A Post Mortem of the Astronaut ICO
The following is an unstructured and informal account of an analysts experience in launching, managing and closing a token sale. These are the personal views of the author only.
As an analyst, I have spent the last 16 months tearing apart token sales in a bid to distinguish the attributes that a company must have to raise a successful token sale and continue to deliver on its promises after the event.
With the recent integration of Picolo Research into Astronaut Capital (our completed ICO), myself and team were able to finally experience first hand the ‘other side’ of the fence.
This is a short overview of my experience in running a token sale — the good, the bad and the ugly.
This is the Astronaut Post Mortem.
“We are not an ICO that you take out to dinner and never call back.”
Background
- Astronaut Capital (ASTRO) completed a token sale from the 20th of September 2017 to the 25th of October 2017.
- ASTRO is a managed crypto fund which is based on the investment principle of Picolo Research.
- During token sale, we raised +8500 ETH from over 1800 investors with almost no marketing budget or bounties.
- Astronaut had three people actively working on the ICO from start to finish.
My expectations
I was never really under the assumption that launching and managing a token sale would be easy, however given my previous experience in raising for and listing IPOs, it was natural to think that the process would be similar on many levels.
The reality
Token sales are a totally different beast to anything we have ever seen and simply cannot be compared to the likes of IPOs, crowdfunding or any other means of raising capital.
In a market which has developed so quickly in the past eight months, a set of rules, processes or procedures to creating and running an ICO currently don’t exist.
Over the course of almost five weeks, we encountered many great things that make this market unique and have reinforced our confidence more than ever that it is the way of the future.
Conversely, we experienced an equal number of situations that we did not agree with, that bring down the credibility of the market and that need to be addressed to ensure the long term sustainability of the entire ecosystem.
Let’s start with the bad
The bounty ‘predicament’
While we have always been familiar with the notion of ‘bounties’ we have not necessarily agreed with the way in which they have been used to date.
We believe that bounties are a great way to spread the word on token sales, particularly when the success of the business is correlated with the acquisition of users, however, the reliance on bounties and the extent in which they are used is in most cases too much.
Bounties have a habit of:
- attracting short term investors
- attracting low value investors
- attracting flippers
- cheapening the brand
In almost our third week of token sale, we finally established a referral link at the request of existing investors of Astronaut. Upon final inspection, over 500,000 worth of ASTRO was sold through this referral program — 97% by existing investors.
Although there is a good chance we missed out on some ‘easy money’ as other would term it, through the likes of signature campaigns and reddit spamming, if we had our time again, we would do it exactly the same.
The flippers
“We are not a hyped up ICO. Please don’t have the expectation that you are going to get a 10x gain in one month… it simply wont happen.” — Matt during AMA.
The rapid growth of the market has given birth to investors known as ‘flippers’, a person seeking quick and easy capital gain, no matter what the concept is.
We take no issue with gaining exposure to such assets, and in fact, we are doing the same for a portion of the portfolio, however the amount of people who exclusively focus on such opportunities is enormous.
From the very start, we honestly and openly told prospective investors that we are not ‘flippable’. We are not an ICO that you take out for dinner and never call back.
This honesty does not gel very well with many prospective investors and we acknowledge that there is likely a huge portion of the market that we missed for not having this.
Once again, a decision that we will always stick with to form the investor base that we want.
The trolls
There are certain people out there who have no intention in investing in, nor even reading about your token sale. To satisfy their own ego however, the only thing they can do is ensure that everyone else questions irrelevant aspects of the token sale such as the teams history, the indisputable track record or anything else they can think of to cause a stir.
Curious community members and prospective investors are not to be confused with ‘trolls’. The vast majority of questions, comments and communication we received were from real interested investors who are now token holders.
Where’s the hype?
A form of analysis commonly used by the ‘flippers’ is the hype metric. The hype metric is a deceiving one which extracts data on the ICOs social media accounts and forums and translates it into a level of ‘hype’.
The thing is, this level of hype is not sentiment based. So although there could be tens of thousands of people talking about it and following it, it does not actually mean the sentiment is positive.
“If you want hype I can purchase a few thousand followers on twitter today and start the bot engine on Saturday. Shall we do a re-rating on Monday?”
