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I'm in my late 20s. It's been almost 4 years since we founded our startup company. We pitched for a year and eventually gathered enough investment to give it a

I'm in my late 20s. It's been almost 4 years since we founded our startup company. We pitched for a year and eventually gathered enough investment to give it a go. The initial plan was to release our app in the local market (middle east) and aim for more users. At the end of first year, with the approval of the board, we decided to delay marketing spending for more development to polish existing features as well as to add more ones. We revoked one feature (not ads) which would provide early cash flow as it turned out to be too ambitious and rash. We pivoted and decided to go global with our proven to be fun features highlighted. It went smooth and retention rates grew tremendously until finally the day for series A arrived. The lead investor (the one with the most equity) already hinted that he would be willing to invest, some others followed as well. They are all angels btw. Mails exchanged, meetings happened, places were visited and it turned out what we can gather is not enough to handle marketing costs for aimed growth. We contacted people from crowd equity funding companies. Apparently, none of them is currently accepting applicants from our country. During our last meeting, the board discussed the idea of an initial coin offering. Some of our investors are crypto enthusiasts and many of them think it is a good idea to fund a project publicly with tokens. The thing is, our product doesn't resemble anything like a currency, not even a commodity in my opinion. It sounds unnaturally arbitrary to have tokens inside our app, or a token with our app's branding on top. Moreover, as someone who is the most technically proficient person in the board, I can easily deduce that all the proposals about hows and whys of the ICO resembles an obfuscated fraud. I couldn't believe what I heard that day and it seems I am the only one who thinks that way. I plan to spend my all remaining days until the next meeting to prepare the hugest report ever written, hoping it will prove that it is the worst idea we ever discussed. As my voting rights being limited, I have no idea what to do if my report doesn't stop its happening. I still need to work for a year to permanently gain rights on my own equity. If I quit now, I'll lose everything except the lessons learned during these 4 years. My question is, what would you do?

