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Token Incentives are F*cked Up, Here’s How Vesting Should Work
It would be hard to think of worse system for incentivizing founders than the one used by many of today’s top ICOs. As an angel investor and startup advisor, I have seen the how the venture world works and think blockchain is building itself on a house of cards. It isn’t a question of if, but when, it all comes crashing down. Let me explain.
One and done funding
ICOs are being done all wrong. When is it a good idea to give teams mountains of money before even building product? That’s a recipe for disaster.
When life is too easy there is no reason hustle. After two short years of vesting (if you even have vesting!), you’re a millionaire. What motivation does a founder have to move fast and build things when they get rich regardless?
And there isn’t a big difference between $50M and $500M— it is life changing money either way — law of diminishing returns 101.
Know what is even worse though: non-vesting equity/tokens. What happens when the founder leaves after 6 months? Is the team motivated to keep building when Bob benefits, without doing a damn thing?
Luckily, there is a better way.
