How Not to Run an ICO
Today we examine a few “dos” and a lot of definite “do nots” for those thinking about running their own ICO, garnered from direct experience trying to launch an ICO from the ground up. This examination is a cautionary tale to all independent entrepreneurs who believe a great idea and a lot of elbow grease is all that is required to make millions in the crypto industry.
How Not to Run an ICO
Recently I wrapped up my second-ever experience working on an ICO project. I really, really believed we honestly had a great chance of great success this time. Pretty soon I would be making enough money to travel around the world and live life how I saw fit. The first time around, I got some pretty uneasy feelings about the legitimacy of it right off the bat, but I was paid up front to write up the whitepaper and roadmap for it, without having any sort of stake in the success of the project. I really don’t know what became of it, but after I turned in my work I was never contacted by my employer again. Oh well.
The second time around, I was to be involved from the very beginning and to have a real hand in the shape of the project. My skills as a writer would be put to use first and foremost; my knowledge of cryptocurrency second. Little did I know that through the course of the project my role would keep increasing in size, from general content manager, to project director, to marketing and public relations coordinator, and then finally to Chief Financial Officer! Sounds like it might not be so bad, right? Wrong. It was bad. It was so bad that we didn’t raise a single actual penny during the duration of the ICO, despite having some hardworking individuals willing to invest their time for free into what we all truly believed was a pretty darn good idea.
Turns out it can take a lot more than hard work and a good idea to sell an ICO in today’s market.
The Tale of An ICO Gone Badly — Very Badly
The following recollection of my experiences is designed to help those interested in pursuing their own ICO adventures and will serve as a good list of things to keep in mind before and after getting started. If anything, it was a learning experience, even though I had never really intended my work for it to be more of an internship. So, to save yourself the time of having to undergo your own internship ICO experience, you can learn from our mistakes. The name of the project and of all the parties involved have been changed or omitted to protect the innocent. We really all are innocent; our only crime being awful at running an ICO.
The story begins with me searching for potential people to interview in the bitcoin space for the purpose of writing articles for this website, CoinClarity. I had already conducted a couple of interviews for CoinClarity and was searching for another one; preferably somebody who had a particularly interesting story to tell. I found one, contacted him, and we chatted on the phone about his experiences in bitcoin for almost 2 hours during our only live conversation.
“Hi Roman, [not his real name]
Thinking about where I could fit in with your project, I have 3 ideas:
1. I could re-write explanatory content for your website (kind of dumb it down a bit for a mass audience — I’m good at that)
2. I could definitely write you up a good whitepaper, make some “infographics” and whatnot. I come from an academic background and have been participating in ICOs since 2014.
3. When it all comes together, I can write up a press release for the project.”
The response I received was quick and encouraging. It got me pretty excited to be on board:
“Trust me, you’ll be handsomely compensated for your ongoing contributions to InstaCoin [not the real coin name] and still be able to freelance with what you have going on the side. As publicly mentioned, a new computer/laptop is part of the package for all team members …”
The proposed salary arrangement we soon came to for being a “basic” team member was definitely inspiring, although it wasn’t “get rich quick”-type money by any stretch of imagination, and I would have to wait until the ICO money started rolling in to get paid. I could live with that. Or so I thought. I soon got to work on whipping up a white paper: making sure I had a solid grasp of the premise of InstaCoin, doing a bit of background research about the problem it was trying to solve, and thinking of all the specifics in the world I could possibly imagine that were necessary to describe to a mass audience exactly what this project was all about. After about two weeks, with almost 20 total hours of editing time, I had an “alpha draft” ready to go.
You’d think that was a pretty solid effort and wouldn’t require too much more editing or revisions, right? Wrong. At my boss’s request, and over a period of 2 months, I churned out no less than 18 revisions of the white paper and tripled the total count of words. Some of the revisions consisted of adding a comma here or there, or rewording something in a manner which I was not even sure had any added benefit to the paper. Needless to say I was pretty exasperated and never want to read that thing again. After my last revision I handed the Word version of the white paper over to my boss, who then proceeded to spend who knows how many more hours making his own tiny revisions.
