Live from San Juan, Puerto Rico It's the Cube

Covering Blockchain Unbound Brought to you by, Blockchain Industries >> Welcome back everyone This is the Cube's exclusive coverage in Puerto Rico I'm John Furrier, the co-host of the Cube, co-founder of SiliconANGLE Media

In Puerto Rico for Blockchain Unbound, this is a global conference Going to the next level in industry migration up and growth, and blockchain, decentralized internet and obviously cryptocurrency, changing the world up and down the stack I have an industry veteran here My next guest Salim is founding CEO, Singularity University and author of the best-selling book, Exponential Organizations He's seen many waves, friend, known him for years

Haven't seen you in a while, you look great You haven't changed >> (laughs) The hair has changed a lot >> (laughs) I've still got mine Hey great to see you

Bumping into you in Puerto Rico is really compelling because you have a nose for the future, and I've always respected that about you You have the ability to understand at the root level what's going on but also pull back and see the big picture Puerto Rico is the center of all the action because the killer wrap in this is money So money is driving a lot of change, but there's some fundamental infrastructure, stack upgrades going on Blockchain has been highly discussed, crypto is highly hyped, ICO's are– Scammers out there but now some legits

What's your take? What's your view right now on the current situation? >> Well I think what's happening with a place like Puerto Rico is When you get kind of wiped out of the old, you have the chance to leap-frog When you think about any of our traditional environments, laying down Blockchain technologies, et cetera It's really, really hard because you have to get the Supreme Court, the Constitution to approve blockchain based land titles, and then you build a stack there from a legal perspective Here they can basically start from scratch and do it completely from the ground up

Which is what's exciting for everybody here >> The top story that we've been reporting here is that Puerto Rico is rebooting The hurricane obviously, I won't say a forcing function, but in general when you get wiped out, that is certainly an opportunity to rebuild If there's any kind of silver lining in that >> There's a long history of that

Japan got wiped out during World War II, so did Germany and they rebounded incredibly We've seen that recently with Rwanda We do a lot of work in Medillin, in Colombia, and that's just been one of the worst cities in the world, is now the most innovative city in the world So this is the transition that we've seen a pattern for >> One of the things I'm really excited about decentralization and blockchain is all the conversations have the same pattern

Efficiency is getting wired into things So if you see slack in the system or inefficiencies, entrepreneurs are feeling the void The entrepreneurial eye of the tiger goes that to that opportunity to reset, reduce steps, save time and make things easier Classic value proposition in these new markets You run a great university but also author of Exponential Organizations

A lot of people are scared, they're like, "Whoa, hold on Slow down, this is bullshit, "we're not going to prove it" And then the other half saying, "No this is the future" So you have two competing forces colliding You have the new guard saying, "We got to do this, this is the future

" Old guard saying, "Blocks, Road blocks, blockers" You covered this in your book in a way, so how do you win, who wins? How do you create a win win? >> You can create a win win What you have to do is leap-frog to the newest, fast as possible The only question is, how can you get to the new? And the problem that you have is, as you rightly pointed out is When you try disruptive innovation in any large organization or institution, the immune system attacks I saw this at Yahoo running Brickhouse

Yahoo is supposedly a super advanced organization, and yet the minute you try to do something really radical, you spend all your time fighting the mother ship So I've been focusing a lot of time the last few years focused on that particular problem, and we're pretty excited, we believe we've cracked it >> How does someone crack that code? If I'm Puerto Rico, obviously the government officials are here at Blockchain Unbound This is not just a tech conference It's like a tech conference, investor conference, kind of world economic form rolled into one

>> Sure >> There's some serious players here What's your advice to them? >> So what we do, and let me describe what we do in the private sector and what we do in the public sector A couple of years ago, the global CI of Procter & Gamble came to me and said, "Hey, we'd like to work with you" And what we typically see is, some executive from a big company will come to Singularity They'll go back headquarters with their hair on fire going, "Oh my god!" If they're from BMW for example

They go back going, "Drones, autonomous cars, hyperloop, VR" Back in Munich, they'll be given a white coat and some medicine and be put in a corner "You're too crazy, now stand over there" And that's the tension that you are talking about And then somebody else will come six months later then they'll do the Silicon Valley tour, then they'll have one of our people go over there, and it takes about three years for the big company to get up to speed, just the C-Suite to get up to speed

Forget transmitting that down So I was talking to Linda Clement-Holmes and I said, "Look we're about to start this three year dance "I've been thinking about this, "let's shrink it to 10 weeks" So we designed what we now call an ExO Sprint Which is how you get a leadership, culture and management thinking of a legacy organization, three years ahead in a 10 week process And the way we do it is, we're in an opening workshop, that's really shock and awe

