My guest for today is Michael Trout who is a US serial entrepreneur and permaculture/bee conservationist expat living in Japan. He is the creator of the Foundups, a kind of anti-startup that seeks to replace the top-down startup business model within the next 10 years. Michael is currently a founder of WholeCom Corp and involved in launching the first of many 100MW solar projects near Manila. Since 1994 he has been involved with over 15 different startups. As VP Business Development of PCN Strategies startup, an Inc 500 fastest growing IT consulting firm in DC, he helped secure over $5 million in new businesses.
Michael holds an MBA/MFA from the University of Alabama, Tuscaloosa. On graduation he founded Genesis Productions Worldwide startup and over $7 million in funding for National Community Development Services clients. While at Florida State University in the 90’s he founded one of the largest free Shakespeare festivals and renaissance fairs in Florida called the Southern Shakespeare Festival which has drawn over 200 thousand people and is relaunching in 2015. Michael is a maverick visionary who sees a world where our centralized, top-down, capitalism model driven by startups is replaced by decentralized, bottom-up, social capitalism model driven by Foundups ushering in Jeremy Rifkin’s vision of an Empathic Civilization. He is also a speaker at the upcoming Metropole Global Forum on November 21 in Los Angeles, CA and currently filming an Animal Planet special that will air in April 2015 on the Asian bee crisis.
In this episode, Michael will share with us:
- 2:10 – How and why he started Foundups.
- 3:15 – The difference between the Startup business model and the Foundup business model
- 7:38 – How Foundups can help save the planet.
- 26:10 – The benefits of joining Foundups.
- 30:39 – What is Ethereum?
- 34:55 – What investors can redeem from Foundups shares.
- And much, much more
Download the Audio Master Class
Michael is a crowdfunding veteran and he’s going to share with us the deadliest crowdfunding pitfalls in his Masterclass which you can download from the show notes on entrepreneursforachange.com/58.
In this masterclass, you will learn:
- • 2:31 –Michael’s out of the box Crowdfunding strategies.
- • 3:38 –How you can use LinkedIn to establish social media presence and leverage your Crowdfunding venture.
- • 14:10 – How to use Skype add-on for Facebook to avoid messaging limits.
- • 21:35 – How to get the word out there if your existing audience and networks are very different from the type of project that you are seeking funding for?
- • 23:52 – Facebook groups vs. pages – Which one to go for?
- • 42:20 – Michael’s tips to manage an on-going Crowdfunding campaign.
- • And much, much more..
Mentioned in this interview
- Y Combinator
- Earth Island Institute
- The Selfish Gene
- Jeff Klein – Conscious Capitalism
- Henrik Zillmer – AirHelp
- Jeremy Rifkin
- Steve Blank
- Dave McClure
- Aardvark Search Engine
- MS Encarta
Where to Find Michael
- Visit Michael’s Website
- Follow Michael on Twitter
- Subscribe to Michael’s Youtube Channel
- Connect with Michael on LinkedIn
- Check out his Pinterest boards
Full Episode Transcript
0:55 Lorna: Hello, powerful change makers, this is Lorna Li, host of Entrepreneurs for a Change and we are on episode 58. Now, I have with us today, Michael Trout who is an expat permaculture farmer/entrepreneur, eye-bleeding dyslexic, and visionary who has a simple but powerful idea for saving our planet which he calls Foundups.
Michael is going to share with us what foundups are, how inspiring entrepreneurs can create foundups of their own, and how you can tap into the power of perpetual crowdfunding to launch and grow your world-changing startup.
Now, Michael is a crowdfunding veteran who’s going to share with us the deadliest crowdfunding pitfalls in his masterclass which you can download from the show notes on entrepreneursforachange.com/58. He will share with us his personal crowdfunding fail stories, what he learned, and what he advises for entrepreneurs who want to get into crowdfunding to do differently.
So, Michael, thank you so much for being on the show. I’d love to first of all ask you who you are and how you got started with this innovative model for your business.
2:10 Michael: Well, I am just an ordinary guy who got fed up of living in the states. I had a job offer on Wall Street in 2004 to go and be a commodities broker at a little boutique firm and I just said, “If want to do this again,” and I said, “No, let’s go and leave and go to Japan,” and that’s what I did and started teaching English and that was in 2004. And I’ve been very happy doing that.
And in that time frame, I had the opportunity to sit back, and look at the world and what was going on with occupy and all the problems, and meditating on a solution and realizing that our planet is pretty well screwed up by us and the underlining problem, I contend, and I can prove, and I can argue successfully is our business model which I call the startup business model.
So the value proposition of this is we can transform the startup into the foundup maybe, just maybe, we can save our planet.
3:08 Lorna: I’m a little confused, what is the problem with the startup business model and how would that differ from the foundup business model?
3:15 Michael: Okay, well, that’s a good question. Well, if you look at for example climate change, everything that’s driving climate change can be traced to innovation that was lost as a startup. And ultimately what’s happening is, is we have a model that was based on – it was put together in the early industrial century when we had this understanding that we thought the world was infinite; we thought resources were infinite. And we basically developed a business model that there is something called GAGR, Compounded Annual Growth Rate, that takes no appreciation of the limits to our planet but only focuses on an exponential return on an investment.
