Initial Slice Offering (ISO)

Slicing Pie and BitcoinI’ve been doing a lot of research lately into Blockchain, Bitcoin and Initial Coin Offerings (ICOs) and, like many people, I still find them pretty confusing. I’ve set up trading accounts and wallets and I bought a Bitcoin that I held for about an hour before realizing I hand mistakenly purchased an over-priced Bitcoin fund and not an actual Bitcoin! (Stupid, I know, I lost about $35.) I’ve even set up my web site to accept Bitcoin for books and legal agreements. No Bitcoin buyers yet, but I’ll keep the option up there until I update my shopping cart technology in the next few months.

I’m frequently contacted by Blockchain enthusiasts who want me to build a Slicing Pie calculator with Blockchain, but I have no current plans because 1) the current Pie Slicer program is my primary focus and 2) I don’t have the technical expertise to pull it off and neither does my development team. And, there is a third reason which is that putting The Pie Slicer on Blockchain doesn’t sound very exciting.

But, putting Slices on Blockchain does sound pretty exciting…

Here is what I know:

  1. Blockchain is a decentralized, secure system for peer-to-peer transactions that is very difficult to hack with current technology. This means you can bypass banks (reducing fees) and governments (side-stepping regulations) and transact directly with other people.
  2. Cybercurrencies, like Bitcoin, can be created by anyone using Blockchain technology (as long as they know how). Bitcoin, in other words, is a type of cybercurrency of which there are many.

Often called “tokens,” the rules of cybercurrency are defined by the creator of the token depending on how they want the token to be used and/or valued. Blockchain is the underlying technology that allows people to store and trade tokens. This means anyone can create a token, even you and me.

For instance, I could create a token that you could buy with cash. I could later allow you to exchange that token for access to goods and services that I provide…not very interesting.

Where is does get interesting is if I create a token that includes benefits traditionally associated with equity ownership. For example, I could create a token that provides the owner with the following benefits:

  1. A percentage of divided distributions
  2. A percentage of the proceeds if the company is sold
  3. The ability to trade the token for equity at a later date

Used properly, the token could be used to raise money for the startup without the need for banks and regulators. Unfortunately, used improperly the token could be used to take advantage of or outright defraud investors. The good news is that companies are popping up all over the place to help manage some of this risk. But, there are still many unknowns.

Even with the unknowns, however, I personally believe this is an area worth exploring. Here’s why:

The Slicing Pie model provides a means of creating a perfectly fair equity split during the bootstrapping stage of a company when the company has no actual value. In order to be worth something, the company has to demonstrate its ability to generate revenue, attract customers or create some kind of intellectual property that people want. Getting to this point may require cash investments. The Pie will handle short-term cash from founders, but medium and long-term cash may need to come from outside sources like friends, family, crowds or VCs. Conventional investment tools often require a valuation and expensive financing documents. As I wrote about in a previous post, setting a premature valuation for a company may cause legal, ethical or tax problems and the financing process may be too expensive for smaller rounds.

Pie CoinSo…what if the company created a “Pie Token” that could be sold to raise money for the company? These tokens would carry equity-ish benefits as outlined above. The company could sell Pie Tokens as-needed based on the market value of the token at any given time. Companies that showed progress and communicated effectively with token holders may be able to get a higher price.

This could provide easier access to capital without the need to set a company valuation…maybe…I’m still trying to figure this all out.

In order to work, the “slice” offering needs to allow the company to continue using the Slicing Pie model until enough cash is earned or raised to sustain growth. When the Pie bakes, tokens would be converted to actual equity in preparation for an IPO if the company needs more money!

I’m not entirely sure if this would work or how this will work. I welcome your own thoughts and ideas in the comment section below!

  • Geoff McNeely says:

    I’ve been noodling on this as well. Using a blockchain technology like Ethereum that allows for “Smart Contracts” and what it calls Decentralized Autonomous Organization (DAO). The below excerpt from Coindesk’s FAQ is interesting for this discussion (

    “In short, DAOs aim to hard-code certain rules that a company would from the get-go. This could be setting aside a certain percentage of earnings for a cause or determining a process by which such a rule could be changed.

