Having that said, you can read the full story on my first comment below.
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?
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.
This is probably the best advice for any engineer who's sitting in the management world and being asked to make a business decision.
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.)
#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.
Agreed. We all need to periodically reread "Who Moved My Cheese?"
Did you just write this extemporaneously? I want to put this where I'll see it at least 3 times a day.
Who would work-hours bear,
To grunt and sweat under a startup life,
But that the dread of something after now,
The undiscovered country to whose bourn
No traveler arrives puzzles the will
And makes us rather bear those ills we have
Than fly to others that we know not of?
Thus time does cause operations in us all,
And thus the native hue of indecision
Is painted o'er with the pale cast of change,
And edifices of great inertia
With this regard their currents turn awry,
And gain the name of action.
If you are the egg, either get out or prepare to suffer (#4). It looks like in this case the CTO feels he/she is the egg and a wrong choice has been made.
If "it is definitely happening" then I would suggest #3, find another job and be merry :)
This approach requires great care. You could easily leave a paper trail that makes it look like you (1) knew it was fraud, (2) advised against it because you thought it was risky, not because you thought it was wrong, (3) when the company went ahead with it you went along.
I think you want something more along the lines of "This seems like it could be fraud, or at least appear to be fraud, but I'm not a lawyer...are we sure this is legal?", and the paper trail needs to have someone that you have reason to trust answering that it has been checked out and is OK. If it hits the fan legally, either civilly or criminally, you need to come off as someone who was an inside victim, not an inside accomplice.
e.g. "Today Harry repeated his threats to sue us for fraud. Todd and I are trying to work out how to deal with it, its new territory for us."
Option #3 leaves you open to this unpleasant scenario.
I was in a position like that a few years ago. A manager a few levels above me had done a severely flawed study, and proposed completely restructuring our company's revenue model based on the results. He pitched it to us before going to the executive team. I pointed out that his numbers were too small to achieve statistical significance, and he was inconsistent in how he calculated the key metric in the study.
Another engineer in the room indicated that they were also concerned that he was proposing a massive change to our company based on very shaky evidence. Other people mostly sat quiet, too scared to make the manager angry.
And indeed, he got pretty pissed. He pretty much told me to shut up, and I let it go. I really wish I hadn't, because the results were even worse than I'd imagined.
He took it to the executives who loved it, and promptly restructured the company. We lost 2/3 of our revenue almost overnight. Investors were furious, and many of them sued us. Most of the executives were forced out, and the company was sold off for a tiny fraction of its previous value to one of our competitors.
The acquisition didn't go well. A lot of my co-workers lost their jobs in the process. I was fine because I saw the writing on the wall, and I started interviewing almost as soon as that disastrous meeting adjourned. I was long gone by the time the hammer fell.
I feel really shitty about being bullied into silence. I saved my own ass, but dozens of people lost their jobs. I could have fought harder for them. Yeah, I probably would have made things worse for myself, and I might have even gotten fired. I still feel like I did the wrong thing.
In this one on one, I would feign having trouble understanding the model and ask the manager to walk you through it in more detail so you can understand it. During the review, ask some pointed questions that will lead the manager towards the error.
In many cases while explaining the model in detail, the manager will discover the error on their own.
This approach allows the manager to save face. Many times, the manager will be very relieved and many times they will realize you knew there was an error all along.
As an aside, this is a great example of crappy managing. A good manager should prize getting opposing opinions. This person valued getting their ideas implemented more than they valued making the best decision for the company. As you saw in your meeting, it's incredibly intimidating for rank and file employees to publicly disagree with managers. You were special because you did so, and that kind of public honesty should always be encouraged and cultivated in good organizations.
In the end, it's not your company. You offered your sincere, thoughtful feedback, it was not taken seriously, and that is on them.
Had you "fought harder" you might have burned bridges for yourself and caused undue hardship and stress. They might have stayed the course regardless.
It's not your fault. It's not your company.
The best thing to do is to do the work to upkeep those relationships you felt were valuable. It's a small world, and a recommendation for your coworker's next position might be more valuable in the end.
Might be the car-crash effect, but I really enjoy reading real-life stories of success and failure.
So management put tons of money into acquiring and creating new products, in the hope that those would become the next big thing. These products varied in quality, but none of them were profitable.
I worked on one of the smaller products, which was of middling quality. We didn't even generate enough revenue to pay the salary of a single developer, let alone the dozen people on the team. It didn't matter though, because we projected the attitude that the executives wanted.
