I have for some time been envisioning a new way to fund start-ups that creates a direct financial linkage between the eventual users of a product and the developers of that product. Consumers end up paying these costs anyway. Under the theory of Consupitalism, they simply pay them earlier in exchange for products that truly meet their needs and which might not be developed otherwise.
This is already happening in many ways on the web. (See Kickstarter, etc.). My own reasons for desiring this form of capitalization come from a long career working in Engineering as an inventor, founder, consultant, and employee of various Silicon Valley Start-ups and witnessing, and feeling, the adverse affects of typical venture funding and IPO's on the development process. Venture firms want 42% Annualized return on investment. This is partly because 80% of their funded ventures fail so the survivors must make up the difference. In Consupitalism products don't get developed if they fail to resonate with consumers from the start. Some companies attempt to "Focus Group" this but I'll tell you from experience most focus groups are a joke.
Paxterran Consupitalism
Here are my thoughts of how Paxterra will be capitalized via a Consupitalist model:
First, make sure that the product category has a huge pent-up demand among consumers. In transportation, in the United States, I would say this demand issue is chronic. Consumers have had very little in the way of alternatives to the gasoline-powered vehicles offered by the major manufacturers. Most majors have some kind of electric vehicle on their product development roadmaps but they are moving very slowly in this direction. I suspect that the huge investments they've made in robotic engine manufacturing systems will need to be amortized before they actually shift their product lines over. As with many new paradigms the winners may not be the entrenched giants that dominated the product category before the shift occurred. (IBM & DEC vs. Apple in the microcomputer revolution of the 1970's for example).
Second, make sure the technological timing for the product is right. Sure, everybody wants a jet pack, but their are no currently acceptable technologies to provide the product. In the case of electric vehicles, until the recent availability of large-format, safe, Lithium batteries electric vehicles offered very poor performance and short range using very heavy, lead-Acid Batteries. Good batteries was the last barrier to obtaining acceptable electric vehicles. All of the other components have been in mass production for many years and some for over a hundred. (Series-wound electric motors for example).
Third, have a robust online presence and a well integrated social network. This is where I will be concentrating for the next month as we move from a quiet R&D effort to a loud and noisy newcomer on the Web. This effort will culminate in some form kind of Crowdfunding event this Summer. I have been monitoring the projects on Kickstarter and feel that Paxterra is a natural fit for this kind of support. We have interested parties in the EU and will be creating a bit of Global Buzz over the upcoming release to the Public Domain of our Engineering data and manufacturing methodologies.
Fourth, avoid large development costs. The biggies are Engineering Labor and Tooling Costs. At Paxterra most of the Engineering was done by me personally. Tooling costs for the exclusive components required to mass-produce the vehicles should be well under $100K. Because all of the sourced components are off-the-shelf items those tooling costs have already been paid by by the component suppliers and don't affect Paxterra. This anchor will remain so that the design can be virally spread globally with very small barriers to entry.
Fifth, keep passive investors away and don't take their money no matter how tempting. The costs of this funding are simply too high. We will totally welcome active investors interested in, say, placing a vehicle assembly plant in their town and we will support them 100%. I never want Paxterra to be in play on a stock market, ever.
Sixth, become an Open Source company. (How we'll do this will be covered in an upcoming Blog post)
Seventh, be sure to make an awesome product. ( Which is what I'll be getting back to now)
I'm sure this list will get longer but should suffice to let you know that Paxterra Electromotive really is an "Uncorporation" firmly engaged in a battle against the big guys, and we think we can win if you will help us get there.
Let the Wild Rumpus Begin!
This is already happening in many ways on the web. (See Kickstarter, etc.). My own reasons for desiring this form of capitalization come from a long career working in Engineering as an inventor, founder, consultant, and employee of various Silicon Valley Start-ups and witnessing, and feeling, the adverse affects of typical venture funding and IPO's on the development process. Venture firms want 42% Annualized return on investment. This is partly because 80% of their funded ventures fail so the survivors must make up the difference. In Consupitalism products don't get developed if they fail to resonate with consumers from the start. Some companies attempt to "Focus Group" this but I'll tell you from experience most focus groups are a joke.
Paxterran Consupitalism
Here are my thoughts of how Paxterra will be capitalized via a Consupitalist model:
First, make sure that the product category has a huge pent-up demand among consumers. In transportation, in the United States, I would say this demand issue is chronic. Consumers have had very little in the way of alternatives to the gasoline-powered vehicles offered by the major manufacturers. Most majors have some kind of electric vehicle on their product development roadmaps but they are moving very slowly in this direction. I suspect that the huge investments they've made in robotic engine manufacturing systems will need to be amortized before they actually shift their product lines over. As with many new paradigms the winners may not be the entrenched giants that dominated the product category before the shift occurred. (IBM & DEC vs. Apple in the microcomputer revolution of the 1970's for example).
Second, make sure the technological timing for the product is right. Sure, everybody wants a jet pack, but their are no currently acceptable technologies to provide the product. In the case of electric vehicles, until the recent availability of large-format, safe, Lithium batteries electric vehicles offered very poor performance and short range using very heavy, lead-Acid Batteries. Good batteries was the last barrier to obtaining acceptable electric vehicles. All of the other components have been in mass production for many years and some for over a hundred. (Series-wound electric motors for example).
Third, have a robust online presence and a well integrated social network. This is where I will be concentrating for the next month as we move from a quiet R&D effort to a loud and noisy newcomer on the Web. This effort will culminate in some form kind of Crowdfunding event this Summer. I have been monitoring the projects on Kickstarter and feel that Paxterra is a natural fit for this kind of support. We have interested parties in the EU and will be creating a bit of Global Buzz over the upcoming release to the Public Domain of our Engineering data and manufacturing methodologies.
Fourth, avoid large development costs. The biggies are Engineering Labor and Tooling Costs. At Paxterra most of the Engineering was done by me personally. Tooling costs for the exclusive components required to mass-produce the vehicles should be well under $100K. Because all of the sourced components are off-the-shelf items those tooling costs have already been paid by by the component suppliers and don't affect Paxterra. This anchor will remain so that the design can be virally spread globally with very small barriers to entry.
Fifth, keep passive investors away and don't take their money no matter how tempting. The costs of this funding are simply too high. We will totally welcome active investors interested in, say, placing a vehicle assembly plant in their town and we will support them 100%. I never want Paxterra to be in play on a stock market, ever.
Sixth, become an Open Source company. (How we'll do this will be covered in an upcoming Blog post)
Seventh, be sure to make an awesome product. ( Which is what I'll be getting back to now)
I'm sure this list will get longer but should suffice to let you know that Paxterra Electromotive really is an "Uncorporation" firmly engaged in a battle against the big guys, and we think we can win if you will help us get there.
Let the Wild Rumpus Begin!