Measuring user value, HODLing STX and one-click payments

#1

TL;DR:

  1. reward value apps deliver to users by revenue or profit - do this by partnering with a payment provider
  2. reward app miners that HODL STX
  3. make a Blockstack “one-click” payment system integrated with auth, identity & storage (via @patrick)

We’ve clearly heard from app miners that they’d like to see metrics that are more closely aligned with the value apps provide to users. We’ve talked about measuring user growth/retention, but this raises a number of questions such as how to define a user, how to prevent Sybil attacks, is one user the same value as another user etc. It also involves tracking users which is against our values.

We’ve also discussed tracking app progress: are app miners continuing to work on their apps, adding additional features, etc. This also has a bunch of problems: it’s a very subjective measure, features may or may not add value to users, etc.

Today, Patrick and I had a great chat where we honed in on the idea that what we’re really trying to measure here is the value apps provide to users. We want more apps that users find useful (valuable) and less of apps from which users derive little or no value. If we’re able to measure this, we can neatly sidestep all of these other questions. We don’t need to worry about how apps provide value as long as they do it in a way that conforms with our Can’t Be Evil principles.

There’s no need to reinvent the wheel on this - there’s already a widely used method of measure the value delivered to users: how much profit a company makes and how much of that comes from money paid by users to the company.

There are a few ways we can do that. The traditional way of getting a relatively objective view of the financials of a company is for the company to prepare periodic financial statements and have those audited by independent auditor.
While it isn’t realistic for us to ask apps to prepare financial statements on a monthly or likely even quarterly basis, it’s something we might consider on a biannual or annual basis. Companies could be ranked any metric or metrics we like such as net income, gross income or retained earnings. The downside of this is that it would be time and money intensive for all parties involved. A metric that changes only a couple times per year is also not the best for our fast moving industry.

Another method of achieving almost the same result that involves less human involves fewer moving parts, would be to partner with one or more payment processors - Stripe or Paypal for example - and have app developers connect their payment processor accounts with a platform we put together that monitors aggregate customer payment (no individual customer info of course). We could then score apps based on gross revenue.

My view is that app developers should be trying to build sustainable businesses around their apps. The way to sustain a user-centric, Can’t Be Evil business is to charge the user for the value they get from their apps.

If app miners can figure out how to make something that users find valuable and are willing to pay for, and do it in a way that Can’t Be Evil, all of the other pieces: UI, UX, marketing in promotion, app maintenance, etc will fall into place.

By partnering with a payment provider and building Blockstack-friendly tools around it, @patrick had an idea that I think is worth exploring that we could create an Blockstack-friendly one-click payment mechanism.

You might ask, why use a traditional fiat payment processor? Why not force apps to accept STX or BTC? If I’ve learned anything from my 5+ years involved in the crypto space, it’s that users aren’t really that interested in paying for things with crypto when there’s a lower friction, higher reward option.
Our goal with Blockstack is not to popularize crypto as a payment method but to build an ecosystem of apps that can’t be evil. In that ecosystem, STX are the necessarily fuel that powers the infrastructure. Forcing crypto on app end users as the only payment method when there are payment methods that are widely adopted, lower cost and have a much better user experience is a recipe for making sure your app gets no user adoption. App devs can use their own stash of STX to pay for names and other digital assets and transfer those assets to the users - users don’t need to make these crypto payments themselves.

In a world where successful app miners are earning fiat revenue from their users, they have less need to immediately liquidate STX tokens to fund their operations. Instead, they can take a longer-term view of building a successful app ecosystem. They can afford to HODL their STX and those that do should get rewarded for doing so and supporting the growth of the ecosystem. We could introduce HODLing of STX tokens as an additional app mining metric. App Miners that HODL their STX would get an additional bump in their app mining score.

I’d love to hear your thoughts!

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#2

Thanks Larry, this is really interesting and I like a lot of it. I’m curious in both cases, having reports made or integrating with a payment provider, how you would prevent gaming without the level of access needed to audit either one (due to rightfully not having personal info included). I could easily push transactions through in loops with the same money under fake names/virtual credit cards, only losing percentage points off to Stripe each time.

