When planning our ICO (or should we say, ‘STO’), we made a conscious decision to reward staff and team members (‘Team’) with shares in our parent company. That way, they were aligned with the business and its performance, and not rewarded just for the sake of being rewarded.
Business has worked this way for time in memoriam. That is, until the new world of ICOs came along!
In this new world, which is innovative, exciting and certainly dynamic, people are rewarded for simply putting their name to a plan. Often, that is exactly what it is … just a plan. Products haven’t been built, customers won or revenue generated. Let alone profit earned. Worse still, others who have very little to do with a project but move in the “right circles” — referred to as ‘Advisors’ — are also compensated just by adding a picture, social media link and a ‘smile’ to a business.
This cannot continue.
To be taken seriously, Teams should be incentivised by rewards tied to tangible performance and milestones. It is inconceivable that traditional sources of funding such as venture capital, private equity or hedge funds would entertain someone with a pitch that said, “By the way we own 20% of the tokens and when our ICO is over we’re going to sell out”. If they wouldn’t consider this, why should ICO investors? The ability to cash in life-changing ‘up-front dividends’ undermines the need for the Team to sweat blood, which is critical to the success of any business.
Although today, most Teams defer releasing tokens or place them in escrow, few of these arrangements go beyond one year and seldom have ties to real economic results. Those that sell out are free to go with no further vested in interest in the success of the business. It is clear that a Team with no restrictions on its ability to sell tokens is detrimental to investors and a significant cause for concern.
By owning shares and not receiving tokens, Team members have a vested interest in the long term performance of the business and are incentivised through dividends and capital appreciation of their equity. A harmonization of common interests between the Team and token holders is established on solid foundations.
So, when looking at an ICO, don’t just consider whether a Team has the wherewithal to rollout a successful business, hone in on when the Team get their tokens, why they get them and when they are able to sell them. If there are circumstances where a Team could sell out and walk before a business is successful, don’t touch the token.
After all, without the team, there is no business!
Find out more about CryptoMillionsLotto and our ICO/STO at www.cryptomillionslotto.io