In order for the rest of the story to make sense, I have to spend a minute on a seemingly unimportant detail. The company as a whole referred to subscribers as "people who pay for our product." It seems like a reasonable definition, but led to some problems.
Most of our products were straightforward. With Workhorse, you paid a flat fee of $45 each month to use it. Some of the other products charged a fee for different tiers of plan. The product I worked on was unique; we only charged money to businesses that made money when they used our product. Our product was rarely successful at making money for our users, so only about 50% of them ever ended up paying for our product (thus, becoming subscribers).
So Devin calls us into a meeting. He tells us that we've done a great job and built something really special. I knew we hadn't, but who doesn't appreciate having their ego stroked every now and again?
Devin cuts to the punchline and tells us that he's done a study, and found that our subscribers have the highest subscriber satisfaction of any product in the company. We beat Workhorse by miles, and even all the other products couldn't hold a candle to our subscriber satisfaction.
Most of our company's users only used Workhorse, but Devin believed that was because we weren't trying tell sell our other products hard enough. Since our subscribers were happier than Workhorse's subscribers, we should make a big push to convert all the users of Workhorse. In fact, since Workhorse had so much market share, and it's probably the best way to make customers aware of our product, we should cut the price of Workhorse from $45 per month, down to $15. Then we'll charge more for our cooler products, and aggressively market them to Workhorse users. We would make piles of cash.
This was the point where I raised my hand. I asked which users he surveyed, and he said he surveyed subscribers. I asked him if he included non-paying users, and he said of course not; you're only a subscriber if you pay for our service.
I explained that this was a problem with the study. Our product only charges you money if you make money. Since our product isn't very good, we only make money for half our users. So the 50% of people who got zero results from our product, Devin just ignored. He didn't survey them. Then the 50% who it did work for, they were pretty enthusiastic about our product.
Meanwhile Workhorse defined a subscriber very differently. You got a 1 month free trial, and after that you became a subscriber.
That means Workhorse surveyed any user who stuck around for more than a month, while we only surveyed the 50% of users who had success with our product. We threw out most of the people who were probably dissatisfied.
I told him that you can't compare our subscribers to Workhorse's subscribers because they're apples and oranges. Furthermore, Workhorse had tens of thousands of users, and we had a few hundred. You can't survey 30 users and compare that with a survey of 5k Workhorse users.
Another engineer piped in and said that he was also concerned. By excluding our unhappiest 50% of users, we were biasing our study in a way that Workhorse wasn't. I looked around and saw a few other people whose eyes said they were also worried, but they stayed quiet.
Devin got mad, he did some shouting, and I shut up, let it go, and started applying for jobs.
Devin took his plan to the executives and they loved it. It was a vindication of everything they'd been doing for years; all the time and money they spent on transforming the company had been successful. They didn't have to be a big, boring corporation with a big, boring product. They could be an exciting company with trendy products.
The executives told their investors that big changes were coming, and the company would be more profitable than ever. We had a series of exciting products, and we had internal studies showing that with a new marketing push, we would dominate the market.
They cut the price on Workhorse from $45 per month to $15 per month, as Devin has outlined. Our customers thought this was great. They liked Workhorse at $45, and they loved it at $15. Sure, some aggressive salesperson would call them every few weeks and try to get them to pay for some product they didn't care about, but customers got used to ignoring the calls.
Revenue plummeted. Investors were furious, and even accused the executives of fraud. They believed that the hype from executives about big profits, followed by the complete collapse of revenue, was the result of deliberate malfeasance. I can tell you from being in the room that it wasn't malfeasance. Someone told them what they wanted to hear, and claimed it was all backed up by numbers. They bought it, and I've already told the end of the story in my previous post.
For me, the moral of the story is that you should be wary when someone tells you want you want to hear. It's tempting to go along with that message because it makes you feel good. Unfortunately, it can also destroy your business if they're wrong.
I think one of the most important things in business is knowing what works, even if it's not what you want to do. Not sexy, true, but I suppose that's why they call it "work".
>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.
(Also, this seems like legally risky advice.)
Nearly all the Ethereum-derived ICOs are 100% fraudulent, and they're popularity does nothing whatsoever to mitigate this.
The SEC is fairly clear how they view this developing situation, and what will likely be done about it. https://www.sec.gov/news/public-statement/statement-clayton-...