itamarst 9y ago
My personal feeling is that you should only work for people you actually trust (https://codewithoutrules.com/2017/01/29/job-contradict-beliefs/ https://codewithoutrules.com/2017/01/29/job-contradict-belie...). Thus: Option #1: Just quit, and keep your mouth shut. Do you really want to be party to a fraud? And, given it is a fraud, will your equity ever actually be worth anything? This is the easy option. Option #2: Quit, tell world you think this is fraud. Better talk to a lawyer first, you want to phrase it the right way (and may get sued anyway). Option #3: Stay on, try to convince them it's bad idea. In this case I'd go for "I think this is fraud, it's too risky", with nice broad paper trail that will be trivially findable by discover if they get sued later, and copies of paper trail kept by you. You may well get fired. And do you really want to keep working for these people? Thing is, if company's choice is "fraud or bust", it's dead anyway. So you're not losing anything by quitting (and maybe you can get them to pay you a lot of money for transition to replacement CTO.) If you do quit, leaving behind the nice paper trail for lawsuit discovery might discourage some bad behavior. (Not a lawyer. Not legal advice. I'm random person on Internet. You probably want to talk to a lawyer.)
- jjuhl 9y ago
  There's also option#4: just get on-board. Accept it's a fraud, milk it for everything you can, then leave after (hopefully) cashing in and leave the whole mess to everyone else and hope there won't be any (too bad) implications for yourself.
  - itamarst 9y ago
    That is an option, yes, but it's the immoral (and perhaps criminal) option.
  - chris_wot 9y ago
    That’s a terrible idea. Just because you leave doesn’t mean the authorities won’t come after you got committing fraud!
- scardine 9y ago
  Like almost all problems in life you have only 4 options: #1 Change you (accept what you are unable to change) #2 Change the other (convince them to follow your vision) #3 Fly (divorce, quit) #4 Stay and suffer (include drinking, doing drugs, whining) It is amazing how many people chose number 4.
  - ORioN63 9y ago
    #1, #2, #3 change state. #4 is no-op.
    - firethief 9y ago
      The state changes no matter what; time makes actions out of no-ops.
      - Infernal 9y ago
        > time makes actions out of no-ops. Did you just write this extemporaneously? I want to put this where I'll see it at least 3 times a day.
eropple 9y ago
You know it's fraudulent. If they won't go along with you on the don't commit fraud thing--and I agree with you in that ICOs are at best penny-stock trash and scams at the median and worst--I see no way I could react other than to quit. You're talking about a Series A company. The likelihood that your equity is worth anything remains very low. The likelihood that you will burn your good name and have trouble looking yourself in the mirror strikes me as much higher and much more destructive than that. And you have more than just those lessons learned for four years--you can still leverage that you were the CTO and handled much of the heavy lifting of that company, and point out that you left because your founders were doing dirty. I am very not a lawyer, I am very not your lawyer, and this is very not legal advice, but depending on jurisdiction you may have some leverage as far as that equity if you really want to chase it (though, again, I don't expect it to be worth much). "I quit because they were being galactically scummy" has some persuasion to it. And definitely talk to a lawyer before you go public with the dirt.
shafyy 9y ago
Well if you think the company is going down (either by being fraudulent or by the ICO not working out) then your potential shares are also worth nothing. In that case, it's better to quit now because you won't be wasting any of your time. Having said that, if you think there's a fair chance that you might convince your board, I'd give it a go. Also, make sure for your next startup not to accept a 4-year cliff on your vesting schedule (standard is a 1-year cliff with a 4-year vesting schedule that vests linearly prorated monthly/daily).
- logfromblammo 9y ago
  A board and executives that would be willing to implement a scammy crapcoin ICO over the written objections of its CTO would probably not have a problem screwing that person out of their equity somehow. If they decide to do the ICO, resign immediately, because that equity isn't ever going to pay out for you. Please also give your underlings some hint of what might be happening, so they can update their resumes before they are asked to run the scam without you.
notyourday 9y ago
It looks like you are not in the US. You really need to look at the implications in your jurisdiction.
- walshemj 9y ago
  And have a get out of dodge plan
CodeWriter23 9y ago
If the morality issues don’t convince you to move on, consider this. Frankensteining tokens on to an app that has no natural connection will more likely kill the app and its revenue stream than catapult it to unicorn status. The UX matters. So a new job is probably in your future regardless of whether you stay or not.
convolvatron 9y ago
if you are going to try to convince them with a paper, make it short and focussed. two pages. no one is going to read anything longer. then it sounds like you'll have to quit, but you will have done what you could.
josaka 9y ago
Insist on quality legal counsel. ICO's do not have to violate the law (though many probably do). Competent counsel will be able to talk them through how to do this safely and explain the risks (which can include returning funds and criminal sanctions) if they try to take shortcuts. If you're not sure which firm to use, look at who sophisticated buyers are using (e.g., check SEC filings in their Edgar system and cross-ref with who's putting out literature on ICO's).
- walshemj 9y ago
  the OP is in the middle east - looking American SEC filings are not going to help much here.
  - anononpurpose 9y ago
    Thanks for noting. I can still read the sources and look for the local counterparts.
  - zer00eyz 9y ago
    > We pivoted and decided to go global with our proven to be fun features So yes the OP should be looking at the SEC filings of other companies. They should also be looking at china and korea -- and every country moving to shut down the sale of crypto. Not only does OP need a lawyer the apparently need an international one.
    - dragandj 9y ago
      "go global" probably means that they are after customers outside Middle East, not that they have formal presence in those countries.
      - anononpurpose 9y ago
        Exactly.
        9y ago
anononpurpose 9y ago
For further reference, I must add I own a few hundred USDs worth of alt coins just for the thrills. I code smart contracts on my local machine for fun. I run my own bot to exploit price fluctuations on some exchanges, I earn a dollar per day. It is fun to play with crypto, but that's it, it's gambling without any doubt. Blockchain is an amazing technology, if only it hadn't been monetized this much.
- flignats 9y ago
  it's a shame you've done all of that and still think it is akin to gambling.
bsaul 9y ago
Small advice in general, as someone who very often fail to convince people, then leave, then happens to be right in the end but withouth being there anymore to enjoy it. Convincing people is a very different matter from proving that you’re right. Those kind of debates often happen because there isn’t a rigourous mathmetical proof that can invalidate the decision, so you’ll have to resort to different arguments than purely logical ones. Eg : in your case, saying « our product isn’t emitting anything ressembling a token, so ICO doesn’t make sense » should be enough theoretically, but it probably won’t ( they’ll probably mention other ICO with product like yours). So, you have to think about the personal motivations of every people you’re trying to convince, sincerely and honestly understand them. Then try to find a different answer than an ICO for each of those motivations. Good luck though, because whenever rationality is lost, things becomes emotional then ugly.
- tonystubblebine 9y ago