4:01 I don’t know if you read the book, The Selfish Gene, you could probably easily argue– we could argue that the startup is a selfish vehicle because it has the interest of a few investors over the interest of the planet, right? And what happens is the success of these startups has created millionaires and they have their access to Capital Networks and we now have runaway inequality because all the money is staying within these groups and these groups get to launch their innovation. And it’s all about feeding the return back to the investors.
4:37 And if you look at for example the startup, about 70% of the ownership in the startup is of the few individuals, right? So we have massive inequality. We talked about this industrial production and everything else. I could go in to all the different problems. For example, we got 40% of our ocean is now covered in plastic sludge.
Well, now, these corporations for example Nestle which makes a $100 billion a year of water, right? Are they taking in the responsibility in cleaning up our oceans? No. Right? And it goes on, and on, and on.
So as long as we have a selfish model, we can’t assure in that something Jeremy Rifkin or even I think a Jeff from Conscious Capitalism. It’s going to be impossible for us.
5:23 Lorna: Oh, Jeff Klein.
5:27 Michael: Right. Impossible to assure in.
5:28 Lorna: Who passed away. That’s so sad.
5:30 Michael: Yup. It will be impossible to assure in what Jeremy Rifkin talks about is an emphatic civilization. We can have empathy built on a selfish business model. We just can’t have it. And we have to understand that it’s a selfish business model that puts the money in to our politics. So all the money that’s coming in, and driving, and buying away our precedence, and taking away our civil liberty and everything else is coming from this underlining process – this model. So if we change this model, we can change everything.
6:04 Imagine for example corporations that we launched were forbidden to participate in politics and lobbying. Well, in foundups when we as group of people and we have to understand when you got something like Kickstarter raising $5 million for some widget, in essence we could raise $5 million a month for providing free power to the people through solar, right? Can you imagine that, a global civilization of individuals come together and putting as little as a dollar or less a month in order to give away free power? Well, it’s happening in Peru. Peru for example is giving away free power through solar to its poor people because it’s cheaper to do it that way.
6:44 So our whole idea of our business model right now is built on this startup model is fundamentally crashing the planet. That’s my argument. So it’s a hard to sell to folks who basically live their life around startups because we see all these benefits.
7:02 But at the end of the day, which we currently have is we have runaway climate change, the CO2 emission is growing exponentially. We have runaway pollution. The amount of pollution going into our oceans and everything is growing exponentially. We have ice caps melting at an exponential rate. We have a runaway problem right now and we have to stop it.
7:24 Lorna: So how do foundups address this problem? I’m not sure what the difference is between a startup and a foundup, so can you share with us what the business model of a foundup actually is?
7:38 Michael: Okay. So a foundup basically is number one, startups that deal with groups, individuals. It’s hard to do a startup by yourself. You can’t get in to Y Combinator, or Techstars, or anything else as an individual founder, correct?
7:52 Lorna: They do prefer to have a co-founder, but I did have a recent guest on my show with Henrik Zillmer, one of co-founders of AirHelp. He might be the founder or co-founder. In any case, he had a team of people that participated in Y Combinator but I did ask him whether it’s possible to be a solopreneur and participate in one of these accelerator programs. And he said, “You can but it’s going to be a lot of work.”
8:17 Michael: It’s really rare. Yes. It’s extremely rare. Extremely.
I don’t know of anyone. And there’s some videos of Steve Blank and others where they are in a nasty blog, the other guy who founded Y Combinator who talks about that.
8:30 Well, foundups is about a founder. A foundup is a founder with an idea, all right? So, number one we differ is you don’t have to be an incorporated vehicle because startups depending who you’re talking to for the most part, startups are incorporated vehicles. If you’re talking to for example SPA, if you’re talking to an investor, again, it’s very unlikely they’re going to invest in your project unless it’s an incorporated vehicle. Correct?
8:59 Lorna: Oh, yes. That would be the case. Yeah.
9:01 Michael: Right. So, foundups are not focused on, number one being an incorporated vehicle. Think of it this way imagine Foundups Corp. becomes your umbrella. So, you, in essence can use my or our status as a corporation where – the C corporation – to launch your ideas.
9:19 Now, that stage is not something you’re going to worry about early on because you don’t have anything, you don’t have a product, or anything else. But to keep in mind, imagine in the future that you don’t need to incorporate because there’s an umbrella right there for you. You don’t need to secure your IP because you have an organization that’s going to do it for you and hold it for you on your behalf. And ultimately as your idea or your project level is up and it becomes successful, then you just become a qualified subsidiary of that entity.
9:51 So in essence for example let’s look at I don’t know if you remember the startup called Aardvark, Aardvark was a Google startup. Actually, it was a bunch of Google expats who left Google, did Aardvark, then Google bought them for $40 million and there’s been a lot of projects like this in Google, then the project fails. Well, they didn’t fail because they all got shares of Google Corporation.
