At Token2049, we got the chance to interview Pavel Bains, CEO, and co-founder of Bluzelle. Bluzelle has been trending in the recent past for their successful $19.5 million ICO. They’re building a decentralized database for blockchain applications and what stands out about Bluzelle is their stellar set of team and advisors.
In this interview, we asked Pavel about what goes into setting up a great team like the one at Bluzelle, how to go about hiring top talent in the lead up to an ICO and the future of ICOs as a fundraising method.
Why build a decentralized database?
We used to work on blockchain projects for enterprises like insurance companies and banks. We’re building applications for three banks in Singapore HSBC, MUFG, OCBC. So its a digital identity KYC system. We built it on Ethereum application, ran it over a private network on Ethereum and then we said, “hey where are we going to store the customer data?”
We had to use a traditional centralized database, so we used Microsoft Azure. The problem was that it didn’t sync up properly with the blockchain application.
What were the blockers in using solutions like Microsoft Azure for blockchain applications?
Well, just integration because the whole stack isn’t decentralized. So “we had to blockchainify” and configure Microsoft Azure to work with the product we built, so that was a big pain point.
With us being in the space, we thought that if we believe that blockchain is the future and if we’re having this problem, other applications are going to have this problem in the future too, so why don’t we just build a database ourselves? So that is how it came up, it was very organic. It was something we saw as a pain for ourselves.
This is the kind of project that will get venture funded straight away. Why did you choose the ICO route? What was the thought process behind it?
Like you said, theoretically, it could be perfect for a venture. But the problem, even months before that, when we were trying to raise funds for our company, we would get all this pushback from the venture world.
And you know, we had a team, we had done projects for some of the biggest enterprise customers in the world but all they look at is; ‘how scalable is it’ and ‘how is this and how is that?’
And we said the technology is too early. Like no one in the world had solved these (scalable revenues) issues unless you’re an exchange. So we said no-ones solved this, but why don’t you give us credit for the customers we have. Those are hard to get, I don’t even come from the enterprise, I come from video games and I closed an HSBC!
They wouldn’t give us any credit for that, so we said, okay if we’re going to build a database we’re not going to go down that route to VCs again.
If you don’t understand this space and respect the technology, I know a group here, who does. There’s a full community here that understands it and knows that it will take years for all this ecosystem to build up. So we wanted to raise money from them. And that is what we did.
Do you think that ICOs are a fund-raising instrument that is here to stay? Or do you think that it will take a different shape in the future?
I think it’s going to stay. Only thing now is we’re going to have to get smarter and we’re going to have to weed out the frauds. There will be best practices.
A lot of it is up to the buyer, we’re just going to have to weed out bad projects. Good thing that Facebook and Google banned ICO ads.
That’s a good thing?
People think its a negative, but I think it’s a good thing. Because, I don’t know, if I was on Facebook and someone advertised an ICO ad to me, I would think, if you require general, mainstream, lowest form of advertising on Facebook to get my attention, I don’t trust that product. You don’t see Nike Air Jordan shoes being advertised on Facebook because it doesn’t need to.
If you’re building developer technology tools, those should be in proper technology journals and publications. For me, it’s good that they banned cryptocurrency and ICO advertising because now those guys will have to think of building a better product and will have to go through traditional marketing means.
So to summarize you think that the community will evolve to make this instrument more legit than what it really is right now.
Yes. Well, it still is legit. It’s just how people use it. So you’re going to get better projects and the best projects among them will emerge regardless.
While assessing an ICO what any decent investor looks at is the team. Your team itself are a set of really smart guys, how do you sell them a vision like this? How do you take a project like this and sell it to really smart people for them to devote their time and energy to it?
So two ways. Up until before the ICO, we had about seven people total in the company. 4 in dev, 1 in marketing, my CTO and me. So they knew what we were doing and they were already interested in blockchain projects and excited about it.
But we knew we couldn’t be in the development sphere with doing just this little projects for banks and insurance, we wanted to build a scalable project and the fact that we discovered something, like a decentralized database, which is really groundbreaking, really ambitious.
If you’ve got a really good technology to build, they want to take that challenge on and say, okay I’m going to give up my next couple of years and this is something to do because if we execute this we leave a mark, people know about us.
Which is the exciting part and given that the work we’ve been doing over the past couple of months has given us some recognition and we’ve built a community, we couldn’t have done that with any other product.
So are you, essentially, saying that if the problem is big enough smart people will come?
If the problem is big enough and the work, challenging enough; yes. Because technology developers, they want to be challenged and they want to be on the cutting edge.
How do you remunerate these people? They come with a price package, before the ICO, so how do you keep the motivation up and get them to settle for something like this?
Well, the thing you do before an ICO, you only have enough money for twelve to twenty-four months and six months in, you’re always worried about running out of money. And you want to keep lean, so you try to hire good talent and you’re only about paying them 30% of their market value and then those guys are also worried about when we’re going to run out of money and how long do we have. So you have all these things stacked against you.
But now post the ICO, you’re like I can pay you a proper salary, you can earn tokens that are redeemable and we can work on cutting-edge tech and we have enough money for the next few years, so you don’t have to worry about anything and just build a great product. So that’s the big change over.
Are you saying that there are enough people in the market that will buy into that right now and say yes, this is worth sacrificing for a couple of months and see the light of day at the end of it?
