The previous Internet article, “Marketing Funnel and Inverted Funnel” introduced Internet marketing methods and gave the example of Xiaomi. There is suspense left at the end of the article: Can Xiaomi’s customers become shareholders of Xiaomi after buying its products? It is what Kevin Kelly famously asked: How can we solve the problem of customers being both users and contributors of value? Users are an integral part of the value of Internet companies. Still, they do not share the benefits brought by the company’s growth. This problem remains unsolved, so most Internet projects that reward users have failed because they cannot correctly assess user value and allocate dividends to users. To understand this problem, we must first understand the characteristics of the user.
Early customers are valuable
The Internet has valuations for customers, and valuations vary for different projects, ranging from US$50 to US$1,000. This valuation is correct. However, once project factors are considered, the value of the project is different at different project stages, and the project’s growth includes the customer’s value. It is the basis for the principle of Satoshi Nakamoto’s coin issuance. Early participants have the highest returns because the value of early projects is low, and the proportion of customer value to project value is also high. It is generally understood that the value of early customers is greater than that of later customers. This pattern has always existed in Internet projects since projects have grown from small to large. Cryptocurrency is different from Internet projects. Internet seed round customers cannot participate. Cryptocurrency customers can participate in the seed round, but the customer does not invest money. For example, in the Bitcoin system, the user’s computer still belongs to them, and the project is not perfect initially. In the initial project, Satoshi Nakamoto himself paid for the prototype.
A concept derived here is that unified pricing cannot be adopted for early Internet projects. The pricing strategy for Apple mobile phones is unsuitable for early projects. Apple’s customers are users, and their contribution to the project is meager. Of course, Apple is not an Internet project based on headcount.
Bitcoin’s algorithm is unsuitable for Internet projects that calculate value based on headcount
Bitcoin’s algorithm takes into account the periodic halving. This shrinking algorithm has brought about an increase in value. This method of issuing coins first high and then low is groundbreaking, and the principle is correct. However, Bitcoin is an algorithm that determines the cycle based on time, not on heads, but on computing power, so this algorithm is unsuitable for projects based on heads. The project of counting people’s heads based on Bitcoin’s algorithm was unsuccessful.
The growth of Internet project people follows the natural growth curve
Most of the headcount growth of Internet projects is natural growth, and the natural growth curve is also called the S curve. As shown below:
It is only reasonable that the issuance of tokens conforms to the natural growth curve. For a detailed introduction, please refer to the chainless white paper and the DW20 white paper. The currency issuance of the two projects is very different. DW20 is the transaction token issued by the chainless project of 210 billion, while the equity token issued by the chainless project is 2 billion. This formula consists of two parts and has good adjustability, so it can be applied to projects with different issuance cycles and issuance volumes, allowing it to simulate the reasonable and natural growth of the project. Based on this principle, we designed the POP (Poof Of People) algorithm. As the issuance principle, the logic of the main formula is that the currency issuance in each cycle decreases according to the increase in the number of people. The issuance is halved in 3 cycles. Halving is not based on time; it is based on headcount. It is a general algorithm that adapts to the token distribution methods of all Internet projects involving people. As an Internet project, the POP algorithm is a tool for calculating the average value of users.
How do Internet projects deal with customer value
Internet projects that do not provide value to users must also pay advertisers this fee. The correct posture is that Lei Jun entered the market cheaply without advertising fees. It is a disguised form of providing value to customers, and then the price gets higher and higher. It also recognizes the value of early customers in disguise. A correct understanding of the Internet is one of the factors that contributed to Lei Jun’s success.
Typical projects based on capitation on the Internet are WeChat, TikTok, YouTube, Facebook, etc. They occupy many users’ free contributions, which is their weakness.
The POS algorithm only solves the average value of the head, but each user’s contribution is different. How can we measure it? We discuss this below. Community and indirect incentives.