  This is the best advice in the thread. Notably missing in the OP is: "What is the option for the company if you don't do the ICO?" Selling that, even if it's "Going out of business without having wasted other people's money is preferable to fraud," is a big part of how to actually have this discussion.
- rabidonrails 9y ago
  >>Convincing people is a very different matter from proving that you’re right. This is probably the best advice for any engineer who's sitting in the management world and being asked to make a business decision.
djb_hackernews 9y ago
There are quite a few red flags in the story, nevermind the ICO. - Pitching before building - Delaying release for more development - "Tremendous growth" but no one willing to put up $$ - What is forcing a series A? Are you out of runway? - An investor taking the lazy approach to investing (requiring others invest first). This is so common and so lazy and not confidence inspiring.
- anononpurpose 9y ago
  My use of language might be confusing. We had a proof of concept implementation before the first investment. We got the investment after pitching for a year. We built and released the v1.0 in 6 months. Improved it for 2 years. Pivoted last summer. Retention rate is still increasing today. The meeting about the ICO happened lately.
thisisit 9y ago
Ask them to take a long, hard look and think whether it is really for them and they can follow through. Long Island Iced Tea pivoted to Long Blockchain but now it is backpedaling: http://markets.businessinsider.com/currencies/news/long-island-iced-tea-company-planned-to-buy-bitcoin-mining-machines-backpedaling-on-plans-2018-1-1012735857 http://markets.businessinsider.com/currencies/news/long-isla...
blueadept111 9y ago
Here's an opposing view, from someone a little older and maybe a little wiser. In the big scheme of things, you're not that important. Your company is also not that important, and whether or not your company chooses to adopt this coin is not that important. If it's a "fraud" by your definition, then many, many other coins (and companies, for that matter) are also fraudulent, and it's not a very important fraud, so don't worry so much about saving the world from it. If you have any interest in working on blockchain technology, go with the flow. Leverage what skills and advantages you have in your life, don't burn bridges, and especially try to keep from burning your bridges because of ego issues. Remember, you're not that important. But you are important enough to do what you enjoy, important enough to have people in your life and career who look out for you, and important enough that every single day you learn something or work on something that progresses your ambition in some way. Maybe this coin offering can be a part of that and maybe not, but the answer is more likely to be found within your own psychology than the details of this particular technological/business crossroads.
- d--b 9y ago
  Well said. I'm also a little older and think exactly along those lines. A mistake in building a feature is not the end of the world. If you don't manage to convince 90% of people at your company, then they will do it, with or without you. And in fact, you should also consider that despite your absolute certainty that this is a bad idea, you also could be wrong. Maybe your product doesn't need coins at all, but funding wise it may be smart to ride the hype, just to get cash. It's not very classy, but business is not very classy in general.
- Sangermaine 9y ago
  This is a very odd response. Whether or not OP is "that important", they're opening themselves up to civil liability or even criminal prosecution is pretty important to them. Committing securities fraud isn't some fun game you can just quit if you like, it can have very serious consequences. >If it's a "fraud" by your definition, then many, many other coins (and companies, for that matter) are also fraudulent The SEC and many other regulators around the world are, in fact, coming to this conclusion. We're already seeing a crackdown starting.
bastih 9y ago
If you want to convince your crypto-enthusiasts, don't try with a huge report. It's not going to be read in detail (IMHO, just like few people ever read whitepapers). I'd make a short list of your strongest arguments, and have a conversation based on them. Probably even 1on1 if you can make that happen. If they still want to do it, and you have no voting power, you are basically hosed -- consider though that if your investors do have voting power to sway direction, that's why they bought voting shares, to be able to sway direction. And if that means making non-sensical moves, oh well. And if you can't get your CEO's vote on this, and he can't convince the investors, it's probably a good moment to look for a different place to work at. Your company isn't yours unless you hold enough voting power.
- valuearb 9y ago
  This. Also try to phrase dissent as questions, such as "How likely is it we will be sued?" "What will we do if we are sued?" Put the onus on the advocates to address all of the concerns before the plan can even be considered. If they don't have good answers to scary questions, it will be the best help you can have.
orasis 9y ago
Don’t write a report. No one reads them. Talk talk talk and listen listen listen with the people that matter. Don’t end the conversation until one of you changes your mind or you decide that you have to quit.
vineet 9y ago
As someone else mentioned, and something that I need to remind myself often: convincing people is a very different matter from proving that you’re right. My $0.02: - Feel free to build the huge report, but likely only show small and focused bits that will make the difference based on the details on the ground. - Try not to just make a logical argument, but focus on the emotional and financial needs as well. Emotional needs would be thinking such as ICO is cool, but is there a lot of risk, especially when you have a business that is working. - It is often hard to completely change people's minds. Sometimes it is better to suggest the compromise. To do ICO for our market, we will need to pivot in these ways ...
carapace 9y ago
Do your best to convince them, but have your resignation letter ready in your pocket. Don't mention it during the attempt, but if you fail then take it out, put it on the table, and graciously take your leave. One day you're going to be on your deathbed looking back over what you've done in your life. Consider that and do your best to avoid actions you'll regret.
tckr 9y ago
I have been in similar situations, where I could see that the direction was willing to go was against my personal values and would also put the startup into even more risk. What I asked myself in these cases: what if I am right? Do I want to stick around for voting rights / equity later of a corporation that is worth nothing in a year? Why waste more time in a team and on a product I no longer believe in.
geofft 9y ago
> I'm in my late 20s. It's been almost 4 years since we founded our startup company. ... If I quit now, I'll lose everything except the lessons learned during these 4 years. I'm in my late 20s. I have never been a CTO. I spent three years of my life working for a perfectly normal and boring startup that eventually ran out of money and shut down. All the threading bugs I tracked down, all the packages I backported, everything was for "nothing" in the end, except what I learned. My equity vested, and was worth zero. A few months before they shut down, I got the sense that this company wasn't what I wanted to do with my life, and it wasn't really going anywhere / the technical goals were shifting into something much less ambitious and much less meaningful, and moved across the country to work on another project with a friend (and stay part-time at the old place). I'm very glad I trusted my instincts there. You'll find something else to do, and you're already better off than most people your age by having the experience you have. Don't hold on to sunk costs.
icedchai 9y ago
If you have no other prospects for investment, raise your concerns, but let them go ahead with it. What do you have to lose? Companies are adding "coin" and "blockchain" to their name, pumping their stock, and increasing their valuation 10x. ICOs are the new penny stocks.
ripberge 9y ago