10:14 Imagine an open Google where you can just plug your idea into this open Google, you have an entire system framework for leveling up, the thing is just as you have Google docs for writing your business plan, you have basically a free management system, you have a free system that allows you to buy and sell that equity that you have to other people and what you have is a decentralized…
10:43 There’s actually a new software that just came out or is coming out this year called Ethereum, a decentralized platform that removes that middleman, so you don’t have for example the Kickstarter in crowdfunding or the PayPal in crowdfunding where projects can happen as a community venture, where projects can actually level up and become part of a global or what I call an open corporation that anyone could be part of.
11:10 For example, anyone could be part of Foundups Corp. for as little as a dollar, right? And by becoming a part of our corporation, you get shares in our corporation. You get to use all the IP. I have introduced something called basically open products, so I’ve been testing new products called for example herb sweetener where I teach you how to make it, a sweetener for replacing your high fructose corn syrup. And anyone can make it from herbs that you grow using GMO-free sugars and you can sell it locally.
11:43 And I want you to imagine for example, imagine a startup that becomes globally recognized herb sweetener that becomes like a Coca-Cola product but this product is not made in plants around the world but actually made and distributed locally.
11:56 Imagine a foundup is something that you just participate in without having to buy in to it. Does that make sense? Okay. It’s a new paradigm. It’s me trying to describe Wikipedia to you before Wikipedia existed when the other thing we knew was MS Encarta.
12:15 So, you have to think of a foundup business. Number is decentralized, a foundup is open and the foundup is bottom-up. A startup in contrast is centralized, a startup is close, and a startup is top-down.
12:29 Lorna: So what the foundup sounds like to me and I can only draw parallels from what I’ve seen in the non-profit ecosystem for example. When you have a bigger non-profit like I believe Earth Island Institute or some… Gosh! Or the Foundation Center, who was it? There are a number of organization that serve as fiscal sponsors to a smaller non-profit project that haven’t gotten to the stage of getting their 501(c)(3) status. So what ends up happening is the non-profit fiscal sponsor then is the vehicle through which all charitable contributions are made. Usually, they will take a percentage of anywhere from 7% to 10% usually of the contributions and then the rest goes to the project that is under that umbrella.
13:28 So for me, foundup sounds somewhat a lot like that too like providing Central Administrative Services as well, in some cases, like office mail-receiving shared software that kind of thing. Is that a good parallel?
13:37 Michael: Yes. Think of it this way is our plan is to launch something called “the Ethereum Play Foundups app.” And right now, I’m testing foundups on Patreon because foundups is a never ending crowdfunding. So it goes through different stages, from the idea of, “Hey, I got a secure little money in order to secure some IP,” to, “I need a secure money to launch my IP,” right?
14:15 There’s different stages. You go from the beginning, middle, to development stage of your business. The whole idea with foundups is, yes, we provide you the operating framework. So just as Google provides you Gmail, provides you e-mail, provides you PowerPoint, well, there’s a lot of things that we want to provide like free crowdfunding so there’s no middleman, there’s no PayPal, there’s no Kickstarter. We don’t take any money out of the pay. To us, it’s just the service we provide you because ultimately our end-goal is saving the planet; not making money off your crowdfunding; not making money off your interaction of selling your vegetables to your community.
14:46 And there’s a lot of independent frameworks already out there called “the open farm.” There’s an Australian network which is providing small farmers the ability to move their produce for example. They don’t take anything from that interaction, that transaction. So what we’re trying to do is decentralize the startup, and to open it up, and to make accessible to anyone. So there are no barriers.
15:21 Because right now, to do a startup, there are so many entry barriers, just incorporating alone is an entry barrier. Finding those investors that would invest, well, we don’t need them. Because if we launch corporations that take 80% of the net profits and capital gains and reinvesting it back in to our network or foundups, then we can make them redundant. We’ve just killed the VC. I’m using a niche term, right? We’ve just made them obsolete in the process.
15:50 And that’s what people don’t realize is that the current model is quickly becoming obsolete.
15:58 Lorna: So how do make money? If you’re not taking a cut on the crowdfunding resources that pass through your platform, then how do you guys stay profitable?
16:08 Michael: So our vision is this is that I believe unlike startups where 99% of startups fail, 99% of foundups will succeed. On those 99%, 1% maybe Googles or Facebooks, all right? There’s no reason for them to roll out. There’s no reason for them to become their own entity.
16:27 So think of foundup is like an open warm buffet business model where think of Foundups Corp. is warm buffet saying, “We’re open to any ideas. We’re not going to pick and choose like Kickstarter, “We’re not going to pick and choose like Y Combinator or Techstars,” or anything else. Anyone could put their ideas on.” We’re launching something called Foundups FX which is Foundups eXtension which is a valuation, validation referral engine and it’s going to sit on all the browsers.
16:55 So our autonomous engine is going to let using the social media decide what ideas are hot, what ideas have value. And as they raise and value, they actually are something called foundup dollars which is a thing like Bitcoin, right? And we will use these foundup dollars to buy and sell.
