blockchain, we actually wrote the first genesis block of echain in a way that pays tribute to Ethereum.
There are other explanations, such as my experience or resources before creating Vechain.
I worked at Louis Vuitton and other multinational companies. In 2012, at Louis Vuitton, I was involved in a very interesting global project called “Tracking and Tracing” and built a system that traced every product back to the original raw materials, manufacturers, transport to warehouses, stores, and then to customers.
It was easy to build a centralized system to do this, but later we started to focus on blockchain. I think traceability is a perfect scenario because LVMH is actually unique, they are very large and powerful, and can build a centralized system to trace on their own. However, LVMH still uses some external suppliers and external partners. Most other luxury industries use third-party manufacturers and external third-party supply chain service providers, so basically this is a perfect example for me to show how we can build different participants into the blockchain, and this is how we started.
TechFlow: What are VeChain’s main goals and achievements at present?
Sunny: To fully leverage the power of blockchain technology and bring it to the real world, to adapt to large-scale, real business applications. That’s our vision, even if we are now slightly upgraded: towards sustainability, essentially the same.
I remember it was really fun at the time. In 2015 and 2016, although we hadn’t started using public blockchains yet, we tried to build a blockchain solution for Givenchy, which was our first user. I don’t like to call them customers, I prefer to call them users, because they are users who use and innovate business processes and become builders with us to build blockchain applications.
Starting in 2016, I started going to Paris to meet with my former LV colleagues. I was lucky that Givenchy’s global CEO was not only my mentor, but also my boss when I worked in Asia. I tried to make an appointment with him and tried to explain the meaning of blockchain, how great, cutting-edge, and future-oriented this technology is.
About 20 minutes later…
He interrupted me and said, “Sunny, I don’t understand what you’re talking about, just tell me what to do.” Fortunately, he trusted me, and we reached an agreement, “Let me try a pilot case, if the effect is good, we will start to expand the application.”
I still remember the name of the product was Infinity, in fact, I believe it is a good sign, it is a pretty good name.
I also remember that the SKU number was 150090, and it only took 3 to 4 months from product development to release.
During that time, I and some of my engineers lived in an Airbnb basement in Paris, working closely together, and personally understanding how Givenchy’s supply chain works from headquarters to manufacturers to warehouses every day. I understood this process when I was at LV, I just wanted to make sure you knew what the existing process was, how to improve it by using blockchain applications, and how to make changes.
Four months later, we launched the first supply chain management blockchain solution for Givenchy, and they were very satisfied with it. So far, we have covered 100% of Givenchy’s leather products worldwide.
TechFlow: How did you build your first engineering team?
Sunny: Well, this is the process of people meeting each other. In fact, in the early stages of my understanding of Bitcoin and blockchain, I took advantage of my opportunity to travel around the world when I was working at LV.
Every time I traveled, not only internationally, but also domestically, because I was responsible for all IT systems and digital solutions, so every time I opened a new store in a city like Chengdu, Xiamen, Beijing, Shanghai, you have to go there to attend the opening ceremony, right?
So on these trips, I started looking for Bitcoin meetups, blockchain meetups, and then I would go to them. There weren’t many people attending at the time. We always joked that it was the same group of people walking around in different places.
At the time, I often hung out on the Bitcoin Talk forum, which was the only blockchain forum I thought existed, and through talking to people, I learned some ideas and solutions.
At that time, it was still quite strange to discuss some business applications, and there were no real enterprise-level adoptions, so my ideas caught the attention of some people.
In my initial engineering team, there was one person from Morocco, one from Colombia, and several from Shanghai. We started as a remote collaboration, and later flew to Paris to work together. Even though they had long since left, those were still good days!
It was a very interesting experience: different time zones, different languages. When I was in LV, I also managed a team in Singapore, and in Paris I was in charge of a global project, so this was not unfamiliar to me. It was a different style, a bit geeky or techy, and very interesting.
TechFlow: Can you explain the transition of VeChain from the alliance chain to the public chain in 2017?
Sunny: When we launched our first product for the first enterprise user on the alliance chain, we actually began to realize that the alliance chain was not a real blockchain.
That level of trust was not enough to compare with the public blockchain.
In fact, some business conversations with customers sparked this point, and we had been considering it for quite some time, but one conversation with a customer was really interesting.
At the time, we were working with French car company Renault on some applications with our partners in Paris, and then some other car companies came to me and said they wanted to do the same thing, and they wanted to do it better.
Because it was an alliance chain, the previous users thought they were competitors!
I said that was not right, that it was not in the spirit of decentralization, innovation, and infinite cooperation, and I even tried to persuade him: we should work together.
These conversations sparked our idea of using public blockchains. Because on public blockchains, you don’t need anyone’s permission to do any kind of application, so it should be open source, free, and free to come and go.
Therefore, we made the decision to turn towards public blockchain in early 2017.
