>> Narrator: Live from San Juan, Puerto Rico It's the CUBE, covering Blockchain Unbound

Brought to you by Blockchain Industries (upbeat Spanish-style music) >> Hey, welcome back everyone We're here in Puerto Rico for exclusive CUBE coverage, I'm John Furry, you're host Here, with Blockchain Unbound, this is a global event From everyone from Silicon Valley, New York, Miami, Russia, Eastern Europe, all over the world, and Puerto Rico coming together, talk about the future of the economy, Blockchain decentralized apps, and more

Our next guest is CUBE alumni, and part of our inaugural crypto currency coverage, from Polycon 18, back to give a command performance, Nithin Eapen Chief Investment Officer at Arcadia Crypto Ventures, good to see you >> Good to see you too John >> So, you had a great showing at our first crypto event, PolyCon, great to see you back in the trenches, you're out, hard-working, pounding the pavement, doing deals What's your analysis here, I mean, you're here networking, you checked out the sessions What's your take? >> We've met some really good founders, really good projects, so that's the key thing that we are looking for

The main idea as our tagline says, "We back Blockchain's best" We are looking for the best founders We are looking for the teams, then for the idea Anything that's decentralized, we are backing them >> So, network effect has been a big part of the conference I've been having

We talked about security tokens, utility tokens A lot of interesting things going on here, but there's a backdrop You've got multiple events going on You've have Blockchain Unbound, run by Blockchain Industries, great team, which put this event together in five weeks So, shout out to those guys

>> (laughs) You have Coin Agenda, >> That's coming! going on, another event going next door, which is after this event And then you have a lot of series of little events, meet-ups, the local community had a great crypto mixer, Puerto Rico, a lot of action >> Too much action, and it's like at the same time, look at it, TokenFest in San Francisco, another 2,000 people over there, here people are on the waiting list, so much action >> And that's going on this week, as well You have anyone going to that event? >> I know, I've got a lot of friends going over there

For me, it made sense, this is closer I thought I would meet a lot of them Puerto Rico is better I found, you know? >> A lot of big money here, a lot of smart money >> A lot of smart money, a lot of big money >> John: Global? >> Global, and the greatest part of Puerto Rico is, it's bringing this concept like, they have reduced taxes for US people to zero percent for individuals, for the next, until 2036

Now that's a big difference If you want to change your domicile to Puerto Rico, for your business it's 4% corporate taxes, and individual it's 0% now, that's >> John: But you got to move here

>> You got to move here, okay But you don't have to give up your US citizenship Now, I think what's going to happen right now is they're going to be other states maybe going to compete for this, or other countries are going to compete for the capital to flow, where does capitol flow to? Capital will flow to cheaper places, or lesser taxes >> So, I got to ask you, I was talking to you earlier this morning, here on the CUBE I said, "There's two killer apps, one of them is money" Money is the killer app

>> No doubt! >> Your reaction to that? >> It is, okay all of our lives, let's say for your son, or my kid, or for me, what my parents, when we went to school, why did they make us go to school or learn, they tell us, "Okay you got to go to college!" Why, they want us to have a better life, they want to have a better car How do you get them, you want money for them But in none of those years did somebody teach you, how does money originate? What is money, is it something you should buy the Garmin? So in everything that we go for, unless we're the Buddha or Jesus himself, we do it for money >> Well you bring up a good point I mean I have a immigrant background from my family, my wife's family as well

>> Where did you come from? >> Well I'm actually Native American, I mean American >> Okay But two, three generations back they, Ireland, >> Ireland, okay! French Canadian, a little bit of Armenian in me but that's okay, all kind of blended I'm in the melting pot, I'm not 1st generation but, in Boston where my parents were from, very much an immigrant town, and they didn't have any money So if you look at now, what's gone through the financial dot-com bubble, which had some impact, but the financial crisis is 2018, if you look at what's happened since then, the generation of millennials there in more debt They're not realizing college, it might not be the thing

