# risk and its appreciation

It has taken a season to vet lawyers and accountants and assemble all the pieces for a business proposal. Could it be faster? Of course, but not given the current financial landscape and my lack of qualifications (being a math teacher doesn’t open up a world of connections in the adult world…). That’s three months of no income. I’ve read about other start-ups that haven’t had revenue for a couple of years, and they even have the audacity to promote a ‘lean’ business methodology. That’s not lean, that’s starvation-lean! And since they are heralded as successful on linkedin, it means they are being patronised by a parent company, and for me that’s cheating.

In business speak, I am now investor ready. Now it involves facing risk, or the perception of risk.

## some basic math

The history of risk makes for fascinating reading, eg Against the Odds. I have always been drawn to the particular conceptual framework around probability. Three things stand out. First, teaching young minds probability is a real eye-opener. Any adult takes for granted that flipping a coin produces a 50/50 chance, getting an Ace of Spades 1/52. But this wasn’t God-given; this is mathematical application, and it doesn’t come naturally to young minds. Why not? Second, probability is contained within statistics, and I hate statistics since it is overly applied and misapplied. Third Bayes Theorem, something I have dived into over the years, and still have not been able to ‘tame’.

At the core of probability is time, at least for the applications that attract my attention. It is the perception of future events, a way to enumerate possible futures to help guide present decisions. This is fine for certain mechanical systems, eg cards shuffled in a deck. But not that useful for a system which involves consciousness. Just look at the Prisoner’s Dilemma, and thats a simple case. Its the capacity of participants to second-guess outcomes which elevates such systems beyond the complexity of purely mechanical systems. Whether it is a class of kids, or investors playing on the stock market, complex dynamics. Chaos Theory 101.

## what is a business plan, after all?

It took me months before I realised what it is, or at least half of it is. Costs. A business plan is primarily a summary of future costing. It is the basic burn-rate of a company over the coming year, at least. That’s half of it. The other half is smoke-and-mirrors.

Whatever anyone says, a business plan attempt to forecast future adoptive behaviour — will people buy the thing or not? Sure, if your company is a new brand of ice-cream, there’s reasonable data out there to base your figures on; stock only one line on the shelf versus three wide, will influence whether the tub is picked up or not. But introducing the very notion of ice-cream is quite another — Steven Johnson’s mentions this in his excellent series which also makes for fascinating viewing.

When it comes to innovation, genuine market-creation, forecasting adoption figures is entirely speculative. Appreciation of risk is nowhere near a mechanical affair. And yet, it may have an equivalent level of simplicity to it, especially when faced with lack of evidence.

## so how does an investor decide what to invest in?

I only know one bone fide entrepreneur who managed to win £110k from an investor match funded by Welsh government after months of stressing; within the year, the money was gone and he had established his original invention wasn’t viable — and he was going for a second round! A consequence of our current enterprise system is that once people invest, especially government bodies, it is hard to pull out until they get their return. Which results in investors and governments being reluctant to enter an investment relationship in the first place, introducing more checks and compliance tests at the outset, thus inflating initial costs. A nasty feedback loop.

This is biggest problem, as all entrepreneurs know, the stepped investment route. Originally, I asked for £30k, but this has grown to £60k, and it has been suggested I put together a £125k business proposal to reach the ‘lower boundary’ entry for VC’s. Again, what happens is that while the vast majority of entrepreneurs are ‘genuine’, wily ‘serial entrepreneurs’ know how to stay on the treadmill, just look at this outrageous trail of mayhem.

The consequence? The entrepreneurial scene, for investors, is like the stock-market. Few invest in the actual product or service of a company, it is merely a numbers game where stock goes up and down. The only difference being, perhaps, investors are betting on people, not companies. More like horse-racing gamblers than poker-players. And as a 45 year old ex-math teacher, I’m not the youngest horse in the paddock.

## ok, what’s the simple answer?

It comes down to this: Has it been done before? If not, can it be tested, and how much will that cost?

Ecosquared is simple. Very very simple. And it is entirely natural. Given our current state of institutionalisation, however, it appears ‘counter-intuitive’ to the point that it is invisible. I watched Mel Gibson’s Apocalypto last weekend again, for all its flaws it is a truly remarkable blockbuster; have you come across the invisible ships proposition? A Gift-Economic evokes a similar response from members of a 3,000 year culture based on a transaction-economic.

Captain Cook’s Risky Endevour?

First and foremost, it takes an acute mind to see Ecosquared. Certainly, I have found paper to be a terrible medium; however, I do find that everyone I engage ‘gets it’ in person. Still, this requires effort because it is mistakenly understood as ‘an idea’ rather than ‘a tool’. Once we get a prototype, and people experience it, even a child will get it — why? because we all grew up in a gift-economic, its entirely natural.

Second and more importantly, it takes courage to appreciate it. For an intellectual, this means admitting how new it is. Experts find this hard because they make their living based on what they do know. For an investor, this means acting on it, ie investing.

Most investors want to know how they are going to get their money back. Which is entirely reasonable for most kinds of investment — new brands of ice-cream say. However, with market-creation, as we have shown above, the rules are different.

We got first prototype running for under £1500, and I use it to track my engagement with people. Didn’t turn the light bulb on with investors. So, approaching the end of £3k and close to second version prototype. It will be clunky, chances of it going viral are slim, but it will reveal a glimmer of its potential. To the right people this will be enough. Enough for a £60k experiment which might show a greater acceleration than any bit of technology in history.

And besides, in a gift-economic, risk is a misplaced factor. I will leave that for another post to describe.

