P&L

I've taken a first stab at a 10 year P&L. I have made 2 scenarios:

1, Sardex Scale:
Growing to achieve the same numbers as Sardex in year 8, with a similar value of trades / member. There are some big assumptions in here, including financing the growth with a £1.3M bond sale over the first 4 years. Playing with the numbers it seems like a 4% transaction fee would be required to make this all stack up - and there is a big question as to whether any of this would work... esp without the economic driver (the financial crisis) which helped Serdex... And I am not convinced what impact this scenario would have... with such a small % of UK businesses using OCN...?

Scenario 2 - IMPACT
This version looks at trying to achieve IMPACT, by growing OCN to 1% of the UK economy in 10 years. If trade values and volumes remain the same as in the Sardex scenario, this requires growing membership MUCH faster to 180,000 members in year 8 (as opposed to 4000). I have increased the number of staff required to achieve this accordingly... and hence costs go up... if everything else stays the same, getting to this scale, to achieve impact requires a £10.5M bond sale over the first 5 years... But does leave us with some very healthy Profits from year 6 onward, which could help build commons based investments to at least have a slight impact on the UK economy...

My conclusion from all this is that we may have underestimated the size of the task at hand, for even a UK only, national mutual credit scheme to work. And that if we are serious we need to explore these numbers in more detail, to work out what is viable and what level of investment we think we will be able to raise to create a worthwhile impact...

I would be happy to talk anyone through the numbers at any point and would welcome any thoughts or feedback at all...

Oli

https://docs.google.com/spreadsheets/d/122zJzu2BhpWWOVAUobNZocGXLhprPOVZSmSYvzbSJl0/edit#gid=1073470216

Sorry I don't know what to do with these numbers. I suppose it allows us to choose what we think is realistic, aim to raise that much money and then we know what trading volume we need to keep investors happy. I find all this number crunching for investors a bit arbitrary though. I don't know what investors we are talking about or what they want to hear. Shouldn't this exercise be done with David Atkinson?

In reply to Matthew... I hope my posts above have helped clarify why I believe this is an essential exercise for any business. We (at least Dave and Dil and I) are not intending to work for free forever. So we need to have a business plan which contains numbers we believe in. This is not (just) for investors, it is for ourselves as members of that business, to help us determine what we must do to be successful. A business which operates without a business plan will never succeed at much! So this is far from being an arbitrary exercise... in many ways it could be describe as the only sensible exercise... unless we are all ok to not get paid and work on this for the love of it with no realistic plan of how we will ever achieve success?

David Atkinson may have useful input - but I would suggest we need to define our own business plan - and have confidence in our own numbers before we start asking ICO advisors about fundraising strategies.

This topic was forked onto an email thread, but I am going to try and lead it back here... so we can carry own the conversation without clogging up people’s inboxes and so we have an easily accessible place to refer to the discussion.

@geoffturk Said:

I recommend we think about OCN's development in terms of two channels:
1) What we can do without outside investment to grow OCN (I will propose some initial ideas in this email)
2) What we will do with investment funds secured to further the growth of OCN (to be determined later, and only enacted once we have done as much as we reasonably can using our own resources)

@matthewslater said:

Another item I'd like to throw into the mix, is task management. Starting with 3 people OCN team is growing into a small crowd of people, which is a good thing. Whether or not we recruit more actively, we should think about how different people can take on different responsibilities and how to subdivide areas of work so not everyone has to follow everything. 3 areas that seem natural to me are:
member recruitment
business development, organisation building and finance.
software development
- ocn platform
- credit commons interoperability
Separation of groups would require slightly more formal processes for meetings, and keeping minutes.

@dilgreengmailcom said (in a related thread which is highly relevant, as it answer part of Matthews Q about dividing up work):

We had a very useful session on the Wednesday morning after the event with the core team, Geoff Turk, Matthew Slater and Thomas Greco.

At that session, it was agreed that a twin-track approach makes sense.

