Failing is no biggie… apparently
As a professional marketer specializing in tokenized offerings, I’m very concerned that my clients are successful. However I’m also looking increasingly at the ingredients of failure — exactly how and why businesses are not able to deliver what they promise at the outset. The number of ICOs which fail is very high, or which crash and burn shortly after take-off. Bitcoin News analyzed that in 2017, ICO failures stood at 46%. The most recent Tokendata figures for 2018 show that of 902 ICOs, 142 failed at the ICO stage, while 276 failed during the first 4 months, even after a ‘successful’ ICO. Only a 54% chance of success? That’s not the greatest odds. It may be an unfair comparison, but you’d need to take 1.2 million flights before being terminally injured in a plane crash. Lately I feel like I’ve taken 1.2 million flights, but I’m still going strong! The comparison certainly suggests that flying is a lot less dangerous than investing in ICOs.
So why do ICOs fail at such a high rate, and what can we learn from this? I believe one factor is cultural, and it’s grown out of what I call ‘Silicon Valley Machismo’. I’m sure you’ve read about — and met — the self-styled Serial Entrepreneurs who have started tech businesses, only to see them fail. They dust themselves off and start another business, only to see it fail again. It’s almost a badge of honor to have blown it a couple of times before eventually settling into the final groove of success. But as such entrepreneurs kick back in their Malibu beachfront home, celebrating their hard-won riches, do they think about the past investors who they attracted, then took and lost their money? — No way, because all is fair in love, war, and business. This attitude has spread to the cryptosphere, with the idea that losing other people’s money doesn’t really matter. “Ah well, I tried, I failed, c’est la vie,” says the Serial Entrepreneur, and off they go to have another attempt.
Now I really don’t think such people are criminal, but it’s not surprising that as a result of nearly half of ICOs failing, investors and the media cry ‘Scam!’ It’s very rarely a deliberate con — not the sort that state prosecutors will be interested in — and yet there is something very careless about asking for large inward investment, and then not taking pains to ensure that investors receive something significant back.
I’m thinking specifically of all this because we just heard of another failure — the stalling of the ICO for the Civil Foundation, which described itself as, “…building a newsroom platform using blockchain technology and cryptoeconomics to create an open marketplace for journalists and citizens. In Civil’s self-governing marketplace, readers may directly sponsor journalists, and journalists collaboratively run their own publications, called Newsrooms. Citizens may sponsor Newsrooms using Civil’s cryptocurrency (CVL), thus kick-starting a new collaborative model for the production and distribution of news.”
OK: so far, so dense, and I’ll come back to how Civil further described itself in a moment. But let’s also look at how founder Matthew Iles describes himself on Medium. He is a, “Husband, dog owner, Brooklynite. Founder of Civil: Making sense of the world together.”
I know what Iles is trying to do: He wants a profile which is human and approachable — something friendly and ‘touchy-feely’. We are supposed to respond positively to the fact that he is a husband and a dog-owner, and lives in Brooklyn. However if I had been advising him I doubt those would have come out as headline facts, ahead of his business expertise or track record. Perhaps it means he has no business expertise or track record — is that what he’s telling us? As it happens I am also a husband and dog owner, but in those vital few minutes of meeting some new business acquaintance, I’m more likely to major on my investment banking experience, the founding of start-ups, and fifteen years of marketing, latterly in the cryptosphere. Perhaps later my status as a husband and dog owner may come into play, but only if it’s relevant.
But let’s get past the founder’s happy marriage and cuddly dog, and see what it was that Civil stood for: “One major problem is that network business models don’t care about good journalism. News institutions rely on social media and other clicks-for-cash platforms to accumulate and monetize reach, which creates economic incentives and disincentives in gross misalignment with journalistic principles. After all, most networks don’t ask many questions about what flows through their pipes, just as long as it pays.”
Right, now I’m starting to understand — the purpose of Civil was to decentralize the way news is gathered and broadcast, possibly in a positive response to the boom in ‘fake news’. It seems like a worthy, campaigning platform, promising ad-free media start-ups. Start-ups plural? As in more than one? Yes, there would be newsrooms (plural) established all over the place, supported by the not-for-profit Civil Foundation, while making money through the for-profit Civil Media Company. As Iles’ pre-sale Civil blurb mentioned, “I have no doubt that as the world is becoming more and more complex, we will naturally have to shift the way we run organizations to principles that underlie all of these complex systems.”