It turns out we should have spent a lot of this time working on our marketing techniques because this was one of our main downfalls, although there were definitely at least a few to choose from. Our website guy, for example, wasn’t the greatest, as he took long periods of time to make updates to the site, and to get it up in the first place. We had no Press Release in place (a big no-no) and all of our social media advertising was organic and limited by donations directly out of the pockets of our team members. These are but some of the problems you face when you start with a $0 budget for an ICO, which we ultimately learned you should never, ever do.
By September, the ICO start date was fast approaching. We landed some interviews with crypto-oriented YouTubers willing to help promote our project for payment in denominations of our own token, a practice we also learned severely limits the number of people willing to help you out. Most everybody wants BTC or ETH up front to create content for you, and we simply didn’t have that, so we had to take what we could get. According to our website analytics, hits from social media platform to the website began to roll in, and things started to look pretty good. The one thing we still needed to get in place was our multisig ICO addresses, which Roman said he would set up with parties he deemed trustworthy.
48 hours to ICO launch. Still no multisig addresses set up to put on the website, which could easily take 12 hours for our website guy to do. Roman hadn’t managed to hear back from his signatories of choice yet, so we sat patiently twiddling our thumbs, hoping for the best.
24 hours to ICO launch. Still no multisig addresses. “Don’t sweat the small stuff,” Roman tells our ICO team in Telegram. “And its all small stuff.” Okay…
12 hours to ICO launch. Social media traffic to the website is peaking at 400 hits a day. Roman still hadn’t heard back from his co-signatories yet, so we have to do the unthinkable: delay the frigging ICO! Our team has a minor freak-out and we are all pretty disappointed. Months of meticulous planning and hard work, all stifled because one key element wasn’t in place in time. But, you can’t have an ICO without ICO contribution addresses, and it looks better if they are at least multisignature, so the funds can’t be looted by one particular individual.
There is a mutiny in the ranks and Roman is ousted from his position as “CEO,” which has the trickle-down effect of bumping me up to “CFO.” I put quotations around these titles because they were never officially implemented, and who really wants to be CFO of a company that had what could perhaps be the worst ICO of all-time? We rejigger the website to reflect a week delay in our launch, which turns out to be a pain because a lot of the ICO review sites we submitted ourselves to insist paying them BTC in order to make changes to our ICO listing. Website traffic begins to plummet. It seems as if everybody who was once interested in purchasing our tokens is now no longer, but we carry on anyway, continuing with our grassroots social media promotion in the best way we know how.
Second ICO launch day draws near. Our site has not yet finished migrating to a VPS, which you need so you get that “s” in your “https://www.icowebsite.com.” It means your server is secured and is pretty much a must have if you expect anybody to trust you with their bitcoin or information.
Ten hours to go. Website has still not migrated.
Five hours to go. Website has now migrated but displays an error message, devoid of any other content.
Two hours to go. Website still down. Our web developer informs us that he has to take off and go to work(!). Everyone is pretty ticked off at this point. Here is a tidbit of our Telegram chat that was taking place at the time:
HR, [15.09.18 02:41] [In reply to CM] What happened though? What exactly went wrong ?
CM, [15.09.18 02:41] Your friend broke our website, that’s what happened
HR, [15.09.18 02:41] How did that happen
CM, [15.09.18 02:41] then he went to work and left it broken
HR, [15.09.18 02:42] [In reply to CM] Seriously?
CM, [15.09.18 02:42] you’re a lot closer to him than me, you tell me
HR, [15.09.18 02:42] [In reply to CM] I am sure there must be a second side of the story
CM, [15.09.18 02:43] look man i’m not having this conversation with you. if you want to be of value right now, encourage AR and his dev to get the website up on time, as promised
CM, [15.09.18 02:43] if its not, I’m going to start reducing his pay for the project for each hour past the deadline its not up
HR, [15.09.18 02:43] ?
