"How many opportunities are there in a lifetime to create a company based on a new scientific breakthrough with the right timing and the right partner?"

Interviewee: Rand Hindi, CEO of Zama

Interview and article by: Wendy, Foresight News

Just one week after selling his nearly 7-year-old company, 35-year-old Rand Hindi immediately embarked on another entrepreneurial journey because, "How many opportunities are there in a lifetime to create a company based on a new scientific breakthrough with the right timing and the right partner?" When this idea emerged, he dismissed the thought of spending six months traveling the world and instead plunged into a field that was not receiving much attention at the time - fully homomorphic encryption (FHE).

Four years later, the valuation of this new company reached 4 billion US dollars.

In early March of this year, Rand Hindi, co-founder of Zama, announced that the company had secured a Series A funding of 73 million US dollars led by Multicoin and Protocol Labs, with plans to use fully homomorphic encryption (FHE) technology to address privacy issues in the blockchain and AI fields.

Since then, Zama, headquartered in Paris, has not only become the most representative startup project in the global FHE field, but has also sparked a wave of venture capital activities related to FHE. According to Rand Hindi's disclosure to Foresight News, "In the next 6 to 9 months, 9 projects will announce the use of Zama technology," "These projects have all received funding, with a total valuation exceeding 10 billion US dollars."

Born in the romantic city of Paris, Rand Hindi has a very geeky side. He started programming at the age of 10 and went on to obtain a bachelor's degree in computer science and a Ph.D. in bioinformatics from University College London. As for the founding of Zama, it can be traced back to his experience of being bullied in his teenage years.

In the late 1990s, as the Internet bubble was about to burst, 14-year-old Rand Hindi participated in creating a very popular social networking site in France. At the same time, he was bullied by older kids at school. With no way out, Rand had a sudden inspiration - could the bully be a user of the social media platform he had created? He indeed found some small secrets of the bully from the website database and used this to threaten the bully, who never dared to bother him again.

Although this "fighting fire with fire" approach helped solve the immediate trouble, it also made Rand Hindi reflect on data security and privacy issues. At that time, he believed that "privacy" would become an important topic in the Internet field. After obtaining his Ph.D., Rand founded Snips, a company focused on solving privacy issues related to AI.

In 2019, upon hearing that Rand Hindi was going to sell Snips, Pascal Paillier, who had known him for many years and held a Ph.D. in computer science specializing in cryptography, approached Rand to express his intention to establish an FHE company together. In early 2020, Zama was officially founded. Pascal Paillier became the new company's Chief Technology Officer (CTO), while Rand Hindi took on the role of Chief Executive Officer (CEO).

Thus began a new business adventure.

Foresight News: Zama was officially founded in 2020, at a time when even ZK (zero-knowledge proof) had not yet gained mainstream attention from the investment community, and the application of FHE was generally considered to be even further behind. In addition to being an entrepreneur, you are also an investor and understand the importance of entrepreneurial timing. So, why did you want to start an FHE company back then?

Rand Hindi: I have always been very interested in privacy.

In fact, from the time I founded my first company - a social network in the 90s - (I have been very concerned about privacy). Because when you create a service that holds a large amount of data, you have to consider how to protect that data. So for me, privacy is inseparable from everything we do online. The company I sold before (Snips) was an AI company trying to solve privacy issues for machine learning and artificial intelligence.

It was precisely because of operating this company that I discovered fully homomorphic encryption technology in 2015. When I learned about this technology, I felt that everyone should use it, and it should be the default setting for everything. But at that time, FHE had not yet proven itself, and its capabilities were very limited.

Even so, I (at that time) knew that in the future I would want to establish a company focused on FHE. So, when I sold my artificial intelligence company (Snips) one week later, I founded Zama with my co-founder Pascal to address the issues of FHE (in application). It has been four years now.

Foresight News: When Pascal approached you, what breakthroughs had occurred in the FHE field? What was different compared to when you first learned about this technology in 2015?

Rand Hindi: In 2017, some new technologies were invented in the FHE (field), opening the door to a new research area. The major breakthrough achieved by Zama was that we were the first to be able to compute any type of FHE operation without any previous technological limitations.

