There are hundreds of startups building in the Web3 space. As Edicted pointed out in Discord chat a few days ago - none of them are actually successful at selling their product. Many don't even have a product to sell.
At the end of the day, everyone has to sell something. It doesn't matter if you're a charity or a massive corporation. If you're a charity then you have to sell your mission to donors. If you're a massive corporation you probably are selling one or dozens or hundreds of products to various target markets. This is how the world of capitalism goes 'round.
In the Web3 space, we see a lot of people launching projects and tokens but often don't have any business model in mind. You can create an interface and have hundreds or thousands of people using it but if you have no means of monetization (of selling), then what exactly are you doing? Biding your time until you or your team gets bored/runs out of funds and moves on.
Right now, a lot of organizations are operating simply on the sales of tokens or funding from DAOs or self-funding from founders. This can only last so long. You can only sell your token for so long. Your DAO funding can run out. Your self-funding can run out.
Operating INLEO: A Case Study
INLEO has been the most fascinating thing to work on in my entire life. I truly enjoy the day-in and day-out of operating the project. Bridging together a vision of what I know is possible with managing the team and cultivating the community. This is no easy task and it has been extremely expensive.
That being said, self-funding it has been an extremely obvious decision for me. I know what the LEO Ecosystem can evolve into some day this vision makes it all worthwhile. With INLEO though, we aren't just relying on self-funding in perpetuity. The goal has always been to move the ecosystem toward profitability as soon as the product (inleo.io) seemed ready.
As I said above, in Web3 you see a lot of projects with nothing to sell but a dream and some tokens or NFTs. What good is all of that in the long-run?
With INLEO, we're aiming to build something a lot different. Actually, we've already built it and are seeing some great traction. Scaling what we've built is now the core focus.
With INLEO, we have a real business model. One that borrows a lot of facets of Web2 and merges them with the incredible capabilities of Web3.
Web2 Merges to Web3
Web2 has done many things right. They've ushered in the "Write" era of the internet. The internet started out as read-only. It was more like a yellow pages for companies to put up random things for people to consume.
Web2 brought about the ability for the users to become the creators. Users began publishing anything they desired and many of the things that users published - it turned out - other users wanted to read. And thus, Social Networks emerged and grew into some of the largest companies in the world.
These companies successfully monetized their main product - the app. They did so in a variety of means but I would say the single most successful was advertising. Companies like Google, Facebook and Twitter built massive ad businesses and have made hundreds of billions of dollars from ad revenue.
Why should Web3 be different? Why should Web3 not earn an education from its predecessor?
That's exactly what I set out to do. I set out to learn from the successes and failures of Web2. They succeed immensely at monetization. They fail miserably at user "quality of life".
Quality of Life is a term I wanted to use to describe the all-encompassing pitfalls of Web2. Web2 sells your data, bans you off the platform when they feel like it, suppress free speech... even manipulate elections across the globe. There are many issues with Web2 and the vast majority of them stem from the fact that you don't actually own anything on Web2.
When you really boil down the issues, you'll find that it's the last sentence above that is the core problem on Web2. You - the user - don't own anything.
With INLEO, my goal is to take the best of Web2 and merge it with the best of Web3.
Take Web2's incredible ease of use and merge it with Web3.
Take Web2's monetization tactics and merge it with Web3.
Take Web2's network effect growth and merge it with Web3.
Leave behind the pitfalls and take the successful tactics.
Web3, Monetized
Ease of use is something we are always going to be building. It's that carrot that we never quite attain. Ease of use is a constant battle of adding new features, fixing bugs and listening to your users. We at INLEO are always on this journey to make the UI/UX better.
The network effect aspect is also incredibly difficult. It requires you have a base network and continue to add new users who in turn bring their friends. We are working intensely hard on this and have a whole team dedicated to marketing & network effects.
Monetization has become a core focus lately. I pay a lot of attention to various Venture Capitalists (VCs) who have some of the largest Podcasts in the world. Many of them sit on the advisory boards of Uber, Stripe, etc. They also actively work with small and medium-sized startups.