You don't have anything vested at all after 4 years that you could exercise now? That seems unusual to me. Sounds like equity in this company is really not worth that much because the company has yet to find a viable foothold after 4 years. If no investor will pay a reasonable amount for the equity, why do you believe it is worth anything? The ICO seems like a move out of desperation. My advice would be to look for another opportunity while you're still gainfully employed. You may get into another opportunity with true growth potential.
zitterbewegung 9y ago
Leave immediately there is no job on the planet worth going to prison for. Even if you don't get caught will you be able to live with yourself? Since you just posted this it seems like that you want to quit. Just do it.
alistproducer2 9y ago
You refer to the ICO as fraud but I'm curious; what evidence do you have of that? If it comes down to "our app really doesn't need a token" then that isn't fraud. If it's "we're going to sell this token knowing that we're going to phase it out and just use fiat after launch" then that's fraud. I understand that as the technical guy in the room you might be uncomfortable with shoe-horning a token where another tech is a better fit; however, that doesn't constitute fraud, just bad engineering. Save the report man. They aren't interested in the technical reasons of why a non-blockchain solution is better. In fact, they're not interested in the tech at all - they are approaching it from a fund-raising perspective. If it's fraud and you know it - leave. If it's not, do the ICO, raise the cash and save your company.
nradov 9y ago
Don't prepare the hugest report. The board and investors probably won't take the time to read and understand it. Write a concise, non-technical report that will help business people and investors understand the potential consequence. And then include an appendix with more technical details.
dangerboysteve 9y ago
Writing a "huge" report is a massive waste of time as nobody will bother reading it. Their minds are already made up on the matter. It's only purpose would be that you have already decided to stay with the company and want an artifact for plausible deniability then things go south. If its fraud and you want to protect yourself , quit, leave and make sure you keep as much documentation you can.
desireco42 9y ago
I think you seem very pasionatte about this, and from what you describe it doesn't sound like scammy situation. It is very hard to guess what you can find disagreable in this situation. Here is the deal, you can use tokens to raise money for marketing and development of your app, nothing scammy about it, especially if it seems it is an app with good traction and actually existing thing as opposed to pretty much 90% of scammy ICO's that are happening. It doesn't mean you need to have tokens in your app. Again, you know best what and how, but, I would, as someone much more experienced (ie. older), advise you to relax and hold off opposition to this. If it is good app, why not stay and see it growing. Don't abandon it just because not everything goes your way. Whatever you do, I with you best of luck. P.S. Even if you decide to leave, try not to burn bridges and pu-pu idea too much, honestly you don't know, you are just interested in something else. Don't hope they will fail because you are leaving, in other words.
- anononpurpose 9y ago
  Thanks sir. Having destructive thoughts doesn't really help, you are true.
mirekrusin 9y ago
Relax, by now everybody knows ICOs are like direct emails from african royal family member; it will go from pennies worth raised money to abandoning idea in no time - you'll just learn few technical things about blockchain/cryptocurrency in general, which is useful and people will get discounts on your product/service at the end. It's a bullshit extravaganza to be watched with popcorn and smile on your face, it'll fade away. If your company is solid it's unlikely it'll end up in total fuckup - cancellation of idea - yes, but investors will pay back to the angry mob one way or another to secure the money put into the shop.
mathattack 9y ago
No need to go out in a blaze of glory. If you really disagree, you can just quietly find another job and resign too.
pratyushag2 9y ago
Your board members are crypto enthusiasts so I would recommend getting somebody who is very knowledgeable in crypto to 1) assess if crypto is a good fit for the company 2) if yes, then how to go about executing it in a way that it's legal and profitable. It's possible that you may be proven wrong or likey that you're right. Either way, it would be hard for a board of say no to such an idea and it would delay the execution of it to such time as when your investments can vest. If they still move forward by then and you're uncomfortable despite all this, you can leave as soon as your stocks have vested. Your goal today is to delay, secondary is to convince.
empath75 9y ago
Regardless of whether you’re right or wrong, or they listen to you or not, you should probably leave the company. When it gets to the point that you think your peers are engaging in fraud out of desperation to keep the company afloat, I don’t see what you gain by staying.
vadimberman 9y ago
First and foremost, I applaud your integrity and levelheadedness. It is rare in the startup world, and even more so among the less experienced people who often lose perspective at the sight of money. The ideal solution is to engage in office politics, but there's not much time, and we techies generally suck at it. It won't be playing on your home turf. > I plan to spend my all remaining days until the next meeting to prepare the hugest report ever written I doubt that will get their attention. It has to be: 1. Short 2. Convincing (read scary) Focus on two messages only: * you will go to jail * * you are killing the future of the company when it's generally well-off * Create examples. Cite business people (NOT techies!) calling it a fraud. While I said "short", the list of examples should be as long as possible. Finally, ask the question: how many companies that ICO'd got acquired? The answer is none. There are just speculations (https://www.coindesk.com/ico-ma-token-exits-get-messy/ https://www.coindesk.com/ico-ma-token-exits-get-messy/ and https://www.reddit.com/r/ethtrader/comments/6kfumc/what_happens_when_one_of_these_ico_companies_get/ https://www.reddit.com/r/ethtrader/comments/6kfumc/what_happ...). As the lawyers in the large organisations are paranoid, they will simply stay clear of it until someone else did it.
garmaine 9y ago
Leave.
rdiddly 9y ago
I have a habit of looking "further upstream" so I'm saying the ICO, or the question of fraud, isn't the issue. The issue is that you're not profitable. Or not sufficiently profitable. A company whose need for money far outstrips its ability to generate money -- that's the company that will be asking "How can we get some money?" and looking for ideas. Maybe it will choose an ICO as the answer, maybe not. A profitable company, one that generates money, never has to ask, because everybody already knows the answer is always "Keep running our profitable business." In other words, if "Do an ICO!" is the answer to "How can we make some money?" the only ones asking the question in the first place are people who don't already know how to make money. Make your exit, for that reason alone. You don't even need to consider fraud questions.
mfrye0 9y ago
From my experience, I often see that the business guys take the engineers opinions with a "grain of salt". As in, they listen to the engineer, but don't 100% take the advice. Being that engineers opinions don't always "align" with the business. Example: Engineer recommends we really need to update the database. Technically it is important, but we could push it another few months and still "survive" as a business. So I agree with the other posters that quitting might be an option. Of course if what they're proposing is fraud, then by all means quit. But perhaps they just aren't taking you seriously, and if you threaten to quit, then they might realize how important this topic is to you. Also, you have more power than you think, even with minimal equity rights. Good engineers are not the easiest to find.