When we started Zama, FHE technology faced three main problems: the first problem was that it was difficult to use. You needed to be like a cryptography Ph.D. to use this technology well; the second problem was that it was very slow. For example, it took several minutes to multiply two numbers; the third problem was that the use cases were very limited. Because existing FHE technology only allowed you to obtain approximate results on encrypted data. For example, the result of calculating 2 times 2 is not 4, but 3.8 or 4.2. For many use cases that do not worry about approximate errors, this is already good, but for medical or blockchain use cases, the accuracy is not enough. If I want to give you a million dollars based on certain conditions, you want to ensure that these conditions are fully met, not roughly met.

(In response to the above three problems), Zama made a series of major breakthroughs: first, we solved this (approximate result) problem by inventing new cryptographic techniques, which allow you to guarantee that the result of encrypted computation is exactly the same as the unencrypted data; second, we made FHE computation 100 times faster through the combination of new mathematical and engineering techniques; finally, we also made it easy for developers to use FHE without having to learn cryptography by creating tools for them.

Foresight News: Improving computation speed by 100 times is already great, but a 100-fold speedup may still not be good enough or fast enough, right?

Rand Hindi: You are right. If you want to do things like ChatGPT or LLM (large language models) in FHE, it is still too slow. But the good news is, we can now do LLM in FHE, which was previously impossible (just still very slow), generating a token takes a day, and the user experience is not good. We need a 1000 to 10000-fold acceleration to do LLM. Of course, we will (eventually) achieve this, because many companies, including Intel, are researching special chips to accelerate FHE. This is similar to ASIC chips in Bitcoin mining, or ZK chips, or specialized GPUs for AI. We will also have special chips specifically for accelerating FHE. When these special chips start to enter the market - maybe by the second generation product - we will achieve a 10000-fold speedup.

So, speed is no longer a problem with FHE itself, it is a hardware acceleration problem.

So, before these custom chips appear, what can we do with FHE? It turns out that blockchain is a very good use case. Because compared to cloud (computing), blockchain is very slow and quite expensive, and blockchain applications and smart contracts are also very simple. In contrast, applications like LLM and ChatGPT have the highest computational costs. So if you can (use FHE) to do ChatGPT, then you can (use it) to do everything else.

So, blockchain is an excellent starting point for FHE use cases. As FHE performance gradually improves, we can access more and more different use cases.

Foresight News: Some cutting-edge technologies like FHE and ZK face the same problem in the early stages of development, which is the lack of an existing market. What is Zama's market creation strategy? How do you create a market at this stage?

Rand Hindi: (In addition to the above advantages) the second benefit of blockchain is that the performance requirements match what FHE can do today. FHE can now process about five transactions in one second, and in the coming months, we may be able to achieve about 20 to 30 transactions per second on a GPU. For most blockchain applications, this level of TPS (transactions per second) is sufficient.

Another interesting aspect of blockchain is that it is a decentralized public infrastructure. In traditional cloud computing, whether you believe it or not, companies can tell you not to worry about confidentiality, that they won't be hacked, and that data won't be leaked, and only the company itself can see the data. But in blockchain, you can't do that; every piece of data in every transaction must be made public to everyone. So in today's blockchain, it is impossible to have any kind of sensitive data or confidential applications. However, with FHE, you can use blockchain in the same way, still putting the data on the chain, but encrypted. Smart contracts will run on encrypted data. So suddenly, you can have confidentiality on a public, permissionless, decentralized infrastructure.

Most of the use cases in this area are related to finance. If you talk to any large financial company that wants to securitize assets, they don't want to reveal their positions to everyone; they need confidentiality. AMMs (automated market makers) want to hide transactions, and if you want to avoid MEV (maximum extractable value), it's best to keep people from knowing what you want to trade.

(Another major use case is) gaming. If you want to play poker on the blockchain, it's no fun if the cards are face up. (There's also) AI, decentralized AI. If you want to train a neural network on a decentralized GPU network, you don't want people to see your dataset. As a company, if I spend millions or billions of dollars acquiring data, I'm not just going to put it on the blockchain for everyone to steal. Without confidentiality, decentralized AI cannot work.

So for me, the question is, what applications have we not built due to the lack of confidentiality? I would say most applications.

Imagine if I told you that all the data in every mobile app on your phone could be viewed by anyone. Then most of those apps, you wouldn't use. That's the state of blockchain without FHE. But with FHE, you can do anything.

Foresight News: As you said, ideally, every project or application in the blockchain field should have a need for data security and privacy. But when you pitch Zama's services or solutions to some projects or companies, if they are not currently planning to use or want to wait and see, what reasons do they give?

