Cryptocurrency & Blockchain Business
Vladimir Malakchi

Why Your Crypto Startup Is Doomed To Failure

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If you are not confused by the sad statistics on the number of failed ICO projects in 2018, you believe in the great and indestructible potential of the technology of the distributed registry and you are ready for the difficulties let’s take off the rose-colored glasses and see what should not be done to avoid being on the list of losers.

The successful completion of ICO is just the beginning of your project.

Some statistics

According to Coinschedule, 983 projects were launched in 2018, but only 21 startups were able to achieve the desired hard cap.

More than half of the launched ICOs did not even attract 50% of the stated amount.

The number of failed projects also includes the projects that were closed at the initial offering stage, and outright scams, deal with the organizers of which will have to law enforcement.

These results are disappointing and repel more and more investors from the industry, who massively get rid of savings on their cryptocurrency accounts under the pressure of hectic market in recent time.

The truth, which everyone knows, but it is indecent to talk about in a society

If you still believe that you will be able to conquer the industry and become the 22nd winner of the ICO race, then get ready for the truth.

Initial Coin Offering is not a story about finances for those who don’t have them. Yes, it may have seemed so at the very beginning, when tokens were based on the air, and anyone who has ever attended a thematic conference declared himself an expensive cryptocurrency expert in a Linkedin profile. The time of easy money is over, and those, who wish to enter the ICO market must change their strategy drastically.

But I still have some good news for you: to say that the potential of ICO is completely exhausted, it is too early.

A startup will never grow into an empire if:

  • your idea is not claimed, and the product solves only the problems that you have invented yourself;
  • the founders don’t have a technological background, and in their understanding, the word “blockchain” is only a new trend, on the wave of which you can make good money;
  • the team consists of pseudo-experts, which position themselves as gurus of the blockchain market;
  • the marketer, adopted in the project, offers on the main landing page to place “Revenue growth by 2000%” and everything in this spirit;
  • you don’t know what to offer the industry and try to implement blockchain technology into those processes, where its use is not necessary;
  • the budget for the ICO campaign equals ten dinners in a restaurant.

An idea that solves non-existent problems

The first thing to think about is whether your project is needed and what problems it will help the community to solve. Unfortunately, a lot of the presented projects with high-flown words on the sites, such as “global” and “high-tech”, do not answer at all global and high-tech questions.

It is appropriate to mention here the cooperation of Mercedes and the manufacturer of the energy drink SilberPfeil. The companies decided to encourage sellers energy drink with AMG tokens for each sold bottle. On the surface, it may seem like a great idea – a well-known brand as a partner, a reward for the sale, but… Using a specific token in one direction is completely impractical.

SilberPfeil could not prove to the crypto players that their token has long-term prospects. As a result, it was not possible to attract the desired amount during the ICO.

There are quite absurd projects in the industry. For example, ICO Rexpax with Belarusian roots, using the blockchain, assured its potential investors that it is the last century to share things with neighbors without their token. That is, nobody could take the salt from a neighbor from the second floor without this blockchain platform. As a result, the community also didn’t share this philosophy, and the team has not been in touch since last February. If we analyze this situation we can see that CEO of Rexpax invented a non-existent problem, embellished its solution with a blockchain and expected to attract investors with his idea.  Let’s learn from the mistakes of others and implement the global technology only in those products where it really benefits. You need to understand that its integration should simplify many processes, and not vice versa.

The founder must know everything

About his project exactly. It is sad to watch an interview with another CEO who turns red after a basic technical question.  In our time business is people, and it attracts like-minded people only when there is trust in top management. Gone are the days when a serious businessman in a tie, who might not even know the media, was at the head of a large corporation. Now there are cool and inquisitive guys in the business, they are in polo and in sneakers, they can easily answer for their projects, protect them and present them in such a way that you want to give your money.

CEO without a team is a hipster without a beard

The team is the core of the project, its brain and engine. A few years ago it was really difficult to find specialists, but now the market of professionals has begun to take shape: they are purposeful, work overtime and walk with their heads held high.

The future founder should understand those worthy candidates who are able to bring the project to the desired level belong to generation Z. The Millennials are not accustomed to obey, but they make compromises and work according to the rule: “We don’t work as we are told, we were hired to talk you about how to work”.

With a limited budget, but a great desire to get the best employees, professionals of the industry often receive offers to pay for their work with tokens (which, by the way, still have to develop). If you are focused on fruitful cooperation, we assure you that an experienced Senior developer will not attract in this case, but a beginner with a zero background might be interested. However, the quality of his work can be immediately silent.

There are often situations when the project creator has to ask for the help of more experienced development teams in order to correct the mistakes of their inexperienced colleagues. Of course, it will strike another blow to your budget. The miser pays twice and doesn’t say that we did not warn you.

If you plan to hire professionals, promise them a decent fee and do not fulfill your promises, we advise you to refuse such a plan in advance. Despite the full scope of the industry, the community is quite narrow, professionals always intersect at specialized events and support communication with each other. Doing it once, you won’t put together a second good team – your reputation will be destroyed.

Developers: a separate conversation

Half of the projects created with the involvement of developers from India, ready to work for $ 1000, but back to the statistics clause (more than 50% of ICO failed miserably). To realize a grandiose idea under the force only the pumped guys with accumulated skills, the average salary of which starts from $ 5,000. It is difficult to assemble such pros in one place – more than 90% of developers are already involved in other significant projects or make their product in-house.

If you don’t have time and desire to form a strong development department, you can turn to ready-made teams of blockchain developers who have successfully established themselves in the market. In this case, there are several undeniable advantages:

  • the team is already organized in advance, a waste of time in dating is eliminated by itself;
  • developers have accumulated experience in implementing blockchain solutions of various levels;
  • you can always turn to them for advice because the guys have been in the industry for a long time and are up to date with the latest trends.;
  • they are responsible for the quality of their reputation, which plays a key role in this industry.

If you take into account all the above facts, then you will be able to create a strong team with a large-scale technological background and reach the planned level.

Festive packaging for your idea

The marketing department is responsible for the face of your project and in the current realities it is becoming more and more difficult to find a beautiful face.

A CV with a promising Blockchain Marketing Expert headline and stories of attracted millions for previous projects can hide a narcissist copywriter, who learned how to customize advertising on Instagram. Do not fall for beautiful fairy tales, check out his previous projects, study their marketing strategies and write on Facebook to the representatives of the startups mentioned in the resume, just in case: maybe the candidate didn’t work there at all (such cases have occurred, so light attacks of paranoia are appropriate here).

Budget

We left the most important, money issue for dessert, as many do not pay this detail due attention.

The budgets, that the future CEO expects, are often cannot cover even half of the costs, arising during the preparation for the ICO-campaign. Some expect to provide a team for the first two months and then pay bills with raised funds. However, there are the other problems associated with marketing, legal solutions and community support, which delay the initial deadlines and are very expensive.

Conclusion

Cryptocurrency industry is developing by leaps and bounds, gaining more and more turns, but the rules are dictated tougher with each passing month. It becomes more difficult to surprise investors and to gain their trust is a challenge for real crypto heroes.

On the other hand, it is an indicator of the maturing market, where there should be no place for fraudsters and not serious business.

We are sure that this article, which is based on our own experience, though boldly, but in full given you the food for thought and will help your startup to contribute to the history of the Industrial Revolution 4.0.

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