So we went to school so that we can have a better life than our parents did Now it's like everyone's realizing that, shit we're screwed So watching as a path, of freedom >> It is! A new way to create wealth, capture the value, but in a new way >> Yes, because you have a chance to be a part of an economy without, a permission of a centralized organization

So, earlier if you wanted to work somewhere, you needed an organization to work This is making it much easier to be a part of the economy to contribute, to help people to get help, all this is happening and you don't have to go to school Maybe school is overrated, our colleges overrated It is too expensive, you spend 200 thousand dollars on college

What is your ROI, when is your ROI? Maybe some disciplines have it But this is your chance to >> Well, you you know that we love media and our disruptive media at the CUBE is to do things differently, but lets talk about some current events that's been happening So this week, John Oliver created a video trashing crypto currency, it was actually funny

But it got to the Brock Pierce part, and he really had it out for Brock Pierce He absolutely destroyed him >> He did! And since then, he lost his place EOS They wiped away all his DNA of evidence with the company This is a comedian, at John Oliver, you're a freaking comedian

What gives him the right to I have that kind of influence on someone's job when he's just telling a joke There's no actually substance of any facts of any kind at what he's doing, So that's a central authority figure that took an editorial comedic routine, and put it out there, but people think that's news >> See, >> That's not The power of media, that the power of all the old traditional media, is that they had a bigger reach I think it's going to change, it is going to be the YouTube's And it's going to become a decentralized YouTube equivalent, or a decentralized media equivalents

Like, a lot of people have made memes and you know, fun videos that go viral and they'll take things down The same, John Oliver obviously, he has us laugh >> He's funny as hell though He is funny as hell! >> You got to admit, >> He's pretty funny! The bit was really good, >> But end of the day, but he really went after Brock Pierce Something was going on there, he took him down

>> See the traditional industries or traditional media they want to take down everybody that they don't consider, the birds of a same feather, this is somebody weird, like Trump, they try to take down Trump They will try to take down anything which doesn't fit their globalist, elitist agenda End of the day, like Brock Pierce sitting on a billion, and John over with his comedy, who has the bigger laugh? I don't know, if you ask me >> When you have F U money like Brock Pierce does, I'm sure it rolls off his shoulders But it does impact the ecosystem a bit

Basically EOS has erased his name in any capacity So, obviously this impacts to public opinion So these comedians and news rep, they have an obligation to share the data Editorializing, I mean I do it all the time, don't get me wrong >> (laughs) But, there's a point, consensus is part of the algorithm now in these Blockchain and Crypto communities where you have Blockchain as a store, against him

>> Okay! But consensus and transparency is a huge deal >> Nithin: Yes! >> This is part of the formula >> I know but see, the whole thing When John Oliver does something, it's not about consensus He can do it, okay, it's going to change! It's like this, when Bitcoin came in 2009, the traditionalists were coming up at the story that, "it is fake money, it's not going to go anywhere" Then it became one dollar, they were just laughing at it Then became 10 dollars, they said it's going to go down Then it became hundred dollars, they did the same thing

And it's only after long time they will realize, "Oh my God, it's changed" The rock has been pulled under my leg It's like when Amazon came, all the traditional retail guys said, "Nobody's going to go and buy a book without touching it" Now we have Toys "R" Us that just went bankrupt There's no more Toys" R" Us, you know, you have to buy your toys pretty much from Amazon at this point

>> Well everything in the model of future will be all contexual so, videos, comedian, news articles, reports, editorial, all will roll into one thing That's going to be a great thing >> Yes! >> And media is going to take a lot of, natural language processing, it's going to get transcript link I think you're already doing it right, you're going to take a transcript of what I speak, you're going to attach the words, you're going to attach it to brands, you can sell that, and that is going to be the future >> Well lets get some of that intellectual property out of your head and into the camera, and for the audience

