I originally wrote this as an article on LinkedIn on January 26th, 2018. Nothing has changed since.
Kodak is a brand many of us grew up with. It was part of many of our families' cherished memories, trusted to capture our life events for posterity. It's no wonder, then, that the brand itself has a warm, nostalgic place in many of our hearts. I mean, Paul Simon titled one of his hits after their product. Like many other brands from yesteryear, it's easy to find yourself rooting for them - it would be a great story to see them come back from relative obscurity and regain relevance in the brave new world of blockchains and ICOs. Unfortunately, it's evident that their chosen path is not one of hard work or innovation. Rather, it is one of opportunism and cynicism - a short term cash grab based on the belief that no one is paying enough attention.
Don't get me wrong, the stated intent of the KODAKOne platform is noble enough:
KODAKOne is a revolutionary new image rights management and protection platform secured in the blockchain that seamlessly registers, manages and monetizes creative assets for the photographic community.
You won't find me arguing against the need for artists to protect their copyright. What's missing, however, are details. The KODAKOne ICO is shockingly short on detail and Kodak and the WENN Digital teams have shown a complete disregard for the potential investor's need to know what they're investing in. Vague promises and marketing buzz words are aplenty but not enough for me, in this case.
The current state of ICOs is messy and Kodak and WENN are not alone in their cynicism and opportunism. The vetting process of ICOs falls to individuals who, for the most part, have to do their own homework (that, in itself, is not necessarily a bad thing - you should always do your homework). A good ICO will often have a hugely detailed white paper and a Proof of Concept (PoC) or demo version of the end product. The KODAKOne effort has neither. As an investor, you should be reading the white paper, demoing the product, investigating the team, scouting the market, and evaluating existing and potential competitors. Your efforts will be hampered here, should you try.
I want to point out the first two areas of investigation because they're where I see the biggest warning signs:
The white paper (or, lack thereof): It doesn't exist. At all. Feel free to sign up for the "Lite paper" (itself a cynical term, imo) on the KODAKOne site. I know I did within hours of seeing press of the KODAKOne announcement during CES (January 9). It still has not arrived 4 days before when they're hoping I'll give them money, and from what I've seen, others have not received it yet either. This is not an oversight. When building trust with potential investors, lack of information is never an oversight. It's a strategic decision.
At best, they've decided that details of their platform give them an advantage over potential competition, but withholding those details for this reason would also indicate to me that their confidence in the proprietary nature of their tech is weak and that their progress in building probably hasn't begun. At worst, it indicates that they don't have the answers and that they're willing to take the money now, and hopefully figure it out later. That would scare me if I were thinking of investing and it should scare you too. (By the way, I fully believe it to be the latter case.)
There are too many questions about HOW their platform would do all the things it's promising to do.
- How will an image be tracked? What will prevent a user from removing the DRM and breaking the tracking? Will they even have DRM? This is fundamental and unclear.
- What tech will allow image recognition post editing/adding a filter? Bigger companies are making inroads here, like Microsoft and Google. What's your plan?
- How does a blockchain even benefit the end user over a centralized database? I don't necessarily see the fit here.
- Moreover, how is the ownership of an image verified before it's forever registered on an immutable chain? What prevents me from being the fastest to register other people's images? What resolution mechanism will be in place?
- How is rights-enforcement a realistic proposition? Through tech, or legal strong-arming? Cease and desist letters to every egghead on Twitter?
- (Again) moreover, how does "continual crawling of the internet" work to find infringing images? I too can build a python bot to crawl the 'net aimlessly 🤓. I need more detail about how yours will target.
- What's the amount of funds being raised, and what will the usage of those funds be?
- Timeline? Milestones? MVP?
- Public or private chain? Why?
- And so many more...
Yikes.
The Team: Kodak's role in the KODAKOne platform appears to be a brand licensing partnership. That's it. From what I've read, Kodak is not contributing anything else. I'm no expert in the digital photography space, but this would appear to be Kodak's first foray into rights management, and there is no existing platform that will be augmented by integrating "blockchain". That, in itself, does not mean that they can't play a role in developing it. BUT, and this is a big BUT, there is no indication that they intend on being a full partner in the platforms development.
Others have done a better job at digging into this than I:
The evidence strongly suggests that Kodak Coin is the re-branding of an initial coin offering called RYDE coin that never got much attention and was apparently aborted days before Kodak Coin was announced. Until recently, the project had a page on the crowdfunding site Start Engine. The page is no longer there, but Google cached a copy (note: no longer available) of the site on January 3.
As recently as last week, RYDE coin was being pitched as a way of expanding the licensing business of its creator, paparazzi photo company WENN Media. Now the RYDE page has disappeared, and WENN Media's parent company, WENN Digital, has partnered with Kodak to create a blockchain platform that sounds a lot like RYDE—except that there's no mention of celebrity photographs.
So, we have a rebranding of an ICO that never got off the ground. Kodak's brand is attached to an idea, and suddenly a failed idea has traction. Why? The only answers to that question are cynical and bad reasons to invest.
