Letter One To Alex Wagner about Superior Act
Dear Alex,
Have I mentioned the best writing advice ever? At least, the best ever for me. I went into the office hours of a professor, and asked for advice about writing essays. I was stuck! He told me to write out my ideas in the form of an email to a friend before starting. This always, always works. Why? Because writing to nobody is like walking around with your shoes ties to one another: it is possible to move, but you will do so awkwardly.
In this case, this email is preparation not for an essay, but for a deck: specifically, the “deck” for Superior Act. I have a somewhat intriguing narrative structure in mind: to jump back and forth between the early stages of the development of the platform, and a latter moment, a delicious point in the future there’s 800 million dollars worth of Superior Action happening. There is a nice word for this technique: prolepsis, the opposite of flashback. My particular prolepsis will let me work through how the mixed cooperative ownership of the platform will work. The other “earlier” part of the narrative will make this future plausible. This bifocal narrative structure also has an appealing nonlinearity, or bilinearity, that distinguishes it from the very straightforward typical nature of presentations.
Before jumping into the stories, we should start with a straightforward explanation of the platform Here’s my straightforward explanation(s): superior act is a cooperatively owned platform for collective buying. It allows for purchases that are superior in (1) their structure (2) their target, and (3) their platform.
(1) Superior Structure: Instead of one person buying the good, the platform lets groups of people purchase goods together, and therefore strengthens their power.
(2) Superior Target: The platform lets people identify, discuss, and target superior goods: higher quality products, products made in better ways, products that benefit groups that need support.
(3) Superior Platform: Superior act is cooperatively owned: the shares of the company are divided between founders, funders workers, supplier, and consumers. Every time a users buy or a supplier sells something on the platform, they get microshares in the platform. Not only does this lead to a significantly lower “platform” take – that is, much less “rent” — but it also aligns the interest of users, suppliers with the platform. In other words, it provides what Charlie Munger describes a “moat”: because users are the co-owners of the platform, they will want to stay, indeed, they will want to help grow the platform.
Now we are ready to jump into the narrative. Let’s flash forward to a future date: there are 8 million people using superior act with an average user spend of 100 USD per month on the platform. The platform has a 10% take, meaning that 80 million goes into the company every month. 20 million of that goes towards operations, paying the salary of the people working for the company, for the digital infrastructure. 60 million goes straight into dividend payout to the shares. Say that there are 600,000 of these shares, 1/6th to each of the groups mentioned above: founders, funders, workers, suppliers, and customers. In this model, every share gets a one hundred dollar payout.
Now move back in time to the present moment: to right now, to the point where superior act is naught an idea shared by two of the cofounders: by us! What path leads from this zygotic moment towards the creation of the cooperative juggernaut in the last paragraph? I propose a three stage process:
Stage One: Zero to MVP (0 – 1000 users)
Stage Two: MVP to Funding/Partnerships (1000 – 100,000 users)
Stage Three: Blastoff (100,00- 8 million users)
What are the elements of a minimal functional version of Superior Act.
First, there’s the act: that is, the proposal for a group of people to buy something together.
Second: there’s the people doing the act, that is, the users. In the MVP, these users will also be significant funders and founders of the site.
Third: there’s an interface that let’s them pool together resources, buy things, give the money to the supplier, and then get the goods that they bought.
Those are the ingredients: now, let me propose what seem, to me, to be to the best way to structure this — choose a list of areas that we want to offer “acts” in.
My candidates:
(a) games
(b) biodynamic goods
(c) restaurant meals in new york
(d) riding accessories
(e) consumer electronics
(f) something related to clothing, don’t know what
And then, with each candidate, we approach someone with a standing in that field, someone with a following and then ask them to be a “sector lead” – the sector lead gets some combination of a commission on the sale, and stocks.
Now: the platform itself — it’s not deep sea exploration complexity, but it is a significant step up from a blog site, and it is important, as well, to create a structure that doesn’t create significant technical debt problems. You suggested that we could pay a developer to do this, but I also wonder if we should seek out a technical cofounder. Obviously doing that involves enormous risks: I bow to your greater wisdom here.
Now, if this is set up correctly: the platform, the sector leaders, the people: it should lead towards, in essence, us being able to run a bunch of experiments and learn what works, where the problems are, and other lessons that weren’t even anticipated.
Now, let’s jump ahead again into the future, and take a look at the platform in full juggernaut mode: you open the site, and see a list of “acts” to participate in. When you click on each act, it links to a substantial, in-depth, multimedia content about the act – you can learn in great detail about the production process involved in that organic nut butter, about the collective that made it, and about the health benefits of said organic butter. There’s also the option to create your own act, of course, and doing this comes – importantly – with an incentive in terms of shares.
Another way to use the site is to browse through different “Collective” – that is, established groups that pool up to group buy certain goods. Some of these are local, some are interest group oriented. Some are even connected to actual physical locations: collective kitchen where you can come and cook with other people, for instance. Any action can be collectivized, after all!
Back, now, to the “how we get there” narrative: we have an MVP that’s operating, and now we’re ready to go for funders. Here, I would propose that we approach:
– PinDuoDuo, because they have a great deal of experience with social buying, and can help with IP, strategy, and it also prevents them from competing with us, and they can help set up this platform in the PRC. (Note, there’s some very perceptible ethical limitations with this company, ones that should be inspected and considered.)
– A shipping/logistics company, one that is eager to hedge against amazin.
– A payments company, as payments is a perpetual cost center, and partnering with a payments company could, at least in my imagination, lead to a reduction of that cost site.
– Venture Capital One
– Venture Capital Two – ideally, with both venture capital firms grounded in some sort of social vision. Doesn’t Al Gore have one?
I do not know how much needs to be raised to achieve the liftoff, but in order to hold true to the vision, creating a group of those aforementioned “Founders Shares” that have enormous voting and operational power seems integral!!!
This message is now more than 1000 words, a typical cutoff for communication. The story is not quite complete, but will it ever be? I am excited to keep talking about this, perhaps we should schedule another video call?
Best,
Ben