Freaks out all the incumbent management And then young leaders and future lieutenants of the business do the thinking of what should come next And they report back Some thing about that opening workshop suppresses the immune system, and when the new ideas arrive they don't attack them in the same way >> It's like a transplant if you will

>> It's like when you do a kidney transplant You suppress the immune system, right? It's that same idea So we've now run that like a dozen times We just finished TD Ameritrade, HP, Visa, Black & Decker, et cetera We're open-sourcing it

We're writing a manual on how to do it so that anybody can self-provision that process and run it Because, every one of the Global 5000 has to go through that process with or without us So then we said, "Okay, could we apply it to the public sector?" Where the existing policy is the immune system You try and update transportation and you're fighting the taxis Or education and you're fighting the teacher's unions

We have a 16 week process that we run in cities We do it through a non-profit called the Fastrack Institute based out of Miami We've run it four times in Medillin, in Colombia and we just finished four months with the mayor of Miami on the future of transportation We're talking to the officials here about running a similar process here in Puerto Rico >> Are they serious about that? Because they throw money at projects, it kind of sits on the vine, dies on the vine

Because there is an accelerated movement right now I mean, exponential change is here I'll give you an example We're seeing and reporting that this digital nation trend is on fire Suddenly everyone wants digital cities, IoT is out there

But now what cryptocurrency, the money being the killer app It's flowing everywhere, out of Colombia, out of everywhere Every country is moving money around with crypto it's easier, faster So everyone is trying to be the crypto, ICO city Saw it on Telegram today, France wants to be, Paris wants to be the ICO city

Puerto Rico, Bahrain, Armenia, Estonia UK just signed a deal with Coinbase What the hell is going on? How do you rationalize this and what do you see as a future of state here? >> Well I think, couple of thoughts

And you're hitting into some of the things I've been thinking about a lot recently Number one is, that when you have a regulatory blockage, it's a huge economic developing opportunity for anybody that can leap-frog it Nevada authorized autonomous cars early and now a lot of testing is done there So the cities that have appreciated– >> So you're saying regulatory is an opportunity to have a competitive advantage? >> Huge, because look at Zug in Switzerland Nobody had ever heard of the place

You pass through there on the way to Zermatt But now it's like a destination that everybody needs to get to because they were earlier This is the traditional advantage of places like Hong Kong or Dubai or whatever They're open and they're hungry So we're going to see a lot of that going on

I think there's a bigger trend though, which is that we're seeing more and more action happen at the city level and very, very little happen at the national or global level The world is moving too fast today for a big country to keep up It's all going to happen this next century at the city level >> Or smaller countries >> Or small countries

>> So what's going on here at Blockchain Unbound for you? Why are you here? What are you doing? What's your story? >> I have this kind of sprint that we run in the private sector and in the public sector and then a community of about 200 consultants And I have to pay 200 people in 40 countries and it's and unholy mess Withholding taxes and concerns around money transfer costs– >> It's a hassle >> It's a nightmare And so I've been thinking about an internal cryptocurrency just to pay our network

All of a sudden now, three or four countries have said, "Hey we want to buy that thing, "to have access to your network" So I've got all this demand over here, and I need to figure out how to design this thing properly So I've been working with some of the folks like Brock and DNA and others to help think through it But what I'm really excited about here is that, there's a– You know what I love is the spectrum of dress You got the radical, Burning Man, hippie guy, all the way to a three-piece suit

And that diversity is very, very rich and really, real creativity comes from it This feels like the web in '96, '95 It's just starting, people know there's something really magical They don't quite know what to do >> Well what I'm impressed about is that there's no real bad vibe from either sets of groups

There's definitely some posturing, I've noticed some things Obviously I'm wearing a jacket, so those guys aren't giving me hugs like they're giving Brock a hug I get that, but the thing is, the coexistence is impressive I'm not seeing any real mud-slinging, again I didn't like how Brock got handled with John Oliver I thought that was unacceptable because he's done a lot of good work

I don't know him personally, I've never met him, but I like what he's doing, I like his message His keynote here, at d10e, was awesome Really the right messaging, I thought That's something that I want to get behind and I think everyone should But he just got trashed

Outside of that, welcoming culture And they're like, "Hey if you don't like it, "just go somewhere else" They're not giving people a lot of shit for what they do It's really accepting on all sides >> Here's my take on the whole decentralization thing