TechFlow: Since the transition to a public chain in 2017, VeChain has undergone significant strategic transformations and advancements, including partnerships with Givenchy, Walmart, BYD, the Government of San Marino, and more. Through the public blockchain upgrades in 2018 and 2021, VeChain has established a foothold in the sustainability space. How can VeChain leverage blockchain to enter the sustainability space after establishing relationships with major institutional partners?
Sunny: I come from the luxury industry and have worked on a tracking and traceability project.
So I believe that supply chain is a problem that can be tackled. We have some convenient resources, contacts, and my personal relationships that can help push things forward.
We try to explore every possible way. And in fact, it is not contradictory for us, it is the same methodology. It uses the digital way to describe some business problems so that it can be achieved on the blockchain.
Then we look at the benefits or values of blockchain and try to find a way to make it visible and accessible to users.
Therefore, we work with different business users. We have worked extensively with PwC and DNV, who are also partners and investors in digital certification.
We provided San Marino with a digital passport and worked with H&M, The Ocean Cleanup, BYD, and many other sustainability projects, with BYD providing carbon emission calculation formulas behind the scenes.
Phase One (2017-2021):
We tried out the various possibilities of different blockchain applications.
These four years were the stage from 0 to 1 that we talked about:
We launched a blockchain, VechainThor,
We developed some blockchain applications with some business partners and got results.
Some of these results are still benefiting today, and we also tested how VechainThor can work with different businesses and different business adoption methods.
Phase Two (from 2022 onwards):
We have entered the next stage, and what we need to think about is that actually, we think popularizing billions of users is the most difficult part, but this is not the only task.
We also need to connect with individual users. This is where the beauty of blockchain comes in.
This is also the beauty of web3.
When we talk about business partnerships, we usually talk about business models: what is the return for the enterprise, you sign a business contract, and then the cooperation starts from there…
The beauty of blockchain is that every individual can be treated as an enterprise on an equal footing.
You won’t sign millions of contracts with each individual, you don’t even know where they are, they are very dispersed, so like Web3 or blockchain, we need Web3’s gamification to acquire and maintain users.
We think that the future of the entire Web3 should be an equivalent combination of enterprise models and individual user gamification
Everyone can create value and create collective value for the entire ecosystem. This is our understanding of Web3.
Since 2018, we have been brewing the next idea, what’s next? We need to see the development of the next 10 to 20 years.
There were two very interesting conversations.
The first conversation happened during the rebranding of Vechain in 2018.
A partner of mine at DNV and I had a discussion at a breakfast meeting that went beyond the usual: what would you really do if you didn’t have to worry about money, assets, and time?
We actually talked about the same answer, which is for future generations, for children, what does that mean for both of us? That means sustainability.
If you want to make the world more sustainable for the next generation, your children will be able to live more comfortably in this world.
It was a grand picture at the time. We didn’t even know how to do it. But from that breakfast meeting, we identified the idea and continued to think about it, because it was just a preliminary idea.
In 2018, we began to prioritize business projects related to sustainability. We tried BYD’s carbon emissions calculation and electric vehicle management (battery management), tried H&M’s recycled material clothing, and participated in The Ocean Cleanup’s project.
By 2021, we summed up that this was the right moment, and we can announce a new strategy.
But we spent nearly two years releasing a new white paper to make our thinking more organized and comprehensive. Web3 or blockchain technology is the perfect answer to sustainable development.
So we’ve come a long way on this idea, and we’ve made rapid progress this year. We released a new white paper co-authored with BCG.
We call it “Web3 for Better”, and that’s the short version of my story.
TechFlow: How do you think Web3 motivates individual users to take action on environmental protection and consider sustainability?
Sunny: That’s a very critical question, and perhaps we can seek answers from history.
Web1: 30-40 years ago, when the Internet was just beginning, the focus was on connectivity. All you had to do was connect to the Internet, and users were quite passive.
I still remember my days in college when it took 2 hours to load a page, and then you could only get the content on the page.
You couldn’t get anything fresh. So Web1 focused on connectivity. That was the priority, the infrastructure, the first step. Users were quite passive. This was the read-only Web1.
The well-known companies of that era were ISPs, Orange Business Service, China Telecom, AT&T, and device manufacturers such as Cisco and IBM.
Web2: It focuses on mobility.
After years of development in the Internet industry, people’s demands have become more diverse. They not only want to connect to the Internet, but also want to be able to connect anytime, anywhere.
I still remember that 10 or 15 years ago, every advertisement emphasized “mobile first”, and if you didn’t have mobility, you had no future.
Thanks to mobility, users have become more interactive, and when you interact with a platform, you are talking to others.
You can generate your own content (UGC-user-generated content), right?
Due to the interactivity of users, well-known companies in the Web2 era are Internet giants like Apple, Amazon, Facebook, Twitter, or WeChat.
Web3: Users own their internet data.