What are you hearing in the hallways here, obviously this is a great networking event here Lot's of agendas, phenomenal, as well as we had over sold almost by double There's people out in the hallways, it's sold out, so there's a lot of Lobby Con going on There's a conference within the conference going on >> Nithin: It is! We call it Lobby Con! >> (laughs) What are you hearing in the hallways, what is some of the cool things that's new to you, that you're discovering? >> So lot of people are now telling me they are very excited about security tokens

They're telling me they're buying security tokens I asked them, which security tokens? It's not there yet, okay See, that's where I tend to differ If security tokens are going to be the big thing, I'm going to be buying it because we are informed >> John: Buy everything that moves

>> We buy it as it moves, but, security token, my question is, so you're trying to make something that is a utility, now you're going to make it security? So that is equity markets, there is a CC for that And you're going to fit this in over there, I'm like, I don't know, what are people trying achieve? This is a free market and they're trying to bring it into regulation >> What's a red flag for you as a, security token implies directly that you're securing something What are they, >> You're pretty much What are people securing, equity, future cash flows, dividends, what are some of the vehicles you've seen? >> At that time they are pretty much secure, or securing future cash flows as dividends They're going to give dividends, they're saying if you're a token holder, you're going to get dividends

My question at that time is, then why do you want a token, why can't it be in equity? Oh, you think you can come with their argument that it's more liquid, but equity's a liquid I don't think it isn't a liquid But it is a great way to go around and secularize a lot of things You can have a small business, think of it, you and me we have a small business, let's say we have a partnership We have a small >> We have a small business, We have a small business, we have a partnership It's very hard to exit out of a small business If we can fractionalize the ownership of a business thru tokens, and there might be people are willing to buy, put thousand dollars in, and maybe I can exit at some point Otherwise there's no exit for me

It's very hard to exit out of a small business Now then, what's the difference between that and equity? I don't know you know, those lines are blurred but, I'm happy for the fact that something like that will give liquidity to a lot of small business owners America is a country of small business owners Across the globe it supports small business owners If it brings liquidity, okay I'm happy with that

But it's really beating the purpose that we don't want a centralized power controlling us Because now that you have Google and Facebook that banned crypto-currency ads Why, Women's Day, all our data, they give us a free access but they hold a lot of our personal data I'm thinking, the guy who brings in the, a decentralized search or a decentralized social media, I'm going to invest in them I don't care if their a success or if the success will come later

There are going to be multiple libertarian investors like me that's going to invest in them >> What I learned was that money is a killer app, and I'll stand by that I think marketplaces are also the killer app You ever think, >> Perfectly true! that this conference, that kind of validates where I was thinking was, the people who nailed a business model, that's the critical, critical pacing item If you screw the business model up, you go sideways

The technology risk isn't as bad as the business model decision risk So I'm seeing the successful ICOs, or plays, have a lock in on the structural value proposition and to be directionally correct, with an understanding of what the hedge is on the technology >> Yep! >> So they can manage it So it's like programmable plumbing They're recognizing that dynamic

The other thing that I'm learning is that the money flow from other countries is massive If you want a money launderer from Colombia, it's coming in from Metadine Narcos It's coming in from Japan, and China Bitcoin and Blockchain is a money transfer opportunity so, I'm seeing a massive amount of money, flowing in >> Capital is flowing, in massive waves >> it's flowing in

>> And it's good, and even if these projects fail, it's a good thing because, you had all this money that was stuck somewhere, that flowed in, and as I said, many of those projects are going to fail Let them fail, because this money has flowed in, you will have a lot of people come and work on these projects, and eventually the correct solution will emerge >> And new structural dynamics are at play And new investors are coming in >> New investors, so many new investors

You know the funny thing John, after we met at Polycon, I think that 99% of the people I meet here are totally new All the guys we met at Polycon in Bahamas, totally different I only know very few people that I met over there So that means a whole set of investors, or common people, who just want to learn about it, totally new That's really good! And who wins here, the average citizen entrepreneur, the average citizen player that wants to start something whether it's a banking, a service provider of some sort, a entrepreneur, or a new financial instrument or firm, all have greenfield opportunity here

