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Is Software the Next Sustainability Crisis?
Welcome to unbounded Talks on Growth in Financial Services. Hi everyone, I'm Mike Parsons, and unbounded is powered by flox.ai. Today, we are talking to the man himself. We are talking to Ian Yako. That's right. He's an engineer, an entrepreneur, and on a mission to make software. Better. That's right.
He is the CEO of none other than flow X do ai. So get ready to dig in. We're going to talk big picture about what's going on in the software, and we're going to give you a ton of clues on how you might make the most of those opportunities in this crazy fast-changing world. So let's get ready to jump into the growth equation.
Mike Parsons: E one. Welcome to the show.
Ioan Iacob: Mike, thanks for having me. It's so great to speak again.
Mike Parsons: It is great to have you back because since we last talked, a lot has happened; I feel like we have to try and process. If you think about the massive change in tech, particularly big tech, many things have happened.
Mike Parsons: Then when you flip over to ai, something that you and I discussed in our last show, oh my gosh, here we are in February of 2023, and everybody's talking about it. Who would've? Ian, who would've thought that people are pre-registering for Bing? Let me remind you, Bing, things have changed very quickly. So what do you think about this change the last year?
Ioan Iacob: Of all things? Yeah. No, I think it's we're looking at this exponential rate, the pace of change. And I think that what's interesting about exponential trends is that the human mind isn't trained to understand exponential trends. So you can understand them rationally, but you don't feel it.
Ioan Iacob: It lingers at the bottom of the chart and then takes off. And this is what's been happening. It's no longer than the summer of last year when we talked about AI-assisted development and every single executive you know and technologists, right?
Ioan Iacob: Like CTOs, CIOs oh, come on. That's not a thing. That's just some marketing stuff. It's not happening. And now everybody's faced with the brutal reality of chat, g p t being able to write pretty good code. Pretty good functional code. It's in your face; you can't ignore it anymore.
Mike Parsons: And the exciting thing, Ian, is that some of the models they're using at chat, G P T. We're based on papers written by guys at Google, yet it's got Google in all of a cluster. It just shows you that nobody can afford to rest on their laurels. So even Google has to be ready for what's next.
Ioan Iacob: Yeah. We're looking at a couple of next years that will be insanely transformational for the entire industry. And yeah, we, I think we'd be, better be ready for that.
Mike Parsons: Yeah. So you've spent the last several years getting after it. It is; you're right to call it out.
Mike Parsons: A year ago, we talked about the role of AI, and I think. What struck me when we were preparing for this show was how crazy things had got in the world of software, not just with the ai, but how people approach tech today and what they're working with in terms of the current environment of trying to find good developers and trying to deal with.
Mike Parsons: Tech, debt and legacy systems. What is the greatest battle for people trying to build software and products now that we've got another vector with AI-powered chatbots? That's just another challenge on the CTO's desk. So what are you seeing when you travel the world talking to folks?
Mike Parsons: What are they stuck with? What's causing them sleeplessness?
Ioan Iacob: I think it's the same symptoms, much more accentuated, that we're seeing, and it's this, costs of software development and cost of it just spiralling out of control. And it's, again it's a function of the same exponential trajectory.
Ioan Iacob: These things have been happening because we've been building this pyramid scheme of software engineering for quite a while now. If you look back, historically, we used to have a bunch of really good software engineers as a civilization. So went through really hardcore schools, and then we started addressing.
Ioan Iacob: The problem of delivering software with volumes, right? Like bringing on more headcount and not necessarily looking at people who can be engineers. And the problem with that is, beyond the philosophical, let's say, an oxymoron happening there because software is fundamentally a high-leverage area. So we're trying to build software using more brute force, right?
Ioan Iacob: But what, what's been happening is people. That we're not properly prepared to be, engineers have created more problems in software, right? So you bring a hundred engineers, out of which maybe you have ten real engineers who are good at building enterprise systems.
Ioan Iacob: 90 people are good at writing code but cannot. Think in terms of architectures and enterprise complexity and scalability and foreseeing things. So they create problems, right? So they create problems in the code they write, and then you end up with a piece of software and bring another thousand engineers, out of which probably 20 are really good engineers.
Ioan Iacob: So it's this pyramid scheme that's been happening in, in particular, the enterprise. And I mentioned enterprise. I think that's where scalability and security are mostly required, right? It's and the level at which. So companies have been growing, right?