# scalable revenues

My intention has always been to phase revenue distribution to SQ ratio distributions. So, Ecosquared won’t take a cut from whatever is directed at the originator (musician, author, blog-post writer, giff-creator, etc), they are thanked by them using the app itself, and this means a natural distribution of money. It’s all about moneyflows. I’d hoped it will be anywhere between 2-10%, but it could be a hell of a lot lower or even higher. Very difficult to tell at this moment.

At this stage, investors want something more concrete, hence I established a clean % rate. Initially I thought 2%, but this is only operational if we get enough people using it. So, I could charge say 25% (still less than eg iTunes or Appstore). But what would be the incentive of attracting a company to soft-launch with us if later, this figure reduces down to 10% or even 2%? If I was a company, I’d wait until soft-launch was over, and the standard rate of 2% appeared. It’s a no-brainer. So, Ecosquared has to offer 2% right from the start, doesn’t it?

## and thus, the inevitable complication around money arises…

Here’s a viable solution: charge people based on the number of people using our app.
• 32% for up to 10,000 users
• 16% for up to 100,000 users
• 8% for up to 1,000,000 users
• 4% for up to 10,000,000 users
• 2% for up to 100,000,000 users
• …etc

Or some such scaling system. Now, is this too complicated?

I don’t mind how much we make, because the more we make, the more we will be able to give for the adoption of the next iteration — ‘marketing’. That is, if we clear £100,000 say, we can distribute this according to how ‘influential’ certain people are. For instance, we can gift a socially important player £10,000 when we give them an update to the app. They can keep the money (like a payment for their proven influence), or gift it forwards as usual. And the chances are — they will! Why? Because they are influential. It’s a virtuous cycle, all positive. The more influential they are, the more money they get. Obvious really.

## no to tax — and yes to revenue distribution

It makes me think about how TV programmes were free for viewers because of advertisers. “Soap operas” because the highly dramatic shows (“operas”) were paid for by cleaning products (“soaps”). Facebook operates similarly. It offers a free channel of social content (people engaging each other rather than watching shows), and advertisers are willing to pay for eyeballs (companies, or any individual who wants to pay for promoting a post). Facebook is a “soap social-media”.

A cut of revenue is simply a tax. A forced costing. I have never liked this. It’s the wrong attitude. I shouldn’t be forced to pay for something which is obviously good, eg NHS. It’s because it is wrapped up with things like paying for defence, which is inherently morally arguable.

So, no tax, means voluntary gifting. Hence tracking gratitude, and SQ. That all makes sense.

I guess the thing that differentiates Ecosquared equity from standard equity, is that it determines the distribution of revenue. Profits are distributed to owners according to %-distribution of equity share of the company. The company has to be in profit for the owners to make money.

(A necessary aside. I was disgusted earlier this week because I saw the news — rare I know — about the power company Centrica which is closing down power-stations (and thus depriving people of jobs) because their profits have fallen. Their profits. So, it is a perfectly healthy company, everyone doing what they are meant to be doing, it’s going well — but because the owners are not getting as much as they did last year, they are going to cut the company. This… doesn’t… make… sense. I sat in front of the TV, irritated. The anchor was interviewing one of their specialist business journalist, and I just couldn’t believe no-one drew attention to this glaring injustice. They talked with moral weight about the potential loss of jobs, sympathetic for those who will lose their jobs, as well as the CEO who had to make such a weighty — but necessary — decision. I expect Russell Brand will be pointing this out in a more entertaining fashion, if he hasn’t already.)

Ecosquared equity (equity^2) distributes revenue. Front-wheel drive, as it were. And so, such owners can simply starve the company by keeping the money, or they can re-invest it in the company for it to continue working well. That is, they are responsible for the health of the company, rather than just feeding off its profits. Does this make sense?

## ownership and usership

I suspect it does make sense, if we shift our thinking away from ownership, towards usership. That is, it is the users who determine the moneyflow through an organisation. Makes sense. But we don’t have the skills currently to make such decisions, other than those made people in positions, who are in a more or less static structure, whose salaries are generally hierarchical ordered. We need a more fluid dynamic system, with multiple moneyflow channels, which generate a more flexible decision-making consensus. But that is years ahead from our current social skills.

Right now, I am pulling together the business plan for Ecosquared which contains financial projections which are attractive to investors. Investors want ownership. Simple as that. I had hoped to introduce them to %-equity of the revenue. If the app goes viral, they could make 16% of £1,000,000+. No strings. Not a cut of the profits, but of revenue. But, at this stage, my very capable of experienced business advisor and no doubt the accountant will see this as a non-viable business proposal for investors. So, we must stick to ownership, and so they will be limited to profit. And the chase for profit means a squeezing of costs and that old game…

Honestly, if we are producing a value-tracking engine, we really do need an investor of quality. I have been saying that we are looking for high net-worth individuals. Perhaps I should rephrase it? We are looking for high net-value individuals.

It will be in all of our interests, as users of the app, to generate sufficient funds so that these investors will be more than happy to be bought out at say 10x their investment, ie £600,000. We can then phase to a gratitude distribution system — including the very same traditional “professional” investors!

Without investors, Ecosquared will struggle, so I shall no doubt be indebted to them — personally — for the rest of my life, just as I am indebted to Colin who coded the back-end SQ-calculator, and to Kevin who has taken me further business-wise than I could have gone alone. I am tracking their value with the app, of course, and they shall be receiving a percentage of everything I get until the day I die. And so does anyone else who helps.

## there’s nothing to it

Just now, that’s zero. I guess that’s why people haven’t quite cottoned on to the power of this thing.

Well… if I get it all lined up, pertinent players have the heads up (like lawyers, accountants, app developers, marketing directors, musicians, authors, etc) — when we launch, we have a chance to take this globally. A parallel economic system, free from ownership and ‘negative’ money. And then it is for us, each one of us, to make our decision as to how we operate economically. With the app in our hands, and our personal network of relationships… it will take years…

# big day, in that little kind of way

This won’t excite anyone else on the planet, but I noticed it.

