 Live from San Juan, Puerto Rico. It's theCUBE, covering Blockchain Unbound. Brought to you by Blockchain Industries. Okay, welcome back everyone. We're here in Puerto Rico for exclusive CUBE coverage. I'm John Furrier, your 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 to 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 didn't Ethan, Chief Investment Officer at Arcadia, crypto ventures, great to see you. Good to see you too, John. So you had a great showing on our first crypto event Polycon. Great to see you back in the trenches. You're out, hardworking, pounding the pavement, doing deals, what's your analysis here? I mean, you're here networking, can you check out the sessions? What's your take? We met some really good founders, really good projects. So that's the key thing that we are looking for, you know? The main idea is 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 competition I've been having. We talk about security tokens and utility tokens. A lot of interesting things going on here, but there's a backdrop. You've got like multiple events going on. You have Blockchain Unbound, run by Blockchain Industries, great team, which put this event together in five weeks. So shout out to those guys. You have Coin Agenda. That's coming. Another event going next door, which is after this event. And then you have a lot of series of little events, meetups, local community had a great crypto, get mixer in Puerto Rico. A lot of action. Too much action, and it's like the same time, look at 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 who are going over there. For me, it made sense. This is closer. I thought I'll meet at the Puerto Rico is better, I thought, you know? A lot of big money here, a lot of smart money. A lot of smart money, a lot of big money. Global? Global. And the greatest part of Puerto Rico is it's bringing this concept like they have reduced taxes for US people to 0% for individuals for the next, what, to 20, 36. Now that's a big difference. If you want to change your domicile to Puerto Rico, you can, for your business, it's 4% corporate taxes and individual, it's 0%. Now, that's- But you got to move here. You got to move here, okay? But you don't have to give away your US citizenship. Now, I think what's going to happen right now is there 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 capital flow to? Capital will flow to cheaper places or lesser taxes. So I got to ask you, I was talking earlier this morning here on theCUBE, I said, there's two killer apps. One of them is money. Money is the killer app. No doubt. Do your reaction to that? It is. Okay, all 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 us to have a better car. How do you get that? You want money for that. But in none of those years did somebody teach you how does money originate? What is money? Is it something issued by the government? So everything that we go for, unless we are 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'm an American, but two, three generations back. Ireland, French Canadian, a little bit of Armenian in me, but that's okay. All kind of blended in. I'm in the melting pot. I'm not first generation, but in Boston, 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.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, they're in more debt. Okay, they're not realizing college might not be the thing. So we went to school so the beginning of a better life than our parents did. Now it's like everyone's realizing shit was screwed. So blockchain is a path, a freedom, 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 or colleges overrated. It is too expensive. You spend $200,000 in college. What is your ROI? When is your ROI? Maybe some disciplines have it, but this is your chance to- Well, you know that we love media and our disruptive media at theCUBE is to do things differently, but let's talk about some current events that's been happening. So this week, John Oliver created a video trashing cryptocurrency. It was actually funny, but he got to the Brock Pierce part and he really had it out for Brock Pierce. He absolutely destroyed him. And since then, he lost his place in Eos. They wiped away all his DNA as evidence of the company. This is a comedian. John Oliver, you're a freaking comedian. He, what gives him the right to 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 and 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, 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 decentralized media equivalent. Like a lot of people have made memes and fun videos that go viral and that take things down. The same, you know, John Oliver, obviously, he has his- He's funny as hell though. He is funny as hell. I mean, you got to admit, he's pretty funny. But end of the day. The bit was really good, but he really went after Brock Pierce. Something was going on there. He took them down. See, the traditional industries or traditional media, they want to take down everybody that they don't consider, you know, like a birds of the same feather. They see somebody weird, like Trump. That was taken- Trump was tried, they tried to take down Trump. They will try to take down anything which doesn't fit their globalist elitist agenda. But end of the day, like Brock Pierce sitting on a billion and John Oliver with this comedy, who has the bigger laugh? I don't know if you ask me. I mean, when you have a few money like Brock Pierce does, I'm sure it rolls off his shoulders, but it does impact the ecosystem a bit. I mean, you know, basically EO is a race's name in any capacity, you know, so obviously there's impact to public opinion. So these comedians and news reporters, they have an obligation to share the data. Editorializing, I mean, I do it all the time. You'll get me wrong. 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 mechanism, but consensus and transparency is a huge deal. 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, you know? It's like this, you know, when Bitcoin came in 2009, you know, the traditionalists were coming up with a story that, I just fake money. It's not going to go anywhere. When it became $1, they were just laughing at it. They came $10, they said it's going to go down. When it became $100, they did the same thing. And it's only after a long time, they will realize, oh my God, it's changed. You know, the rug has been pulled under, you know, it's 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 you 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 contextual. So, you know, videos, comedian, news articles, reports, editorial, all will roll into one thing. That's going to be a great thing. No, and media is going to take a lot of natural language processing. It's going to get a transcript, like I think you are 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, let's 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, there's a great networking event here. Content agendas, phenomenal, as well as, you got it oversold almost by double. There's people in the hallways, it's sold out, so there's a lot of lobby con going on. A lot of, there's a conference within the conference going on. It is. We call it lobby con. What are you hearing in the hallways? What are some of the cool things that's new to you that you're discovering? So a 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 a fund and we buy everything that moves. Buy 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 there 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 to achieve? This is a free market and they're trying to bring it into regulation. What's a red flag for you? I mean, security token implies directly that you're securing something. Yeah, 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 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 an equity? You can come up with the argument that it's more liquid, but equities are liquid. I don't think it is a liquid, but it is a great way to go around and securitize 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're a partnership, 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 our business through tokens, and there might be people who are willing to buy, put $1,000 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. 