    In the abstract, this is similar to how a normal company works. The big difference is that the rules of normal companies are not enforced digitally.”

    That said, there has been a lot of pushback in various blockchain circles about the amount of energy needed to “mine” blocks. Meaning that the cost of producing coins exceeds the value of the coins potentially. That’s not really relevant to this discussion, but to the long-term viability of crypto as a funding option.

    So there are companies like Consensys working on sustainable/low energy alternatives to the blockchain that work similar but are more sustainable. One example is Holochain ( ( that I think would be very interesting to explore for the purpose of managing Pie Slices.

    As an experiment in the past I created a currency using the Ethereum Wallet that created a pool of coins that I could do what I wanted with. It’s not that hard, but for long term practice it would need smarter folks than me to lock up loose ends. But clearly I think you are on to something! This is an ongoing conversation I am very much interested in following!

    Thanks for starting the discussion!

    • Mike Moyer says:

      There is an open question about whether tokens are limited in number. Slices are not limited. I think tokens usually are which is why it would be important to be able to convert them to shares. I’ll check out Holochain.


      • Geoff McNeely says:

        Yeah, but you could allocate an incredibly large number of tokens, and then only authorize the ones being used for Pie. But it does make for an interesting hypothetical. Do you end up splitting or merging pie slices along the way? While the value is hypothetical the token is merely a stand-in. You could have one billion tokens and then deal with an order of magnitude in the thousands or millions for pie, before closing out the contracts and eliminating all the tokens when converting to actual shares or cash…

      • Curt Sahakian says:

        Tokens can be limited or unlimited in number. There are conflicting philosophies on this.

      • Victor Vorski says:

        “There is an open question about whether tokens are limited in number. ”

        Tokens can be anything… It’s just a program. I think that token=slice and any authorized person can issue slice tokens (with some sort of approval by other members?) and you have slicing pie on the blockchain…

  • davidorban says:

    The concept of digital cryptographic tokens is evolving rapidly. What they mean from the accounting, equity, governance point of view, but also what is the set of best practices as business models evolve to take them into consideration. Is the stakeholder group of those who buy them merely for the expectation of the token value increasing in time deserve the same attention of those who actively participate in the network that the token enables through the applications released?

    The speed of change makes it hard to not only be fully informed, but to make decisions that are aligned with the most advanced practices in the field.

    At the same time tokens are here to stay. Not only driven by the enthusiasm of speculators, but through the genuine advantages they represent in being able to measure and quantify the value of things that were unmeasurable before, or quantified at a much more coarse level, and consequently creating entirely new markets, expanding the economy.

  • Curt Sahakian says:

    I have been thinking a lot about this lately:

    1. This is a hot area right now. If you have a business that fits it, you can perhaps raise some lower cost money more quickly than otherwise… and perhaps with more certainty than otherwise.

    2. The software is no longer so cutting edge, and what you need is open source, so it is easier to do now.

    3. You still have some tax issues. Basically the tokens are taxed as property. Every time you sell them, you have a taxable gain or loss.

    For U.S. IRS Treatment See:

    4. You still have some securities law issues. In most instances, particularly if you are using it for the purpose of raising money, it is a security. If you are a U.S. citizen you really should make sure you have this base covered.

    I can’t recommend this article too much.

    Also See:

    A lawsuit seeking class action status has been filed in California against the founders and promoters of the controversial Tezos blockchain project.

    S.E.C. Warns Celebrities Endorsing Virtual Money

    The SEC Filed Fraud Charges Against 2 ‘Initial Coin Offerings’

    5. One solution to the securities issue is to find a low cost way to comply. Equity Crowdfunding Regulation CF permits you to raise up to $1M with a cost of under $5K. Equity Crowdfunding Regulation A+ permits you to raise up to $50M with a cost of about $500K… though I have found one group of professionals who can do it for about $50K.