I was replying to an email from Scotland’s talent scout for Angel’s Den. His email went to the heart of it — understanding Ecosquared, explaining it, and trust. For the later, he’s actually introduced me to a colleague of his from Oak Team, to check the worth of our system, before he can approach individual investors. So far so good — though if we were operating Ecosquared, all this would involve moneyflow.

I finished my email thanking him for his candour — I am so glad I am operating in Scotland! — up-front and honest is the way I like it. And I mention (in parenthesis) that I am recording it. I sent off the email, and went to the Ecosquared Prototype app and dutifully recorded my evaluation of the engagement: partly for his observations (he said it was a waste of his time or it was brilliant), and partly for what was evoked in me (genius is in the mind of the beholder). He’s second on a specific list of people (the people I have introduced to the app, not the core group), and fourth in terms of SQ. I sat there, checking the evaluations, how people compared, and thought yes, that’s fair, at least from my point of view. And is the SQ fair? Difficult to say since there’s not enough density of engagement. SQ matches my evaluations just about perfectly with the exceptions of Colin and myself.

And then this happened. I closed the app and noticed that it was on a side page. I flicked to my home-page. I use Ecosquared all the time. I like using it. It is useful to me. Yup, home-page is where it deserves to be. Here’s what it looks like now:

Gmail, Maps, a torch (I have used this a few times, very practical), and now ecosquared. What did it replace? Google Play Store. Yup, it ousted one of the Google products. Question is, will it ever replace one of the docked apps? Phone, Chrome, Camera, Settings…?

## ok… anything slightly bigger to share with us, David?

In the wider world, things are going relatively well. Jorge is making headway with the back-end coding of the Gifting Mechanism. My God it has been a rigmarole getting a server and server-admin, and we’ve got a new URL to operate in the background. All his work is being hooked to the front-end, so we should have something to see pretty soon. All very exciting, in a back-end kind of way.

Meanwhile, I’ve spoken with Kevin from the Alba Innovation Centre. Once before Christmas, and twice since new year. He’s set up a meeting this Friday with an IP specialist and a regional manager from Scottish Enterprise. We agreed last week to meet at Kevin’s offices in Livingstone Tuesday. At his request I have been writing up a business plan over Christmas and New Year. Finally I have succumbed to ‘business sense’. Business Plan, horrible thing for what Ecosquared is, wrong tool. It reads more like an academic paper, nearly 50 pages. And on Monday, I decided to pivot, the lean-business term to basically signify a change of direction, taken from basket-ball I believe. I forked a business plan exclusively concentrating on the Gifting Mechanism. Much more succinct, and much more attractive to investors.

Mistakenly thinking Livingstone was south of Glasgow, I thought it sensible to make a few appointments in Glasgow to make the journey from Dundee worthwhile. I called up three angel investor groups, two responded positively: Lancaster Capital (the chap running caught me when I got my first knock-back last year; there’s a story behind that which I will go in to one day if that avenue turns out well), and Kelvin Capital. Meetings went well. Why? Because of the maths! I’ve modelled the Gifting Mechanism using InsightMaker. Take a look at the following.

I’m not going to explain it. Perhaps it will make sense to you, or perhaps it just piques your curiosity. But it sure is exciting.

## anything else?

My parents have been ill. Influenza of some sort. They are rather old, and it has floored them. My father in bed for a week with aches in his bones. Illness like this makes them age visibly before my eyes. My mother hobbling around, coughing to the edge of the very end of her breath. I’ve seen news reports about flu and how significant it is to that generation, but only in person does it have meaning. Honestly, their mortality is visible, to themselves too. Definitely a wake-up call.

Why mention this personal thing in this Ecosquared blog? Because the thing that is missing when I talk to people is the real experience. Adults are so used to simulating things in their heads, with business plans and financial projections, etc etc. The level of misunderstanding that Ecosquared triggers is very very basic. People think it is about ideas, on models. It is not. It is based on genuine, real relationships between people. Friend, family, living relationships, of blood, of feeling. This is why it will work. Not because it is commercial. It is real. It is an accounting system which tracks genuine value between people. And old people in our society deserve all the help they can get. Ageuk is one of the charities I’d like to pull in for the soft-launch in Easter.

It’s less about age, it’s more about wisdom. If the app doesn’t help us generate a sensitivity to wisdom, then it isn’t worth it.

# Projects Function & business update

So, here’s a screen shot of the Android app, Projects Function:

What does it do? You simply evaluate how enthused or committed you are to the projects you are involved in. ‘My’ shows your current value, 0 to 10. ‘Soc Av’ shows median — and because not enough people have evaluated their projects yet, the medians are uniformly 0!

Why this function? So that everyone can see how the project is doing at any moment. It should be possible to get data from the server to show individual scores within a specific project, which would then allow users to get the heads up very easily on how people are faring. Think collective project management. We’ll be doing a lot more in this direction once we get moneyflow.

## up next

While explaining the Gifting Mechanism to my coding partner, Colin, a couple of weeks ago, he pointed me at a brilliant bit of free online software — InsightMaker. I’ve been modelling the Gifting Mechanic ever since, onto the 12th iteration. Amazing. It allows the user to choose various rates of gifting, amounts of money, number of people who take, and so on, and runs a simulation, and I’ve included some standard deviation too. It even allows ‘sensitivity testing’, allowing 50 simulation runs simultaneously so it is possible to hone in on the rates that produce favourable results. That is, virals. Amazing! This is not only useful for potential investors, but for people using the app in the future to guide their behaviour — its the gifter’s equivalent to the ‘buyer’s guide’! Each user can get an idea of the kind of behaviour they need to exhibit if they want the thing they are recommending to go viral. And with a financial dimension, this means the money follows things we value. Viral doesn’t necessarily mean exponential growth, it can mean sustainable growth.