Once again, I think it comes down to the team, the product. The entire package. I think that is the problem, because people ask me all the time, “What do I do to have a proper ICO?”, “How do I do this?”. What they don’t realize is that a lot of it comes down to the founders, CEO and CTO being able to communicate their message really properly, being able to get on the stage and get people excited enough to say, “I want to invest in that project”, “I want to buy their token”, “I want to use their product”, or “I want to work for those guys”.
And some of that stuff I can’t teach that to somebody. If they’re shy to go into a room and stand in front of people, well then you’re not going to be able to recruit good talent, right?
Would you say that that is the most difficult part of your journey so far? Recruiting and retaining talent? Or what was it?
No, fortunately, we are in Vancouver where there is a good talent pool and because our product isn’t hundred percent blockchain based, it’s a decentralized database and it doesn’t need people who’ve worked on blockchain particularly.
So we can just attract talent who know data networking, infrastructure technologies and teach them what we’re doing and apply what they know before. So in Vancouver, we were able to recruit well from that.
And because of a lot of people coming on, they can see what was done during those good four-five months of the ICO phase. They got themselves talked about everywhere, they had webinars, they put out documentation, they put these advisors together. So that little time crunch is a great recruiting process.
So when I said to one of my developer who comes from a Korean background, he wanted to try all these tactics like traditional tech companies have to do while recruiting, I was like no we don’t have to do that. Look what we’ve accomplished in four months!
If a dev can’t buy into us based on just that, then I don’t want that person!
The second part is your advisory board. How difficult is it to assemble a good advisory team and what are the back and forths that happen there?
So for us, doing the ICO was basically building the entire company and everything was thought out pretty well, you know. We had a strategy behind everything. It wasn’t just, “Quick! Get an ICO done.” it was “What are the long-term benefits”. And we also said we were painting a full picture, we had to get the whole painting covered.
One of it was the fact that I don’t come from enterprises, I come from video games. But I can understand tech and I can absorb it fast, my CTO is a good architect but he’s not a pure database architect. So what we did was that, if we’re going to build this product, what are the first type of roles we need?
Obviously, we need a CEO type advisor, because they can coach me to be better and we also realized that we need someone who understands open source technology, somebody who has built database systems before, that would be helpful. The third person would be a crypto-technology expert. So from that, we made a list of people across the world that we would like. Then we started working down that list using our own personal networks, saying things like these are the type of people we need.
It wasn’t like we said, “hey this is our product, want to be an advisor?” It was more like, “this is our whitepaper, does this interest you?” If yes, we had more conversations about it and then see where it aligned and if we could all work together. Then it wasn’t tilled much later that we were like, we would love to have you on as an advisor and by then they saw the value of the team and the product.
So for us, we never put down a time frame for our ICO and advisory board because then you just start asking everybody. We took our time each one and once we got those three, we got the other groups. For example, an encryption expert, a security expert and on and on.
Good people lead to good people.
How do you structure your engagement with them? Is there a paid component or is it entirely that they are interested in your project and they want to work with you? Or is it both?
With the advisors? We have a token pool set for the advisors. And it wasn’t just for our ICO they are vested over two years and you know, now that the ICO is done we sit down and say that this is what we expect.
Like Gil Penchina, he is really good with being a CEO coach because he’s been a CEO for a number of companies. So I can ask him how to conduct a meeting on a week-to-week basis and other things like that. Other ones can bring us more customers, like even one a month is great. Then when we hit a problem with the technology, they can help us out with that and sometimes they even talk about the technology we’re working on it and to the community so that it isn’t just coming from us. Like just last week, Michael Egorov who is CTO of NuCypher jumped on and did an hour on our telegram answering questions just about technology.
So it is all down to business development for Bluzelle right now?
Umm, no. Product development. So our business development is a bit different from other companies because our customers are the token buyers, producers who want to offer their space up and then the developers, who all have a certain amount of understanding of the field.
So building the product is the most important. The next big version will come out at the end of June and so before that we have three and a half months to go find the developers that could sit and build up the developer community with understanding our product now, answering FAQs and give them the documentation they need so that when the product releases people are like, “hey I’m ready to use this.”
How far from now?
About three and a half month. And then we have the after and at the same time we have companies that are onboarding now to figure out what their pain points are and what their roadmap is so that we can say that this is what we’ll have solved, you guys can test that get your feet back on it.
Does it still make sense for someone who is starting out and is going the ICO route and is in the process of recruiting and building a good advisory board? What is your advice to them?
One would be, don’t put any time constraint on yourself.
What I would do is, I’ve got my product and I’m going to do an ICO eventually. These are my strengths. To get this product through an ICO phase I need this and that. And just run it like any other company and focus on recruiting a good developer team and an advisory board.
Because at the end of the day people need to believe that you are credible enough to execute this project. People need to believe in your credibility. That is all it is. So having all those pieces together gives them the confidence that you and your team can do it.
Hitesh Malviya is the Founder of ItsBlockchain. He is one of the most early adopters of blockchain & cryptocurrency enthusiast in India. After being into space for a few years, he started IBC in 2016 to help other early adopters learn about the technology.
Before IBC, Hitesh has founded 4 companies in the cyber security & IT space.
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