17:15 Now, what we do is we have the way we make money is this is we become like Groupon. So imagine on our foundups platform, we’ve got a million people doing foundups, okay? And of those, we got a thousand trademarks. Now, what we do is we broke the deal to get the best discount for those trademarks or we broke the deal to get the best cost for those pants just like Groupon does. So we can discount, let’s say, a normal person cost you $500 to get that trademark done. We get down to $300 because of volume. Ultimately, we take 20% of the cost savings that we provide. That’s our business model.
17:50 That’s just one of the ways. There are multiple ways to make money. And the other thing that will happen here is we become this massive IP holder.
17:58 Imagine right now that if you have IP and if you don’t have money that IP is worthless to you because you can’t defend it. There was no 600-pound gorilla protecting you. The first thing you do on our platform is when you raise your first $5,000, $10,000 is secure IP, you secure the trademarks, you secure whatever IP.
18:16 What happens is we actually come in and are going to grab and secure IP before these big IP farmers out there which were out there buying or trying to secure IP. The difference is, is an entity, we’re there to protect that IP that can be sold or resold. Again, we don’t make any money out of this. It’s like how does Google make money out of Google docs, how do they make money out of Gmail, how do they make money out of all the different products. Those are services. And our end result is to launch open corporations that ultimately are going to choose on their volition to stay part of us because our business model is not “don’t be evil is to be good,” because “don’t be evil” just doesn’t cut it anymore.
19:01 So by us providing everything an entrepreneur needs, we believe that they will say, “We want them to stay part of the foundup family.” And as they become successful instead of a few people deciding where does the 80% of the net profit go because we believe 20% going to investors or whoever shared as profit is fair and reasonable. Imagine all of the sudden, you have 80% of the net profits of Google, or Facebook, or whatever feeding back into the system where instead of you have a few people, or a foundation, or an organization deciding where that money goes, that money is shared equally amongst all the stakeholders that responds for generating those net profits and then they decide where that money goes into which foundups of their own choosing on our platform on playfoundups.com or Play Foundups.
19:49 So it’s a business model that’s ultimately is selfless. That’s why I call it the selfless foundup because ultimately we have a big crisis at hand. And if we don’t take a mass of step towards stopping it, there is not going to be a planet for us in the future. That’s the simple fact. I don’t know if you know numbers.
20:11 I just saw the recent was 40% of life on our planet has basically disappeared in the last 40 years.
20:20 Lorna: Yeah. Recently, I heard the news that essentially our wild life lost was much more accelerated than we anticipated.
20:30 Michael: Yes.
20:31 Lorna: So, yes. I truly believe along with the philosophy that the late Jeff Klein shared with me in our previous interview on Conscious Capitalism that business is a powerful transformative force in the world, so we can either use it for good, or we can use it for ill, or in a destructive way so to speak. So I’m off for using business as an unstoppable force for good.
I think one of the challenges that a lot of purpose-driven, conscious business owners have is a lot of the motivation really does come from saving the planet approach which is really commendable but then the big challenges of profitability like how to you actually make it a for-profit business rather than a charitable endeavor. So, I was definitely intrigued by your model, your ability to generate revenues for your overarching corporate entity through discounts for example. Do you have to be at a certain level of scale before any of those benefits actually come to your organization? So it sounds to me unless to have achieved certain economies of scale, the revenues that you’ll get from a bulk discount may not be there.
21:52 Michael: Well, like I said that’s one business model.
21:56 Lorna: Okay.
21:57 Michael: One of the revenue. Obviously, there’s actually multiple ones. The thing is this, let’s just look at the numbers, if Google had launched as a foundup not as a startup, then $1 invested in Google in 1996 would return $1.65 million today, okay?
22:16 Now, imagine if as an investor I then had $1.32 million dollars to choose, where to put it, where am I going to put this because that’s the capital gains, right? Eighty percent of that of the $1.65 million of that $1 that I’ve put in to Google.
22:35 Now, I want you to imagine what the world would be like, and we do know for example that the billionaires have made money, right now there’s about $6.7 trillion, imagine a world where $5.3 trillion was reinvested not by them but by all the employees that help made them that money into launching foundups. And of those, like I said, we’re not trying to make money off, we’re looking for that next Google, we’re looking for that next Facebook. I believe for example Foundups Corp. is like Berkshire Hathaway or has the potential of Facebook or Google.
23:18 All of the sudden, you have to imagine a new business paradigm where we capture all the ideas before anyone else because why wouldn’t you put your idea in a selfless model versus trying to get it going in a selfish model? And if you just will look at the data and Dave McClure will tell you, “You got to be a complete moron to do a startup because so few of them succeed.”
23:45 Most people realized there is three stages to a startup, there is the pre-seed state, right? Which is where 99% fail. Then you got the seed stage, if you’re fortunate enough to get into that stage then you got something like 80% fail, right? And then you got the VC stage which I call the “seeded stage.” So, it’s the pre-seed, seed, and seeded.
24:05 So what foundups does is it takes away these stages and it just basically says there’s this one vehicle and it’s not about for example foundups isn’t about trying to make a few people money, it’s about for example feeding your family. It’s about for example picking up trash and then having a global community saying, “Yes! Thank you Mike for helping to save the bees, I’ll put in a penny to help towards that.”