Moreover the SEC communiqué does not say almost all token sales are securities offerings. In fact the Investigative Report on the DAO lists several securities-like qualities that the DAO had that most tokens do not have.
In general, encouragement to participate in fraud is not good advice no matter how worldly the source.
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.
best advice in this thread so far.
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.
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.
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).
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.
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.
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:
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/ and 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.
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.
I can NOT release an app that violates EU privacy laws in the EU and expect that it will be allowed to be sold after the issue is discovered.
In the case of crypto (what were talking about here) local laws would apply. If china holds tightly on to that ban, if south korea follows suit, and this feature is integrated, then they are defacto violating local laws and may be subject to local laws and sanction actions.
If its fraud and you want to protect yourself , quit, leave and make sure you keep as much documentation you can.
- 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 ...
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.
"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.
- 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.
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.
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.
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.
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.
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.
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.
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.
#2: is it fraudulent? Some people think all ICOs are fraudulent, some reasonable people may disagree. If you think all ICOs are fraudulent, see #1 above. Or if you think they are legit but this one has fraud in it, ditto. But (not knowing the situation) you may be overreacting.
#3: Sticking tokens into the app may simply be a dumb business decision, but not actual fraud. It's OK for you to disagree with a business decision, but if you don't agree with the direction, at the end of the day too bad. "CTO" can mean a lot of things but it's rarely an executional job -- most often it's "chief talking officer". So your opinion counts, but shouldn't be decisive. If you decide "well, OK it's not fraud, just bogus" you have to stop complaining about it OR leave.
Finally...lots of good ideas look weird from a technical basis. I thought YouTube was weird: why sort content by media type -- shouldn't a video about X be part of a web page about X? I thought the Apple II was weird: who wants a home computer you didn't design and build yourself? Clearly I was wrong!
But if actual bad behaviour is the plan, do leave, even if you think they will get away with it.
Disclaimer: my company does ICO campaigns, assesment, development, and security audits, but we add external lawyers to the loop.
When you disclose somthing, that's a disclosure.
Check out "STRICT LIABILITY FOR CORPORATE EXECUTIVES" on page 3:
At the end of the day, as a c-suite officer, I would have been liable by being complicit.
Once I stated my objection, I and my fellow c-suite colleagues went to the board with our objection, and CEO decided to continue executing the unethical behavior, I and a few of my c-suite colleagues all bailed.
That sucked hard.
PS. That signal from us leaving ended up preventing the securities fraud that was about to happen.
However, similar laws do exist in many countries.
Once I stated my objection, I and my fellow c-suite colleagues went to the board with our objection, and CEO decided to continue executing the unethical behavior, I and a few of my c-suite colleagues all bailed.
That sucked hard.
PS. That signal from us leaving ended up preventing the securities fraud that was about to happen.
Your board should have taken action against the CEO if the behaviour or decision was indeed unethical. Allowing the CEO to proceed means the deck was stacked against the rest of you. Sounds like those of you that resigned in protest made the right decision.
You've already lost. The decision has been made, they're moving ahead, and it's clear (a) you can't change their minds and (b) you aren't onboard with it.
You should treat this as a learning experience about decision-making and corporate politics.
Put aside the technical issues and take some time to consider the people issues. Who is the decision-maker? What is his/her motivations? How are decisions made in your organization - top-down, consensus, debate, face-to-face, etc? What role did you think you should have in making this decision, and how did that differ from the role you actually had? How do you feel about all of this?
Maybe you felt this was your decision to make, or should've been given more weight/input on the decision. This is a relationship problem. You don't have the role you want with the others.
Another view might be, you were consulted but ultimately you weren't the top decision-maker in the org, the decision didn't go your way, and you need to either (A) get onboard with it or (b) leave.
It's very reasonable to want out at times like this. Don't do anything rash, but if you can't get onboard with this decision and really do object to it, leaving this organization might be your best bet.
It's important to realize, when you aren't the head person, there are some things that aren't going to go your way. You can argue and fight and debate, but ultimately, a decision has to be made, and it might not be the one you want, but you have to either tow the line, or leave, doubly so as an executive. As bad as this situation is, it's way worse to have a bunch of people who can't agree, and decisions not getting made, than MADE decisions that don't go your way.
If you truly have ethical or legal issues, you should get out. You're young and will move on to something else quickly. But I think this stuff (ICOs and coins in general) is grayer than you might think. There's a lot of gray between 100% upright business practices and fraud, and you're somewhere in the middle.