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's about 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 you have Google and Facebook that banned cryptocurrency ads. Why? It means they hold 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 a decentralized search or a decentralized social media, I'm going to invest in them. I don't care if they're 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 the killer app, and I'll stand by that. I think marketplaces are also the killer app. The other thing I learned at this conference that kind of validates where I was thinking was, the people who nail the business model, that's the 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 being directionally correct. With an understanding of what the hedge is on the technology. 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 Columbia, it's coming in from Medellin, 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, it's flowing in. Massive waves. 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. So many new investors. You know the funny thing, John, after we met at Polycon and over here, I think 99% of the people I meet here are totally new. All the guys we met at Polycon and 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, an average citizen player that wants to start something, whether it's a banking, a service provider of some sort, an entrepreneur or a new financial instrument or firm. All have green field 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 a second round after eight years. He had to crawl on his knees to get that. And that too, you won't get their attention. You need to know referral. Now you have a chance to go to the world. And money's right. So easy money coming in is a bad thing in a way that most entrepreneurs will fail. The investors will lose their money. But that's different. But at least you have access and you can try the thing that you had in your mind. Earlier, you had no option and they would take a big stake. There's no dilution. This is pretty much crowdfunding 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. Nathan, I got to get your thoughts on building a company because obviously you're also not only an investor, you're also doing strategic advisory work for people building the venture architecture and then the actual build out plans for their venture. Great. So you've talked about this in the past. You have a relationship with some protocol guys. You can check with them and some good network there. But there's also a dynamic with this industry where the business development aspect that was really important, people are partnering. And there's a way to partner and a way not to partner. There's a way to do token economics and there's a way not to do token economics. Very true. What is your advice to companies that have a good thing going on? They have tailwind 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 and the 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're running your team. Have a good team. That's the first thing. Have a great team, great founders, vision, execution, you need that. The next key thing is you have to think about marketing it. 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 will reach out to the rest. So networks are super important. Super, super important. So advisor, their advisor selection should be based on the network that they bring to the table. Right, so the first advisor selection is the guy who will help you flesh out your idea properly as tokens. The next advisor set is a marketing advisor or a technical advisor. The marketing advisor is 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 Fiat. It doesn't matter. One of these is required. All right, so you have these three things then you need to build strategic partnerships in your business. Say, let's say you're a loyalty points guy like Al is doing, you know Al, right? Yeah, Albers you are. From FuseChain now through Digital Bits. From FuseChain Digital Bits. They're a sponsor of our great team. 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 has got the brand, the strategic partnerships. He's built the 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 is 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 a drink. Great point, be honest, ask for help. Again, I can't reiterate my experience that I'll share is during the computer revolution, internet revolution, web.one.0 and now, partnering in the early days when it's forming can make or break a company. Very true. Make or break a company. So note to that. Now, token economics. 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. Okay, so last day, one founder reached out to me. ICO is going on, third or seventh day into the ICO, he's raised less than $300,000. I meet him and he needs help. Half, but 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, greatest 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 coins has he bought? Four years, he's not bought a single coin. And he's structured 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 know this. You know, you should be an investor yourself. So there are different kinds of investors. There are institutional investors, there are funds, family offices, and there are retail investors. If you're not any one of these, or anyone 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. That's where the advisory comes in. Know your customer. Know your customer. Not the KYC in a different way, but know them from a marketing standpoint. Exactly. Know how the retail purchase is made. 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, you know, my tokens are worth 100 million. I'll make, you don't have a user. You just have a product. Your tokens are worth strike, if you ask me. It's worth zero. I can tell my house is worth $100 million. It's only worth as much as the top buyer. How much is evening to pay from it? I told, 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. Let's talk about 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. They're doing all privates. Basically oversubscribed 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 SEC component. Whether it's a utility and they can come after you. So they've made it private. And then they've adapted 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 or the wealthy investors, they all have an external entity where they can invest into it. What about the small investor who was investing $1,000 or $5,000? 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- They don't want to take on lawsuits basically. Compliance, audits, SCC problems, and Princeton problems. So now let's compare and contrast the different kind of companies. US-based company wants to raise money in the US to do accredited, but now 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 some of them are going to register themselves as a security token. Some of them are going to do just a Reg B for very high net worth individuals. And the public round, they're going to raise it from the China, the Korea, Japan, whoever is allowing 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're going to allow their rules to be lax. They're going to let capital 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, wealth 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? They could ask- 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 30%, the more it goes up, you just don't want to work anymore or you're going to search for that place that will tax you less. Like Puerto Rico. Puerto Rico. Exactly. 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 from crime and all those things, crime or being kidnapped or just, these two things happen. I'm telling you, most people will move or some of the state will have to change that law. They got to get the security up. Nitin, thanks so much for coming on theCUBE. Really appreciate your insight. Thank you very much. Thanks for sharing. Okay, this is theCUBE's exclusive coverage from Puerto Rico where we're getting on the ground here, getting all the data from the blockchain unbound conference, quite a restart week. I'm John Furrier. We're back with more coverage after this break. Thanks for watching.