I’m getting ahead of myself. Point is, after working on this, I feel confident I can produce some potential figures in a business plan that actually make sense. Combined with the prototype version of the Gifting Mechanism, investors can make an informed decision. Part gut from direct experience, part mind from models and projections. Nice.

## bonus insight

And this experience has given me an insight into what a traditional business plan is. It is nothing to do with the product, its all to do with the financials, costings. And because I am naturally aligned to lean business practices, I have come up with a minimal MVP for under £3,000, and the next one at £30,000 for a global open-ended viral capacity. This doesn’t take into consideration salaries for me or my coding partner, nor costs for compliance, etc, etc. It is the minimum to get us off the ground. If we reach the next threshold of funding, so we can pay for the heavier costs. Sustainable growth. I’ve never thought of taking money from an investor to pay me. Which is why our costs are so low. If we factor in salaries, even reasonably small ones, and the other expected costs like ‘sales’, we are dealing with £100,000, which is the figure that all government business loans and most investors are looking at as being ‘realistic’. You live and learn.

## interested?

Drop me a line. I’ve been terrible at finding user-cases, which would provide us with some valuable data for the business plan. And an investor of course. And coders, etc, etc. Download ecosquared prototype at google play, athe iPhone version should be online very soon. Help to make good things happen — and get generously remunerated for it. Why? Because there’s a global population somwhere down the line who will be incredibly thankful to those who act now.

# investor gatekeepers

After a few weeks of putting the word out, here is a summary of my experiences of the angel investment situation here in Scotland.

## first there were ten

Of the ten or so contacted, it has been relatively easy to arrange meetings, once I learned that I have to talk about level of investment and equity, nominally £30k for 16%. Of the few who request written info before even contemplating a meeting, they all respond with a negative, saying it does not match their criteria. I usually have to reply with a rather forceful email requesting what criteria exactly, and on two occasions this has led to a meeting.

## from five to two

Of the five I have met, one did not have a clue what I was talking about. I am on point, and I do explain how the gifting mechanic works. This can be overwhelming. For all but two so far, the app-server combo does not conform to the criteria they use to evaluate and subsequently pass on to their syndicate of funders. Most of these syndicates consist of reasonably well off professionals who are looking for different investment opportunities. In comparison to ISAs or playing on the stockmarket, investment in any kind of company or startup is a high-risk. They are not looking for innovative. They are looking for a niche product, something which fits the current market and makes a reasonable case for growth. Most are physical companies, many biologically orientated for some reason, and only a few in app development, eg controlling household boilers or lights with a mobile app, that kind of thing.

Of the three that said it was not suitable for their syndicate, they did offer to pass on my proposal to specific individuals they thought might be interested. None have honoured their word. The quality of response of individuals I have met here in Scotland is higher — where what they say and what they do match more closely than business people I have met south of the border. It is a tiny sample, for sure, but I suspect there is more hardness in the Scottish businessman. He doesn’t want to promise anything he can’t deliver. But still, I find the gap between word and action is still wide enough that I mistakingly take a barge of bullshit for a trustworthy relationship. I am learning. I am now entirely skeptical. It doesn’t matter what anyone says they will do now, it means less than the vapour from their tongues, insufficient to moisten a stamp let alone a letter of intent, or anything resembling useful action.

Why this behaviour? Because there is no moneyflow. I have dabbled with the notion of introducing MTTP into the initial engagement, but I have found that it appears to be too much of a gimmick at the moment. Only when I have sufficient funds and a body of practice behind me, will it operate well. Indeed, operate for anyone on the planet. Point is, we need to have moneyflow from the initial conditions. The current system has all this hot-air, talk, preparation — which could go on for months! — until eventually ‘gold’ is struck. And course, the investment has to be worth the time and effort that everyone has put into make the decision. I wouldn’t be surprised to find that upward of 25% of money funded goes to pay the time and effort before funding is released. Absurd, and also makes for a distrusting business environment. The alternative? Money flow from the start.

I am tracking people’s contributions through the app, of course. So, when moneyflow does arise, I can distribute it to those who have have actually been helpful. I tell people this, but because this is early days, they can’t ‘compute’ the significance of this. When I end up distributing £1,000,000 to these critical first-steps, the world will be a different place — it will pay to be sensitive and helpful.

## two interested — why?

Through this relatively painless procedure, two have shone through. Despite the obvious challenge of comprehending the app in the first place, they were open-minded enough to listen. This indicates a qualitatively different mind-set. Both were quite unlike the others. First, they were investors themselves. Second, they were not simply going through a checklist, establishing what other products our app is like. They were genuinely looking for newness.

One began to relate ecosquared to trust networks already out there. For example a child-sitting service which was growing slowly in the US west coast (where else?). He talked of the importance of sharpening the pitch so that it was super-clear what was being offered, giving me examples of mechanical buzzards, of all things. Of course, the problem I have is that the tool has potentially ubiquitous use, but what I need to do is pin-point some specific potential user-cases. Specific problems solved, so the ‘market’ will find the offering obvious. And this chap offered to do just this.

In both cases, these individuals were genuinely engaging. Genuine potential here.

## a final surprise

My nephew did something unusual, in fact doubly so. Firstly, it is unusual for (my) family members to mix business with blood, and secondly, it is unusual for someone to recommend something when they do not understand it. Both, I believe, are natural to the human state and once ecosquared has some validity, people will find it is healthy to trust friends and family first, whilst also developing the courage to explore things they do no understand or feel is right. That is, genuine trust network, and thus a strong enough existence to explore new experiences. Strong roots, strong branches.

