ICOs were the mainstay of firms operating in the blockchain and cryptocurrency space, where billions of dollars were pumped into these companies with a promise of delivering something that would ‘change the world’. This phenomenon of excess capital being raised by ICOs particularly gained traction in the bull market of 2017, continuing well into 2018.
Around 86% of ICOs have never shipped a product despite making claims of ‘trying to change the world’ or ‘make the world a better place’. In spite of having the funds and access to the best advisors and mentors, they failed to ship anything of value or anything at all.
Here at Bank of Hodlers, we’re big believers of decentralization. The downside, however, of decentralization and firms leveraging the same is their inability to ship decentralized products as a result of raising capital before shipping a product. We didn’t want to follow that pattern, even though we’re big believers in this space, because we didn’t want our end customers to buy into something that won’t exist a year from now. We wanted to create value for the community before asking them to invest in us. We also want to get the fundamentals right, more than anything, of a startup. At the end of the day, we’re still going to be a startup, so we wanted to achieve things in the startup way and not the ICO way.
In following this approach, we focused on hiring a great team with a lean budget, focused on building an MVP, and focused on finding a product market fit. We only want to go out and raise capital with a product ready and our traction in place - something that is typical of what a normal startup would do.
Why should the process of building a startup on the blockchain be any different?
With the bigger picture in mind, we have to account for the fact that Blockchain doesn’t really change the way products are managed and shipped. The only change that blockchain can bring to a company’s processes are in terms of the implications of the product, as well as who controls the product in the long run - but not the way good companies are built.
At Bank of Hodlers, we wanted to ship first and we’ve been trying our best to distance ourselves from the typical ‘we want to change the world’ ICOs. The moment we ship, and the second we get traction is when we’re going to raise capital.
When we do have a product and relevant traction, we’ll have a value proposition for our customers. We want to position ourselves such that we don’t become one of those firms that over-promises and under-delivers. It is for exactly this reason that we decided not to raise an ICO.