You may be asking, if you've made it this far, "why does this matter?" Surely, if someone doesn't think an investment is a "good one", they can avoid it and move on, right? Sure. Right.
However, let's look at the potential damage of opportunistic cynicism with regard to a burgeoning investment area like ICOs:
Familiarity = comfort: Good or bad, familiarity sets expectations and allows for a level of comfort. Generally, I would bet that Kodak has delivered in that past for you and your family more often than not. This is key to the KODAKOne/Coin effort - they're relying almost exclusively upon it.
For investors looking to join the ICO movement, the landscape has been scary. As mentioned earlier, doing your homework is and has been an absolute requirement. Trust in the details and team should be reinforced by transparency and more data/information than a person could likely digest in a single sitting. By attaching a known brand to an ICO, WENN and Kodak are looking to capitalize on familiarity and the heritage of a brand that many of us hold near and dear along with our nostalgia. Even if you're missing a feeling of nostalgia for Kodak, you definitely aware of the brand and could/would assume that their being attached legitimizes the entire project. It doesn't. Should a half-baked solution (or, worse, vapourware) be the result of this ICO, it will delegitimize ICOs for a large group of people that found opportunity and comfort in familiarity. If you can't trust the familiar, what can you trust?
The ICO movement, generally: Without getting overly technical, an ICO is not meant to solely generate an investment vehicle. Because Blockchain is distributed widely, the platforms require community participation in its block generating (mining) activities. That's how the blockchain's benefits are created - decentralization, transparency, and immutability are founded on the community's efforts to maintain the chain. Participation in these efforts relies on incentives - participants are rewarded with coin for their efforts/resources/investment and, ideally, the coin's value grows overtime. A common analogy is that the distribution of coins to participants acts as buying the gas (community effort) to the blockchain's engine.
An ICO, in its ideal form, incentivizes the participation in these activities by allowing the targeted market of individuals (in KODAKOne's case, the photography community) to buy into the platform early and at a discount. By "buy into" I mean, the community agrees that this is a useful product for them, that they want to use it, and they're backing those feelings by investing their money into it to see it become a reality.
When the platform launches and gains traction, the initial coins distributed during the ICO would gain in value as new users buy in at market prices, and the early adopters should benefit. There is rarely (ever?) a gatekeeper, however, that prevents speculation from outside the target user community. What is more, in opening an ICO to accredited investors only (as is the case with KODAKCoin), you're very clearly targeting an investor rather than a community of users. That's Kodak & WENN's prerogative and, to be fair, inline with compliance to SEC regulations due to the speculative nature of the investment and the amounts people are investing. What it's not, however, is any further indication that utility of the platform is a priority over gathering cash.
Also, consider this:
Vancouver-based Global Blockchain Technologies Corp. announced today that it is investing $2 million in KodakCoin
The Company has subscribed for all 8 million Kodak Coins that were available in the Pre ICO Stage I. Stage II Pre ICO opens tomorrow January 10th
Absolutely, Kodak, WENN, and Global Blockchain Technologies Corp (GBT). have every right to do this. It gives the ICO a cash injection to continue its activities (seems like a bit much for the efforts as they exist), and (potentially) rewards an investment group for taking on risk. I'd ask what, if anything, does GBT Corp know that has not/will not be shared with ICO investors? A lot? Nothing? Without a white paper, or even the mythical "Lite paper" how are individual investors to know what they're getting into? What does their fellow early investor (GBT) know that they don't, yet? And how do these activities inflate the cost of a coin against the interests of their end user base, the photography community? None of this adds up to even an indication that the end product has been considered.
This cynicism and lack of transparency, combined with the opportunism of attaching a known brand for initial traction do damage the ideal of the ICO, broadly. In the traditional investment markets a prospectus is required prior to sale of the investment vehicle to the public. Not even bothering with a white paper sets a precedent with an ICO that has generated much more public awareness than is typical. Bad ICOs will force regulation and, potentially, overregulation, which can kill the entire movement.
It's my belief that the combination of opportunism and cynicism is only required in the absence of a great solution. The WENN and Kodak team may have a good idea, theoretically, and they may even have the best intentions, but their approach is all wrong. It smells and looks like a cash grab from the eager investor that probably missed the huge growth of crypto coins the first time around, and is now looking for a way in. The KODAKOne ICO is all marketing and branding, no substance and no detail.
Feel free to invest if you want your hard earned money to prop up a heritage brand a bit longer. Feel free to invest if you truly feel like the only thing missing from WENN's initial effort (RYDE) was co-branding. Feel free to invest if you're an institutional investors that has potentially been in receipt of more information than individuals are offered. Feel free to invest if you love some speculation. Otherwise, don't bother.
They have just over 4 days left to provide the detail and, even if they do, I would ask, "is that enough?" to overcome the bad taste their contemptuous approach has created? Not for me, but...
Unfortunately, the ICO will probably be oversubscribed immediately.