So, my nephew showed a few slides to a neighbour of his who is a successful entrepreneur, and his response was positive. From what I heard, very positive. It looks like the most positive response has occurred indirectly, ie not through me directly — which is a good sign. It indicates that whatever is presented is reflecting what the viewer already knows. That is, they have observed the elements in society themselves, and my composition brings these elements together in a rather pleasant composition. Thus, resonance and acknowledgement, followed by appreciation and excitement. I am only speculating at this stage, since I haven’t met the gentleman. But I do know how the psychology of discovery works based on my experience with young adults.

I am, in fact, envious, that my nephew witnessed the buzz. Had I been present though, I am sure I would have white-washed whatever their excitement was with my own. This is a major problem with inventors or creators, at least for some. Without recognition, the creator internalises the lack of response, and so whenever even a glimmer of appreciation appears, it can often lead to an incandescent explosion of delight from the creator, which all too often snuffs out the joy of the receiver. I don’t make this mistake with kids. Or rather, when I see a kid start to light up with a discovery, I add my passion like fuel to their flame not just for having a new enlightening perspective on fractions say, but expanding it out to the joy of mathematics in general, and the ability of any one of us to learn! I have found that this genuine learning flame is weak in adults and can get easily snuffed out, whereas with young adults it has the radiance of nuclear fission, all-at-once intellectual, emotional and indeed spiritual.

## conclusion

So, who is to know what may emerge? It is slow progress. I am certainly not excited about a positive response any more, because I have had people say ecosquared is genius before and very little came of it. In fact, the opposite — I trusted their perception and their direction and risked too much, losing my family in their enthusiastic promises. I won’t make that mistake, indeed I can not.

I have also begun the route through the public funding maze. Very nice engagement with managers at Business Gateway and Scottish Enterprise so far, with potential matched funding or 70% funding, but it is going to be 12 weeks putting together the proposal and then a further 12 weeks getting a decision. We’ll see how far I get along that path before I run out of steam, though perhaps some business-minded people may be attracted to complete that journey. Again, the method justifies the accretion of more ‘business folk’. The more money involved, the more people, and the more it costs to get anything to happen. Something which our app has the chance of cutting completely.

Meanwhile, Colin continues to develop the back-end engine and I fund the front-end app, which can be found on Google Play, ‘ecosquared’. I’ll write about user-cases in another post — feel free to submit your interest in the comments, via the app itself, or from the ecosquared.co.uk website.

# ecosquared app

So, to recap. Early this year, Colin Kilburn went ahead and coded a back-end financial engine on a server. He also coded a web-app. Meanwhile, I taught maths in order to make some money. This autumn, I paid a chap called Abhinav to code a front-end android app, some cash and some %-equity.

Here we have a working prototype.

It allows a user to choose a project (touching the title at the top, in this case ‘peek at app’), choose the name of someone (eg Tim), and choose a score (eg 6). Users can see their relative values they give for each person, thus getting a gauge of the priorities they think are important, and the SQ, the Social-Quotient, the result once everyones relative values are relativised themselves using our algorithm. It can be sorted by the tabs (in this case, SQ).

We’re looking for interest from various partners:

• user-cases to test in the field — reasonable density, people who interact relatively regularly over a week or two, so a group of people can evaluate the effectiveness of the algorithm to capture ‘intangibles’
• angel-investors — around £30k to make the engine more robust, secure, and scalable on a virtual server so that anyone on the planet can use it
• coders — to develop the other modules (Colin has run out of money and is now working for money, poor man)
• business folk — to flesh out some commercial potentials, business plans, etc
• contributors — landing-page designers, designers, philosophers

I’ve had plenty of people who want to commercialise it. Either by tracking value in a building renovation setting, licensing the code to enable people to value emails, gift buttons — all of which are under licence, using our back-end financial engine. Still, nobody as yet has seen the commercial potential in the app itself. So, I am especially interested in people who have the vision to see how this can be applied ubiquitously. Basically, anyone anywhere who is doing anything, can use the app to track the contributions people make to whatever they are doing.

When I started out saying ecological economics, I didn’t mean as a category. I meant it as a description. It is an alternative economic. A gifting economic. A network economic. An instant economic. And this app is the first working tool that enables it. We are coding the other functions later this autumn into winter.

# how much does running a car cost?

I’m returning to education, and because of the rural area in which I live, I shall need a car to get to schools to do supply on a daily basis. So, I shall have to ‘buy’ a car. Which brings into question how much a car costs to run, the issue of ownership, petrol costs, taxes, and so on. Also, a brief look at current ‘alternative’ solutions like Zipcar and a local car-trader down the road who is trying to compete with a low-tech solution, and then we’ll look at how an ecosquared car use may be financed. And if cars don’t rock your boat, we’ll look at other applications of the same math such as with health, revealing a fundamental core to economics: the relationship between capital (a static fund) and regular payments.

# everyday running costs of ownership

These costs are ‘reasonable’ for running an average car; with new cars devalue, replace the ‘maintenance’ costs with devaluation. ‘Upgrade’ is the amount of money that is put aside to pay for a new car; eg sell a car at a loss of £500 over the year will mean that the new one will be bought to re-coupe that loss; that is, it will cost £50/month to just stay ‘level’.

Still, if you have a car, these costs are reasonable. That’s £3000 to £5000 a year! Cars burn money…

# running costs of rental

Roughly £400, which is £250/£100 more than ownership. No head-aches of ownership. New car. Surely there should be a non-new rental deal out there? There was, but more of that later. Let’s look an a new ‘alternative’ to rent/buy.

