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David Fritsche

Founder Secured Communications, NASA, Author, Coach and Smart Cities BLOCKCHAIN

What's the most important part of any ICO? 30 Aug 2018

What's the most important part of any ICO?

Intuition

My business partner is intuitive about people.  We’ve been working together for 20 years now.  We met through a person that we’ll call Pete for the sake of the article.  Pete was a very charismatic guy.  One of those guys you instantly like and who says all the right things.  He knows the right people and can help a business in so many ways.  In a word, Pete was «smooth».

Years ago, Pete was working for my current business partner in another business.  A year or so later, he left that business and started hanging around my technology business.  Of course, we hired him… My then future partner's words to me – “watch your back!”

Pete was on salary and I even personally leased him a brand-new Jeep.  Guess what?  A year later, Pete was turning clients against us and the leasing company was calling me asking where the Jeep was?  Pete skipped town and I was personally liable for the Jeep.  I found out later, he left his previous city due to some bad debt and he was in hiding.

That common experience of having someone you trust turn on you helped my business partner and I build a trust and a common bond.  Knowing who you are working with and evaluating people is everything.

ICO People

For an ICO or a business investment decision, there’s one thing I look at first and last – PEOPLE.  But, since we can’t travel to meet all these project owners, how can evaluate them and make sure we are investing in the right project?

First lesson – you can’t be sure.  But, there are some things to look for.  Let’s use a scale approach to simplify.  1 to 5 with 5 being best.  Let’s also be really honest and keep the bar high.  A 5 would be Steve Jobs or Bill Gates starting a tech business.  Everyone else is at best a 4 and that’s ok. 

Second Lesson – Sometimes it’s a “gut” call on a person.  I agree with this, but get a second opinion like my business partner.  Sometimes your “gut” is wrong.

Third lesson – Its all about the people.  People are who you trust.  Smart people will figure out how to complete the project and more importantly, how to adjust the project as it progresses.  It’s not a straight line from start to finish.  It’s a series of decisions and inputs that make it succeed.  It takes expertise and the ability to communicate with the public, staff, investors, advisors and much more.

Evaluating the Management team:

For example, if someone is doing a cryptocurrency that is to be used as money or for financial transactions, what talents would they need in management?  If they are all just tech guys with a cool, fast blockchain that everyone should use because it’s the fastest and solves all the technical problems…Forget them. In my opinion, you better have talent in the FinTech sector and have worked with banks, commodities and Fiat.  If they don’t have talent in the industry they are trying to change, they will never be able to understand the complexities of that industry.  Doesn't mean the the main peaople have to be old or have all the experience, but they better surround themseleves with people who do.

Talent level –

Are they good at what they do?  Do they have the skills that are needed to pull off the project goals?  Have the won an award or do they have education to back their talent?  Sometimes you can see this in the way they write their Whitepaper.  Complex doesn’t mean smart.  Sometimes complex means they are just not a good communicator.  Talent is subjective, but over time, it finds a way to validate itself.  

Experience –

Look through their LinkedIn closely.  How long have they been working in their specialty?  Have the moved jobs frequently?  Have they run a business before?  Have they worked for significant companies?  Experience means a lot.  This one is a pretty objective measurement.  Longer time, bigger companies and higher titles mean something.

Industry –

Does the mix of management experience make sense for their goals?  People can cross industries, but be aware that any industry seems simple from the outside.  But in reality, they are all complex and over many years have solved problems.   New solutions that don’t have the guidance from an industry insider will repeat failed solutions or not address real needs.  This one is also fairly objective.

Advisors –

You can judge the management team by the level of the advisors they recruit.  This will be the same level of customer and partner they recruit.  This one is a mix of subjective and objective.

Communication/PR —

Form and substance matter.   They need the substance and experience to pull off the task.  They also need to be able to promote the task.   Are they good at PR?  Is their message clear? Just read the website and the whitepaper.  Watch their presentations if available.  If you are not clear on what they do and why, chances are they fail here, and that means they will do the same to vendors, clients, partners, etc....  This one is admitly subjective.

Evaluating the Advisory Board

The advisory board reflects management and their ability to attract global leaders.  Evaluate the advisors in terms of their gravitas to the project and the industry in which the project is in.  It’s not hard to get advisors.  If they are in technology and they have Bill Gates as an advisor, they get a 5.

Conclusion

I've been asked by ratings companies what I think of their criteria for evaluating ICO's.  Mostly I think they miss on three points: 1) The miss the importance of the business model and how the project sustains itself (separate blog).  2)  They tend to overestimate «form» like the details of making a project real.  KYC, Legal, Business plan, etc.  These are absolutely needed and should disqualify a project completely.   If they don't have these, move on. 

But, there's really one main reason for the success of a project:  3) People, People, People

Do everything you can to learn more about the people.

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