Ioan Iacob: It's something that technology hasn't foreseen back in the nineties, 2000. So the complexity and the scale at which software is being used right now is something we haven't been prepared for as a civilization.
Mike Parsons: Do you think it's a bit? , large enterprises have been throwing so many engineers at the problem.
Mike Parsons: It's that famous mythical man month, right? Yeah. Throw more people at it. The brute forces, you would say that this brute force just means that if you take the law of averages, that really more and more bad code is going into the system. So invariably, the enterprise is creating. Sort of a house of cards.
Mike Parsons: It's all band-aids here and there. Is that a kind of way to interpret what you're saying? This is the kind of the
Ioan Iacob: That's exactly the image. And then the more bad code goes in, the more engineers we hire, and quote-unquote engineers. And what we're learning is, Very large organizations, but I and I think not just very large organizations. Still, humankind generally doesn't have a good way of measuring engineering quality.
Ioan Iacob: Software is not measured by quality. It's measured by quantity. It's about headcount. , it's about the number of people that are, which, in all honesty, doesn't mean anything.
Mike Parsons: How many lines of code, these kinds of concepts
Ioan Iacob: rather, it's pure headcount, right? Like that's the main metric in software.
Ioan Iacob: It's just headcount. And I think Steve Jobs was the first one that was, yelling, screaming at the top of his lungs about this. It's one good; one great engineer is not worth two or three. So it's worth a hundred x, right? Like an average engineer. And I think w. By definition, there are much more average engineers than great engineers, right?
Mike Parsons: Okay. So I think what we've identified is at a big-picture level. Larger organizations are throwing more engineers at the problem, but what they don't realize if I study what you say, is that they get stuck with a series of bad situations if people want to understand why they have so many issues with legacy systems, and why they have so much tech debt.
Mike Parsons: I think it's the root cause of what you've just caught out. We're throwing more and more bad code; we're committing more and more bad code into our applications. So we're getting it into production, which causes more and more people to be fixing rather than creating the new stuff.
Ioan Iacob: Yeah.
Ioan Iacob: If it was unanimously accepted, 2000, 2010, that 80%, 85% of the code being written is rework. I would say that 95 to 98% of the code being written is reworked. So there's very little. Code being written that's adding value.
Ioan Iacob: Most of the code being written is patchwork and not great patchwork at that, too, to be fairly honest.
Mike Parsons: Your brain fails to comprehend when you have bad fixes. On top of bad fixes or bag code upon bag code to fix the bad code. And we all know that when you sneak in a quick bandaid to fix this thing, often something else on the other side breaks the unforeseen, exactly.
Ioan Iacob: And then what, what executives in, in banking are seeing, and they're. In banking, but also enterprise in general. What they're seeing, and they're incredibly frustrated, is I'm spending all this money on software, and I don't get exceptional results.
Ioan Iacob: I was talking to the c e o of a large financial services group in Central Europe, and they're saying we're present in about ten countries, and we have 4,000 people in it. And we're barely keeping up with doing regulatory-mandated updates to the systems, right? So there's no, there's very little chance for us, and by the way, every year, we need to increase that number to keep up with just doing updates and maintenance on the systems, right?
Ioan Iacob: So there, there's something directly broken in, in, in that system.
Mike Parsons: The business implication of what you're talking about means that, Id. The idea that an IT department might or a tech team or engineers might think about or work on the products of the future is getting further away because people are becoming more devoted to bug-fixing compliance; essentially, keeping the trains running is such a full-time job.
Mike Parsons: No one's thinking of what's the next business to be in? What's the next product to launch Would? Would that be fair?
Ioan Iacob: Right, and the big part of the problem is legacy systems. And again, we just have not been designing for 20 years ago systems for the scale at which software is required today. Right?
Ioan Iacob: It's been driven by all these digital growth trends. So today, 18 90% of the cost in a large organization goes towards maintaining and updating legacy. And it's barely keeping up, and they, costs are increasing, but still, it's barely keeping up with, as you say, keeping the trains running.
Ioan Iacob: So, that's insanely frustrating for executives in the enterprise. I'm, we're talking to another global bank this time. They have 80,000 people in it, 80,000 people in it, right? It's just. They have, by the way, almost 1000 people just doing iOS development.