Track one: Open Credit Network:
building a viable and dynamic UK trading network
developing the skills, messaging, governance necessary to do this
building straightforward trading/directory software to get moving (Geoff is producing a first version of this: https://gist.github.com/geoffturk/db46323401705a0a1387c303548b7fe0)
building the public profile of democratically governed, member owned mutual credit exchange networks
developing economic and other analytic tools
Working with 'networks of networks' in mind, but not for now.

Track two: Credit Commons Protocols Foundation (snazzy name to be developed in due course)
- imagined as a cross between the Linux Foundation (building/maintaining core standards and lower stack tiers) and the VISA association (operating as a democratic, mutual project with key Mutual Credit players as members)
AIMS:
to provide the necessary conditions for the viral spread of a Credit Commons Federation (with Mastodon in mind)
work towards a fully decentralised model, robust and secure (unenclosable, well governed commons along Ostrom lines)
hold key 'brand' and other assets securely through protective rights / patent management as appropriate (intent: resist subversion/devaluation)
develop and maintain effective and democratic governance
Activities:
defining, building and holding the base protocols of a public Credit Commons
developing and making available a 'minimum viable' package of services (accounting, admin, directory, governance, website, comms) to make it easy for any group, anywhere, to spawn a Mutual Credit exchange network
providing 'minimum viable' as-a-service support mechanisms to Mutual Exchange networks
building and maintaining viable top tier (continental, global) exchange networks
raising 'seed ' funding - prob thorough EU grants and similar
developing and launching an investment vehicle

I thoroughly agree with Dil's summary and suggest we use this separation to help us move forward.

This thread is about Track 1: OCN.
I will try to pick up the other points in a further reply to avoid this getting too lengthy.

building straightforward trading/directory software to get moving (Geoff is producing a first version of this):

@olisb @geoffturk Is there a module in the stuff @bobhaugen and @lynnfoster have developed for ValueFlows, which can be forked for this?

When OCN gets to-scale as a trading network, hooking up with ValueFlows/REA will matter?

We have not developed a trading directory or marketplace. Seems like lots of other people are doing that, and we like to work on unsolved problems.

But yeah, when they want to create an economic network, ValueFlows is the vocabulary to use for economic interactions. As far as we know, there is nothing else that is general-purpose, although the http://datafoodconsortium.org/ is good for food.

We're working on several new parallel software projects that are not very usable yet but might be when OCN gets ready. http://mikorizal.org/futures.html

I wouldn't recommend using any of our older software for something new. We're focused on these newer projects.

Thanks @mikeh8 for thinking of this. We in ValueFlows (https://valueflo.ws/) are happy to work with you all any time you think it makes sense. Might not be a very big deal to get the vocabulary mapped in from the beginning if you're interested. Our software status is either "too old" or "too new" at the moment, so probably no forking opportunities right now.

Might be worth having a web conference so that Dave, Dil & Oli have a better grasp of what value flows is. OR Maybe Dave could interview Bob for lowimpact.
The 'trade exchange' model offers a network of businesses accounting for exchange between them. Value flows is much broader as it incorporates whole supply chains, and multidimensional economic value. I feel that value flows is a step further away from business as usual as it requires a different approach to accounting.

It would be great to see Bob/Lynn in a low impact interview. Would encourage better recognition of complementarity of planetary/P2P stuff like ValueFlows and place-based stuff like Preston Model (Dave’s recent interview). Helpful, when we’re tangling with alternative moneys?

I feel that value flows is a step further away from business as usual as it requires a different approach to accounting.

Depends on somebody's current understanding. Value Flows can produce accounting reports a lot like ERP (Enterprise Resource Systems) do, except for being able to handle whole networks and each of the agents within them.

So it's only different if one's understanding is entering debits and credits, but that's not how ERP systems work. They generate accounting reports automatically and nobody enters debits and credits unless they are doing adjustments to correct errors. Most users never see debits and credits.