    6. I know of at least one crowdfunding portal ( that has an intense interest in doing a crypto coin offering. They are probably not the only one with such an interest.

  • Naji makarem says:

    Thanks for the post Mike. I don’t see the difference between what you are proposing and simply offering people the opportunity to join the pie by investing cash at the standard cash multipliernof x4.

  • Mike Moyer says:

    Thanks for the comment. It will be interesting to see how equity and tokens evolve…


  • Josh Whitaker says:

    But isnt this just exactly the same thing as giving out equity in exchange for cash? Which is “illegal” for early stage companies? Its just doing exactly the same thing but using other words to do it. The problem that it seems u r trying to solve here Mike is that its just ridiculous that early stage companies are not more able to do that. Just because a few people have scammed people in the past like this doesn’t mean that the majority of us who are trying to do something good should suffer. The problem that needs solving is that… Though this may be a good work around, lol, maybe the old pre-internet fogies who are currently setting the idiot rules wont be able to follow what u r saying and therefor also wont be able to call it illegal because it isn’t actually illegal then. I like this, but it makes it complicated for the investors, what? they have to buy another currency which they can then use to buy equity? LOL. Thats legal but buying equity directly for cash isn’t? I fucking hate old people running the world.

    • Mike Moyer says:

      Yes, it smells like the Token is just an electronic stock certificate. The rules are changing, but it’s slow. Equity crowdfunding is still a lot of work.

      Old people tend to make the rules because they have all the money. I, myself, am looking forward to joining their ranks, but (as you noted) I’m not looking forward to being hated by younger people.

      I hope Slicing Pie can help make early-stage investing become easier and screw-proof so we don’t need so many butt-covering laws!

  • kevincarney says:

    I think the idea has merit, but of course the devil is in the details.

    Very few people seem to know much about Blockchain, and when I finally bothered to read a few “What is Blockchain” type blog posts, I was surprised by how simple it is, in concept. I think we’ll be seeing more and various solutions built on blockchain (which as I understand it is nothing more or less than a decentralized ledger – of pretty much any type of transaction – where the integrity of the data does not rely on any centralized authority).

    I do not personally know what might prevent what you’ve described from happening, and I’m curious to see what happens with your idea.

  • David Casey says:

    Hi Mike! Awesome to see this post after our conversation. A couple more resources: I’ve attached an image of the various classes of cryptocurrencies and tokens out there.

    Here’s a short video of an emerging regulatory framework in Switzerland that is essentially a tokenized “smart share” (programmable), similar to what you’ve described in the article. This would be the first in the world that I know of that is actually representing a share.

    Here’s a deeper dive for those interested: Genesis Version of the Conceptual Framework for Legal & Risk Assessment of Blockchain Crypto Property (BCP):

    Lastly, here is a nifty piece of software built by Noah Thorpe on the Ethereum blockchain that allows entrepreneurs to issue tokens for their projects in a similar way you outline in Slicing Pie:

    • Mike Moyer says:

      Thanks for the notes. This is interesting. I wonder if the Swiss technology would work in the US. I’ve exchanged a few emails with Noah at comakery, he seems like a good resource.

  • Eddie Courtroul says:

    I’m currently setting up a Grunt fund for an ICO within 6-9 months. Very keen to hear of any progress made by Mike or others who have thought through Pie Slicing in the ICO context.

    • Mike Moyer says:

      Keep in touch! I’m still in the learning process. Would your ICO raise enough to terminate the Pie or would you raise small money as part of the Pie?

  • Rafael Pinto says:

    Wont you have serious problems with the SEC with this model of “pie token” funding?

  • SFEOS Game says:

    Hi, my name is Chadrick Mahaffey and I’ve been working on a concept I’ve been calling Crowd Founding for quite some time. I’m also very involved in blockchain DAC (Distributed Autonomous Communities) design and development. I have done a talk and a few interviews about it, and one can be found here – – Slicing Pie had a lot of potential in the DAC realm.

  • >