Master Plan Part 1:
10X IMPROVEMENT
VOLUNTARY PAYMENT
Part 1 involves the test running of a couple operations. The first one is the 10x improvement principle. We want to be at least 10 times better in at least 10 different domains over our competition. That means one tenth the price, one tenth the waste, ten times the service, innovation and quality. That leaves at least 5 more domains: ten times the product beauty, creativity, and community support. The marketing and branding will be ten times as effective, our products will be ten times as accessible, the company will be ten times as flexible, as open and honest and we’ll value our customers and employees ten times more. So that makes the list 16 long but why stop there? Incremental improvements won’t cut it, we’re aiming for orders of magnitude. To truly make a significant change we have to shoot for the stars. Then to top it all off, we want to pilot a voluntary payment program. We’ll explain all of this in detail later in the Master Plan outline, but as a quick summary, we want to create a network effect where every new participant adds tangible value to all existing participants. Making participation free with voluntary payments should accelerate growth and lower the barrier to entry. Rules will be broken, imagination will be unleashed.
Had we decided to be a traditional business, even the smartest moves would have given us marginal advantages over the current competition. If we could source paddles for $100, we could undercut competition or match the shrewdest ones by reselling at $140. That would give us a “healthy” 40% profit margin for the risk we assume. The reality is that by buying in bulk directly from the manufacturer, the manufacturer offloads risk and secures a large amount of sales and in turn trades lower prices to us. However, being a middle-man re-seller is a dying form of business with the advent of the internet and modern logistics and shipping. Manufacturers can more easily sell directly to customers. More internet re-seller startups using the same model leads to greater competition which in turn will lower prices to near 0% margins. Given a long enough consolidation time, and economies of scale, manufacturers may be able to sell a paddle directly to customers near the cost of production. Our best estimates put that around $50 per paddle. But, a wild increase in popularity of dragon boating might lead to more demand for paddles and as such manufacturing will grow to match the demand. More likely, the modern world will require more carbon-fiber for other purposes. In either case, further economies of scale could bring the cost of carbon fiber down to near $10 a paddle. That’s a 10x decrease in cost, or put another way, a 10x improvement in the value a paddler gets. So, naturally the answer is to vertically integrate and become a carbon fiber part manufacturer + seller, or partner with an existing one in China, right?
Well, that would be an extremely expensive and intensive operation, beyond what we’re currently capable of, so we needed some out of the box thinking. We can let the natural progress of current economies scale to $10 a paddle on their own. Our focus will be one in a new direction. One night while in my garage an idea came to light. All these objects just sat here, owned but unused. At best utilization rates approach 1% on average, but some things collect dust for months and years. What if we could figure out a way to increase utilization rates? Through sharing it wouldn’t be too hard to 10x utilization rates, and thus potentially lower prices by 10x immediately. But thinking even bigger we could change the way our modern economies work. Right now we focus on mass producing minimum quality products that will be bought and owned yet rarely used, then discarded and replaced. With some products like phones this cycle can happen every year. However its more justified since they get used a lot and so they degrade and break. However, even high tech solutions can be imagined. But with something like a handheld tool or a paddle the solution is obvious. For example, when a homeowner is doing renovations, they’ll buy a cheap cordless drill. One of tens millions produced that year. They’ll use it and put into into storage for when they might need it again. It gets the job done for drywall decently, but can’t drill metal at all and usually ends up breaking after 100 hours of use if it even gets there before being tossed. Imagine if instead only tens of thousand were produced, but these were the best, longest lasting drills possible. Now imagine you can order one on demand and an autonomous drone flies over and delivers the drill, even doing the drilling for you. In this kind of world, the line between product and service is blurred. Ownership and sharing is re-imagined. A world of product-service, and owner-sharer duality. A world where we rethink scarcity of resources and see true abundance.