Much of their advice for the past 12-18 months and in the next 12-18 months has to do with becoming cash flow positive. The landscape has changed significantly for startups. The ZIRP (Zero Interest Rate Policy) era is over. That means the funny money has washed out of the system and you can't just sell people on a dream anymore.
These VCs are asking their companies to tighten up spending and look at ways to generate immediate revenue. They're seeing dozens of companies fail and go out of business. These are the companies who were selling some 5-10 year dream with no hopes of revenue before that dream is achieved.
INLEO is different. We are fully bootstrapped (by me) and we have never taken outside capital to develop the application suite. I have talked extensively in the AMAs about how INLEO has a super long runway. I've been fortunate being in the crypto space for over 8 years now. The runway is long and INLEO will continue churning no matter what.
That being said, when you look at INLEO from an investor or outside onlooker perspective, you're going to want to see revenue. You don't want to just hear that one guy has the ability to fund the project for 10 years. VCs like the ones I've described want to see what the immediate and future plans for generating REAL cash flows are.
The day we launched Premium is when everything changed for me. The immediate outlook of generating revenue took a radical shift.
Ads were always my #1 focus in terms of generating revenue. Afterall, I mentioned above that Web2 companies have made hundreds of billions of dollars from advertisers... why can't INLEO gain a slice of that pie?
Well, we are. But our slice is tiny. That slice is growing as our userbase and traffic grows but Ads are a long-game. It will require a 10x growth in userbase before we see a cash-flow positive scenario from ads alone.
When Premium launched, I realized that the immediate revenue problem could be solved by Premium. It's also a huge benefit to the long-term revenue that Ads bring.
The flywheel became clear to me the day that Premium went into Production on inleo.io.
Right now, there are 203 Premium Subscribers. The payment rail is HBD and it costs 10 HBD per month to be premium. That's $2,030 per month generated by Premium. That's $2k/mo ($24k per year) that was not being captured previously.
Combine this with the ad Revenue and we're looking on the order of $3k-$4k per month (depending on the ad performance in a given month). That's not bad for a brand new startup with these products just recently going live in the past few months.
Remember that the new INLEO UI only went live on May 1st, 2023. Not even 1 year ago. That's when things really took off around here.
My goal with the team now is to get to 1,000 Premium Subscribers by the end of Q1, 2024. That's March 31st (~60 days from today). We'll need to onboard about 13 new Premium Subs each day for the next 60 days if we want to achieve this goal.
It won't be easy but I have aligned our dev team, LeoTeam and now I am working on aligning the community in this goal. That's $10k per month ($11-$12k combined with Ads) for the LEO token economy.
Remember that 100% of the Premium subscription revenue goes back into the LEO Token Economy autonomously. Every time the Premium Pool account reaches $500 HBD, it buys $250 worth of LEO and $250 worth of HIVE and permanently pools them together in a liquidity pool. Creating both immediate buy pressure and long-term liquidity for LEO and HIVE.
Imagine $10k per month in buying pressure + permanent liquidity in this pool and you can see this flywheel take off. If a tiny community of 2,000 users can generate over $10k per month in real cash flow for our Web3 ecosystem, we'll be much more attractive to the types of people I've mentioned above. This flywheel contributes to onboarding and network effects as well. As the LEO Token Market Cap grows, our userbase grows. As our Userbase grows, our Ad Revenue and potential Premium Sub revenue grows alongside it.
Other forms of monetization are coming VerySoon to the INLEO platform. We're working on Author Subscriptions, Promotions and our internal Ad Platform.
Things are heating up on INLEO. Are you on the train yet?
Join Premium today at https://inleo.io/premium. Make your first blog post from inleo.io and we'll visit you with @leo.voter (by the way, big changes coming to @leo.voter. We're adding Delegation Tiers which will allow Premium users to increase their APR when they delegate HIVE POWER. It will also have a tier for Staked rewards. More details coming to the @leofinance blog soon, so keep an eye out for it if you want to start earning 20%+ on your HIVE POWER).