itamarst 9y ago

My personal feeling is that you should only work for people you actually trust (https://codewithoutrules.com/2017/01/29/job-contradict-beliefs/ https://codewithoutrules.com/2017/01/29/job-contradict-belie...). Thus: Option #1: Just quit, and keep your mouth shut. Do you really want to be party to a fraud? And, given it is a fraud, will your equity ever actually be worth anything? This is the easy option. Option #2: Quit, tell world you think this is fraud. Better talk to a lawyer first, you want to phrase it the right way (and may get sued anyway). Option #3: Stay on, try to convince them it's bad idea. In this case I'd go for "I think this is fraud, it's too risky", with nice broad paper trail that will be trivially findable by discover if they get sued later, and copies of paper trail kept by you. You may well get fired. And do you really want to keep working for these people? Thing is, if company's choice is "fraud or bust", it's dead anyway. So you're not losing anything by quitting (and maybe you can get them to pay you a lot of money for transition to replacement CTO.) If you do quit, leaving behind the nice paper trail for lawsuit discovery might discourage some bad behavior. (Not a lawyer. Not legal advice. I'm random person on Internet. You probably want to talk to a lawyer.)

jjuhl 9y ago
There's also option#4: just get on-board. Accept it's a fraud, milk it for everything you can, then leave after (hopefully) cashing in and leave the whole mess to everyone else and hope there won't be any (too bad) implications for yourself.
- itamarst 9y ago
  That is an option, yes, but it's the immoral (and perhaps criminal) option.
- chris_wot 9y ago
  That’s a terrible idea. Just because you leave doesn’t mean the authorities won’t come after you got committing fraud!
scardine 9y ago
Like almost all problems in life you have only 4 options: #1 Change you (accept what you are unable to change) #2 Change the other (convince them to follow your vision) #3 Fly (divorce, quit) #4 Stay and suffer (include drinking, doing drugs, whining) It is amazing how many people chose number 4.
- ORioN63 9y ago
  #1, #2, #3 change state. #4 is no-op.
  - firethief 9y ago
    The state changes no matter what; time makes actions out of no-ops.
    - Infernal 9y ago
      > time makes actions out of no-ops. Did you just write this extemporaneously? I want to put this where I'll see it at least 3 times a day.

eropple 9y ago

You know it's fraudulent. If they won't go along with you on the don't commit fraud thing--and I agree with you in that ICOs are at best penny-stock trash and scams at the median and worst--I see no way I could react other than to quit. You're talking about a Series A company. The likelihood that your equity is worth anything remains very low. The likelihood that you will burn your good name and have trouble looking yourself in the mirror strikes me as much higher and much more destructive than that. And you have more than just those lessons learned for four years--you can still leverage that you were the CTO and handled much of the heavy lifting of that company, and point out that you left because your founders were doing dirty. I am very not a lawyer, I am very not your lawyer, and this is very not legal advice, but depending on jurisdiction you may have some leverage as far as that equity if you really want to chase it (though, again, I don't expect it to be worth much). "I quit because they were being galactically scummy" has some persuasion to it. And definitely talk to a lawyer before you go public with the dirt.

shafyy 9y ago

Well if you think the company is going down (either by being fraudulent or by the ICO not working out) then your potential shares are also worth nothing. In that case, it's better to quit now because you won't be wasting any of your time. Having said that, if you think there's a fair chance that you might convince your board, I'd give it a go. Also, make sure for your next startup not to accept a 4-year cliff on your vesting schedule (standard is a 1-year cliff with a 4-year vesting schedule that vests linearly prorated monthly/daily).

logfromblammo 9y ago
A board and executives that would be willing to implement a scammy crapcoin ICO over the written objections of its CTO would probably not have a problem screwing that person out of their equity somehow. If they decide to do the ICO, resign immediately, because that equity isn't ever going to pay out for you. Please also give your underlings some hint of what might be happening, so they can update their resumes before they are asked to run the scam without you.

notyourday 9y ago

It looks like you are not in the US. You really need to look at the implications in your jurisdiction.

walshemj 9y ago
And have a get out of dodge plan

CodeWriter23 9y ago

If the morality issues don’t convince you to move on, consider this. Frankensteining tokens on to an app that has no natural connection will more likely kill the app and its revenue stream than catapult it to unicorn status. The UX matters. So a new job is probably in your future regardless of whether you stay or not.