Well, complex is the operative word here, so let’s take a step back from the issues with Civil, and talk generally of how we pitch the BIG IDEA. Complex or simple? The elevator pitch is a well-established discipline that I would encourage everyone to become good at. You need to be able to get across the key facts of your offering in the least possible time, so that your prospect is left asking for more. To do this requires really clear analysis of what you have to offer, and what will interest your audience. I have seen countless presentations and pitches at meetups where entrepreneurs deepdive into their new technology and dazzle everyone with data which is of little use to investors, because it fails to mention what’s in it for their audience.
In my 6 Steps approach I constantly stress the importance of telling a story, and making that story very ‘shiny’, so that in the least possible time the audience will appreciate the offering, and how it will improve their lives. They expect that the new business knows what it’s doing in terms of the technology, (and maybe in the budgeting), but they want to hear the story, THE BIG IDEA, and be excited by the elevator pitch. Even the most corporate of investors are human (believe it or not!) and they too want to hear about how this new offering will rock their world.
Did Civil do that? No it didn’t.
By the way, I’m not sure how to refer to Civil: is it in the past tense, or present? The founder says, of the cancellation of the ICO, “We’re going to regroup and we’ll be fine. Before the end of the year, these thousands of people who already participated in the first attempt will come along with us and it will be the beginning of something.” So good luck to Civil, and the disappointingly small number of investors who ‘got it’. For the record, that was investment of just half a million bucks from individuals, plus a million from seed investor ConsenSys.
How does anyone get good at telling the shiny story and making their elevator pitch? After all, unless you are a ‘Serial Entrepreneur’, you probably only have one shot at this, just as you’re launching your ICO. I believe that there’s no better money spent than hiring the services of advisors who know what they’re doing, and have done it many times before. That’s people like me and my team. We have logical steps and processes to go through, and perhaps most significantly in the discussion about success and failure, we know how to guide you towards the ‘shiny story’, which educates your audience and provides you with an offer that crushes it. That’s what you want, isn’t it?
So rather than putting marketing at the back end of your plans — a ‘nice to have’ addition — it should be front and center of your thinking, from day one. How are we going to tell the world about this? — has to be one of your primary considerations. If you can’t tell the world simply, and engagingly, then the world will not be interested, however genius your core idea is. I happen to be very well-disposed towards Civil’s concept that, “Our blockchain-based platform and its smart contracts will protect journalists against censorship and intellectual property disputes while fostering transparency across the platform.” But should I have to work so hard to penetrate the many layers of complexity which confront me when I ask the question every investor needs to ask: “What’s in it for me?”
So do you have to wait until your ICO is shaping up for launch day before starting to practice your elevator pitch skills? Absolutely not! Try this exercise:
Look around your office or workroom. Pick any common object — a pen, your sneakers, a telephone charger, whatever. Now develop a two-minute elevator pitch on this object, to be given to someone who has never seen a pen, or sneakers. Don’t presume anything, but focus on a fluent, understandable, shiny story which will excite your listener, and convince them that they need to know more. When you’ve figured out what you want to say, do the pitch to a friend, colleague, or — if you’re like Matthew Iles — to your dog. Learn from how your pitch is perceived, then re-work it and do it again. And when you’ve perfected that pitch, move on to another object, and repeat. This can become a daily exercise, where always the point is to tell your audience what they need to know.
As far as I can tell, the lack of a clear well-told story was a prime reason for the current failure of Civil, just as it has been for half of the other ICOs and tokenized offerings this year. As Matthew Iles has now commented, “It’s a setback for us, though not a shock. We watched the CVL token sale’s progress with the rest of you. We expected a different outcome when we launched the sale, but circumstances changed. We learned a lot of lessons which we will reflect on in the coming weeks and share with our community and the public.”
My take-out: I’m glad that a lot of lessons were learned, but a pity they were learned only after the collapse of the token sale. It doesn’t have to be that way, and this is why I’ve been turning my attention to the ingredients of failure. Sometimes it’s true that ‘Failure makes me stronger’ as the macho Silicon Valley-type entrepreneurs would have us all believe.
And sometimes failure just looks like… failure.