Monday, April 9, 2012

So What Is This "Dendrite Network" Anyway?

The basic idea is pretty simple, but the ramifications are pretty intense.

It's a little bit like an MLM business and a little bit like an Affiliate Network, but it's also a little bit like Twitter, or Stumbleupon.

Let me start by pointing out some aspects that are important but not part of the main thrust of the network:

First, the entire system will be run on an "open books" basis, meaning that all income and expenses of the business will be open to the users and the public.

You'll be able to watch us operate.

Second, I am not running this business to make a profit (although I have no doubt that it will make a lot of money.) I'm running this business to help people, so after all expenses and payroll are met any excess profit will be disbursed back to the network in creative ways. (Grants, zero-interest loans, scholarships, gifts, etc...)

Third, although there is a strong financial component to the network, it is intended primarily as a means of information exchange and collaborative thought. I originally called it the "Automatic Single-In Many-Out Propagation Network". (Now "Dendrite Network" doesn't sound so unwieldy, does it?)

Okay, now let me describe a few important ways that this Dendrite Network differs from an MLM program:

There is no central product or product line. This is a service to help you promote and sell your product or service.

There is no centralized hierarchy. (In MLM terms, your "upline" is also your "downline" and vice-versa.) Sales and information travel from node to node (that's you bub) in all directions. There's no center to the network. The company administers the system but does not sell a product "into" it.

Put another way, I don't give myself a privileged position in the network. If I want to profit from it I will simply sell my own services (I'm a computer programmer) to the network.

You're not expected to rack up "recruits". I expect most people using it to communicate with, on average, around twelve to twenty-five other people, and for that group to remain relatively stable.

There is no cost to participate and no required purchases. You can join the network as a vendor or just participant and not make any purchases. It's perfectly alright to earn money from the network simply for facilitating other peoples' connections to each other.

It's too soon to know how well the network will function to provide income to non-vendor participants but it is part of my dream for this that people will be able to make significant changes in their lives through participating.

So, how does it work?

Let's break it down by the three different "roles" a user can play: vendor, customer, and participant.

Everyone is a participant. You receive "packets" of information from your immediate group of contacts. These packets talk about some offer or other (hopefully not too spammy) news about interesting things on the internet. The packets could be tweets, SMS text messages, emails, etc...

You, as a participant, take a moment to review each packet (like reading your Twitter feed or something) and you have the option of:
  • Rejecting it. If you don't like it for any reason you can tell both the person who forwarded it to you and the original vendor who created the offer.
  • Forwarding it. This is the default action. If you find nothing objectionable in the message, you pass it along to the other members of your immediate group of contacts who haven't seen it yet.
  • Accepting it. It turns out this message was for YOU! You engage with the offer. Make a purchase, sign a petition, donate to find a cure for breast cancer, whatever worthy cause or pleasure you have found.  "HOORAY! The system works!"
So that's the "cycle" for a normal user or "Participant". You get interesting offers (and if they're not interesting you can belly-ache about it!) and you pass them along to your immediate group of contacts.

When you see something you like you purchase it (or otherwise engage with it) and become a customer. Nothing shocking there.

Now let's examine what happens for a vendor.

In order to be a vendor you have to first agree to live up to certain simple standards, mostly involving promising to operate in good faith and not abuse the system. (I'll write up those standards in another blog post soon.)

Next, to create an offer, you need a product and you need to pick a retail price and a margin for that product. We'll have to see how it goes, but I expect margins of between 5% and 50% to be common.

When a sale is made through the Dendrite Network, you take the retail price minus the margin amount.  The margin is divided between the (up to) six participants in the chain of connections between you and your new customer.

If there are more than six people connecting you to your customer then the six "closest" to the customer get the margin.  If there are less than six people connecting you to your customer then the Dendrite Network keeps the extra portions, which is the only way that we (the company that administers the network) make money. (And remember, any extra money over operating costs are "recycled" back into the system.)

That's the core concept: everyone passes information back and forth; up to six people who facilitate a sale collect a portion of the retail price of the sale.

There are a ton of implications!

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