convolvatron 9y ago

if you are going to try to convince them with a paper, make it short and focussed. two pages. no one is going to read anything longer. then it sounds like you'll have to quit, but you will have done what you could.

josaka 9y ago

Insist on quality legal counsel. ICO's do not have to violate the law (though many probably do). Competent counsel will be able to talk them through how to do this safely and explain the risks (which can include returning funds and criminal sanctions) if they try to take shortcuts. If you're not sure which firm to use, look at who sophisticated buyers are using (e.g., check SEC filings in their Edgar system and cross-ref with who's putting out literature on ICO's).

walshemj 9y ago
the OP is in the middle east - looking American SEC filings are not going to help much here.
- anononpurpose 9y ago
  Thanks for noting. I can still read the sources and look for the local counterparts.
- zer00eyz 9y ago
  > We pivoted and decided to go global with our proven to be fun features So yes the OP should be looking at the SEC filings of other companies. They should also be looking at china and korea -- and every country moving to shut down the sale of crypto. Not only does OP need a lawyer the apparently need an international one.
  - dragandj 9y ago
    "go global" probably means that they are after customers outside Middle East, not that they have formal presence in those countries.
    - anononpurpose 9y ago
      Exactly.
      - 9y ago

anononpurpose 9y ago

For further reference, I must add I own a few hundred USDs worth of alt coins just for the thrills. I code smart contracts on my local machine for fun. I run my own bot to exploit price fluctuations on some exchanges, I earn a dollar per day. It is fun to play with crypto, but that's it, it's gambling without any doubt. Blockchain is an amazing technology, if only it hadn't been monetized this much.

flignats 9y ago
it's a shame you've done all of that and still think it is akin to gambling.

bsaul 9y ago

Small advice in general, as someone who very often fail to convince people, then leave, then happens to be right in the end but withouth being there anymore to enjoy it. Convincing people is a very different matter from proving that you’re right. Those kind of debates often happen because there isn’t a rigourous mathmetical proof that can invalidate the decision, so you’ll have to resort to different arguments than purely logical ones. Eg : in your case, saying « our product isn’t emitting anything ressembling a token, so ICO doesn’t make sense » should be enough theoretically, but it probably won’t ( they’ll probably mention other ICO with product like yours). So, you have to think about the personal motivations of every people you’re trying to convince, sincerely and honestly understand them. Then try to find a different answer than an ICO for each of those motivations. Good luck though, because whenever rationality is lost, things becomes emotional then ugly.

tonystubblebine 9y ago
This is the best advice in the thread. Notably missing in the OP is: "What is the option for the company if you don't do the ICO?" Selling that, even if it's "Going out of business without having wasted other people's money is preferable to fraud," is a big part of how to actually have this discussion.
rabidonrails 9y ago
>>Convincing people is a very different matter from proving that you’re right. This is probably the best advice for any engineer who's sitting in the management world and being asked to make a business decision.

djb_hackernews 9y ago

There are quite a few red flags in the story, nevermind the ICO. - Pitching before building - Delaying release for more development - "Tremendous growth" but no one willing to put up $$ - What is forcing a series A? Are you out of runway? - An investor taking the lazy approach to investing (requiring others invest first). This is so common and so lazy and not confidence inspiring.

anononpurpose 9y ago
My use of language might be confusing. We had a proof of concept implementation before the first investment. We got the investment after pitching for a year. We built and released the v1.0 in 6 months. Improved it for 2 years. Pivoted last summer. Retention rate is still increasing today. The meeting about the ICO happened lately.

thisisit 9y ago

Ask them to take a long, hard look and think whether it is really for them and they can follow through. Long Island Iced Tea pivoted to Long Blockchain but now it is backpedaling: http://markets.businessinsider.com/currencies/news/long-island-iced-tea-company-planned-to-buy-bitcoin-mining-machines-backpedaling-on-plans-2018-1-1012735857 http://markets.businessinsider.com/currencies/news/long-isla...

blueadept111 9y ago

Here's an opposing view, from someone a little older and maybe a little wiser. In the big scheme of things, you're not that important. Your company is also not that important, and whether or not your company chooses to adopt this coin is not that important. If it's a "fraud" by your definition, then many, many other coins (and companies, for that matter) are also fraudulent, and it's not a very important fraud, so don't worry so much about saving the world from it. If you have any interest in working on blockchain technology, go with the flow. Leverage what skills and advantages you have in your life, don't burn bridges, and especially try to keep from burning your bridges because of ego issues. Remember, you're not that important. But you are important enough to do what you enjoy, important enough to have people in your life and career who look out for you, and important enough that every single day you learn something or work on something that progresses your ambition in some way. Maybe this coin offering can be a part of that and maybe not, but the answer is more likely to be found within your own psychology than the details of this particular technological/business crossroads.

