ICOs: 10 things that cool me off

Ok. it may not be the best moment to feel bullish about the future of ICOs (if you don’t know what an ICO is really i suggest reading my intro post on the topic), but i do believe the future is bright. Regulations, SEC ongoing involvement and China brutal move or even Hong Kong positions are a good thing for the market. Call it “clean up time”. Actually i believe this is exactly what the market needs to cool down things a little because i think we’re reaching peak time.

i am spending a lot of time reviewing potential ICOs in which to participate. i am excited and worried at the same time. I do see great projects but also a majority of mercenaries who invest little thought in their project and even less in the preparation of their ICOs. There are a few negative signals that immediately turn me off in an ICO. In one word: lack of care and professionalism. Here is how i try to spot them.

1. Unreadable White papers

Not sure who decided this was a good format to present and “sell” an ICO. Fat protocols like Ethereum and more had one when they launched so i guess everyone thought it was a good idea to write long and complex papers no one would read or even understand. They are supposed to make the project look serious, credible and legitimate. I feel this is the exact opposite.

I bet a tiny minority of people involved in ICOs even care to read them and even less manage to understand them. Those documents are either too technical, or miss critical information about the business strategy and focus on explaining technical stuff only 0.1% of the world population may even understand or are simply poorly written.

Example of a text found in an ICO whitepaper. Do you get it?

If i can’t be convinced by other elements than your white paper, there is very little i want to know about your ICOs. For example: i want to see a product i can try or a piece of code on Github where the developer community gets excited.

At least some companies are honest about it and don’t even provide one

Also if you put your White Paper in a PDF format make it also accessible in a full web version: it is much better to read when on mobile/tablet.

2. Crappy websites, Crappy Claims.

People involved in the blockchain industry are probably some of the brightest minds in the world. But boy, those websites. Hardly optimized for mobile, with unaligned pixels, consistent typos, heavy arrogant animations and vague wordings and promises. Tip: because you’re going to be decentralized it does not mean your website has earned an ICO oscar. Decentralized brings nothing until you can explain why this is good and creates value. Bragging about it and being powered by the blockchain is as good as adding chocolate chips on a Tabasco ice cream: it just does not make it better.

3. Shadowy teams

Blockchain projects are incredibly complex to pull off, especially in an highly volatile industry. But honestly, unless your have high profile figures on board(eg like Vitalik Butterin) i don’t care that you have advisors no one has ever heard of that are blockchain specialists/evangelists, presented in dated pixel pictures. And by experience i know what most advisors do: nothing. They get free shares/tokens and lend their name for credibility and burst power. But they don’t do the job? So who does? The team.

And here is what matters: i want to know who is clearly involved *full time* in your project. This is an information usually really hard to find. And if it is, it is a big NO-NO.

no names, no team.

This above for example is an ICO that got attention because Paris Hilton has pointed her interest (yes that Paris Hilton).

Looking at their site you can’t even figure out who the team is. Digging a little you find out that a convicted high tech CEOs is involved in it. Remember? Blockchain? about building trusted systems?

Actually a good rule of thumb: the more a celebrity is pushing for something, the less you should follow…

4. Ads for your ICOS

Like with good products, best ICOs get talked about. Best ICOS have their own merits and fantastic promise. They don’t need crappy paid ads to make noise about it. I see more and more ads for ICOs. By curiosity i sometimes click on them. Here is my observation: 100% of them are not interesting. They have to pay to get your attention. For me an ICO that is ad powered is an instant turn-off.

that ad for this ICO is particularly funny….

Great copywriting.

5. Sketchy products

Some companies (rarely) will have a product to show before their ICO. Use it. Feel convinced by it. If you re not, just don’t do the ICO no matter what the other signals are. Execution and sense of details is not something that is the most impressive part of this new industry. Even for high profile ICOs. I tried to use for example the mobile app version of TenX a high profile ICO. I have so much to say…. Buggy all the way (they raised tens of millions in minutes…). Sure, the company is new, etc…but when you raised so much money and when you plan to change the world do release crap.

