Ironically the only ethereum dApp which people actually use - EtherDelta decentralized exchange - was never ICO'd and makes piles of money.

The incentives for token sales are to raise as much Eth as you can, spend as little of it as possible on the actual project while watching its value appreciate, then either have a product launch that semi-fails or have some good excuse why the project just couldn't work for some reason while minimizing the chance that people bring legal action against the project.

Why wasn't Ethereum an ICO?

Arguably that was the model for all other ICOs and the platform for the vast majority.

Ethereum had an ICO, back in 2014:

https://blog.ethereum.org/2014/07/22/launching-the-ether-sal...

Qtum has shipped and met all its promises so far: https://qtum.org/en/

Basic Attention Tokens are already integrated in Brave browser: https://basicattentiontoken.org/

BAT is a borderline scam. Previous discussion here: https://news.ycombinator.com/item?id=15722299

zrcoin did. the market is still young but it can be a powerful tool where traditional VC are not present.

Who was born first the chicken or the egg?

And Ethereum did a crowdsale. On Counterparty and Ommi. It’s literally in the first paragraph of their Wikipedia article:

>> Ethereum was proposed in late 2013 by Vitalik Buterin, a cryptocurrency researcher and programmer. Development was funded by an online crowdsale between July and August 2014.[5] The system went live on 30 July 2015, with 11.9 million coins "premined" for the crowdsale.[6] This accounts for approximately 13 percent of the total circulating supply

Wabi seems to be doing it right: https://www.wacoin.io/

None of this product requires the blockchain though. They're applying RFIDs to baby formula. The currency is nothing but an unnecessary lock in

Well, you could use a generic blockchain to keep an audit trail of the label certification process. But yeah, special-purpose cryptocurrencies are just walled gardens in disguise.