Blockchain feeding frenzy: a famine of robust models
I’m announcing the Mihell & Lycos ICO is coming in the first Quarter 2018. The process has been an exciting challenge with world class advisors pressure testing every claim and the strategy, and making the team accountable for the commercial quality of the white paper. In fact, when we started the development of the white paper, the challenge I put to our management team was to approach this as if I were asking them to put $250,000 into the venture. Right from the beginning, commercial rigour has been there.
In coming weeks, we will reveal meaningful details about the ICO, but at this stage I want to reflect on the most important question that has been raised so far, ‘why an ICO?’ (And what makes our ICO worthwhile?)
First and foremost, having lived through the dot.com bubble, I see many similarities with blockchain and it is easy to predict what will happen in the next few years. The feeding frenzy you can now witness is only going to grow in intensity, with dumb money going into all sorts of weird and wonderful ‘ideas.’ The line between scam and hope is blurred; it’s hard to tell, (but some are very obvious!). If we think about those with the best of intentions, a significant issue is that they have not nailed down the fundamentals of the business model.
And that is a big reason why many will fail — weak to zero business model underpinnings; as was the case with 1993 websites and the first WAP mobile ‘ideas.’ Many of which were expensive ‘brain farts.’
When we started our ICO journey, the criterion that had to be fulfilled was ensuring we had a model that made commercial sense. It feels idiotic to write that, but as we all know, many digital based ‘companies’ come out with $50 dollar mouse traps. Yes, the technology and idea is awesome, but real world application is missing. Practical issues surrounding B2B relationships, supply chains, people sticking to what already exists, picking fights with giants, user eduction or Time-To-Market are never really thought out. These fundamental requirements for any market winner become like a chicken bone in the throat of the business.
When you ask a VC or investor why they are getting involved in blockchain, I hear the echoes of 1993, “because there is money in it…” This narrative is going to cause a lot of damage to the crypto ecosystem, in terms of reputation and burnt capital; but also a lot of good can come from it, because people will have had the opportunity to try and fail, a critical part of innovation.
Those failures will feedback into the system, as lessons about what not to do; witness boo.com which was a darling of the early web years, pushing the limits of the capabilities back then, which fell in spectacular fashion. But the developers found their limits and, importantly, sought ways to expand those limits to rapidly innovate so that new disruptive models could be formed, I give you exhibit A — Amazon.
Because we all know that history will repeat itself with blockchain, the good ICO needs to have a clear focus about what should be fulfilled or avoided, which is why we are doing things differently. But we are also looking at what makes for a successful ICO to ensure our blueprint has every chance of success.
We’ve decided to create a model for a token sale that is fair and innovative, not because we are nice guys, but because commercially it is the right thing to do (but we are actually nice guys!). The feeding frenzy of blockchain ICOs has blinded many to the purpose and practicalities of blockchain and that is ultimately counter-productive, because a good business is built on solid foundations of an easy to understand model.
Watching vanity headlines of ICOs where token sales end in days, hours, minutes or even seconds, reaping in millions of dollars in crypto is telling a vital story — that no-one is really thinking of the model, the strategy or the potential blockages to building a solid business. I guess you can say, for many people, all they have purchased is the right to dream about being a backer of a next big thing, hoping to convert their purchase into an outrageous fortune.
What makes our ICO different is we believe in fulfilling the capabilities and meaning of blockchain and in doing so, we have the makings of a sustainable and profitable enterprise that adds value to all stakeholders. To us, blockchain is all about trust, transparency and community building.
The structure of our ICO was built by asking, how do we generate and maintain trust in the token? What value can we add to the transparency of blockchain? And, how do we construct a worthwhile community to which people will want to belong, contribute to and why will they?
Technology has always been a distant consideration of our team for two good reasons. Firstly, allowing technical capabilities to be a driver easily clouds judgement calls. You have to kill the conversations that begin with ‘wouldn’t it be cool if…’ The conversation should always be around why are we doing this, for what market and how will the market benefit. Secondly, technology plays are fraught with risks and, as marketers and communicators, technology development is not our core strength. A very good friend of mine always says, ‘dig where you stand.’
We know there are many Adtech and Martech opportunities, and how blockchain could be an awesome solution, but for our team to attempt that as a technology play, would not be playing to our inherent strengths of strategy and communications which create movements. When we release the white paper, you’ll find a commercially driven model, underpinned by a proven team doing what they love to do, with a track record covering decades.
Taking ownership of our own business destiny, while leveraging blockchain
For over twenty years I have worked with Business-to-Business marketing and communications, and I’ve seen or done what works and what doesn’t. An important part of our ICO is to eliminate the classic chicken or the egg scenario, where you need users to deliver value for a company partner, but you can’t get the company partner until you have the users.
You will find we have created a token that increases in utility and therefore value, the larger the community becomes. And we have ensured mechanisms are in place so participation is encouraged and rewarded. Importantly, we have clear goals and purpose for participation.
Creating the community or giving the community purpose does not require any company partner (B2B relationship), which means we are not beholden to third party relationships in order to create a successful token for a vibrant community.
We will also avoid token sales, where a few buyers dominate. Here I see failure rates for post-ICOs occurring, because the model prevents a genuine community driven and supported network. Yes, you have decentralisation, but only in the guise of small kingdoms. From a business sense, I understand why people choose this path, because it feels safer to sell to a few for large sums. But ultimately this is a false economy, because the utility of the token is throttled from day one. We believe you must have absolute confidence in your product/service and build into your model the ability and desire for mass adaptation.
Purpose built model for community based Token Sales
Basic economics of supply and demand, enhanced with trust, are the simple ingredients for our token. We will have a fixed supply (up to 1 billion), priced at under $0.20 each and to a maximum purchase value per buyer. This offers assurance of scale but with an end-in-sight for supply. I can’t give away our entire model, but safe to say, it is designed for a mass market and active participation with a purpose.
Looking into the future, we will require years of community development, rewards and bonuses for participation so our capped token supply will need to give us the right balance for scalability, size, a long-term rewards program, but with enough supply limit to increase the value of the tokens for a large market. Capping the purchase per user prevents small kingdoms and gives us a truly global audience.
In the coming weeks, I’ll be providing more detailed information and the launch of our white paper, along with associated assets to provide you with the complete picture. And when I do, I would like you to use this first article to determine if our purpose and execution are spot on. We believe in accountability, and how you start is how you will finish.
In short, you’ll find that our ICO will be about broad adoption and support to create a long-term enterprise, with a valuable and useful token.