It also just fundamentally builds a reliability of all apps in App Mining on a 3rd party, which feels pretty weird. Stripe isn’t Can’t Be Evil, so we’d have somewhat of a hole in that promise there I would think.

And then to measuring profit. To me, this is not an indicator of anything other than goals and accounting - a high growth company may be aggressively pursuing market share with their very valuable app, but not show a profit for years. Another may be happy to keep a skeleton crew and keep super high profit margins. And, how do you compare apples to oranges when it comes to different types of businesses? These will have different appropriate ratios of profit made from paid users. I would think this necessitates some kind of categorization to start, which may be contentious, but does feel possible.

Another take: If value to users is what we want to measure, perhaps a simpler route is disseminating a common survey (handled by an App Reviewer) directly to the users of said apps, getting out something akin to a Net Promoter Score or similar. Asking them at the next login to that app is much less intrusive to me than making me share my data with Stripe, plus you’re getting a common score back to compare 1:1 with other apps regardless of industry. You would need to put methods in place to assure that Miners aren’t answering their own surveys, but that seems more feasible than analyzing financials and stripped down Stripe data. There are patterns for this kind of thing all built out around consumer satisfaction that we could draw on and organizations like TrustPilot and others have created methods for getting reliable, real user data out of users of software.

#3

From Stripe ToS:

“The Network Rules state that you may only accept payments using payment cards for bona fide legal commercial transactions between you and your Customers for goods or services that are free of liens, claims, and encumbrances.”

It’s against the Stripe ToS. In my experience Stripe is one of the best companies in the world at detecting and preventing payment fraud. I suspect if you tried to “easily push transactions through in loops with the same money under fake names/virtual credit cards, only losing percentage points off to Stripe each time.” My guess is that your account would be closed pretty quickly.

Yeah I see the issue here, but the payment methods that have widespread user adoption all require trusted 3rd parties to process. The only way to get around that is to be crypto only, and like I said, much to my dismay even hardcore bitcoiners almost never pay by bitcoin. I see payments as something other coins are trying to solve.

I’d rather track app miners - people that we’re paying money to instead of tracking their users.

We could measure monthly revenue instead of profit.

Our current problems stem from the fact that companies gave away their “valuable products” for free so that they could grow quickly and have lots of users that they could track and sell as eyeballs for ads. The only way I see to solve that problem is for users to pay money to apps.

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#4

I’m not suggesting tracking their users, only measuring their satisfaction. No tracking required.

Sure could, which would likely be closer to fair. Still worried about a) comparing different app with different business models fairly and b) gameability, your faith in Stripe is probably well placed, but for an app to put together a few hundred legit people paying a high amount monthly to give appearance of revenue and then kick it back to them under the table is very easy to setup and likely undetectable. It would definitely be worth the trouble as they can pay the kickbacks out of the much higher App Mining rewards they’ve likely bought for themselves.

I do agree sustainability is a key vector that App Mining should try to influence for the better, but by the same token, giving value to people is what open-source is built on and what Blockstack itself currently does - as we and others are showing/trying to show, revenue isn’t the only way to be sustainable. I’m not sure how to balance that ethos with basically forcing everyone in App Mining to create revenue - this would essentially eliminate hobby apps from the program that in the real world, can often turn into businesses. I think we’d start to see apps focus around a handful of use cases that can reliably drive revenue and see less exploration and innovation, which feels like the opposite of what we want. The system could fall back on traditional business models vs. trying to discover new ones because the system rewards revenue blindly.

And not a problem, just a fact: Trying to get people, at least in the current market conditions, to pay for a likely worse app experience when free exists, is a big hill to climb. It might not be one devs want ask the small pool of folks who would be their early adopters to bear. Some apps are cut out for generating revenue right away, many are not, we would need to account for that in the system. It might make sense to have a timeline for this wherein App Mining as we currently have it is a runway mechanism, but after 6-12 months they must graduate and in order to continue into phase 2 of the program, they have to be generating X amount of revenue.

Thanks for starting this and getting us thinking :slight_smile:

1 Like
#5

I’m moving this to the github issue. Let’s continue the discussion there! https://github.com/blockstack/app-mining/issues/136#issuecomment-556027044

Sure thing!

closed #6