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Blockchain & ICO

ICOs’ Viability in 2018: Lean Management vs. Bubble Marketing

by Victor Paul, PhD, from Trans Finance Solutions, on Aug 23
ICO project GetDoIt shows an efficient ICO approach: the team focuses on lean project management instead of conducting a bubble marketing campaign in media
Article 8 getdoit

No doubt, ICOs marketing expenses are too high nowadays, and not every start-up can afford it. An army of ICO marketers and PR specialists propose to promote ICOs for a lot of money: $300K, $500$, $1M, and even more. Are they effective? Not always. The recent research discovers that most marketers know little about blockchain technologies and tokens sale methods. And worse, they cannot see the writing on the wall and continue to perceive ICOs as low-hanging fruits in spite of the tightened regulations and declining market. Please glance at the fresh figures: the total amount of funds collected by ICOs in 2018 decreased dramatically as a result of changed investors’ position: they start thinking of ICOs viability.

Under the circumstances, conducting ICOs marketing campaigns is going to be an uphill battle, ICOs organizers are getting frustrated and being about to throw in the towel. However, one should not lose optimism due to the fact that the ICO bubble has blown out because experts suppose the ICO world is becoming more mature in 2018 and more traditional investors get involved. Instead of the ICO marketing newspeak, such investors employ “a classical” investment management lexicon, talking about “proper due diligence,” “professional business models,” and “feasibility reports.” It not the end of crowdfunding, but the beginning of a new epoch for better-structured ICO projects with good business models to attract investment.

The investors return to circulation a well-forgotten word “business plan,” asking for a higher level of transparency. To really start off an ICO on the right foot, we have to take into consideration the current realities:

  • regulators begin to carefully investigate ICO campaigns in search of deviations from current legislation, lack of transparency, and information security breaches;
  • investors require a clear justification of project risks and financial projections;
  • both investors and regulators want to see how a token that is released and distributed within an ICO campaign is linked to a projects’ business model (if a project has any business model).

All of the sudden, ICOs founders find out that managing an ICO is a complex and time-consuming process, requiring organizational, financial and legal skills. They have to show investors a project’s value proposition (if they know what it means). What competitive advantages differentiate an ICO project from incumbents (new data monetization opportunities, Interoperability, verifiability, personalization, and shared resources… anything else?). Do smart contracts really work on a business task? If so, in what way? If ICOs founders have no appropriate figures describing a proposed market and reliable financial projections, investors can assess a project as inefficient or even a fraudulent one.

Today, ICOs founders should be more explicit than yesterday, and rather realistic while explaining a project’s business model. Talking about a business model, they should not forget about start-up costs, a target customer base for a project, competition, risks, marketing strategy, and projections of revenues and expenses. The latter has some special features today:

  • there is no more chance to waste money for bubble marketing campaigns in media (lean management is welcome);
  • an appropriate market research shows real demand for project’s product or service and one more point: customers are ready to pay for it;
  • new realistically described monetization opportunities and methods are sources of projects’ profitability;
  • a project token is tied to a value proposition and business model, and it is an efficient payment method within the ecosystem (a transaction engine of choice).

Now the token economy is under scrutiny not only financial regulators but also investors. They know that tokens have to enable business models and increase the asset turnover within project ecosystems. Today false promises to investors to pay dividends or other profit on investment sound inappropriate. To keep tokens’ monetary value and liquidity, project initiators have to control initial release and distribution of their tokens, providing ecosystem’s participants with an appreciation how tokens are foreseen over time. In this way, the token enables financial management of ICO project and creates better user’s experiences.

And we can see a good example of such a token: Get-token of the GetDoIt project. To be efficient and legal, Get-token’s issue and distribution are properly structured and based on the bespoken GetDoIt financial modeling:

  • raising a capped amount of funds, to align with the GetDoIt project’s business model and GetDoIt services’ calculations;
  • selling a fixed percentage of total token supply, with an exact allocating to the team, advisors, and investors;
  • selling tokens at the market value that is calculated with the use of GetDoIt financial model;
  • letting all Get-token users know all calculated risks related to the GetDoIt project;
  • enabling buyers to keep some percentage of the total token supply;
  • employing the GetDoIt financial model to calculate the soft cap (a lower limit) as a sufficient amount for the GetDoIt project team to create a minimum viable product (service);
  • calculating the hard cap as an absolute upper limit for the GetDoIt project team to implement the full-scale project.

The GetDoIt project initiator uses token network effects to form different internal marketing schemes optimized for certain distribution policies and accessibility through discount and loyalty programs. In this way, the Get-token of ERC20 type interact with and optimize the GetDoIt business model, creating new values, and participating in various ways in important ecosystem functions.

For more detail about the GetDoIt project click https://getdoit.io/investment

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