Here’s what you are going to have to consider if you want to hang with the big boys like Bitcoin and Ethereum
We’re here to put a dent in the universe. Otherwise why else even be here?” – Steve Jobs.
As a veteran blockchain writer and researcher, I often get queries from aspiring ICO entrepreneurs like: “What do you think of my ICO idea?” Or, “How can I get a really good idea for an ICO?” Their ambitions, of course, are to found an ICO that’s as famous as Bitcoin and Ethereum, an ICO that attracts millions of followers and Bitcoin wallets of money, and an ICO that survives years after stragglers have died.
Since an ICO is, essentailly, a business, I suggest we flip the questions from how an ICO benefits us, to how an ICO benefits a specific market and consider the following questions:
- Who is our target market? Sometimes, it helps to define our market as narrowly as possible. For instance, dating blockchain Luxy advertises itself as the mobile app for affluent singles with an annual income of $200,000 or higher. Some entrepreneurs find macro needs by fishing for micro ones. For instance, the problems of one market sector may turn out to be the problems of the world.
- What is this target market interested in? Most ICOs replicate one another in minor details and fail to become remarkable. Examples are the cannabis munchie startups. That’s ok if you want the safe path with a steady stream of clients. Cannabis munchies always attract. Such ICOs are not remarkable – but you get clients. A variation of this question is to ask what you can offer to help buyers improve. For instance, Experty, a voice and video-calling application that is listed as one of the top three ICOs for 2018, seeks to create a decentralized platform for consultants so they can safely monetize their skills. The team behind this application states that it wants to alleviate the talent crisis that exists within the blockchain community.
- What does your market need? What is something that people of your target market would pay hands over heels for, even get into debt, to procure? Convince a large enough market that you can satisfy this need – or satisfy it better than competitors can – and you’re a billionaire. This is the hardest category to check, and, therefore, ICOs that manifest this quality are so scarce. Blockchain startups in this group include Bitcoin, Ethereum, IOTA, NEO and six, or so, others. Find the need, and you’ve got your fame, immortality and wealth beyond reason.
How do I find out what my market needs?
Here’s what doesn’t work:
A common suggestion is to use focus groups or surveys like Survey Monkey to ferret out what your target group needs. From a scientific perspective, this doesn’t work, simply because qualitative models like these are highly untrustworthy. Reasons include that participants are in a hurry, they’re tired, they may have misunderstood your questions, they may have no particular interest in helping you, and so forth. You could browse relevant Facebook groups, chats, forums etc., but you would have to do enough of that for long enough to haul in a catch.
Here’s what works:
You need to know the field so thoroughly that you experience its problems. Ask yourself what you would like, or what you would buy that doesn’t exist? Satoshi Nakamoto noticed the problems of the time: Banks and large corporations deceived their customers which led to the Global Financial Crisis of 2008. “[We need],” Nakamoto insisted in his famous paper, “A purely peer-to-peer version of electronic cash [that] would allow online payments to be sent directly from one party to another without going through a financial institution.”
At the Disrupt SF convention of 2017, Vitalik Buterin told AngelList founder Naval Ravikant why he created Ethereum:
“You basically need to have some system that keeps track of how much money you have at any given time, how much money you have the right to spend,” Buterin said. “You can very easily do it with centralized servers, but if you want to do it in a decentralized manner, it’s actually a very hard problem.”
Look at ICO failures. Did any come up with a good idea that you could salvage and improve? One way to find these ICO failures is to conduct a key search on articles and press releases from 2008 of ICOs plus your industry term (e.g., “ICO + cannabis”). Track the ICOs that you like, to see if they survived. If they died, maybe you can resurrect them in some improved form.
A case study of a brilliant ICO idea – The very first ICO
The very first ICO is a story in itself and barely known. In 2010, J.R. Willett was a software engineer who fell into Bitcoin at a time when the world’s largest Bitcoin exchange, Mt Gox, failed, and when bitcoin scams were regularly making headlines. With a third child on the way, the family were tight on finances and certainly not into Bitcoin, but Willett’s wife gave him $200 for both his birthday and Christmas and said, “Flush it down the toilet if you want to.” Instead, Willet used it to dream up an idea, called Mastercoin, of contracts on top of Bitcoin, the way email is layered on top of TCP/IP. Seeking funds, a desperate Willett submitted his whitepaper via what he called his own “initial distribution”, in 2013. While Mastercoin made nary a dent, the idea of initial coin offerings (ICOs) took off big time.
Years later, Willett told Forbes, it was this “bizarre feeling of, whoa, I published a white paper and an address, and strangers were sending me money.”
Why did Mastercoin fail, while the ICO idea succeeded so spectacularly? Five years later, a simplified Mastercoin became a runaway trend (built on Ethereum instead of Bitcoin, but the same concept nonetheless), raising $2 billion in just the first nine months of 2017. But for Willett, it was the ICO that hit the jackpot. As he soon realized, “What everyone got really excited about was, hey, I can publish a paper and people will send me money. Literally within a few months, other projects were doing the same thing – the most famous of which was Ethereum.”
The idea was simple. The need was there. Everyone wanted to program their own blockchain startups. Few had the money to do so. Willett showed you could just publish a paper to picket attention.
Willet’s ICO idea fit the conditions of Peter Thiel’s 10x rule for great startup ideas, where your solutions achieve 10 times the results of others who struggled.
Ironically, this very first ICO also fulfilled Bloomberg’s observation that “the hottest ICOs are the ones that have done the least amount of work”!
Sometimes, a simple solution to a red-hot need is enough.