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…

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