Now this raises some questions about responsibility and who truly owns the means of production/service with entitlement to the profits of goods and services sold. A simple monopoly owner or corporation could further exploit prices, making these product-services inaccessible to those who need it most. However, a distributed form of collective ownership, where customers get a stake in the sharing network can align incentives for the greater good. At the heart of every business lies cooperation in unison with competition. Customers finance operations and growth, while the employees try make everything happen better than before. Sometimes banks and investors can accelerate growth by injecting capital early, however, this can cause conflicts of interest where the needs of investors and creditors are put above those of the customers and workers. This can be further exacerbated when money, the symbol for wealth, is taken more seriously than the actual wealth. When just money becomes the object of the goal, the enjoyment and creative spirit of employees, as well as the value and life improvement for the customer can fall into secondary consideration. Modern corporations run on a delicate balance of competing interests between shareholders, creditors, customers, managers, workers, governments and other parties. Sometimes it amazes us just how everything holds together when there are so many competing forces. Our mission involves taking the best of the competing forces of capitalism and balance them out with cooperation.
The first wave of sharing companies like Uber and Airbnb provide us with inspiration. Through software and the internet these companies have linked us in ways previously thought unimaginable. However, their one downside is that they are a type of middle-man re-seller. They insert themselves between provider and consumer, taking a fee from every one they connect. While connections are their service and as such it’s fair they get rewarded for doing so, it’ll one day be considered inefficient. What if we could eliminate the steps between provider and consumer and link them directly without middle-men? This is where collective ownership comes in. By giving away a stake in the network to providers and consumers, they become part owners as well. This distributes responsibility and reward alike. This efficiency gain could drive prices lower and value up by eliminating fees and markups at each step in the chain. Furthermore, and this will be explored in detail in The Master Plan Part 2, using technologies like cryptocurrencies, the network can be made even more distributed and autonomous.
Now that a lot of the theoretical stuff is out of the way, this is how Space Paddles works. One paddle will serve many paddlers. We have a docking station near the water where paddles are stored while awaiting use. A paddler can come by and pick it up for a practice or race, then drop it off for the next user. As we gather usage data and better understand patterns, we can provide a minimum number of paddles per paddling location. We hope to have a rotation of about 5 paddlers per paddle by 2025, and potentially reach 10 per paddle by 2030. Each user will share the total cost of the paddle, that includes purchase price, maintenance, storage and operational costs, as well as any other business expenses incurred by The Space Paddles Company. This information is available one a separate part of this website for transparency purposes. This is also where the sharing network effect will emerge from. Each new user will further share the burdens of running this operation, making it just that little bit easier for everyone. Certainly this should be easier than individually owning and maintaining a paddle.
One paddle, as of 2019, costs about $110 CAD. Hopefully the build quality and resilience of the carbon fiber will allow the paddles to last many years. We estimate, conservatively, 1000 hours or hard use or 5 years with 5 paddlers sharing it. Adding extra operational costs and maintenance divided into a per paddle basis, each Paddle currently costs a bit over $150 for its lifetime. As the network will grow, fixed costs like the docking station, business licence and website fees will be divided across more paddles, plus we’ll be able to make larger purchases, saving on the unit price and bulk shipping fees. To keep things simple, we can say one paddle will cost $100 for its lifetime of service. Off of that number we can build a price sharing system.
To start, we are offering 3 tiers of membership, because we know different paddlers have different needs. One day we hope to be able to fully customize pricing based on individual usage to really maximize value, but for now we have to keep it simple. So, we have a basic package for $35 a season for 2 hours of practice a week, a value package for $50 a season for unlimited practice and two competitions, and an unlimited package for $65 for unlimited practice and competition use. The value and unlimited packages will come with extra services to make the experience like no other. We’ll add more and more services over time but to start we hope to have have towels, PFDs and bench-pads. Finally, to truly give a meaningful share of the company directly to customers, we’ll implement voluntary payments after the customer has helped finance two new paddles. That means once a paddler has paid $200, they’ll have unlimited access to Space Paddles for life. We’ll set two voluntary suggested price points equal to the continuing operational expenses of the company, or the previous price plus 25% profit for us (Chris and Kevin), cause let’s be honest, we still need money to live too.