I would also ask the board how many examples they can find of companies who did an ICO, and were later successful.
Also, I'd be looking for a new job... Even if they listen now, it doesn't sound like good leadership.
Edit to add: Your equity is only worth something if the ICO works. If there's no ICO and you still can't find investors, your equity is also worth nothing. I wouldn't even consider it...
That being said: Using things like blockchain to represent stock ownership; and using crowdfunding, are great ideas. They just don't replace the fact that your company needs a viable business plan, paying customers, and actual investment.
Things like an ICO are like the old story from the 1990s about a lumber company changing its name to "lumbar.com" because there were plenty of fools trying to invest in anything related to the internet.
So, even though this is new technology, how is it relevant for your business? Crowdfunding is great for funding artists, and great for swindling unsavy suckers. Blockchain technology is still too primitive to represent ownership for a run-of-the-mill company; even for a run-of-the-mill "tech" company. Why? Because the tech of blockchain will be too much of a distraction from building your real business.
Anyway, when I read your details, I see a startup that's not going anywhere, and is considering an ICO out of desperation. It's probably time to assess if your company is viable or not.
If you're going to leave, don't try to be too diplomatic. Be frank with your board, "I am leaving because I do not believe that our company is viable. An ICO is a distraction from finding a viable business model and savvy investors. Blockchain / ICO will be a useful technology in the future, but at this time it's too immature and will be a distraction from building our business and product. I recommend that you concentrate on the shortcomings of the business and its product."
Care to explain what makes this unethical? What if you think these regulations are unethical?
If you need to start adding a bunch of qualifications to this principle of illegality being unethical, meaning that if you can't apply it consistently, then it's probably not well founded.
Decide where you draw the line, and tell them. Don’t try too hard to fight the idea or persuade them, just make your case calmly and if their decision is over your line, walk away. And wish them well as you walk away, no reason to burn bridges.
That also means that if my judgement in my area of expertise is not trusted I will quickly start looking for something else to do. "If you don't trust me to do what I'm good at I'll go somewhere else or do something else".
If I were in your shoes I would not feel trusted anymore and look for something else. You also mentioned that all your shares are vested. I'm more used to schemes where you shares vest over time e.g. you receive 33% of your shares per year worked so you will own all your shares after three years. If this is how your vesting works consequences for leaving should not be that bad.
However if none of the shares have vested you should thread carefully. Having been part of a similar situation with vested shares and leaving I know there are compromises to be made. All parts have a lot to earn from an amicable deal that let's you and the company part ways without any bad blood.
In short, leave if you believe they are doing something illegal, and then sue them for creating a situation where you had no choice but to leave your job. But not all ICOs are, by default, illegal.
1. be moral, walk away, maybe talk, get no money
2. stay, make lots of money, wipe tears away with hundred dollar bills
I'm not sure I would rock the boat since you still care about your equity.
I would spend your time trying to make the app better, let someone else handle the ICO to bring in funding to get you to your vesting mark.
If you don't feel the ICO is a good idea or is potentially fraud, just don't participate in setting it up, keep your name out of it. I'm sure they will use a service or outside experts to handle it.
It will bring in funding to get you to your vesting date which sounds important to you.
You're in your 20s so this isn't your last rodeo, ride this one out, see what happens, use your knowledge and experience toward the next one.
Good luck riding it out.
My company plans on partaking in a legally grey area with a real potential for liability down the road, do I want my name associated and put my neck out for something I don't believe in?
I think you know the answer already.
But first go get a good lawyer.
I'm guessing there is a playbook for "fundamental disagreement among execs/founders in a startup" and a chapter in said playbook for "CEO doing questionably ethical stuff".
I'd seek good legal council regardless of what happens.
Not a lawyer, not legal advice, etc. Just heard this on the grapevine, could be false. (But I find it very plausible.)
I read all 92 (and increasing) comments. There are some duplicate concerns, questions, suggestions etc. I want to be as transparent as I can to leave a useful record for people who will be in similar position as me. Below is my attempt to do so.