# ‘alternatives’ like zipcar

Based on a trip daily to work and back, clearly Zipcar isn’t the right solution. Another one is Uber, but that’s beyond the horizon at the moment; it’s touted to do to logistics what Amazon did to book-selling, and everything else-selling, kinda. It’s what ecosquared will be competing with a few years down the line, if we’re not clever.

# a guy down the road called Darren…

I spoke with a guy last night, Darren Sharpe, an interesting guy. He was ahead of the curve and came up with ‘rent-a-banger‘, basically renting out non-new cars. He ran this for 15 years, but the insurance was a real head-ache, and people abused the system; as we know people take care of things they own, and tend to trash or neglect rented cars, flats, tools — a mentality shift which is critical for longer term sharing solutions.

Now, Darren sells five-year old cars for £2k, and guarantees buy-back at £50/week. So, if you want to return the car say 10 weeks down the road, he will buy it back for £1,500. Thus, cost of use is £200/month PLUS £100/£200 ownership costs. That is, using Darren’s system you need £2k capital, and it costs £150/month more than ownership.

## summary of current offerings out there at the time of writing

Looks like ownership is still the cheapest way to run a car, with all the head-aches that ownership entails. Basically there is a financial separation between the players: the owner of the car, those who build the roads and the insurers, the car-mechanics who maintain it, and the company employees who supply the petrol. They are all working together, using the same economic system, with the belief that competition provides us with the best service at the lowest cost.

# ecosquared?

Well, it depends on what scale the ecology is at. Let’s say it we have levels of social saturation, which I’ve used before, but in reverse order this time, from the ‘fantastic’ to the realistic, me now looking for a car:

• Yellow Saturation with massive game-changing coverage
• Blue Network where a wide sector of people are sharing within ecosquared protocols
• Green Team of a few people connected and using the protocols
• Red Solo just starting with only you using the protocols

## Yellow Saturation

A world where there are enough people in the network to own Esso; where the users and employees of the petrol stations are the shareholders, have %-equity. Nobody is making a profit from the petrol you get at the station. You drive up, fill up the tank, resource use is tabulated, you drive away. No money transaction. Of course, your petrol use may be higher or lower than others, and this is related to how often you use the car. Remember, none of it is yours: its an economy of use, not possession.

(By the way, Esso is evaluated at \$300b. 100million people putting in £3000 each (the cost of petrol for a year for some folk) could buy Esso outright. That’s something to think about. An FTP open moneystream of \$300b; that’s everyone on the planet contributed \$40 each. Will we ever reach this ‘fantastic’ situation? Well, we have the protocols. We have the intention and love and trust between us as friends and family… we just lack the trust in their operation. We are trapped by our traditional mechanics.)

And the cost of petrol is much lower in certain countries, those which have decentralised their government. Just like Esso is %-equity crowd-shared, so is ‘government’. A double win for the folk who manage that first!

## Blue Network

A car-pool where insurance is brought within the fold. That is, a crowd-owned insurance company. Again, no-one is making money out of us. When an accident occurs, it is covered by FTP. Of course, it comes down to trusting people to drive cars around. Do you give a super-dooper car to a young man? Only if he proves he can drive well. Insurance companies have the math worked out in terms of rates of injury etc. We should be using this math to simply reduce costs of premium, or in our case FTP contribution towards this BitCar project. Money is not put into the organisation competing with other organisations, a massive marketing and advertising game, both externally and internally.

This is from Direct Line’s 2012 Annual Report (p98).Operating costs 25% of revenue, over a £1billion. That’s a lot of ‘financial’ machinery being paid for.

In terms of ecosquared, we don’t want an insurance company; in fact, we don’t want any company for that matter. We simply use the assurance we have between us: MTTP for p2p, and FTP for one to many. If some network of people give a flash car to one of their group, and they don’t have the resources locally to cover it if things go wrong, then they will require other networks to subsidise them. This is the typical fission-fusion and 1:5 grouping that all kids are familiar with by the age of 11. Not complicated. Fractally complex, but essentially — mathematically and psycho-socially — simple.

## Green Team

For this to work, the team has to be concentrated. That is, people who live close by, who share the same garage for example. Each participant ‘owns’ their car in the sense of paying for Road Tax and Insurance (£50-£100/month). Instead of paying for when the car breaks down, a contribution is made to keep the car running smoothly. How much? Depends on how many cars are in the network and the size of the garage, but let’s say around £50/month. They may need to take more people on during periods of stress, or pass cars on to other garages if the demand is too high, as occurs nowadays. And when things are slow, cars are invited in to upgrade them. The objective is to keep cars healthy, so that they do not ‘lose’ their value. Courses are put on to invite owners to be involved in the maintenance of their cars.

Instead of saving funds in private banks, or accessing credit, participants GIFT(£50/month) for the use of the car, FTP{Bitcar}. This accumulated FTP (within a year, 10 car-owners accumulate £6000) not only attracts other car-owners to the network, but can operate like insurance, and to buy in new car, perhaps when a member of the community gets to driving age.

## Red Solo

Difficult. Two things possible: hack ownership, and share %-equity in the income enabled by car-use.

### hacking ownership

Let’s say I manage to generate the funds to ‘own’ a car at £2k. Let’s say I give-it(car)-forwards-to the ‘BitCar’ project. I also give-it(£50)-forwards-to FTP. Which means I have 100%-equity in all three ecosquare value vectors, Vp Vk Vi, namely the Aggregate (ie the car), FTP or Moneystream (which will be £300 by summer), and SEA.

Who knows how I can leverage this in the future? Perhaps attracting others to the Bitcar project? Perhaps someone may wish to GIFT(car)(£50). Perhaps, I will be able to give my car to someone (rather than selling it), and produce the dynamics described in the Green Team? Either because I leave the country and don’t need the car, or I buy a new car. Perhaps I can use the FTP to buy a new car, and thus include the car within the BitCar network?