Now, it becomes obvious just how profitable an operation like this could be. Conservatively using 5 paddlers per paddle paying $50 per season, and a $100 cost, the return on investment is 2.5x per season, or 12.5x per paddle lifetime. The numbers are bigger if 10 people share one paddle. Normal businesses take years to just make their money back. That’s the power of sharing. All it takes is for us to plant the first small seed, spend $5000 of our own money to get it all started. Then we watch as our beautiful business tree grows and grows with the help of everyone else. Of course we could just pocket those profits and retire as millionaires in our thirties. We won’t lie, that sounds great. But that’s not our mission. That’s also why we want to distribute ownership as much as possible. Greed can quickly corrupt a couple of 20 something year olds. By giving users a stake in the company it’ll keep incentives aligned. To show we mean it, we won’t take a single dollar profit until we reach full voluntary payments, hopefully around 2025. More specifically, we want to service 1000 paddlers at a ratio close to 5 paddlers per paddle. You can view the progress and financials here.
Keep in mind, in the early stages the math is very very loose. A lot is assumed. A lot is off of feeling and intuition. It’s probable that in the future some serious data can be collected and statistical analysis performed to scientifically nail the absolute lowest prices per user. Until then, we have to take a leap of faith and trust that everything will work out. But that’s been the way humanity has worked forever, so we’re not worried.
This is where the love comes in. So far it’s all been cold hard logic, but our company is so much more. Remember the mission. Even if a lot of this breaks a whole bunch of business rules from a profit perspective, that’s literally the point. Name a rule, we’ll try to show that love and imagination cannot be bound by it. We want our community to care for and inspire each other. We want it to grow organically. This is the exponential network effect discussed earlier. Each new participant directly funds 2 new paddles and as such helps up to 20 more participants have access to the best, cheapest, most valuable paddles. We want our members to be proud of what they’re helping to build. As a thank you for doing the work and spreading the love we will forever let you enjoy the network at no added expense. And, due to the exponential growth, those 20 new users will fund 20 more each and so on. So given enough time, one user can be indirectly responsible for thousands of paddles and tens of thousands of happy paddlers. True collective ownership, true sharing of an abundant resource.
Not impressed yet? Well we’re also making payment voluntary for any paddler under 24, with the goal to make all payments voluntary by the time we reach 5 paddlers per paddle around 2025. Take it as an offering of generosity, or as a marketing move, or both. Again, since more users means more direct value for existing users, we want as many sharers as possible. Paddlers will tell their friends, word will spread of this cool new company doing something nobody else does. Plus, this directly reflects our end goal. There’s no better time than to start now. We’re trusting that our customers will value this company so much that they’ll want to not only be a part of it, but to help it grow, to give back.
The rationale behind this stems from our philosophy of shared ownership and responsibility. What we are doing here is leveraging the power of the collective human spirit using modern business tools. We know humanity has unthinkable potential, and we can do anything if we believe we can. That’s what this is, it’s us taking responsibility of inspiring others into believing that impossible is a state of mind. But sometimes it takes seeing to believe, even if what you were looking for was always in plain sight. Follow the path of the money and it should become clear. On a macroscopic level, we invented money as a tool to efficiently allocate resources. Money is an idea, the symbol, the placeholder, the potential. We move it around, cause its easy to move ideas and symbols versus the matter, energy and time they represent. And what is that energy and potential? What it boils down to is us finding a way to share and use the planet’s and more specifically, the sun’s energy’s work over time. Our planet is fully solar powered. Plants grow using sunlight, our water and air systems rely on the sun’s heat as well as the earth’s rotation to flow and cycle. But the rotation is really a gravitational energy exchange between earth and the sun. The oil we burn owes it’s chemical potential energy to a natural process of energy transfer from the sun over millions of years. The metals and minerals we build with also eventually connect back to a star fusing elements, and our sun’s gravitational fields coalescing it all into our beautiful planet. So, we use money to efficiently use what the sun so generously shared with us.
Now, once upon a time, money was also physical. But over time we’ve been distilled it down to its most basic form, an idea. Money ten thousand years ago took form as trade able objects. These objects took time and energy to find or make. A thousand years ago, money was further distilled and abstracted into the form of metal coins. The coins themselves were much easier to make and move than the things they could be traded for. Then, last century, something remarkable happened. Fiat money was invented. Unbacked paper currency.
We hope that this is already enough to inspire countless people to come together and share. Re-thinking old ways of doing things 10 times better. In a way this is a mix of crowdfunding, sharing, and distributed ownership. But, why stop here? To really have your mind blown, check out The Master Plan Part 2…