Before I got seriously involved in the ICO space, I was under the illusion that all founders were very bright and experienced people. I thought, well, if you found a startup and launch an ICO, you must know what you’re doing, right? Wrong.
The more I watch ICO founders stumble forward on the rocky road to unicorn fame, the more I realize that they are only people. They make wrong choices and dumb mistakes… all the time. What’s interesting, they all make the same bad moves, delivering deathly blows to their own ICOs along the way.
The three typical mistakes I describe below are those that I see most often. They are all dangerous enough to destroy a great idea ; but luckily, they are also easy enough to avoid.
Dumb move no. 1: Not having an MVP
The times when a normal (non-blockchain) startup could raise money without any product at all are gone. For ICOs, it was different even a year ago: in 2017, a good White Paper and a well-organized hype campaign could raise you several million. Not anymore, folks. Too many scams, too many failures, too few actually released platforms. Investors are wiser now, and they want to see a prototype. Sure, there are exceptions. Some teams are so technologically accomplished, with ideas so clearly needed by the market, with such extensive prior experience, that backers will happily invest based on their words alone. But most probably you aren’t one of these exceptions!
A founder I know has recently had to put his ICO on hold for this exact reason: backers’ money, which he had expected to rush in like a mountain stream, turned out to be a meager trickle. Investors wanted to see an MVP — which he didn’t have. The idea itself was quite good: a marketplace for industrial goods, connecting manufacturers with B2B clients. The team had lots of relevant experience, and the WP was nice. But it simply wasn’t enough.
Why do so many founders launch their ICOs without having a prototype? Here’s their logic: I need money to build an MVP, so I need to raise that money first. So the founder basically says, “Gimme your money, and I’ll give you a prototype”. The public replies, “Nope, first you give us a prototype, and THEN we’ll give you our money”. It’s an impasse.
But wait — it’s not! The impasse is only in the founders’ heads. What they should be thinking is, “Ok, I need an MVP, but I have no money to pay other people to build it. How can I make one without paying someone?”
Good news: there are several ways to make a prototype for free (or almost). The first and probably best way is with Bubble. It’s basically a platform where you can build apps (including very complex ones) without code. It features tons of free plugins and APIs, you can accept and send payments via Stripe & PayPal, integrate chats, log people in using Facebook… The most amazing part? You won’t need to write a single line of code. It’s kind of a drag-and-drop system… kind of.
Bubble does have a learning curve, and you’ll need to use a few paid courses (available at Udemy for $10), but just about anyone can master it. Devote an hour a day for a month or two to learning this fantastic tool — and eventually you’ll feel confident enough to build that MVP of yours. Or — who knows? — perhaps you’ll be so fascinated with Bubble by then that you’ll forget all about your ICO.
Another great prototyping platform is proto.io. It’s different from Bubble in that it creates glorified mock-ups, not real functioning apps. So you can model user interactions in detail, but you can’t make users interact between each other for real. However, the result will often look prettier than what you get with Bubble, and for many projects it will be enough.
Here many ICO founders will say, “Wait, but I want to build a decentralized app! I need a prototype on blockchain!” No you don’t. As many great articles on Medium explain (here, for example https://medium.com/app-partner-academy/your-mvp-isnt-supposed-to-be-a-product-%E4%B8%80-it-s-a-process-58bb458a1982 ), the point of an MVP is to test your riskiest hypothesis. For instance, “Will people want my decentralized stuff?” So get creative and think of how you can imitate your future dapp without actually using blockchain. Build the simplest imitation possible and run an experiment involving real people (you can find such testers on BetaList, for example). If the experiment fails, tweak the MVP and try again. And so on. Here’s another reason not to pay developers at this stage: you’ll need to keep paying them every time you need to change the prototype.
Summing up: a good idea isn’t enough. You need an MVP. It doesn’t have to be expensive — in fact, it’s better that you make one yourself for free (or almost) and iterate many times.
Dumb move no. 2: poor White Paper
I take White Papers very, very seriously. A White Paper doesn’t just explain your idea — it shows who you are. Are you a practical and knowledgeable person who thinks clearly? Or are you a dreamer who’s drunk the Kool-Aid? (There are too many of those, unfortunately.) Can you formulate the problem, the solution, and the course of action? Or are you just after a quick buck?
White Papers can be bad in many different ways.
- First of all, they can be unclear, confusing, disjointed. Sometimes I read a White Paper and think, “Gosh, mate, have you even read it after you wrote it? It’s a mess!” If a White Paper is poorly structured, so is the founder’s thinking process. Sure, there are different opinions as to what constitutes the best structure — problem statement first, market opportunity first, and so on. But whichever structure you choose, be clear! Even better, make a diagram first, with a list of chapters and topics you plan to cover.