CM, [15.09.18 02:44] there’s nothing left to discuss
FH, [15.09.18 03:11] Incase anyone wants my opinion this is bullshit
About 5 stressful hours later, 3 hours after the ICO was supposed to begin, the website becomes live. But its not live everywhere – only in certain parts of the world – as it turns out the process of server migration is slow as it takes time for changes to the DNS to be recorded and propagate across the entire world. Finally, 24 hours later, the website is up for everybody, and we sit back and wait for our millions to start rolling in. We are battered from our trials and tribulations, but still optimistic that pretty soon we will all get to quit our day jobs.
Day 1 of the ICO finishes with zero sales. “Our first day was a bust,” I begrudgingly admit to the team. “But we have to focus on how to best go forward and try not to be defeated. After I finish today’s work I will be back at promoting this thing 100%. There’s no further work that needs to be done besides advertising and marketing.” We won’t let the lack of sales on our first day get us down. Not us! We’re too talented, too hardworking and too spirited to give up so easily.
Day 7 of the ICO finishes. Total sales: zero. Doesn’t matter! Our Telegram group cannot be brought down, for the most part:
TG: “I want us to get this into our bloody skull; it is either we find money to pump this project or we are ready to grind through the hard toil; let’s brace up and stop lamenting. ??
Roman: “That’s why I remain positive, throwing out positive phrases like ‘don’t sweat the small stuff’, then continued to remain positive even after such is firmly stuck up my ass.”
FH: “See this is where I fundamentally disagree roman, ZERO sales is literally the opposite of small stuff. Your team shouldn’t expect miracle. I’m not expecting miracles, but a single f****** sale would be nice, how long must we wait for 1 sale guys?”
Day 14 of the ICO finishes. Total sales: zero. It’s looking pretty grim. Our bounty hunters number in the hundreds and are in full deployment, managing to drive about 1 hit to our website per every 10 of them in existence, on a daily basis. Things are not going well. It’s almost starting to become comedic and the reality of the situation is setting in. Our website developer starts freaking out, acting highly erratic and threatens to pull the plug on the website if he is not paid now, even though he had previously agreed to wait for payment until the conclusion of the ICO. His unprofessionalism becomes unbearable and he is excommunicated from the group.
Day 30 and the ICO is finished. Not one single sale. Things have gone spectacularly poorly. Like, far more poorly than we could have possibly imagined. Breathtakingly badly. No lambos for us. Not even minimum wage-level compensation for our combined thousands of hours of effort put into the project. There are several more interesting parts to the story which I need to leave out to protect our reputations, but below is a summary of my experience in running a failed ICO, which absolutely can be learned from by anybody thinking of running their own ICO.
Some Do’s and Do Not’s of ICOs
- DO have some starting capital. You will need it to pay for people with professional marketing and website development experience, as well as for basic things like domain names and a VPN server. It also is a seriously motivating factor when it comes to paying your staff. Starting capital will also be handy when it comes to things like hiring a graphical designer to make your token and project logo, and to get the attention of freelance writers willing to help review your project or explain it to a mass audience.
- DO NOT go into your venture without expecting to spend at least $10,000. Seriously. If you think you can just pay everybody working for you in denominations of your token (or ICO product) because you know its going to be “the bomb” or “the next bitcoin” in 6 months time, you’re going to attract the wrong types of employees, partners and marketers. They will either be underexperienced and thus willing to accept tokens with no immediate value as payment, or if they do have experience they will not be as fully committed to your project as if you had been paying them in denominations of real money.
- DO hire people willing to work for free, who exhibit passion and a genuine interest in seeing the project succeed, even if they don’t necessarily have much previous experience. Though you can’t expect people to sacrifice their regular incomes to help you under any circumstance, those willing to put in an additional 10-20 hours a week on top of their regular job, checking in regularly to see what’s going on, are the best employees to have working on your project.
