In my blockchain investment work (we have invested in six early-stage projects, including bloXroute, Enigma, FalconX, NEX and two stealth projects), I have been struck by the fact that decades of progress on applying the scientific method to entrepreneurship (e.g., experimental design, lean startup, design thinking), as well as decades of established governance modeled, are being effectively blown up by Initial Coin Offerings (ICOs).

Steve Blank and Eric Ries popularized applying the scientific method to startups in an incisive fashion with the publishing of their books, Four Steps to the Epiphany and The Lean Startup, respectively. These became canons for entrepreneurs around the world as they embarked on the journey for product-market fit.

With blockchain startups raising over $5 billion in 2017 and over $12 billion through the first three quarters of 2018, it appears that this discipline of staged experimentation and fundraising is being discarded.

Harvard Business School professor Ramana Nanda and I spent some time on this issue in an article we published last week in Harvard Business Review called “The Hidden Cost of Initial Coin Offerings”. In it, we outline 3 defenses of large ICOs, some of the downsides they present and how they constrain the team from executing successfully on their mission. We hope it adds to an important debate on startup staging and experimentation in the context of this exciting, emerging funding mechanism.