>> Because, see earlier when you wanted to raise money, I was talking to a founder the other day, I asked him, how hard it was for you to raise your first raise, like 10 years ago? He was telling me that he walked the doors across multiple VCs, to kind of scrap in one and a half million dollars And then he did his second loan after eight years >> He'd have to crawl on his knees to get that >> And that too, you won't get the attention, you need to know reference, now you have a chance to go to the world, and monies were, so easy money coming in is a bad thing in a way that most entrepreneurs will feel the investors will lose their money but that's different, but it at least you have access and you can try to think that you had any in mind earlier

You had no option, they would take a big stake Now there's no dilution, this is pretty much cloud funding on steroids You have a chance to go to market, you get the go to market money and see if it works And if it doesn't work, let's fix it after that >> Nithin, I got to get your thoughts on building a company, 'cause obviously, you're also not only in this as an investor, you're also doing strategic advisory work for people building the venture architecture and then the actual build up plans for their venture

So you've talked about this in the past, you have a relationship with some protocol guys, you can check with them, there's some good network there But there's also a dynamic with this industry where the business development aspect of it is really important People are partnering, >> Very very important And there's a way to partner and a way not a partner There's a way to do token economics and there's a way not to do token economics

What is your advice, to companies that have a good thing going on, they have a tail wind at their back, they got wind in their sails, but have to make some hot partnering decisions Looking for fellows, fellowship in that ecosystem How do you advise folks in this partnerships and then talk about token economics after? >> So the first thing I would tell founders is to reach out This community is very very supportive Like you can reach out to me, you can reach out to other guys, LinkedIn, Facebook, or come to these events, and in the hallways

Say your idea and you need help, because you will need help, you cannot run this alone You are running a company, you are running your team Have a good team, that's a first thing Have a great team, great founders, vision, execution, you need that The next key thing is, you have to think about marketing and how do you market, you need to get some big names on your board who can reach out to their network and tell them about your idea

And they reach out of the rest for you >> So networks are super important >> Super super important, like >> So advisor, that their advisor selection should be based on their network that they bring to the table >> Right, so the first advisor selection is the guy who will help you flush out your idea properly as tokens The next advisor set is a marketing advisor or a technical advisor The marketing advisers also very important because you need to market the product, get the money in, because end of the day, you need money to build it You need to pay your employees, whether it's in Bitcoins or in fear, It doesn't matter, one of these is required

So you have these three things, then you need to build strategic partnerships in your business Say, let's see your a loyalty points guy, like Al is doing, You know Al right? >> Al Burgio, >> From FuZe Chain now doing DigitalBits Hot deal, hot deal! >> Hot deal, hot deal >> Look at what Al did, he went out, he got his strategic partnerships with the loyalty guys, now he's got the brand, the strategic partnerships, he's built a product already The money he needs is only for go to market so that he can push it to multiple companies and get them on the chain

Brilliant idea so, strategic partnerships, advisors, founding team, and then, show the idea to the people Go out there, let them know that this is what you're doing, why this idea is great, how big is the market, there was a problem that you're solving, what is your solution Explain yourself frankly and honestly, and I think the community will reward you, to go and find your dream >> Great point, be honest, ask for help Again, I can't reiterate my experience of, I'll share, is during the computer revolution, Internet revolution, Web

1o, and now partnering in the early days when it's forming, can make or break a company Make or break a company >> Very True! So, note to that, okay now, token economics >> Nithin: Sure! >> Sounds easy, but you really got to make sure that you have a good economic framework that matches the value proposition

Talk about what you advise there >> So last day of the one founder restart to me, ICO is going on for our seventh day into the ICO He's raised less than 300 thousand dollars I meet him, and he needs help After what, seven days into the ICO, all I could tell him is, shut off your ICO, it's not going to raise money

He's like, "Why," and I'm like, he said, "read this paper" I'm like, "There's nothing in this paper "I can put money into" And he's like, "Why is that?" So I asked him, so how many companies has he put his money into, how many points has he bought? Four years, he has not bought a single coin And he's flustered something by himself So he's never bought a coin, and he's expecting people to buy coins at his price