24:32 And when you start scaling to what we have now where we have 80% of the world online then foundups can be very viable because it’s about stopping the crisis or doing stuff that we can do as individuals. And we can’t launch in businesses, we can’t produce enough non-profits, we can’t produce enough organizations, and we’ve proven this over the last 60 years. All the crises have gotten worse; not gotten better.
24:58 So, we need a business model that empowers the individual and that’s what foundups does, it empowers individual, makes the change.
25:04 Lorna: So, it’s interesting because when I see the motivation of people getting to startups from founders to the first employees to investors, one of the primary and incredibly powerful driving forces is ultimately selfish – the desire to cash in big time on the next idea or hot product and company. So what is the motivation for joining the foundup system and launching a foundup if the return is just making enough money to survive?
25:37 Michael: Well, it’s not that because it’s Play Foundups. If you could spend the next 10 years putting a dollar in a thousand ideas, okay? What are the odds? One of those ideas would be a Facebook or a Google. For example, I would have put a dollar into Wikipedia. Wikipedia is a non-profit because no one would– they couldn’t find any investors. For example, it’s stupid to go after MS Encarta. They were so heavily invested in, right? That was the Microsoft encyclopedia that launched in 1995.
26:10 So, the idea with foundups is number one is you’re empowering people to do that things that are important to them, you’re supporting as a global community those things. Like I said, I for example have launched 10 foundups in the last three months, okay? I’ve launched and funded. My garden is funded that’s feeding my kids. My permaculture farm is funded that has helped cover the basic cost of the permaculture farm. And I am developing new products.
26:40 So, I would say that the valuation of Michael Trout as an entrepreneur launching foundups is significantly higher now that I have $700 a month coming in from my foundups than I was when I first started. Does that make sense? I have the network, the people that are coming behind it.
27:00 So what I want you to imagine now is imagine an open Y Combinator, or open Techstars, or an open– a thing that is an open incubator. Think of foundups an open incubator where anyone could place their ideas, anyone can fund those ideas, and ultimately anyone can trade those ideas what I call “stakes” in those ideas in an open decentralized stock market or stake market for foundups. And it’s like a game, just think of it like a game. So do you think Michael Trout, his garden foundup is going to become a permaculture farm? Is he going to be able to transform for example, number one is transforming our riverbank into a food force which I’ve started doing.
27:41 I’m practicing what I call probably “eco-terrorism” in the sense that I’m taking state land and I’m doing what I want with it. I don’t care. They can arrest me but I’m going to turn this grassland into food land for the community. So, I’m doing it as a foundup and I’m getting it funded as a foundup.
27:58 So, foundups are about following your passion about doing the things that are important and ultimately food security is going to be a very big issue in the future. So if you’re not growing your own food, if you don’t have access to clean water, in the next 10 maybe as early as 10 or 20 years you may be facing a crisis because those things can be significantly limited.
28:24 And I got into permaculture only because I stepped away from foundups to do permaculture because I want to secure food security. So I became a permaculture farmer only out of need, not out of necessity for my family.
28:37 Lorna: How many foundups are currently on your platform?
28:40 Michael: Well, I am testing it on Patreon because to code out a platform and everything else takes significant amounts of money, takes developers, and everything else. So I’m using Patreon which is for the artists and they are the only never ending crowdfunding solution. And I said the moment they launch I was like, “Great. I can start testing foundups.”
29:00 I’ve got four or five other people doing foundups. One guys is doing “how to be happy” foundups. He is a French guy; it’s all in French, but he does videos about happiness and everything else. I have another guy who’s writing a book on startups and foundups. And I have another guy who also does farming and other things.
29:19 So, I’m trying to encourage people to think of anything that’s beneficial to our planet that it isn’t motivated by necessary greed or that is more motivated for survival or for benefit to think of that thing as a foundup. And if does level up, what we’re committed to is taking like I take 80% of the money that I raise and I do redistribute that out into other foundups. And I have that setup I call it “distributive crowdfunding” where I have that setup actually on a sliding scale. So when I get to a thousand patrons on my Patreon page, it will be 80% but up to then it’s distributed. Actually, I’m distributing more than the percentage.
29:58 So, I am encouraging other people to do foundups and actually helping to get them going and working with them to do them.
30:06 Lorna: So it sounds like you have about 15 foundups in your platform right now, the 10 that you started plus five other people’s foundups is that correct?
30:14 Michael: Sure. Well, I don’t want to say platform because I’m using Patreon which is their platform for launching artists. I’m hijacking it and using it for foundups until I can get enough money, so we’re currently coding out some of our platform, Ethereum. I don’t know if you’re familiar with Ethereum. It’s probably going to be a good show for you to cover together with one of the guys to talk about it.
30:36 Lorna: I’m not sure what Ethereum actually is, can you explain?
30:39 Michael: Ethereum is basically a decentralized encrypted web. It’s brand new. Think of it as a new kind of web browser that is completely encrypted and that you can create your own more like you do web pages, your own business models on it. You could become your own bank. You can remove the middleman; it’s decentralized, so there’s no middleman.