* Many people commented or touched on the topic of my role as CTO. Things I did can be summarized as these: building the proof of concept (vanilla Java for Android) before the very first seed; constantly be in dialogue with investors and the other co-founder (CEO); gathering all the dev team including the designers; managing outsourced development; having code contribution on 10% of server side code (especially mission critical parts such as auth and soft real time systems); %50 code contribution on Android (Kotlin, Java, RN hybrid); %50 code contribution on iOS (Swift, RN hybrid) including migrations to latest Swift versions; deciding frameworks, platforms, SaaS components; literally scripting all the dev-ops; building small demos for investors to test ideas; hacking all day when the dev team is able to self organize. Despite all the hardships, I must admit it was the most amazing playground I could ever hope for on this age. I have a BS degree on Computer Engineering if anyone wonders.
* Some people expressed their concerns about my mental and physical health. I can say I failed almost on all of those. My cigarette consumption skyrocketed. I smoked weed almost on a weekly (sometimes daily) basis. Having no time to cook, I ordered take away food a lot (it hurts to eat outside financially). I stopped doing sports last year. Socially, everything is much more OK. I have a really supportive life partner who I never disappointed. I didn't lose a friend without my own consent. My family is worried but also proud with all their best wishes and support felt here.
* I understand some people's suspicions on me having a bias towards fraudulent ICOs. Let me explain our situation a little more, you can decide for yourself. First of all, we can still gather investment without the ICO, just not enough for a meaningful (or hasty) boost. It has its consequences though like hibernating for a while, losing the original dev team (they are already informed by me btw) for cheaper labor, figuring out how to deal with ancient local law etc. It will almost feel like a new startup. Some people may therefore think "the project is dead" and that is true if looked from the inside. The sad thing is we finally built the real thing which our users really love. Ad revenue interpolations shows hope.
I have some other reasons (technical and observable) to think that our attempt would be fraudulent.
Firstly, there has never been such a plan, not even a bite-sized bit of it. The ICO is definitely an idea emerged as a reaction, a reflex. The startup scene here is visibly shifting towards blockchain tech, that is a fact. But issuing a token in our app feels like watching Pinterest issue its own coin for people to spend on pinning some content. In the end, all the brainstorm in the meeting can be summarized as "placing a button to spend/receive the token inside the app for some arbitrary reason which we can figure out later" in terms of UX. It's a feature without a problem to solve.
The next thing is, all the other B2B solutions we can pivot to are quite cheaper, easier to build and equally doable without a blockchain. No business has ever demanded from us an immutable, distributed database with fail recovery. We are repeatedly told that a dev-friendly API is more sell-able than bleeding edge cool technology (lesson of my life).
About the shady stuff: If the value of our token drops after the initial offering, the ones who are gonna get hurt by it are mainly the early adopters who would all be selected from angels or ventures. We only plan for a private, invite only ICO to benefit from network effects among some rich people. It is even spoken out loud that, and I'm quoting, "all we need is some well designed PDF with our successes (there are some after all) and vision highlighted, some kind of white paper as the jargon tells". The excuse has been debated as the token will be traded publicly despite the private distribution, and will always be promoted within the app. So the existing user base will be harvested to create the hype, investor money will be grabbed via private offering when shown enough hype is there, the market will do the rest. Almost all gathered liquidity will be converted to fiat to buy time to figure out a viable business plan. If the bought time is not enough, the crypto world will be blamed, all will be well. It really sounds like an IPO without the risk and responsibilities coming after that.
* The million dollar reality is not all ICOs are against law. This is completely true and applies in our case. We have good legal advice and will definitely get away with all of our actions. Regardless of the future incidents, nobody is going to jail or even paying fines for anything. Nonetheless, as stated by some commenters, it still may create some issues outside if we (founders, investors, the board, dunno) plan to travel and do business abroad. I didn't know that, thank you so much for the intel.
* Some boring facts and misconceptions: There is no us vs them culture between the founders and the investors. There is actually only a little politics between people, and mainly because of age differences. What drives the pursue is mostly misinformation about blockchain news, lack of technical knowledge and shareholders' being able to carelessly act due to having the safety net of financial resources. It is pure luck or lack of it that I am the only one who is capable of navigating through the echo chamber in our board, where right now words like "crypto is the next big thing" is resonating among people who have no idea what even a software protocol mean.
* Completely off-topic, or maybe not, nonetheless I want to make games some day.
Thanks again everyone. It's been a pleasure to read you all.
I think this actually sounds interesting, if it cost a little to pin something but it also means that content creators get a little bit of $$ just for creating content that people pin. Of course nothing about this requires a blockchain or a new coin, but it could be fun!