Rand Hindi: We have been commercializing our technology for the past 9 months, and so far, over 100 companies are interested in using it. We have a community of 4000 developers. So, we are the most successful and widely used FHE solution provider.

This is because without FHE, these companies wouldn't even be able to build what they want to build. So, companies like Fhenix, Inco, and Shiba are using our technology to build L1 and L2 with confidentiality. But there are also companies that want to build applications that require confidentiality. For example, AMMs that hide transactions, or asset tokenization that wants to hide balances and amounts in transactions.

So we have two types of customers, one is building infrastructure using our technology, and the other is building applications on top of this infrastructure using our technology.

Foresight News: As you said, Zama is a widely adopted solution provider, but there are indeed some competitors in the market. Why do many projects choose Zama?

Rand Hindi: I think the simple answer is that we are the only effective product. There are other technologies, but technology is not a product; technology alone cannot be practically used by developers.

So, from day one, Zama made some very strategic bets. We believe the two most important things for developers are: 1) they don't want to worry about anything cryptographic, so they shouldn't have to learn anything about cryptography; 2) they should be guaranteed that anything they do on encrypted data will be exactly the same as unencrypted data. As a developer, you can create an application without FHE, and then just add an FHE layer on top of it.

Using other technologies requires you to delve into it like an expert, then tweak it, modify it, and I think the main reason people adopt us is because it's simple, effective, and it delivers what we promise it should be able to do.

Foresight News: FHE is one of the solutions to privacy issues, but there are also some other technologies, such as ZK that we mentioned, and MPC (multi-party computation). They are related but different. Can you briefly tell us what roles these three different technologies will play in the broader encryption field?

Rand Hindi: ZK is a great way to prove that you have performed a computation without revealing the data on which the computation was based. For example, I can prove that I am over 18 years old without revealing my actual age. The problem is that ZK does not allow you to compute on encrypted data. So, if you have multiple users and you want to do something with multiple people's data, the ZK prover has to see the data of each person. So, it's hard to have ZK's composability and multi-user privacy.

But ZK is very suitable for things like scalability. So, if you just want to prove the correctness of something, ZK is a good technology. But for privacy, FHE is better because FHE allows you to compute on encrypted data. So you can have the same level of composability and multi-user interaction as regular applications, but the data is encrypted.

However, the problem with FHE is that if you use the same key to encrypt data, someone must have the decryption key to reveal the results. So how do you protect the decryption key? This is where MPC comes in. If you want to protect encrypted privacy, MPC is a great technology because what you can do is split the key into multiple parts and distribute it among different people. This way, no one has the key, and people need to reach consensus before decrypting something.

So, FHE can be used for private computation, and MPC can be used to protect private keys. Technically, Zama does use MPC, but we don't use it to replace FHE. We use MPC in a very specific part of the product, which is to protect private keys.

Some people also try to use MPC for secure computation, but the problem is that MPC is difficult to achieve composability because MPC is very slow, unless you already know what you want to compute and can preprocess it. But in blockchain, if my contract calls your contract or another contract, you can't really do this preprocessing. You have to compute in real-time. MPC is not friendly for this use case.

Foresight News: You mentioned "keys." In a previous interview with Epicenter, you said that FHE itself is not the problem. Now, the problem is actually key management. Can you explain this in detail? Because this is not only a problem that FHE may bring to blockchain, but also an opportunity, right? If there are some vendors who can solve this problem.

Rand Hindi: Yes, absolutely.

I would like to use our fhEVM product as an example to illustrate this. In fhEVM, as a user of FHE smart contracts, I have to use the network's key to encrypt my data—because everyone is using a public key, you need to encrypt data under the same key for composability between users—then I send this data to the blockchain for computation. But sometimes I need to be able to partially decrypt, for example, I need to decrypt the balance of my encrypted ERC20 tokens. So, how do we allow users to decrypt only specific parts of the blockchain state without revealing the key and enable them to decrypt everything? This is where a protected private key is needed, and this is where MPC comes in.

So, alongside this FHE blockchain, there is actually an MPC Key Management Service (KMS). It distributes the private keys of the blockchain across multiple nodes and allows people to decrypt based on what the smart contract says. As long as this key management system is secure, the only thing you can see is what the smart contract allows you to see.

So, this is why I say FHE is not the problem, because FHE is unbreakable, even with quantum computing. The problem is how to protect this private key, and the answer is MPC.

Foresight News: I am also curious about what changes FHE will bring to the broader encryption ecosystem. For example, in the ZK aspect, some projects are building so-called privacy chains. For example, Aleo and Mina. What about FHE? Do you think we will see a similar situation?