Ioan Iacob: Those numbers are mind-boggling because they don't have hundreds of iOS applications, right? Yes. Okay. Maybe they have 20, but they have 1000, almost 1000 people just doing iOS. . And it's this inflation of headcount that, that's been happening. And throwing more and more at the problem but not solving it.
Ioan Iacob: So let's throw more headcount.
Mike Parsons: I think what's interesting is what we see at the enterprise is reflected in different ways throughout small and medium businesses and the developer community. I wanna read out something you posted, which caused like a. An enormous amount of conversation on LinkedIn. It was a user posting to Y Combinators Hacker News, and I will just read it.
Mike Parsons: And I think this also shows the other side of what's happening with software. So this is a post done by Drek on Hacker News. An engineer, and just let's, I'll read it out, and then we can discuss it. Okay. So De Fran says, I currently have ten fully remote engineering jobs.
Mike Parsons: This individual says he has ten gigs, and the bar is so low. He says oversight is non-existent, and everyone forgives for underperforming. , I can coast for about four to eight weeks before a job. Fires me on a 1.5 million run rate for compensation this year, and he goes on a little further.
Mike Parsons: But this happens when you have too many people. Ian, this is what you're saying: this guy, this. Is moonlighting in 10 jobs. This is the definition of an industry. That's a breaking.
Ioan Iacob: Oh yeah. And you can imagine this guy isn't even trying, right?
Ioan Iacob: He does nothing literally. And then it takes two months for an organization to figure out that this guy's doing nothing and let him go. But then some people travel along, go with the flow, do a bit of code, and yeah, there.
Ioan Iacob: Th, those people stay on those jobs forever. Yeah, at least this guy; I love him, and he is honest.
Mike Parsons: But he is on the other side of that equation of large organizations. He's probably moonlighting at ten startups, all of whom are just throwing people at the job trying to fix with this brute-force mentality.
Mike Parsons: I think. This is so powerful, and honestly, it's very frank; you're almost holding the industry you've grown up in. You are; you're almost holding it to account. Does it feel at all awkward or uncomfortable? When you look at, for someone who was in math, Olympias, an engineer who's founded several companies, does it, how does it feel to be calling your industry?
Ioan Iacob: Again, I think for us, this has been a mission since, almost two decades ago, when we started that first company. And we started it because we wanted to fix how software is being developed, right? And then we realized that the problem is much; the rabbit hole goes much deeper, right?
Ioan Iacob: We realized that there's a need for much more systemic change, right? Not just for a company that comes and helps other companies do softer, right? And this is why we started Flow X and us re. Embedded all that are thinking about creating proper software and providing a systemic solution to this challenge as a civilization.
Mike Parsons: All right. Now we're, now we've painted a picture of the problem, and you are starting to take us towards the solution. I wanna remind all of our listeners and viewers that if they want to get the show notes, the transcript, and all the links from this show, head over to unbounded flox.ai.
Mike Parsons: Okay, Ian, here's the big question. How do we start to think about what you are saying is effectively let's rethink software? Before we get to all the answers, did you realize when creating Flow X that you were embarking on such a radical? Did you realize the can of worms, or were you still going into the rabbit hole, as we say?
Ioan Iacob: There was some understanding of what we're doing. This was our mission, and this is why we started the company; we wanted to fix something that was soaring, and we had. Some understanding of how inefficient it is. But then e, even when you see the numbers, it doesn't hit you as hard as when you start working with organizations, right?
Ioan Iacob: You look at reports that say, Hey, the cost of BAT software in the US is 2.5 trillion. And that's such a de-dimensionalized way of looking at it. Yes. It's been, isn't. that doesn't even mean anything. So what does 2.5 trillion mean? Nothing. But then I would say that one, one of the things that we are really, let's say, passionate about is actually that 2.5 trillion, that means people who are wasting their lives, building things that are not useful. And I think that's, Incredibly bad for them. That's incredibly bad for the users of that software.
Ioan Iacob: It's just, it's a very different picture when you think about it as a waste of human intelligence and waste of human brain with and waste. Human emotion, frustration, and the sheer amount of waste that goes into that 2.5 trillion are unfathomable.
Ioan Iacob: And that's just the cost of bad software to companies.
Mike Parsons: Interestingly, you touch upon the idea that it's almost so unfulfilling for engineers, and I would imagine it's also for the product owners and the business people. To all be sucked into this system of bad software, bad code, this brute force approach, like nobody can be happy deploying 80% of their tech budget just to keep the legacy system lights on.