31:06 So each note that you setup is a bit torn. It’s all independent. It shares the data. It distributes the data. It’s an amazing product. And ultimately, it’s a product that I was needing in order to do foundups because you can’t have a decentralized startup without having the platform to build it on. Does that make sense?
31:25 You need to have that framework in place. So, they’re building that framework. It’s still a little early; they raised $20 million to develop. And they have something called Ethereum which is their own version of Bitcoin.
31:36 So, it’s all tied into the whole Bitcoin space. It’s built on Bitcoin. And it’s definitely worth looking into if you’re listening to this; just type “Ethereum,” watch the talks. I’ve written a lot on it on LinkedIn I’ve got a lot of posts that describe it.
31:51 Lorna: Okay. So help me understand the foundups ecosystems, do you have these founders who can then establish a foundup within your open corporation network, am I understanding this correctly?
32:05 Michael: Sure. You just put your idea. The corporation is just a level. So if you think about it in levels, think a foundup starts at level zero as your idea. The moment it gets validated and validated means someone likes it, someone supports it, someone follows that, so that forms a validation – social media validation.
32:20 The foundup then levels up and goes through different stages and it’s a project management stage like, “Here at stage one, I’ve got to do this.” And then when you get to the stage or, let’s say, in level five all of the sudden, “Okay, you’re qualified now to become a subsidiary of our entity. You don’t need to incorporate, you don’t anything. You get access to banking, get your own credit card,” everything gets done for you at no cost or whatsoever for you.
32:48 It comes out of what you’ve raised. You got to pay for these services at cost from the crowdfunding and other services that you have. Play Foundups doesn’t exist, so what I’m describing to you is theoretical in the business model. I just want to be clear; you can’t go somewhere and see this in action.
33:07 If you go to foundups.com, you can see I’ve put all the documents, all the data in one place so you can get a better understanding of it.
33:15 Lorna: Okay. Wait. So, I’m a little unclear. Is this theoretical or is it actually happening or do you mean that it’s theoretical and that it’s currently happening on another platform which you mentioned?
33:28 Michael: Sure. I’m testing it on Patreon, right?
33:30 Lorna: Okay. Patreon. I got it.
33:32 Michael: I’m testing it on Patreon, all right? So, I’m testing it on Patreon because I couldn’t test whether those foundups could be launched unless I have never ending crowdfunding. Well, there is never ending crowdfunding. It really aren’t because I’m testing it.
33:43 So now with that tested, the first thing I need to do is build a validation engine so that’s called FX. So, right now, we’ve got FX pretty much coded to 70%. We’re alpha testing it. It’s a social media, like I said, referral valuation, validation engine. So it will sit in Facebook. It’s going to sit on Pinterest. It’s going to sit all over. So if you’ve got Chrome, you’ll be able to download the extension and you’ll going to see FX.
34:09 So in order for us to validate foundups, we needed an engine to do that in order for us to, let’s say, “Mind our foundups,” we need this product. Just think of foundups as hardware, think of Ethereum as the software and then think of Play Foundups as the connector between the two. Does that make sense?
34:28 Lorna: Kind of. Obviously, like a paradigm shifting model so to speak.
34:36 Michael: It is.
34:37 Lorna: Again, as you mentioned, it’s like describing Wikipedia before it existed. So, I’m just trying to understand the ecosystem. So you have the founders creating foundups and then you have the funders and are those funders effectively investors that then receive shares in foundups that they can redeem?
34:55 Michael: Sure. They get this thrice. So we have something called foundup dollars. Think of foundup dollars as Bitcoin, so the moment you put a foundup dollar into a foundup, basically that foundup dollar becomes a stake in it.
35:06 Lorna: Okay. So you invest real money and you get foundup dollars in return?
35:11 Michael: So, basically, yes. So the way it’s going to work is we will take your worthless dollars and give you foundup dollars, right? We will take anything. We’ll take Bitcoin no matter what currency you have out there that’s part of currency. Depending on the market, again, it’s going to be dictated by the market. It’s decentralized. So the market is going to tell you how much they will give you foundup dollars for a dollar for example or take…
35:34 Lorna: So what’s the exchange rate, a US dollar for a foundup dollar?
35:38 Michael: Well, right now, I have set for 100 to one right now.
35:42 Lorna: So, you get 100 foundup dollars to 1 US dollar?
35:47 Michael: Correct.
35:47 Lorna: Okay. And what can I buy with foundup dollars once I’ve made that currency conversion?
35:53 Michael: So what happens is, again, right now what I’m doing is crediting folks foundup dollars that you’ll be able to use on our apps and other things. If you buy Ethereum right now, they’ll raise $20 million selling Ethereum, but you can’t do anything with that Ethereum so it’s the same situation.
36:09 What you will be able to do with foundup dollars is you will have something called I think as a decentralized Craigslist where people will be able to put whatever it is that he have. Let’s say, “I have an old tractor,” “I’ve got this,” “I’ve got that,” you will be able to put it up on what I call “The Foundup Mall” and you will be able to purchase using your foundup dollar those things.
