Sep 16, 2017 · 37m · top-founders
784: Crypto: How ICO Companies Turn Money Raised Into Cash-In-Bank To Fund Growth
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In this episode of The Top, host Nathan Latka interviews First Blood founder Joe Zhou to examine how the decentralized esports platform raised five million dollars in a record-breaking ICO and strategically converted raised cryptocurrency into fiat bank reserves to fund operational runway.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Nathan holds 49.7% of the talking time here. How this is scored →
Nathan as informed peer 4.3 Guest teaching 3.8 Guest disagreement 1.9 Nathan pushing back 3.9
speaking balance: gold is Nathan, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 32:13 Joe dismisses retrospective price criticism
Joe directly rejects Nathan's framing that leaving $70M on the table was a mistake, arguing that project survival required cash and future token prices were unknowable.
Hardest push from Nathan ▶ 25:38 Nathan attacks ICO cash liquidity claimsNathan repeatedly refuses Joe's framing of crowdsale success, pressing on whether the headline $5M represented actual usable fiat money.
Biggest teaching moment ▶ 14:54 Joe explains decentralized witness infrastructureJoe walks Nathan through why custom tokens are technically required to incentivize distributed nodes to validate match data in games like Dota 2.
Nathan holds their own ▶ 19:31 Nathan cites Etherscan wallet ownership dataNathan demonstrates prepared on-chain research by citing specific wallet addresses and exposing that the top five holders control over 70% of all tokens.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Nathan as informed peer | Guest teaching | Guest disagreement | Nathan pushing back | Why |
|---|---|---|---|---|---|---|
| Overview of First Blood and Esports Monetization Model | 3 | 5 | 0 | 2 | Nathan introduces First Blood and asks standard clarifying questions about the business model and terminology. Joe educates Nathan on esports matchmaking ranking (MMR) and their API hackathon prototype. | |
| Previous Startup Alt Options and Regulatory Roadblocks | 6 | 3 | 1 | 3 | Nathan demonstrates domain knowledge by referencing his recent interview with Christoph Jentzsch regarding The DAO hack and bug. Joe explains the regulatory hurdles from the CFTC that shuttered his earlier options platform. | |
| Preparing the Crowdsale Campaign and Community Tours | 5 | 4 | 1 | 4 | Nathan drills into the financial math of the crowdsale, breaking down runway per employee based on raising $5M at $11 Ether. Joe explains deploying Solidity contracts on-chain and how blockchain block time translated into real minutes. | |
| Explaining First Blood Token Utilities and Witness Nodes | 3 | 7 | 1 | 5 | Nathan admits confusion over why native First Blood tokens are needed instead of simply transacting in Ether. Joe schools Nathan on decentralized infrastructure, explaining witness nodes, automated game outcome validation, and payout fees. | |
| Token Economics, Pricing Ratios, and Upcoming Beta Launch | 6 | 4 | 2 | 4 | Nathan computes implied market caps ($70M USD) and presses Joe on how the conversion ratios between Ether and tokens were formulated. Joe notes market price is secondary to utility and explains the arbitrary initial ratio and Power Hour discounts. | |
| Token Concentration and Founder Allocations | 7 | 3 | 3 | 6 | Nathan pulls on-chain data directly from Etherscan.io, confronting Joe with stats showing top holders control over 70% of tokens. Joe defends the architecture by explaining their 1% cap on network voting impact. | |
| Turning Crypto Tokens Into Real Dollars for Emergencies and Growth | 5 | 4 | 5 | 8 | Nathan forcefully challenges the marketing claim of raising $5M in minutes using an extreme medical emergency hypothetical to test liquidity. Joe pushes back against the premise, clarifying that treasury Ether belongs to the corporate project rather than personal founder holdings. | |
| Liquidating 80% of Raised Ether for Fiat Operating Runway | 4 | 7 | 2 | 3 | Joe reveals that First Blood liquidated 80% of raised Ether immediately into USD ($4M fiat in a traditional bank) to fund payroll and marketing. Nathan enthusiastically admits this insight completely clarifies the operating mechanics of ICOs for him. | |