Think about the process from passive to interactive for users. What’s the next level? The next level is that I own my things, I own my creations. No longer does the platform control traffic or user data.
In fact, I created the user data, so I should be the owner of the data, I should be responsible and in control, and I decide how my data can be used.
Blockchain makes this possible.
Whether it’s smart contracts, tokens, incentive mechanisms, token economics, Web3 focuses on users. Whether it’s large corporations, enterprises, or individuals, the focus of Web3 should be on users first.
Users are not only more interactive, but also more creative, because I am the owner, I get incentives from my creations, so users go from passive and indirect to creative.
That’s right, this is Web3, and blockchain is perfectly suited for this kind of thing.
From a corporate perspective, this is my business, so I turn to blockchain.
From a personal perspective, no matter what I do, I put my data on the blockchain, and how I make it valuable.
The biggest challenge is how to validate everyone’s work and get value from it.
How individuals are connected from the top down, and ideologically, the key to user participation lies in the users themselves.
So no matter what we do, we need to consider users first. We need to consider how to make users put in effort and do the same thing.
If you believe in the same thing, it is the entire key concept of our sustainable development strategy. That’s what sustainability requires. We see different types of challenges:
There are many terms in sustainability, such as sustainability, ESG, impact, carbon emissions, footprint, etc., and there are many different standards or protocols.
Sustainability is generally led by large companies, government organizations or large non-profit organizations.
How are individuals motivated? This is the question that Web3 can answer.
The real goal of sustainable development is actually to make everyone contribute and live a more sustainable life. Ultimately, the entire environment (natural, social or economic) is more sustainable and lasts longer.
Sustainability should not be just a corporate project, it should be the bottom line of our lives. This is the question that Web3 can answer through smart contracts and collaboration with different types of technology (such as the Internet of Things).
TechFlow: Do you have specific plans and execution methods for people to participate in Vechain’s sustainable actions?
Sunny: We have identified several pillars of our sustainability strategy:
Vechain is one of the few projects in the crypto sector that has released three whitepapers in total.
The first round was in 2017, the second round was in 2019, and we were slightly delayed due to COVID-19.
Now, we have released our third whitepaper.
In the whitepaper, there is a small part of our journey from 2017, 2019 to 2023, our roadmap or different steps, different levels we are thinking about.
Basically, starting from the first two whitepapers, we only delivered promises and thoughts, now we offer a bigger framework to work hard to achieve promises and partial goals.
This involves both strategy and execution.
We will call on builders to join us.
We need different types of content, different types of formats, graphic design, videos, online and offline seminars and so on to keep communicating. That’s why I have been traveling frequently. Trying to seize every opportunity, with my team, not just me, the whole team is trying to go to different regions for communication.
Even before the whitepaper was released in November last year, we started doing this, organizing a series of business seminars with different participants (some individual developers, such as business operations, media, etc.). They will build and convey content together to make more people understand our vision, mission and inspiration, and try to inspire more people to join us.
This cannot be a work that a single entity can solve, it is both my job and everyone’s job.
We ultimately need to make applications possible, so we call on builders, they need something, they need tools to build, right? Builders may represent different resources or expertise, but how to adapt, how to use accessible and convenient Web3 technology, we need more tools. That’s why we will launch a new mobile wallet extension in the summer. VORJ is an aggregator that we just launched a few weeks ago. In fact, I tried it myself. I created a token called “Drink free coffee with Sunny” in just 5 minutes without any coding.
When I was at a workshop with community developers, we used this tool which is great, you don’t need coding experience and now you can create your own smart contracts. In VORJ, we not only provide users with the ability to create smart contracts, but also an API central library and various other tools to make it easier and faster for builders to adopt, and we are able to build an entire ecosystem.
TechFlow: In the rapidly changing world of cryptocurrencies, where does the motivation to focus on a particular direction come from? What is your thought process when choosing a direction?
Sunny: My motivation comes from multiple areas. When making decisions, always consider long-term value. And constantly think and expand on your strengths, learn and evolve yourself. In addition, you have to both cooperate and make yourself competitive. In the project, filling in the unknown puzzle pieces in the process of achieving the vision is very satisfying.
TechFlow: Why did VeChain decide to establish an engineering team in Dublin?
Sunny: The more research you do, the more you will find the problem of geographic expertise and resource allocation. The European region is more advanced in the concept of sustainability and has more development potential for future applications.
We still maintain global operations. This is just closely related to the talents we need. Dublin is a technology center, suitable not only for the encryption field, but also for Web2. In fact, our office is right across from the Dublin Amazon building. Our CTO is stationed in Dublin.
For community locations, our largest community comes from the United States, the second largest is Europe, and the third largest is Southeast Asia.
For team allocation, we have headquarters in San Marino, technology centers in Singapore, which is also our starting point, and business centers in Milan.
This is a fairly decentralized layout. Operations are not just about geographical location, but about how you develop after delivery.
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