So I tell people, either you should notice, you should be an investor yourself So there are different kinds of investors, there are institutional investors that are funds, family offices, and then are retail investors If you're not any one of these, or any one of in this group, how do you know what these guys are buying it for? So reach out to them! >> That's where the advisory comes in, Know your customer! >> Know your customer! And not the KYC in a different way, but know 'em from a marketing standpoint Know how the retail, >> Exactly! purchase is made >> Because if

>> If you yourself are a buyer, at least you have some idea If you've never bought a token, and if you're, I had another founder tell me that, my tokens are worth hundred million I'm like, you don't have a user, you just have a product

You're tokens are worth shite, if you ask me It's worth zero, I can tell my house is worth hundred million dollars It's only worth as much as the top buyer How much is he willing to pay for me? So I told the founder, I'll pay so much for this price because I think, if it's about that, there's a huge risk as the main investor coming in He doesn't agree! >> So lets talk about some, how rounds are being done now

So one trend that I'm seeing, not, I shouldn't say trend, a few deals I've seen done, but it seems like a trend, I'm trying to get validation on this, Where people are avoiding the public ICO altogether, doing all privates >> Yes! Basically over subscribed round Trend, dynamic, real deal, what's your thoughts on reaction to that? >> It's just that the founders are adapting Because if you go to the public, the moment you're going to the public, what's happening is, there's the SEZ component Whether it's a utility and they can come after you, so they have made it private

And then they went after, and even further, a lot of the founders that I know, they just stopped accepting money from US entities or US individuals Well it's a bad deal for a small investor See the big investors are wealthy investors They all have an external entity where they can invest into it What about the small investor who was investing thousand dollars or 5,000 dollars? Now you have pretty much shut out his chance of getting into a great ICO

So the founder is going to raise his money from maybe Korea, Japan, China, and Singapore He's going to form a company or a foundation in Cayman, or Lichtenstein, or Gibraltar The small investor is a loser The large institutional investor has no loss in this process, so, that is the founder adapting because he does not want, >> They want to manage, >> They don't want it to become lawsuits, basically >> Compliance, audits, SEZ problems, they don't end fencing problems

>> So now let's compare, in contrast, different kind of companies US based company, wants to raise money in the US, they do accredited But they want to go outside, say Asia, or an Asia company wants to raise money in the US, what's that dynamic like, what are the issues? >> I think what's going to happen is they going to, some of them are going to register themselves as a security token, some of them are going to do just a reg D for very high net worth individuals And the common, the the public round, they going to raise it from the China, the Korea, Japan, or is lobbying them And that's what I think, multiple small countries are going to come into the space, which they know now, they can get the capital flowing into their company, and they going to allow their rules to be lax

They going to let capitol flow through And then US will have to change, or maybe UK will have to change, whoever is against this will have to change Capital means money, belt capital, and resource capital, like humans, we tend to move to places that are freer Why did I move from India to US, or why did your parents or the earlier generation move to US? >> John: For a better life >> It's a better life, the real better life is, you have the freedom over your property, the fruits of your labor

If the fruits of your labor are taxed at 50% or thirty, the more it goes up, you just don't want to work anymore, or you're going to to search for that place that will tax you less >> Like Puerto Rico! >> Nithan: Puerto Rico! >> Are you bullish on Puerto Rico? >> I am bullish on Puerto Rico because, these, if they can sustain this, and have the rule of law, means they can protect people's wealth, like from crime and all those things, crime or being kidnapped These two things happen, I'm telling you, most people will move or some of state will have to change their laws >> They got to get >> the security up Nithan, thanks so much for coming on the CUBE

Really appreciate your insight Thanks for sharing! >> Thank you very much This is the CUBEs exclusive coverage from Puerto Rico where we're getting on the ground here Getting all the data from the Blockchain Unbound Conference Part of restart week

I'm John Furry here, we've got more coverage after this break, thanks for watching! (upbeat electronic music)