So, running costs are identical to ‘ownership’, only difference is, the money that normally goes into the ‘bank’ (for whatever nefarious purposes they put it to) when saving up is replaced with FTP, an open-money-stream:

### invest in people, not things — we are the ones ‘making’ the money anyway

Secondly, an alternative way of thinking about this, is to think what the car enables. I will be able to teach, making around £80/day after tax. The car enables this. Without the car, I can’t get to school. So, in a way, the person who gives me the car, is enabling me — they deserve some %-equity in my income. If I make £1600/month, what %-equity would they want? Same goes for the garage mechanic — how much %-equity do they deserve?

Whoever has contributed the car (£2k), the mechanics at the garage (£50/month), I still have to pay for insurance and road tax (£50/month). Based on a plan which is half-way between rent and ownership, at around £250/month, those who supply the car should get around £200/month, which is 12.5%-equity of my income stream.

After one year, the ‘owner’ has recouped their investment, and the garage has made £323.99, regardless of the repairs. Total, £2400 to use the car.

Now, with this kind of relationship, if I kept using the car by the end of the second year, the car-gifter will have made £1722.78 ‘profit’, and the garage another £750 from the second year to cover the costs of maintenance. Total, £4800 to use the car over two years.

A few questions may come to mind, about what the gifter of the car may do — perhaps offer a better one, and if so, what is the rate now? And does the garage-mechanic keep getting more and more until they are taking all of the 12.5% equity reserved for car use? Well, funnily enough, no. It tends to a number. After 10 years, for example, the car-gift owner will be getting £50/month and the garage-mechanic £150/month. Perhaps the car will require that amount of maintenance, but probably not.

# the core of economics: numbers and time

Whatever your interest is in cars, the math pattern deserves attention. Why? Because it shows the relationship between capital and regular investment. Think about this in a completely different field — health. Do you pay for health treatment when something goes wrong (capital), or should you be paying a regular investment for health (regular)?

This relationship is at the heart of all our finances: the difference between a static lump sum and regular payment.

FTP, the accumulation of money as an index of trust within a network, combines both: regular payments to a static ‘standing wave’ of money. Where is this money? Well, it is like a bank, but unlike a bank, accumulated FTP does not get used. Like MTTP guarantee, it remains in escrow between the parties. So, FTP acts more like a guarantee, to be released if not enough revenue is generated from what is co-created; to ‘buy out’ those who do not wish to have %-equity in the co-created product.

The thing to get your head around is that %-equity is at the base of new economics, ecosquared or otherwise. Moneyflow is secondary.

And there is a race going on: as capitalism gets finer and finer in resolution, turning everyone and his dog into a capitalist, versus the sharing economy, where we are all part of a greater whole, a collaborative commons, where we share everything. Capitalism has massive momentum, institutionally, mechanically (financially), and psychologically. The internet has cracked open a massive opportunity in the form of open-source and it rejuvenated the commons and after a decade a massive sharing meme. But are the proponents of the sharing economy fooled by their relative luxury, royalty within the citadel playing games because they live in a world of material abundance?

It’s a tough call, and we each have to make it. We do so in our daily actions. We do so with every single financial transaction. I for one, am not convinced, as I turn to ‘buying’ a car, filling it with petrol regularly, and fueling the current system which is so destructive to our environment, and our collective soul.

So, FTP has been rolling around my head since the beginning of the year. I haven’t finished the math, or the website invitation, but after speaking with Patrick Anderson, I pulled together this provisional video. From even the briefest perusal of Patrick’s G+ About page, it’s clear he is insightful and working towards bettering the world.

In terms of the system, I already have a Stripe submission in play, though will be looking at alternatives for moneyflow for content, eg for this site, which constitute ‘Surplus’ which is divided in the ratio of SEA. That is, the system is minimally operational!

## the triggering dialogue

Interesting. I found you on linked-in… searched for your future product foundation thing on the internet, didn’t find you, but eventually came round to your g+ page — and you are already in my circles! How are things going with you?
1:57 PM
Hi David. I’m doing well. How are you?
Hi. Yeah, pretty good. Too many convergent thoughts since the new year. Way too many. Hence my rather rare attempt to outreach, eg with you. Perhaps a few other players who are on the fringes, who are exceptional, may share the… burden of exploration 🙂
2:32 PM
I don’t know where it comes from, but once you see in a new way, you are compelled to show others. I see your G+ response to my old, repetitive post. In not really sure what you mean by math or model, but I am willing to work with you to develop those interpretations
2:38 PM
Ah, nice. You talked about fractional ownership, I think. I was asking if you have any math for this? To track fractional ownership. If this is what you were working on, coding, etc? With your product future foundation?
2:39 PM
Ah. Hmm… It seems so elementary that I don’t see how math would help
2:41 PM
hehehahahahah ok, cool heheha I have the opposite problem. When I engage my peers who are trying to develop algorithms that track value, they don’t see the simplicity of our solution. So, good.
2:43 PM
I may be wrong, and an willing to try, but let’s look at a small example and then scale up to see where we lose track
2:43 PM
Well, that’s it exactly. Ok, you free for a quick chat? Or perhaps a major engagement? How serious are you about this? By major engagement, I mean, say, an hour, where we delve as deeply as we can. So that we establish the parameters of our engagement.
2:44 PM
2:45 PM
Can you prove it financially? Are you loaded? Are you living in comfort? A life of luxury?
2:45 PM
I want to chat right now, but I have to go to work in about half hour Just because I’m not living and luxury now doesn’t prove this approach invalid
2:46 PM
Same here. However, if you can prove something mathematically, that’s a big bonus. Something useful to leverage with.
2:47 PM
I haven’t actually implemented anything yet because nobody understands me yet
2:47 PM
I’ll put £5 forward to engage you over the next 20-30 mins or so. Will you.
2:47 PM
I appreciate your offer but I am so anxious to explain this solution that I would be willing to pay you:-D
2:49 PM
Exactly, will you put money forward? I will take you at your word. Which means, if after we engage, you don’t think it has been useful, then don’t honour your word. From the little I have engaged, I believe we are worth £5

