DADI ICO has a lot of buzz around it with their public token sale coming end of January, and while things look decent on paper, here are 7 questions the team needs to answer before I would invest in the project.
1. Do they really have the tech chops to challenge the likes of Amazon & Microsoft?
It’s a fair question given that we’re dealing with a meaty platform. Normally, you would expect to see a group of ex-Googlers in charge of something like this, but what we have here is a group of marketing guys from a digital agency background.
So, our first point is that the team lacks hardcore tech DNA.
Secondly, the resumes from the core team members seem to overlap a lot, each lending reputational credibility to the other.
Yes, VCs love teams who have worked together before, but out of the 16 people listed in this ICO pitch, we have overlapping in seven resumes, and two of the three founders have done startups together before.
Moreover, there’s no mention of any successful exits in their ICO profile, although, in fairness, digital marketing agencies aren’t exactly something you sell – they just aren’t wealth-building exit vehicles.
2. How come the numbers don’t add up?
DADI have projected that the value of their market will exceed $100 billion by 2022. The keyword here is ‘by,’ meaning that the market should already be worth $100 billion when we clink champagne glasses to welcome 2022.
They see the market growing by 18% year-on-year, so, by 2023, when they claim they will be making $500 million in revenues, their market will actually be worth $118 billion.
DADI expects to take a 0.5% share of that market. But 0.5% of $118 billion is not $500 million; it’s $590 million. While this may be great news for DADI, the uncomfortable fact remains that they’ve got a simple basic calculation wrong.
Then there is the question of growth.
It’s taken DADI four years to reach revenues of $1.9 million. Is it viable that the same team can now go from here to $590 million in the same length of time? Let’s put that in context: if they scaled 1,000% in the next five years, they would manage to reach only $19 million. Imagine the growth percentages needed to go from 1.9 million to 590 million!
3. Why have they underestimated scaling?
We aren’t experts in fog computing, but those who know this stuff say that fog needs mass implementation of 5G to scale properly. Statista forecast that there will be 17.6 million 5G subscriptions globally by 2020 (as opposed to 1.8 billion 4G subscriptions). Although they see this number jumping to 545 million by 2022, the bulk of mobile subscriptions will still be 3G. Why? Because all future mobile growth will come from Asia, from places like India. But India has low penetration rates and it’s just not cost-effective to roll out 5G en masse there.
The consensus among the experts is that 5G will not bring discernible advantages to most IoT projects aside from latency-critical uses such as cloud robotics.
Neil Postlethwaite, director at IBM’s Watson IoT Platform, says the following in an interview for Tech Radar: “For use-cases with large bandwidth requirements, 5G will make a key difference, but for many IoT scenarios, existing communication technology combined with a good edge strategy will go a long way.”
This is why we are questioning DADI’s ability to scale up within these timeframes.
If DADI can’t scale due to 5G, it will impact them commercially because the whole premise of their business model is passing cost savings back (to their clients, users, miners) by utilizing fog computing en masse.
4. Why aren’t they showing us their crown jewels?
Their USP is price transparency and undercutting the likes of AWS or Azure. Yet, nowhere in their white paper or wonderfully designed website do they mention their pricing brackets. Nowhere can I see a table benchmarking their prices against Azure.
DADI have been operating for four years. Surely this information is in the public domain?
5. Where’s the true crypto devotion?
How can a company that has spent $2 million in development and has been in R&D for four years (with a coin at the heart of its ecosystem) not have a simple crypto wallet to show for it by now?
Their white paper states they will build one after the ICO.
Four years is longer than most crypto startups have been in existence and most of those startups built a wallet from day one.
6. Why ask for $29 million when $1 million will apparently do?
DADI have stated that their ICO is capped at $29 million. However, if they raise only $1 million, they would consider this a benchmark of success and thus keep the funds.
First off, $29 million won’t be anywhere near enough to equip them for a clash with the mighty Microsoft and Amazon.
Secondly, if they need up to $29 million now, how will obtaining just $1 million be enough to significantly move the dial for them?
Thirdly, why didn’t they simply seek VC money seeing as they have proven traction and proven revenues? If DADI are currently turning over $1.9 million, plenty of VCs would be willing to invest $10 million, possibly more.
So, to outsiders looking at things objectively, it appears as if DADI had a fog computing solution, saw the ICO hype, and decided to tack on a crypto coin to jump on the ICO bandwagon (that might explain the missing crypto wallet).
7. 300 years of combined networking and they can only find ONE advisor?
Everyone knows you can’t do an ICO these days without tripping over at least 20 advisors – they are starting to feel like the biblical locust plague!
So it’s curious that DADI have only listed one advisor for their ICO. This is a team that boasts “300 years of collective experience”! To put it another way, that’s 300 years of collective networking and all they’ve managed is one advisor.
That advisor also happens to be one of their suppliers - they host on his Master Node.
In their white paper, DADI quote Oracle CEO Mark Hurd as predicting that 80% of industrial applications will be transferred to the cloud within a decade. Surely some hardcore tech heavyweight from the cloud space would want to get behind DADI and endorse them? Where are these people?
And where are all those high-profile brands DADI claim to have on speed dial? Couldn’t they find at least one of those CEOs to back this?
One advisor. It doesn’t make sense. What are we missing here?
Once again, as I pointed out earlier, the project looks decent on paper and they are probably going to have a successful ICO whether I invest or not, but given how we are all stakeholders in any project we put our money in, I would expect DADI to answer these 7 questions ahead of their public token sale.