Rand Hindi: (In addressing privacy issues) FHE is growing much faster than ZK because FHE is very easy to use in blockchain. You just write a Solidity smart contract, there's no change for developers, and there's no difference on the user side. Everything is on the chain, and you can still have composability.

Before (FHE), ZK was the only technology everyone could try. But with FHE, everyone knows it's a better technological solution. The question has never been whether people want to use ZK or FHE, but before Zama, FHE was not usable. So there was no choice.

Now that we have usable FHE, people are turning to FHE as a privacy layer for blockchain. In the next 6 to 9 months, 9 projects will announce the use of our technology, including Inco, Fhenix, Shiba. These companies/projects have already raised funds, and the total valuation has exceeded $1 billion. So, in 9 months, FHE has grown from zero to a $1 billion ecosystem, and this doesn't even include the value of Zama itself, but only the valuation of these new chains and protocols. This organic growth proves that people really want this technology.

Foresight News: Will we see more FHE-based L1, L2, or sidechains? That's what I really want to ask.

Rand Hindi: I think all three will exist. FHE is no different from any other blockchain protocol; it doesn't change anything about blockchain consensus and security, it just adds an additional layer of confidentiality on top of what you initially wanted to do.

Foresight News: Let's go back to the issue of speed. New technologies like FHE and ZK consume a lot of computing power, making them very expensive. You mentioned earlier that in the coming months, it will become much faster. Can you give us more phased expectations in this regard?

Rand Hindi: I roughly mentioned some performance numbers earlier. Today, we can do about five ERC20 transfers per second in FHE, with the balances and amounts encrypted. If we make some engineering improvements on GPU, we can achieve 20 or 30 TPS.

If you want to achieve hundreds or thousands of transactions per second, you need ASIC. ASIC is not only for improving performance and speed, but it can also significantly reduce costs. We have built an FPGA prototype internally at Zama, which can match the performance of an (NVIDIA) H100 GPU in FHE, but at only one-third of the cost. This is very interesting. Transitioning to ASIC not only has the potential to significantly increase speed but also to halve or even reduce costs to one-tenth. Of course, like any new technology, the first iteration of the network or FHE chain may be relatively more expensive, and you might have to pay 10 cents for an ERC20 transfer, but this number will only decrease.

We are at a tipping point where FHE is already good enough for most blockchain applications, and it is evolving towards being able to do anything.

So, imagine if we can achieve a thousand or ten thousand transactions per second in FHE, then everything you do in blockchain can be end-to-end encrypted. FHE will become as natural for blockchain transactions as HTTPS.

10 years ago, I think only about 10% of internet traffic was encrypted, and today this ratio is over 95%. The same will happen in blockchain; initially, maybe 5% or 10% of blockchain transactions will be encrypted, but eventually, 95% will be encrypted, and this is not unreasonable because it won't cost you more and it will allow you to do more in this way.

Foresight News: In the crypto world, we often consider 2022 as the year of ZK, when after a research paper was published at Paradigm, basically every VC was paying attention to ZK. So, what about the FHE field? Do you think there will be a year of FHE, or is it actually happening this year?

Rand Hindi: From my perspective, it feels like it's happening. I think FHE is becoming a big narrative, and investors are investing in FHE.

I have a Telegram group with 50 VCs, and I share company information with them. Every time a company collaborates with Zama, I send it to our investor group and ask about their investment interest.

Not only startups are using FHE, we are now also collaborating with some big companies that are starting to use FHE for existing protocols. This is very exciting.

Foresight News: So, in this large ecosystem, how does Zama position itself?

Rand Hindi: Do you remember "Intel Inside"? When you bought a computer in the 90s and early 2000s, you would see a sticker on the computer that said "Intel Inside," right? When you bought a computer, you knew it had an Intel chip, even if you couldn't see it. We think Zama is the "Intel Inside" of confidentiality. You know our technology will exist in every application and every blockchain you use, but you won't see it because it's not consumer-facing; it will exist at the protocol level.

So, our vision for the company is that at some point, you know, just like we transitioned from using unencrypted HTTP to using encrypted HTTPS for our data, we will use something at the protocol level that encrypts every service we use, similar to HTTPS. When this happens, you won't even know Zama exists.

If we do our job well, you won't know Zama exists. Maybe there will be a sticker on websites that says "Protected by Zama," but that's it.

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