Mike Parsons: That cannot be a good feeling right at the top because you said, what impact do we have daily for an engineer? You are going through cleaning up mistakes, bandaid here, just to keep things going at all ends of the equation. Nobody's happy.
Ioan Iacob: And that cost keeps increasing right year after year.
Mike Parsons: So it's almost like this compounding problem that demands a radical solution. Like we don't solve this. Just on the edges, tinkering on the edges. It sounds like you are quite ready to be radical in how you go about solving this problem. Yeah
Ioan Iacob: I think the people in the industry have realized for a long time something is broken, and they're trying to fix it, but we don't yet have something widespread, like a proper systemic fix.
Ioan Iacob: We. We're now arriving at a new generation of tools to potentially fix that problem. Because if you look at large companies, they're stuck between three main paradigms, right? One is they're stuck and completely captive to solution vendors, right?
Ioan Iacob: To inflexible solutions that do not represent their business and that you cannot. Tweak, or you don't have the resources to tweak, change, tailor, or adapt to your business and have those solutions reflect your business. So you're stuck with this kind of one size fits all blueprint or template.
Ioan Iacob: and that's one category of organizations; another category of organizations is stuck with insanely high costs of internal IT departments, right? And homegrown technologies and solutions. Have some flexibility but are incredibly slow and inefficient to update and tailor.
Ioan Iacob: And we're all seeing the crisis of these very narrowly niche languages. And the low code contributed to that idea of low code, and.; we tried as a civilization to bring in this generation of no-code tools, right? This is not a bad idea per se, but the first generation of no-code tools we've seen until now actually doesn't work in the enterprise.
Ioan Iacob: So it works for very simple use cases, right? To build fairly simple things, but in an enterprise, they deepen the problem because you cannot get away without adjusting that. And using full code. To tweak and create all these workarounds to make it work in that specific context.
Ioan Iacob: Every time you update the platform, you must change all the workarounds and end up in a much bigger mess. And they get very fast. They get to a spaghetti approach because they don't have one. An engineering structure at the core, right? You design screen by screen, or you have this simplistic way of representing processes, so you end up with a much bigger mess than initially what you were when you started, right?
Ioan Iacob: So you see, all these projects started and then abandoned right there. They have a first release, and people are then like, ah, I'm done with this. Yeah. I think this is where our opportunity as not just flow X, but really as a civilization is right, and bringing in this new generation of tools that is is a hybrid no code, full code approach, because,
Ioan Iacob: We cannot get rid of engineers no matter what the no-code tools are saying that, yeah, we're gonna, we're gonna build software automatically. No, you cannot get rid of engineers. The structure, and the complexity of the enterprise, are just way too high; just to check in with you there, what you are saying, this is your first big step into almost your first principles of the solution.
Mike Parsons: Start with combining no code and full code.
Ioan Iacob: Yeah. I think that's one essential, quintessential if you will, characteristic of this new generation of tools that can solve the problem. And it's not about replacing engineering; it's about augmenting engineering and taking off the plate of engineers.
Ioan Iacob: Things that are easy and. again, philosophically speaking, it's about how you encapsulate the most. Time-consuming, resource-consuming and complex things in enterprise software, which are scalability and security, and how do you let people focus on functionality? How can you let people build things, functional things, right?
Ioan Iacob: Because the challenge is not building a functional thing. The challenge is scaling it and how you wrap it in a scalable way and turn it functional into something scalable. I would say that's a second principle. We see it as necessary to think about.
Ioan Iacob: Again, 90, 99% of the complexity in the enterprise is not the functional or des design aspect. It's security and scalability, right? The non-functional aspect of a solution, robustness and
Mike Parsons: all of that. So it sounds like number one; it's about bringing together the two worlds of full and no code.
Mike Parsons: The second thing, it sounds like the elimination of repetitive standardized tasks that are about you or, in the past, were about managing the legacy to free up that time to go and work on real features, new products, new functionalities.
Ioan Iacob: Providing a layer that encapsulates security and scalability, so you don't have to worry about that.
Ioan Iacob: You can let people focus on the functional things they need to build. That simplifies the task by orders of magnitude, not just one magnitude. And then since we're there, actually we're seeing.
Ioan Iacob: And then since we're there, we're seeing now AI able to create decent functional code. So that's another way of augmenting the capability of engineering. And I think that allows us to reduce engineering workforces to true hardcore engineers who can contribute in an engineering-ish way, right?