We run the world today on a series of very top down hierarchical structures The corporation, the military industrial complex, Judeo-Christian religions, et cetera That are very hierarchical– Designed for managing scarcity, right? We're moving the world very, very quickly to abundance We now have an abundance of information, we'll soon have an abundance of energy, we'll soon have an abundance of money, et cetera And when you do these new structures, you need very decentralized structures

Burning Man, the maker movement, the open-source movement, et cetera It's a very nurturing, participatory, female type of archetype and we're moving very quickly to that What we're seeing in the world today is the tension going from A to B >> And also when you have that next level, you usually have entrepreneurs and sponsorships People who sponsor entrepreneurs the promotion side of it, PR and that starts the industry

Then when it hits that level it's like, "Wow it's going to the next level" Then it gets capital markets to come in Then you have new stake holders coming in now with government officials This thing is just rocket-shipping big time >> Yes >> And so, that's going to change the dynamics

Your thoughts and reaction to that dynamic >> Completely, for example When we do these public sprints we end up usually with a decentralized architecture that needs to built

For example, we're working with the justice system in Colombia And the Supreme Court has asked us to come in and re-do the entire justice system Now you think about all the court filings and court dates, and briefs, and papers all should be digitized and put on a blockchain type structure because it's all public filing We have an opportunity to completely re-do that stack and then make that available to the rest of the world I think that trend is irreversible for anything that previously had centered– I mean, most government services are yes, ratifying this and ratifying that

They all disappear >> Well Salim, I want to tap your brain for a second Since you're here, get it out there, I want to throw a problem at you, quick real time riff with you So one of the things that I've been thinking about is obviously look at what cloud computing did, no one saw Amazon web services early, except some of the insiders like us Who saw it's easy to host and build a data center

"I have no money, I'm a start-up or whatever" You use AWS, EC2 and S3 They were misunderstood, now it's clear what they're doing

But that generated the DevOps movement So question for you is, I want to riff with you on is, "Okay that created programmable infrastructure, "the notion of server-less now going mainstream" Meaning, I don't have to talk about the server, I need resource so I can just make software, make it happen That's flipped around the old model, where it used to be the network would dictate to the applications what they could do How is that DevOps ethos, certainly it's driven by open-source, get applied to this cryptocurrency? Because now you have blockchain, cryptocurrency, ICO is kind of an application if you will, capital market

How does that model get flipped? Is there a DevOps model, a blockchain ops model, where the decentralized apps are programming the blockchain? Because the plumbing is the moving chain right now You got, Hashgraph's got traction, then you got Etherium, Lightning's just got 25 million dollars I mean, anyone who's technical knows it's a moving train in the plumbing But the business logic is pretty well-defined

I'm like, "I want to innovate this process "I'm going to eliminate the efficiency" So this dynamic Does the business model drive infrastructure? Does the plumbing drive the business model? Your thoughts on this new dynamic and how that plays out >> I suspect you and in violent agreement here

It's always going to be lead by the business model because you need something to act as the power of pull to pull the thing along, right? The real reason for the success of Etherium right now is all the ICOs and it was a money driven thing Today we're going to see these new stacks, now we're on version three of these new types of stacks coming along, and I think they're all looking for a business model Once we find some new killer ops for this decentralized structure, then you'll see things happen But the business model is where it's at >> So basically I agree with you

I think we're on the same page here But then advice would be to the entrepreneurs, don't fret about the infrastructure, just nail your business model because the switching cost might not be as high as you think Where in the old days, when we grew up, you made a bad technical assess and you're out of business So it's kind of flipped around >> Yeah, just hearing about this term, atomic swaps

Where you can just, essentially once you have a tokenized structure, you can just move it to something else pretty quickly Therefore, all the effort should be on that I think finding the really compelling use cases for this world is going to be fascinating to see >> So software-defined money, software-defined business, software defined society is coming >> Yes >> Okay, software defined, that's the world Salim thanks for coming on, sharing your awesome expert opinon

Congratulations on your awesome book How many countries is your book, Exponential Organizations– >> It's now about a quarter of a million copies in 15 languages >> Required reading in all MBA programs, and the C-Suite Congratulations, it's like the TANEx Engineering that Mark Dandriso put out A whole new paradigm of management is happening

Digital transformation >> We now have the ability to scale an organization structure as fast as we can scale technology >> Blockchain you know, the nature of the firm was all about having people in one spot So centralized, you can manage stuff Now with blockchain you have a decentralized organization

That's your new book, the Decentralized Organization >> Although, I'm not sure I have another book in me >> There's a book out there for somebody, Decentralized Organizations Salim, thank you for joining us The Cube here, I'm John Furrier the co-host

Day two coverage of Blockchain Unbound more coverage after this short break (electronic music)