You want me to pay you?
2:50 PM

Not really, it just goes forward. Part of the discussion… I’d like to have a video up explaining it, but, that’s still in the pipeline. The actual math hasn’t been finalised yet. Hence this engagement. You might be part of the solution. Doesn’t prevent us from experimenting, though. So, I am willing to put £5 forwards. Are you? Actually, with this time now, let’s reduce it to £1 since we don’t have much time left…
2:52 PM
The system I am trying to describe “cancels out” most of the need for money
2:54 PM
Yeah, I know, I know. I need something to sustain my exploration. I’ve done enough over two years and have to go back to work because of ‘problems’ in communication. Let’s talk another time when you have the time and the £ interest. You definitely are saying the right things. It will be good.
2:55 PM
We will need some money to start, but I’m sure a kickstarter campaign will work once we can explain it to others
2:56 PM
Good luck! Get back to me when you are ready to engage logarithmically.
2:57 PM
I am in severe debt right now going through a divorce and was out of work until just the beginning of this week
2:57 PM
Tell me about it… That’s why our engagement will be valueable. Don’t waste it through this little text chat. You are highly valuable, so am I, and our engagement will be valuable. Don’t worry. If I had the money, I’d invite you personally, but I don’t. So, be assured, get back to me when you have time.
2:58 PM
Okay, it would help me understand your needs if you would send me example of algorithmic engagement
2:58 PM
ehehe — which comes first, understanding or experimentation? I have enough info from your posts that I want to experiment with you. Based on that experiment, I will have more understanding, and so it builds… It’s fine, don’t worry. This engagement has already been useful. Believe me. I will record something, post it, and invite you to review it.
3:01 PM
Ok, set you later. *see
3:02 PM
Cool. Have a good day, really 🙂
3:02 PM

## readability of this post — the turning point of understanding and information

Editing a Google Hangout Chat has been a real pain. I hope it is readable. How well you penetrate this, how deep your reading, will determine the depth of our engagement, and the speed by which this protocol takes shape in 2014. Your temporal co-ordinates as you read (early January? Spring 2014, Summer? Perhaps 2015), compared to the current saturation of this (FTP) protocol in the current marketplace, will determine your importance in this process. You  know, early adopters and all that.

So it comes down to understanding. I have explained complex math to kids. I am a professional communicator. And yet, with ecosquared, the resounding response from the beginning has been lack of understanding — and get this — a demand for more explanation. Just look at this site — it is two years worth of explanation! I have risked my wellbeing, my family’s wellbeing, on ecosquared. I believe ecosquared holds the kernal of a global solution, and this FTP may be the actual turning point — it enables a means of moneyflow that helps us learn how to operate a completely alternative economics, an ecological and ethical one, one based on giving.

Is there enough information, through the video, this post, the other posts on this video — is there enough INFORMATION, that it warrants engagement? It is through the process of engagement that understanding will emerge. That is, is there enough INFORMATION that you are willing to conduct an EXPERIMENT? Not just theorise, discuss, chat, etc, but actually conduct a financial experiment?

## But where does the money go?

Yes, that’s the trick, isn’t it? Where indeed…

You’d like to know where it goes, but as we know from our current situation, the money end up in the pockets of those who have it. Capital. Money attract money.

Ecosquared protocols perform two hacks on money, namely MTTP and SEA. FTP performs the equivalent function of ‘capital’, though it operates more like ‘insurance’.

For now, suffice to say, you will get a say in where the money goes if it ever has to leave the network. That is, FTP is merely the decision to give money forward to a future date where you and others decide what to do with it. What power you will have in where it goes, depends on the quality of engagement you have, the value you co-create, and so on. The money doesn’t really ‘go’ anywhere. It is like a standing wave of collective intention; the accumulated FTP indicates the health of the network, the level of trust we have in one another.

Perhaps faith. Once our engagement occurs, our initial faith in one another will be honoured by trust. With small amount of money, small periods of engagement, and small projects, and over time this grows — based on results. Just like any enterprise or company or government or any social organisation in recorded history. It’s results driven. But to have results, one needs experimentation.

## It’s up to you. Right now.

So, are you willing to gift £x forward to an engagement? You don’t have to pay that up after the engagement if you didn’t think it valuable. Of course not. But if you do think it is valuable, you will be happy to, and indeed, perhaps give more money forwards as your confidence in what we are doing is proven. Yes, in what we are doing. FTP is the financial protocol for collective co-creation. It is the process by which teams form in a network. And it operates from the get go.

Perhaps you will need some more information, so read on. Perhaps you need someone social validation, an article in some trusted source gets written at some point, or someone you know invites you to FTP later in the year, and after a few invitations, your trust of your friend or colleague overcomes the need for ‘understanding’ and you give it a go. And then, you will have experiential evidence of the experiment: how money-trust-time operate in ecosquared. Then it is for you to decide what to do next. Lovely.

This is a win-win-win solution. It’s just a matter of time. It’s a matter of who reads this: those who already resonates with it, and those who are willing to risk their word-action to test it. And of those who participate, those who can iterate a better version of engagement than this first, rather crude, iteration of video and blog post.

I look forward to meeting with you!