- DO NOT hire people who are not in it for the long haul, who are not willing to go the extra mile to help make sure the project is successful. They are especially prone to leave you hanging when you need them the most and will be more prone to ditch you altogether if you pay them up front. I’m not saying don’t pay them up front; what I am saying is find team members and freelancers who demonstrate the willingness to be committed from the beginning, and then pay them.
- DO keep tabs on the ongoing of your bounty campaign (if you decide to have one). Inspect the quality of the work they are doing. If you decide to include, for instance, blog posters in your campaign, make sure they are generating original content on a blog that gets at least a few dozen views every week. Make sure they aren’t just copy/pasting material from your website into their blog or using a text spinner to make it appear as if they are using their own words. Quite often such text spinners render the original message incoherent and meaningless, especially if there is any deal of technical complexity involved in explaining your project.
- DO NOT just hope for the best and assume everybody is going to do what you expect of them. Quite often bounty hunters will just do the bare minimum amount of work possible to be technically eligible to receive the bounty reward. Just because somebody with 5,000 Facebook friends is posting about your project 5 times a week on Facebook, it doesn’t mean they will drive 1 hit to your website. Quite frequently, they won’t, because they don’t really have 5,000 friends; maybe they have 4,500 bot friends, 450 bounty hunter friends and 50 actual friends/acquaintances/family members. Same goes for Twitter followers and YouTube subscribers – quite often their numbers are fudged, and they have zero actual influence in the real world.
- DO some research on the competition before getting started. There could be something out there already that is remarkably similar to what you’re doing, and perhaps they have a more experienced team, a better looking website or a bigger pile of startup funds to throw into marketing and advertising than you do. If this is the case, but you still feel like your project is the superior version of the two, be sure to come up with a list of advantages that distinguishes your project from your more famous competitor. You’re going to need it when someone whose job it is to make successful investment decisions on behalf of their clients (think investor groups or ICO pools) asks you why they should choose you over the better-looking competition.
- DO NOT think people are just going to jump at the chance to pour money into your project because 1) its about the blockchain, 2) its an ICO, and 3) you think its an awesome idea. ICOs aren’t nearly as hot a topic as they were just this time last year, and with the ICO market being as saturated as it is, with a lot of people already suffering from ICO burnout, investors are becoming a lot choosier with the projects they pick to put their money into. Why invest in something when there’s more attractive, safer looking alternatives right beside them? Out of pity or feeling you are owed something for your hard work? No.
Some things that definitely help if you can get them (some of them are kind of obvious, and you might think it would go without saying, but they’re still easy to forget):
- Team members of note: previous experience with successful ICOs or well-known companies (Microsoft, Google, IBM, Oracle, NVIDIA, etc.).
- Advisors of note: same as above, or any recognizable name within the blockchain / cryptocurrency space.
- Backers / Angel investors: companies or individuals willing to commit some startup money into your venture, or even give you an outright donation (yeah, trust me, we know: easier said than done).
- Major partnerships: find a company or organization willing to work with your project from the beginning, one that is willing to invest their own time and services into it to make it successful for their own benefit (as well as yours).
In case you couldn’t tell, I was pretty disappointed with the whole experience, and the whole thing definitely has a stinging effect to not only one’s ego but one’s confidence in their ability to spot a good idea when they see one. I never even got a free computer as promised, but I don’t hold that against Roman. I don’t think he or anybody knew things would go this poorly.
The best thing I can do now is tell my story as a tale of caution to others looking to get involved with an ICO project. Market conditions aren’t very good these days and most crypto investors have wisened up considerably over the last 2 or 3 years when it comes to ICOs, so unless if you are tip-top on top of your game, have an undeniably powerful vision, and the expertise to get the most out of your marketing funds, things may just not go the way you thought they would.
So, in conclusion, learn from my mistakes, go on out there and gain as much information as you can about ICO marketing before you start, and if 25 things all go right in a row for you, you just may have better luck than we did!