Ioan Iacob: To, to solving the problem and to the business. , right? Rather than having to throw bodies at the problem. So helping, organizations focus much more on quality than quantity. And other than that, we're doomed into this self-colliding, imploding.
Ioan Iacob: Ponzi scheme,
Mike Parsons: right? Yeah. You did paint a house of cards with diminishing returns over time, calling upon this radical solution such as integrating low code and full code, such as automation, or at least reducing redundant tasks so that engineers can focus on high-value activities.
Mike Parsons: I think moving away from the brute forces, as you said, and then using things such as. So what's next? For flow X dot A? What's next for the platform? What can we expect in 2023? What are some of the things you are most excited about that's gonna happen on the platform, and how can we start addressing this problem You've talked about?
Ioan Iacob: We already, at the platform's core, had these concepts, right? The hybrid, no-code, full code, ai, the generative AI for user interfaces and encapsulating. The non-functional characteristics and letting people build functional things provide a layer of scalability and robustness for what people build.
Ioan Iacob: 2023 for us is super exciting because we're starting to bring out Actual machine learning and AI-assisted development. And AI-assisted operations. We have been running for the past two years with some very large banks, and now we have gathered enough data to start producing, not just.
Ioan Iacob: Could, but great results in terms of assisting people building, building software, right? But also assistance to people running processes and optimizing processes, right? Such things as AI-driven process optimization and AI-assisted development of the interface.
Ioan Iacob: Assisted development of business rules. These are all coming, and we're going to announce a couple of releases; I think in q2, q3, that is gonna be very exciting for, I would say, the entire community.
Mike Parsons: That's great. That's great. So it sounds like understanding the problem, we've got this house of cards in the way software has been built, and you are taking a few key concepts, this hybrid approach, this Streamlining automation of basic tasks so people can move up to higher order.
Mike Parsons: Functional, feature-driven, product-driven new releases, and being as smart as possible to deploy AI to assist in that. So we get more leverage in this game. We can move away from brute force and become smarter, not working harder, and creating more value for all those constituents because I like the CTOs.
Mike Parsons: his internal stakeholders are happier, and his engineers are happier. And you know what, if they're all doing well, it sounds like the customer wins too.
Ioan Iacob: Yeah, so absolutely. And I think, again, what we're benefiting from here is leveraging technology and software, which has this very interesting characteristic of having.
Ioan Iacob: incredibly disproportionate results, right? Like orders of magnitude better results than approaching things in the brute force way. And I think, yeah, I think that's the opportunity for our civilization to do things in a way that's not just, A bit better, but that is orders of magnitude better going forward.
Mike Parsons: I can't wait to have you back again. I, it would be great if we could put some time in the calendar around q2 and q3 so we can talk about how the platform is delivering on solving this problem and unfolding this house of cards so that all of those stakeholders we talked about so they can actually do better in their work or if they're actually on the other end. If they're a customer of these financial institutions, they can be happy, loyal customers who see value in that service provision, right? Yeah,
Ioan Iacob: Absolutely. And imagine if, as a civilization, we could build software and technology ten times faster than what that would mean.
Ioan Iacob: There many people are excited about curing cancer. Imagine if in, maybe, we're 20 years away; imagine we would be 20, 10 times more efficient than that cure would be two years away instead of 20 or just five times. It's four years. There are people excited about going to Mars, right?
Ioan Iacob: All of that is, is powered by software. Imagine we get ten times or five times better than we are today at building software. So what's the impact we have on civilization when instead of something that's maybe 10, or 20 years away, we could have something one or two years away?
Ioan Iacob: And so there's this interesting transformational opportunity that we have for humankind as we launch into a new era with better software, with better technology that's better, and more robust and reliable instead of. , just the current house of cards if you, as you call it.
Mike Parsons: Yeah. Elon, listen, thank you so much for. Being so frank and open about an industry you've been in your entire career, calling it to account, challenging the status quo, and saying, we can do better. It's great to be part of it. So it's great to hear what you and the team are thinking about it.
Mike Parsons: I certainly can't wait to have you back to hear about some of these future releases. So I wanna say big thanks to you and a big thanks to you all of our listeners and viewers. If you want to catch up on the transcript, show notes, and links to what anyone was talking about, head over to unbounded dox.ai.
Mike Parsons: Okay, that's a wrap.