Coming from a research background with Picolo and strictly avoiding the hype metric for several reasons, we were curious to put ourselves to the test with some of the other ‘ratings agencies.’
With no surprise, the hype level of Astronaut came back as low on several of them due to our small marketing spend and four week old twitter account.
During one of the conversations with another research house when I was questioning the validity of the metric I jokingly said “If you want hype I can purchase a few thousand followers on twitter today and start the bot engine on Saturday. Shall we do a re-rating on Monday?”
Needless to say they didn’t take it too well.
The shillers
When they say that nothing in this world is free, they were referring to exposure for initial coin offerings.
As a research firm (Picolo) that has never taken remuneration from subscribers or companies alike, we always knew this was a point of difference.
What we didn’t know however was the rate in which influencers with small followings charge or ratings sites to give you a measly ‘star’ next to your listing.
Fortunately, the vast majority of our press and exposure was 100% free, however the inbox flooding of promotional ICO deals was really pushing the limits of our storage.
The ‘reverse’ shillers
Even a new breed of capital grabbing has risen with CPC Google Adwords aimed at intercepting funding halfway through.
Now, let’s talk about the good
Having a real product
Having some type of a product, whether it is MVP or otherwise is essential in doing an ICO. As analysts, we would never completely disregard a venture that was raising off a white paper alone, however I would be lying if I said it wouldn’t lose a few points.
The catch for us is that we don’t have a run-of-the-mill product. Our product is actually our performance in the market, something which has been available publicly for the best part of 2017.
This resonated extremely well with the community, removing the uncertainty and effectively giving them piece of mind that our success is not reliant on spending significants amount of capital on R&D.
An established community
In addition to our track record we have over 10,000 subscribers that receive weekly reports from Picolo/Astronaut since March. Having this community was a great way to establish our initial investor base and structure the stages of the sale.
Getting exposure the old-fashioned way
Getting real press and exposure that isn’t a ‘pay for play’ option is not that difficult if you are willing to put in the work.
In most instances, the best engagement and success will come from such articles that are ‘investigative’ in nature and not simply just a plug for the ICO.
Astronaut was fortunate enough to have several of these due to the nature of its product and the problem we are trying to solve.
A top-tier community
I can say with no hesitation that the Astronaut community are among the most realistic, supportive and intelligent I have ever seen.
For due diligence purposes, we have viewed countless slack and telegram channels to get an understanding of the community involved and what people are saying on the private communication networks.
I can say with no hesitation that the Astronaut community are among the most realistic, supportive and intelligent I have ever seen.
In very little time the community became almost self moderated, helping new token holders with questions and concerns as they came in.
Astronaut owes the success of its ICO to it’s subscribers and their belief in our strategy and the team.
A market that respects transparency and honesty above all else
The general market of investors are getting smarter by the day. The moment that you try to hide something, you can bet that your world will come crumbling down.
As the concept of our venture is built on transparency and honesty, we ensured that during ICO phase it would be me (as the founder) delivering these messages and answering queries. Doing this almost 24 hours a day for 5 weeks is not easy, however, investors are not putting money into your product, your advisers or your bounty hunters, they are putting money in the core team.
Conclusion
We are extremely thrilled with the success of our ICO, the loyal community we have amassed and the prospects of the future for Astronaut.
While we have always had our finger on the pulse with regards to ICOs, we feel that we can now take our analysis to the next level having been through the entire token sale process ourselves.
Our goal to acquire ‘sticky’ investors has resulted in a tight register, something which means significantly more to us than raising 2x more and becoming yet another ‘flippable’ token.
I have highlighted a number of issues that we see in the market, however it is important to note that these issues are simply the result of an investment segment that is growing at rapid speed.
As the ecosystem matures, we will find that alot of these aspects will naturally rebalance. Already we can see that the high price ‘shilling’ on youtube and select so-called ‘ratings agencies’ are starting to get a bad wrap.
Our belief in starting this ICO for Astronaut was the same as bootstrapping a company. Invest as little as you can in marketing and hype, stay lean and if you have a good enough product — investors will knock on your door.
Here we are.
Once again, thank you to our token holders for joining us. We have no doubt that we have a long and exciting future ahead with each and every one of you.
Thanks,
Matt