6. Bad KYCs

This is the worst part of the process of an ICO. KYC (aka “Know your Customer”) is the gate to know whether you are eligible to participate and also a way to push away “money launderers” abusers and by that way naturally building up a cap to the number of participants in an ICO. Most of those KYC steps, involving asking your name, your crypto wallet address and sometimes a piece of ID are outsourced. They are not handled by the company running an ICO: they are outsourced. There is something that make me highly nervous about giving so many critical details to companies you never heard of, about not knowing what will happen to your data once the ICO is over…..Some of those “sub-sites” are just bad in their execution: buggy, full of typos, not mobile optimized, with bad UX all the way, not able to handle loads of traffic in short period of time. I dropped a few ICOs because that step was just an immediate turn off.

Tip: invest time in your KYC process and presentation. Even if you outsource it. it is a critical part of your product even if you don’t perceive it that way. regardless it will submerge your customer support if something goes wrong with it.

But even more important: i avoid ICOs where KYCs do not involve a pre-whitelist and a clear selection. ICOs where anyone can come in the day of the ICOs and try his chance to get something out of it is nearly certainly going to turn out a failure. Huge whales usually manage to get their share by putting lots amount of gas (sorry for the technicality) and will squeeze out the majority of contributors resulting in downtime and wasted money (txn)

I avoid those ICOS. I prefer KYCs where users first register, get whitelisted a cap per user is announced and the ICO organized. ZeroX had the best organized ICO hands down (also was one of the most successsful)

7. Unclear/Complex Deal terms

Some ICOS will approach you before the date for a pre-sales. They will promise you a high discount. Sounds like a good deal. But i don’t like deals where i don’t see the whole pictures. When I am not able to get the terms of the deals (number of tokens, vesting, lockup, trading possibility post ICOs, value of the token, total amount raised, in pre sales etc…) i just drop it. So when i see web site promising some cool ICO discounts. I just run away.

8. Bad ideas.

That one is obvious but also hard to spot. ICOs make you believe everything can and will be tokenized and that this tokenization will results in sensational value creation and hence valuations.

That is not true. The timing for tokenizing everything is not right for every idea. The idea of tokenizing everything is not right for every project. My take is that we’re in a phase of infrastructure and foundation layers. That the tokens that have most sense and value are those who are able to built better endemic, native and specific foundations (another long debate on this one). For some industries (like real estate for eg), i think asset tokenization can also make a lot of sense (eg tokenizing a real estate domain in countries where domain Registries are either inefficient or inexistant or unreliable) as there is a real need of urgency around those. But going after every single idea the web gave birth to and applying some sort of magical recipe to tokenize it somehow is something that i would avoid.

The test i usually like to apply is the following: Can that business do the same 1. Without tokens 2. Do at least as good without tokens. If the answer is yes to both, no ICO for me. So creating a Youtube or Facebook competitor on the blockchain may sound cool. But highly unlikely to be the right timing. There are critical foundations to be built before and the industry needs first to solve scale, speed of mining and cost of mining until we even can consider consumer Dapps.

Does it look better to you?

Right now it feels like many startup, completely unrelated to the blockchain industry are just jumping in the bandwagon, twisting their pitch and core activity to find a way to artificially build some sort of token as part of their model and fund their (failing?) companies through an ICO

And then you things like those. No comment.

Genius

9. Poor Marketing Road Map.

This one is partially addressed above. But i am observing that most project are about deep tech but very rarely address the business aspects: how they will grow their audience and adoption, how the token will gain in value beyond the speculative activity of a token once listed in an exchange. I want to know if the company has the ability to build a real business and not just a great tech. You can find this answer also in the profile of the team, if they have a good track record or deep expertise in the domain they are addressing. But in my experience this topic is just simply too many times ignored. And for a reason: it is REALLY hard and difficult to get something marketed right.

10. Gross (not growth) Hacks

Hacking your way to growth is fine until you cross a line. I stumbled upon one trying their product. I wrote a detailed blog post about it. It reminds me the early days of the App store. Many developers were ready to anything to get attention and downloads. The only way to find out is to try the product or wait for a SubReddit to get your attention. This is revealing of the state of mind of the team and how accountable they will be down the road.

Bottom line: Blockchain is supposed to disrupt the way Trust is built. If you can’t send positive signals of trust during your ICO process who will trust you for your mission