This is an excerpt. To hear the full interview, click on the Soundcloud or Youtube links.
Over the course of this year, the ICO landscape transformed from wildly unregulated territory to a much tamer, more lawful space. Consumers have developed healthy skepticism; governments have cracked down on illegitimate actors. Additionally, companies within the crypto and blockchain industries have taken steps to self-regulate the space.
Still, the future of ICO-backed companies are volatile and unpredictable. Companies funded by ICOs are faced with a unique set of challenges; their structures are often fundamentally different than companies who receive more traditional forms of funding.
What’s more is that we have reached a point in time when the fruits of the ICO boom have been borne–now, the companies who raised millions have shown their substance (or lack thereof) to the world. Some have been successful; others have squandered millions through failed attempts to build products.
Recently, Finance Magnates spoke with Jim Preissler, CEO of Trade.io, about the ways that the ICO space has changed, and what makes some ICOs more successful than others. Jim also clarified why Trade.io is working on de-listing its tokens from exchanges that aren’t the platform’s native exchange.
The Decision to De-List
Jim explained that the de-listing is happening in part because of suspicious activity on some other exchanges. “We’re seeing wash trading, strange trading patterns,” Jim said. “In order to protect our token holders, we’re trying to move the bulk of [TIO] trading onto our own exchange.”
“There’s also a lot of regulatory reasons to do that,” he continued. “We can control what’s going on with the tokens–who’s holding them, how they’re being utilized, and so on.”
Additionally, “a lot of exchanges come back with increasing demands for higher fees and a lot of other stuff…We’re trying to do the right thing for our overall community.”
Jim said that he doesn’t believe that concentrating the majority of TIO tokens will have a negative effect on the token’s price. “The utility is on our exchange, so I think it makes sense for [the token] to be traded on our exchange. I don’t think it’ll adversely affect the value at all–if anything, having the liquidity concentrated in one spot will help the overall value and utility of [the token.]
This way, “we can control the outcome, and make sure that everything is on the up-and-up.”
Extensive Planning is Vital for an ICO’s Success
Jim also shared his insight on the ICO market and some of the most significant challenges that companies face when holding an ICO.
“The reality is that if you’re trying to compress fundraising, a public launch, and building a company all into a one- or two-month-period–it’s incredibly stressful and time-consuming. You have to go into it with a lot of planning; if there’s any areas where the wheels can come off, they will come off.”
“The more prepared that you are going into it, the better off you’re going to be,” he continued. “I see a lot of teams wanting to go fast, and wanting to ‘rush it’ – inevitably, this will cause a really big problem. You really have to step back and plan things properly.”
“It’s not only the process, but it’s things that get neglected, like security. When I say security, I don’t mean just for the website–but also manager’s personal securities: hardening their personal cell phones; hardening websites.”
Jim explained that “these are things that often get overlooked, and then become access points for potential problems.”
“You really can’t cut corners; you have to plan things well,” he reaffirmed.
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”80 to 95 Percent of All ICOs Fail”
“Once you’ve done your ICO, the next question is: ‘how do we make this into a successful, long-term, survivable entity?’”, Jim explained. He described this as “the next wave of failure.”
He went onto say that “we’re starting to see that the 2017 and early 2018 [ICOs] are not turning into anything. They raised money, and now the money is kinda gone, or it was squandered–you’re only gonna see a small percentage of them that actually did successfully deliver a product.”
Our CEO Jim Preissler on the difficult times the crypto world is going through: “we are working hard to come out of this as a very strong company and community.” pic.twitter.com/mPpL7fagW1
— trade.io (@TradeToken) February 6, 2018
Jim said that the ICO projects that have been successful all have one thing in common: “the management teams have done startups before, have been through the venture capital process before, or they have enough corporate background and experience to navigate the tougher problems.”
“When all is said and done, the reality that you’re going to see is that 80 to 95 percent of all ICOs fail, which is not that dissimilar from the VC world–you see most startups fail as well,” he added.
A Lack of Professional Support Sets Many ICOs Up for Failure
“After the ICO, you have to build a company and a product, which is the next big hurdle where you see a tremendous amount of failure, not surprisingly,” Jim said. “A lot of this has to do with [the fact] that you have teams that have never done this before–for two guys with only a couple years of corporate experience, to build a business, build a team, build a company, build a product–it’s not easy.”
“And,” he continued, “in many cases, they don’t have the same support system that venture capital [firms often offer.”
Indeed, many ICO-backed companies are attempting to build themselves from the ground up without any kind of professional support system at all.
#CEO Jim Preissler comments on the price reduction: “We’ve been selling #TradeToken based on the price of #ethereum … we felt it was only fair to lower the entry point to allow greater participation, and still allocate a large amount of Trade Tokens to our loyal followers.” pic.twitter.com/wxKd86uBYr
— trade.io (@TradeToken) November 22, 2017
The Good Ol’ Days of Easy ICOs are Long Gone
“The easy days of the ICOs have been long over,” Jim said. “Now, most ICOs either raise a decent amount of money or they raise nothing–it’s almost like there’s no middle ground anymore.”
“That’s really a differentiation between two guys and a whitepaper and a well-planned ICO–you either have to do one or other the other. Unless you have an incredible idea, the two-guys-and-a-whitepaper days are pretty much behind us,” he said.
“We’re seeing more established companies moving into an ICO, more well-planned startups with good teams moving into an ICO. I think those are the ones that we’re going to see being successful, moving forward. The heyday of it is behind us.”