| Reflecting on Fund Target Sizing and Ether Price Appreciation | 6 | 4 | 6 | 7 | Nathan calculates that waiting six months would have yielded $74M at $200 Ether and scoffs at Joe's claim that price appreciation is irrelevant. Joe firmly counters that nobody could predict market swings and operational capital was required immediately. | |
| Promo: Acquisition of TheTopInbox.com | 2 | 1 | 0 | 1 | Mid-roll acquisition promo for TheTopInbox followed by rapid-fire Famous Five routine questions with standard, agreeable answers. | |
| Episode Recap and Next Guest Preview | 0 | 0 | 0 | 0 | Host monologue recapping Joe's story, crowdsale numbers, and promoting the next podcast episode. |
Statements from this episode (13)
Zhou: FirstBlood Monetizes Through Small Fees on Tournament Winnings
“First Blood is a platform that allows gamers to play games not only for fun, but also for money. The business model behind First Blood is really just, we're trying to open it up this venue for amateur gamers to compete against each other, demonstrate their ski…”
Zhou: FirstBlood Operated as 'Project Tron' on The DAO Before Hack
“Before the name first slide really came into life, we were operating under the project Tron in the DAO community, and we were one of the Most popular projects that are being supported. We're thinking about launching it, but then the whole bug happened.”
Zhou: FirstBlood Invented the Crypto 'Power Hour' Crowdfunding Concept
“And really the September 26th, we finished in the first hour, Because we were the inventor of the Power Hour concept for the whole crowdfunding thing.”
Zhou: FirstBlood's 2016 Token ICO Sold Out in Just Four Ethereum Blocks
“It was really fast. We finished within the first four blocks in the Ethereum time.”
Zhou: Why FirstBlood Needed a Custom Token for Witness Node Utility
“For that layer, both both digital currency can work. Yeah, and then you go a little bit further where there are function, functional specific utility that cannot be achieved by ether, such as this witness Witness program would be running these only decentraliz…”
Zhou: FirstBlood Pays Witness Node Operators From Game Winner Fees
“In first class term these people are getting paid because the winner of the game is paying a small percentage fees to the network. Part of that fees goes to the people who are running the witness.”
Zhou Admits FirstBlood's Crowdsale Token Pricing Ratio Was 'Very Arbitrary'
“That ratio is very arbitrary. We basically, you know, look at the previous projects, we did the token launch and then we came in with a number, and then we want to give early supporters the special perks, such as discounts to, you know, to join the crowdfundin…”
Zhou: Most dApps in 2017 Lack Real-Money Economic Functionality
“A lot of dApps right now, they haven't launched with their real, you know, real money function yet. They probably, you know, there's some products who deployed their app, applications on top of testnet, but they don't know how the real economy is going to work…”
Zhou: FirstBlood Caps Witness Node Selection Impact at 1% Per Wallet
“All this selection process, ah, Has like a cap rate on on how likely you're getting selected to be participating in the network or helping the networks to be around which we did we did cap at the one percent as a maximum impact. So it doesn't matter how much y…”
Zhou: FirstBlood Founders Were Allocated About 10% of Total Tokens
“The allocation, I think we had about 10% off the total.”
Zhou: FirstBlood Raised the Equivalent of $5 Million in Ether
“Because we raised we raised about five dollar, five million dollar equivalent ether.”
Zhou: FirstBlood Liquidated 80% of Its ICO Ether to Fund Operations
“We liquid about 80% of the ether post crowd sale. We remain about 20% ether in the smart contract for because we don't Yeah, we don't need them, the amount of cash in the bank.”
Latka: Liquidating ICO Ether Early Cost FirstBlood $69 Million in Upside
“If you had, that was in September, if you had waited just six months and liquidated all those shares at the 372,000 shares at the current price, which is almost 200 bucks, you would have basically had seventy four million dollars in cash in your bank.”