36:25 Now, what’s going to happen is as you put money into foundups, those foundup dollars are actually going to turn and increase in value as that foundup increases. So as that foundup level is up, so well your initial investment. Well, you’re going to say something like, “Oh, I want to buy this,” “I want to get that,” you’re going to exit out of that foundup. And someone’s going to basically say, “Hey, I’ve got these stakes in Michael’s permaculture farm available.” Someone will say, “I think that’s going to further. I’ve been following Michael and I want to get in to that.” So he will basically buy your foundup dollars off you and then you will be able to basically then use that money or use that stake that now goes back into foundup dollars into purchasing anything you want.
So think that in the same extent…
37:10 Lorna: Where can we find this marketplace? You can buy full good listed in the foundup marketplace.
37:16 Michael: Correct. Right. And it’s tax free. It’s a decentralized exchange. Again, we don’t make anything. Imagine BitTorrent market.
37:25 Imagine like everything you see in BitTorrent like these downloads, think of those instead of a download thing…
37:33 Lorna: Like PirateBay?
37:34 Michael: Yeah. Right. Think of it like tomatoes or, “Here’s this,” or, “Here’s that.” You will be able to just type in. Well, it’s going to be autonomous. It’s going to know exactly when you logged in it’s going to know what’s around you. It’s like, “This is what’s available within a 20-mile radius,” and so on.
37:48 So this will plug into all these established building networks as open farm network and everything else that we’re going to fit in to. So, ultimately, it becomes a way for folks to invest in their community, invest in projects and foundups, that then level up, that then produce goods, that then can be distributed locally or within your network. And some of those just like regular stuff will step in it big. And if you’re fortunate enough to have a dollar into one of those projects, you’re going to be very happy.
38:26 And then what happens is those individuals have a term and I call them archangels, they turned around and all of the sudden you have this snowball effect. So the moment we have one successful foundup that can turn around and launch more then it’s going to be a never ending– the snowball is going down the hill. All it takes is once.
38:48 Lorna: I’m trying to grasp this, so currently right now what do you have available in terms of tangible goods for sale in your foundup marketplace?
39:00 Michael: So, right now, people who are patrons of foundsup.com can get my products that I make. So I make herb sweetener, I make yogurt, I make all these different… I only make some of my products available to local. I teach English in Japan, so I have my own parents and I have them buying foundup dollars as a coupon that they use for my English classes and they also use for buying products.
39:28 So I make all these really cool organic herb yogurts and I go and fetch mountain spring water and add herbs, all these amazing organic products that I make available to them.
39:42 For those who are outside, the only product that I have as an international product is a herb sweetener which is basically a GMO-free sweetener that can be used to make herb yogurt or whatever. It can be used as a syrup of whatever. And I have videos on how to make and everything else.
39:59 My goal is I want other people to make herb sweetener. I want to create a herb sweetener brand which is as big as Coca-Cola. But unlike Coca-Cola, it’s owned by the people, for the people as foundups.
40:09 So, imagine seeing the brand herb sweetener recognizing and then that product is actually made locally and distributed locally. I know that’s not a unique idea but I’m taking it to foundups as providing as an example.
40:28 So if you want herb sweetener, you have two options. Number one is you can become a patron and I’ll send you some, and I’ll send you seeds with it, and I’ll show you how to make it, right? And you can start making and use the labeling, and the branding, and everything that as a social network that were creating for the brand.
40:45 Lorna: Well, so, it’s interesting because it seems the value of the foundup currency is going to really depend on the evolution and the breadth of how quickly your marketplace develops. Right now, at Bitcoin, I can pretty much buy anything with that coin, right?
41:00 It seems right now with your marketplace, what’s available locally, yogurt or your herb sweetener. So how long do you think it’s going to take before foundup dollars are going to be able to be redeemed on a much broader scale? Because from an investor’s point of view, if I were to invest in foundups, I’m essentially getting digital currency that I can’t necessarily use until the rest of your marketplace catches up. So I’m trying to figure out what [inaudible 00:40:37]?
41:31 Michael: You’re getting on that. You’re getting shares in the corporation too, so you get– We’re a C corporation, but I’m gifting my shares. We are gifting 2 million shares of Foundups Corp. In an open corporation [inaudible 00:40:53] all shares, number one are voting. Number two, no more than 10,000 shares and they’re non-dilutable to that cap.
41:54 So if you put a penny in and you get shares, every time you share more shares is going to basically non-dilute until you hit that cap. So, right now, the investment for anyone who wants to support the vision of Foundups, the whole idea is number one is you’ll get foundup of dollars that you’ll be able to apply in our marketplace in the future. You have to understand.
42:15 Bitcoin, four years ago was worth nothing and you could get 15,000 Bitcoin for a dollar and they didn’t have a marketplace. So, we’re like where Bitcoin was in 2010. And it’s funny enough I actually came up with the idea of foundup dollars at the same time or around the same time Bitcoin but I didn’t use foundup dollars only because I was like, “I don’t want to confuse people,” “Oh, this Bitcoin, people are starting to talk about this Bitcoin,” so in the diagrams you’ll see me using Bitcoin.