d--b 9y ago
Well said. I'm also a little older and think exactly along those lines. A mistake in building a feature is not the end of the world. If you don't manage to convince 90% of people at your company, then they will do it, with or without you. And in fact, you should also consider that despite your absolute certainty that this is a bad idea, you also could be wrong. Maybe your product doesn't need coins at all, but funding wise it may be smart to ride the hype, just to get cash. It's not very classy, but business is not very classy in general.
Sangermaine 9y ago
This is a very odd response. Whether or not OP is "that important", they're opening themselves up to civil liability or even criminal prosecution is pretty important to them. Committing securities fraud isn't some fun game you can just quit if you like, it can have very serious consequences. >If it's a "fraud" by your definition, then many, many other coins (and companies, for that matter) are also fraudulent The SEC and many other regulators around the world are, in fact, coming to this conclusion. We're already seeing a crackdown starting.

bastih 9y ago

If you want to convince your crypto-enthusiasts, don't try with a huge report. It's not going to be read in detail (IMHO, just like few people ever read whitepapers). I'd make a short list of your strongest arguments, and have a conversation based on them. Probably even 1on1 if you can make that happen. If they still want to do it, and you have no voting power, you are basically hosed -- consider though that if your investors do have voting power to sway direction, that's why they bought voting shares, to be able to sway direction. And if that means making non-sensical moves, oh well. And if you can't get your CEO's vote on this, and he can't convince the investors, it's probably a good moment to look for a different place to work at. Your company isn't yours unless you hold enough voting power.

valuearb 9y ago
This. Also try to phrase dissent as questions, such as "How likely is it we will be sued?" "What will we do if we are sued?" Put the onus on the advocates to address all of the concerns before the plan can even be considered. If they don't have good answers to scary questions, it will be the best help you can have.

orasis 9y ago

Don’t write a report. No one reads them. Talk talk talk and listen listen listen with the people that matter. Don’t end the conversation until one of you changes your mind or you decide that you have to quit.

vineet 9y ago

As someone else mentioned, and something that I need to remind myself often: convincing people is a very different matter from proving that you’re right. My $0.02: - Feel free to build the huge report, but likely only show small and focused bits that will make the difference based on the details on the ground. - Try not to just make a logical argument, but focus on the emotional and financial needs as well. Emotional needs would be thinking such as ICO is cool, but is there a lot of risk, especially when you have a business that is working. - It is often hard to completely change people's minds. Sometimes it is better to suggest the compromise. To do ICO for our market, we will need to pivot in these ways ...

carapace 9y ago

Do your best to convince them, but have your resignation letter ready in your pocket. Don't mention it during the attempt, but if you fail then take it out, put it on the table, and graciously take your leave. One day you're going to be on your deathbed looking back over what you've done in your life. Consider that and do your best to avoid actions you'll regret.

tckr 9y ago

I have been in similar situations, where I could see that the direction was willing to go was against my personal values and would also put the startup into even more risk. What I asked myself in these cases: what if I am right? Do I want to stick around for voting rights / equity later of a corporation that is worth nothing in a year? Why waste more time in a team and on a product I no longer believe in.

geofft 9y ago

> I'm in my late 20s. It's been almost 4 years since we founded our startup company. ... If I quit now, I'll lose everything except the lessons learned during these 4 years. I'm in my late 20s. I have never been a CTO. I spent three years of my life working for a perfectly normal and boring startup that eventually ran out of money and shut down. All the threading bugs I tracked down, all the packages I backported, everything was for "nothing" in the end, except what I learned. My equity vested, and was worth zero. A few months before they shut down, I got the sense that this company wasn't what I wanted to do with my life, and it wasn't really going anywhere / the technical goals were shifting into something much less ambitious and much less meaningful, and moved across the country to work on another project with a friend (and stay part-time at the old place). I'm very glad I trusted my instincts there. You'll find something else to do, and you're already better off than most people your age by having the experience you have. Don't hold on to sunk costs.

icedchai 9y ago

If you have no other prospects for investment, raise your concerns, but let them go ahead with it. What do you have to lose? Companies are adding "coin" and "blockchain" to their name, pumping their stock, and increasing their valuation 10x. ICOs are the new penny stocks.

ripberge 9y ago

You don't have anything vested at all after 4 years that you could exercise now? That seems unusual to me. Sounds like equity in this company is really not worth that much because the company has yet to find a viable foothold after 4 years. If no investor will pay a reasonable amount for the equity, why do you believe it is worth anything? The ICO seems like a move out of desperation. My advice would be to look for another opportunity while you're still gainfully employed. You may get into another opportunity with true growth potential.

zitterbewegung 9y ago

Leave immediately there is no job on the planet worth going to prison for. Even if you don't get caught will you be able to live with yourself? Since you just posted this it seems like that you want to quit. Just do it.

alistproducer2 9y ago

You refer to the ICO as fraud but I'm curious; what evidence do you have of that? If it comes down to "our app really doesn't need a token" then that isn't fraud. If it's "we're going to sell this token knowing that we're going to phase it out and just use fiat after launch" then that's fraud. I understand that as the technical guy in the room you might be uncomfortable with shoe-horning a token where another tech is a better fit; however, that doesn't constitute fraud, just bad engineering. Save the report man. They aren't interested in the technical reasons of why a non-blockchain solution is better. In fact, they're not interested in the tech at all - they are approaching it from a fund-raising perspective. If it's fraud and you know it - leave. If it's not, do the ICO, raise the cash and save your company.

nradov 9y ago

Don't prepare the hugest report. The board and investors probably won't take the time to read and understand it. Write a concise, non-technical report that will help business people and investors understand the potential consequence. And then include an appendix with more technical details.