- Another way for a WP to be bad is to lack important bits of information. Have you included a properly detailed description of the problem, for instance? (I’ve seen White Papers where the whole problem part took up a couple of paragraphs!) Does your market opportunity section include numbers, cited sources, research results? Do you have a financial model? Is there a detailed description of your ICO sales rounds — with bonuses, vesting periods, and all? Have you included a presentation of your team? A marketing plan? A justification of your choice of jurisdiction? Is there a chapter on the technical realization of the project and a thorough explanation of your Roadmap milestones?
- The third major flaw that I find in White Papers is all about language and style. The usual culprits are long-winded sentences, bad grammar, and poor vocabulary. Yes, I know, not all founders are good at writing, but you need to have someone on your team with a gift for words. Otherwise who will write all those press releases and blog posts for you? Outsourced marketing people? Don’t even think about that. Outside of your team, nobody will grasp your project concept well enough to explain it in writing to your potential investors. So all your texts have to come from someone inside your tribe.
A useful tool to help you analyze your writing is Hemingway. Many writers hate it; I don’t like it much, either, but it’s definitely helpful when working on a White Paper. You see, Hemingway assigns a grade to your writing, but it’s not a quality grade — it’s a school grade, as in “an n-grader would understand this text”. Most Americans apparently read at the level of a 10-grader, but since many of your WP audience won’t be native English speakers, it’s better to aim for Grade 8 or even 7. In many cases, it will mean dumbing down your text: making sentences shorter, replacing complex words, or eliminating passive voice. But you know what? It’s ok. It’s a useful exercise. Just don’t get too conversational: your White Paper should be easy to read, but it’s still a business document.
Summing up: aim for a clear structure, engaging style, and comprehensive content. You will probably have to cut and revise many times. Prepare to spend at least a couple of months on your White Paper. It’s like a first date: you will be judged by it — by every part of it.
Dumb move no. 3: Rushing it
Often founders get fixated on a certain starting date for no reason. Like, “I wrote in my White Paper that the ICO will start in July, so it must start in July!” Be realistic: everything that has to do with ICOs takes more time than planned. A failure to accept this fact can lead you to ruin.
Here’s a recent sad example from an ICO team I know personally. There was just one week left before the start of the presale, and nothing was ready. The project wasn’t registered on any trackers, there were like 20 people in the Telegram group, their website had gone live a week before, their blog consisted of 3 entries. There was nothing — and yet they decided to stick with the original plan and begin the presale. Needless to say, it failed. It failed impressively fast.
How much time do you need to prepare for an ICO? I’d say that you need at least six months from the moment you start writing your White Paper (if that’s the first thing you do). You’ll have to work on several things at the same time: WP, website, community-building, blog, MVP… If you like to-do lists, make one — and make it long and detailed. If you have money to spend on paying team members, then by all means delegate some of the tasks; but don’t expect things to move fast. In fact, proceed as slowly as you need to do everything right. Nobody likes an undercooked ICO.
Don’t get attached to any particular starting date that you’ve picked. Chances are, the deadline will come and go, and you’ll still be nowhere near ready. It’s fine. ICOs are made for people, not people for ICOs: this one’s yours, so you should be calling the shots, not some preliminary roadmap you’ve compiled. However, once you’ve finished the White Paper, website, pitch deck, and a financial model — and your MVP is at least half-ready — then do pick a date at least a couple of months in the future. You need it to start registering your ICO at tracker websites, which takes much more time than you imagine — unless you pay to be featured ASAP. However, some of the best trackers don’t have paid listings at all, so you’ll have to wait in the general queue, and this can take weeks.
A word on advisors: you’ll need to start contacting and selecting them once your White Paper (and preferably pitch deck) is ready. Going through dozens of potential advisors, scheduling calls, and negotiating fees can easily take a month. Any actual advisory work can only begin once your website goes live, so don’t rush to sign actual agreements and start paying — just keep them on hold and report on your progress every week or so.
Summing up: give yourself at least 6 months to prepare for your ICO — even if you have the money to pay for outsourced services. Prepare for things to move much slower than you expect. Don’t get attached to any initial deadlines you set for yourself. Put quality first!
Of course, there are many more dumb mistakes that ICO teams routinely make — from entrusting marketing to the wrong people to paying hapless YouTubers for poor-quality reviews. I plan to cover a few more in the next installment. Meanwhile, if you know somebody who’s done something really dumb during their ICO and suffered for it, do let me know: I collect such blunders!