42:43 So in answering your question, it’s going to come down to number is how soon or when I can raise the C capital in order to code out the platform? Now, my hope is this, is I believe for example Foundups eXtension, FX, has the potential being self-sustaining its own viral products something like Twitter or something like I don’t know if you know Buffer or RightTag. These are friends of mine startups.
43:12 I believe FX has the potential to change the web just like Twitter did. And if I’m right in this assumption then all of the sudden think of FX as its own little foundup within Foundups to become a vehicle that’s going to provide the revenue to help develop– what I’m trying to develop is the scope of what Google developed with Google docs and so on, and so on.
43:36 There’s a lot of margins to it. And it’s going to take time and effort. How I see this is, is that things are only going to get worse on our planet. The vision of foundups is simple; it’s individually driven. And people can start to launch them in Patreon and I will work with them one-on-one to help them with their foundup. And it’s just a matter of time before people realized that our current business model is where the problem lies and that the only way to save our planet is to change it. And we need to transform it.
44:09 So, the answer to the question, it’s up to the global community and the money that we can raise. If I can find someone who would put a million dollars in the foundups, I would say you have a marketplace within six months. If it’s going to take me five years to raise that million dollars, then we’re looking in five years from now. So, it’s out of my control. All I can do is be the messenger and say, “Listen, I’ve got all ready to go, all I’m missing is capital.”
44:38 So when the capital comes, we will develop it. And that’s the crutch of all of that stuff.
44:45 Lorna: Have you thought about trying to get in to Y Combinator on this one?
44:48 Michael: No. I approached Y Combinator in 2000. I understand foundups is not new. I’ve been doing foundups since 2010. I went down the Y Combinator, I went down the Techstars, I went down on all these different things. What I realized is this, is I am the end game to the startup. If I am right, I killed the startup, I killed the Y Combinator business model, I killed the accredited investor business model, right? I changed it all. It’s like how Wikipedia changed it all for Encarta.
45:18 So why would someone who invests in something that destroys their cake? They wouldn’t. And it took me basically four years to realize that. The only way foundups is going to happen in my view is number one, if I’m fortunate to find an investor who is selfless and says, “Let’s give Mike a chance,” and he understands the crisis at hand. And say, “I’m willing to try anything to save our planet,” and, “Let’s put in some money into foundups and see if Michael is right.”
45:45 Number two, where people finally get fed up if I can get the offer by Wall Street because we change the whole system. We have to understand, if foundups replace the startups, we say bye-bye to lobbyers, we say bye-bye to all these politicians who are taking money because foundup corporations cannot give to lobbyers and they cannot give to that.
46:05 So the moment people start grasping that all of the problems facing our society stems from this business model and that Trout has this alternative business model that launches an alternative corporation which is built on the existing, nothing changes. All that changes is the bylaws and articles. We don’t have to change any laws, we just basically change the way that all these future entities start.
46:31 I have raised a lot of money for non-profits and non-profits is a whole… And we can spend our time in non-profit. I used to work raising capital for them. Non-profit are not needed. We don’t really need non-profit. Like I said, foundups are all about for-profit. We just take 80% and we put it back in to the system.
46:51 It’s like Google taking 80% of their net profits in order to fund more Googles. You know and I know that their investors are too selfish; they don’t want to do that. They won’t take 80% of the net profit and fund their greedy lifestyle.
47:05 So when people realizes, “We don’t need this 1% to be successful businesses. We don’t need them anymore,” and that’s like where flies in a jar that had a lid on, right? And all of the sudden, the lid has come off in the last four years with crowdfunding, right? The lid has come has come off but all the flies are still in the jar thinking they can’t leave the jar. I’m the fly, right?
47:27 And what I’m trying to do is say, “Listen, we can leave the jar. We can save the planet. We can change everything but we need to step away from the selfish model and embrace a selfless one.”
47:43 Lorna: Wow. So, I really admire your visionary approach to business. So can you let us know how can we stay in touch with your work and get involved in foundups?
47:57 Michael: Foundups.com. I got rid of our website. I was like, “What the heck do I have a website for?” So, I have it now pointing to Patreon. The first thing that we’re going to launch is this decentralized Craigslist for foundup dollars.
48:10 And the reason why I say, “Foundups.com,” is because in the future foundups.com will point to our platform. And in the future, you will be able to get Play Foundups App. Well, you can actually start testing.
48:22 We’re an open corporation, so anyone who becomes a patron of foundups gets access to all of my IP as long as they agree to launch this as a foundup. So, I am completely open but the requirements, “Hey, if you will put a dollar in to this, I will open up my books to you.” Anyone could become a part of Foundups Corp.
48:41 So you go to foundups.org, that’s how I linked in the organization. You could see all the members that we have. Anyone can join Foundups Corp. Can I join Google? No. But you can join Foundups Corp.
48:50 Lorna: Okay. Thank you so much. I look forward to your masterclass on how we can successfully tap in to the power of perpetual crowdfunding in order to launch our world-changing foundups.
49:05 So, folks if you want to access that masterclass, that would be at entrepreneursforachange.com/58.
49:15 Thank you so much for your time, Michael. And you have a beautiful evening.
49:20 Michael: Thanks a lot. It’s been wonderful.
[END OF RECORDING]
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