dangerboysteve 9y ago

Writing a "huge" report is a massive waste of time as nobody will bother reading it. Their minds are already made up on the matter. It's only purpose would be that you have already decided to stay with the company and want an artifact for plausible deniability then things go south. If its fraud and you want to protect yourself , quit, leave and make sure you keep as much documentation you can.

desireco42 9y ago

I think you seem very pasionatte about this, and from what you describe it doesn't sound like scammy situation. It is very hard to guess what you can find disagreable in this situation. Here is the deal, you can use tokens to raise money for marketing and development of your app, nothing scammy about it, especially if it seems it is an app with good traction and actually existing thing as opposed to pretty much 90% of scammy ICO's that are happening. It doesn't mean you need to have tokens in your app. Again, you know best what and how, but, I would, as someone much more experienced (ie. older), advise you to relax and hold off opposition to this. If it is good app, why not stay and see it growing. Don't abandon it just because not everything goes your way. Whatever you do, I with you best of luck. P.S. Even if you decide to leave, try not to burn bridges and pu-pu idea too much, honestly you don't know, you are just interested in something else. Don't hope they will fail because you are leaving, in other words.

anononpurpose 9y ago
Thanks sir. Having destructive thoughts doesn't really help, you are true.

mirekrusin 9y ago

Relax, by now everybody knows ICOs are like direct emails from african royal family member; it will go from pennies worth raised money to abandoning idea in no time - you'll just learn few technical things about blockchain/cryptocurrency in general, which is useful and people will get discounts on your product/service at the end. It's a bullshit extravaganza to be watched with popcorn and smile on your face, it'll fade away. If your company is solid it's unlikely it'll end up in total fuckup - cancellation of idea - yes, but investors will pay back to the angry mob one way or another to secure the money put into the shop.

mathattack 9y ago

No need to go out in a blaze of glory. If you really disagree, you can just quietly find another job and resign too.

pratyushag2 9y ago

Your board members are crypto enthusiasts so I would recommend getting somebody who is very knowledgeable in crypto to 1) assess if crypto is a good fit for the company 2) if yes, then how to go about executing it in a way that it's legal and profitable. It's possible that you may be proven wrong or likey that you're right. Either way, it would be hard for a board of say no to such an idea and it would delay the execution of it to such time as when your investments can vest. If they still move forward by then and you're uncomfortable despite all this, you can leave as soon as your stocks have vested. Your goal today is to delay, secondary is to convince.

empath75 9y ago

Regardless of whether you’re right or wrong, or they listen to you or not, you should probably leave the company. When it gets to the point that you think your peers are engaging in fraud out of desperation to keep the company afloat, I don’t see what you gain by staying.

vadimberman 9y ago

First and foremost, I applaud your integrity and levelheadedness. It is rare in the startup world, and even more so among the less experienced people who often lose perspective at the sight of money. The ideal solution is to engage in office politics, but there's not much time, and we techies generally suck at it. It won't be playing on your home turf. > I plan to spend my all remaining days until the next meeting to prepare the hugest report ever written I doubt that will get their attention. It has to be: 1. Short 2. Convincing (read scary) Focus on two messages only: * you will go to jail * * you are killing the future of the company when it's generally well-off * Create examples. Cite business people (NOT techies!) calling it a fraud. While I said "short", the list of examples should be as long as possible. Finally, ask the question: how many companies that ICO'd got acquired? The answer is none. There are just speculations (https://www.coindesk.com/ico-ma-token-exits-get-messy/ https://www.coindesk.com/ico-ma-token-exits-get-messy/ and https://www.reddit.com/r/ethtrader/comments/6kfumc/what_happens_when_one_of_these_ico_companies_get/ https://www.reddit.com/r/ethtrader/comments/6kfumc/what_happ...). As the lawyers in the large organisations are paranoid, they will simply stay clear of it until someone else did it.

garmaine 9y ago

Leave.

rdiddly 9y ago

I have a habit of looking "further upstream" so I'm saying the ICO, or the question of fraud, isn't the issue. The issue is that you're not profitable. Or not sufficiently profitable. A company whose need for money far outstrips its ability to generate money -- that's the company that will be asking "How can we get some money?" and looking for ideas. Maybe it will choose an ICO as the answer, maybe not. A profitable company, one that generates money, never has to ask, because everybody already knows the answer is always "Keep running our profitable business." In other words, if "Do an ICO!" is the answer to "How can we make some money?" the only ones asking the question in the first place are people who don't already know how to make money. Make your exit, for that reason alone. You don't even need to consider fraud questions.

mfrye0 9y ago

From my experience, I often see that the business guys take the engineers opinions with a "grain of salt". As in, they listen to the engineer, but don't 100% take the advice. Being that engineers opinions don't always "align" with the business. Example: Engineer recommends we really need to update the database. Technically it is important, but we could push it another few months and still "survive" as a business. So I agree with the other posters that quitting might be an option. Of course if what they're proposing is fraud, then by all means quit. But perhaps they just aren't taking you seriously, and if you threaten to quit, then they might realize how important this topic is to you. Also, you have more power than you think, even with minimal equity rights. Good engineers are not the easiest to find.