Published October 13-17, 2022
In a previous series, I wrote about MuCo as seen through the lens of Arun and Jeni. In this series, I will outline the four phases of MuCo’s evolution: Startup, Web2 scale-up, Web3 launch and Web3 scale-up. First, let us summarise the problem that MuCo aims to solve.
Consumers have attention and data. Brands need both – attention to ensure their messages are not ignored, and data to help them personalize the communications and offerings. But there is a gap: consumers are swamped with messages and ignore most of them, and have no incentive to share personal data with brands; brands have no mechanism to persuade consumers to solve the problems of attention recession and data poverty.
Into this chasm comes Mu, a first of its kind brand token for attention and data, a ‘currency’ for next-gen loyalty and rewards. Mu enables brands to build a hotline to their customers. It enables brands to offer micro-incentives (“Atomic Rewards”) for the small actions that can yield big results for brands. If customer engagement, growth and cross-sell can be improved, brands can cut down on their adtech spending, half of which (estimated at $200 billion and growing 30-40% annually) is being wasted in reacquisition and wrong acquisition. By improving retention, repetition (increasing customer lifetime value), referrals and reactivation, brands can improve profitability.
By using Web3 principles for Mu, MuCo solves the five key problems that plague most transaction-based loyalty programs: debasement, redemption difficulty, expiry of points, lack of tradability, and lack of value appreciation. In other words, consumers lacked ownership on the loyalty points they earned. MuCo’s DAO-like governance ensures there is no single ‘ruler’ who can change the rules to alter the tokenomics. Mu redemption is very simple: from being possible in-place where the earning happens (for example, in emails) to a marketplace and an exchange. Mu, once tokenised, does not expire. It can be traded on an exchange. Also, with clear rules on future growth, Mu value can appreciate over time, as its value and utility becomes clear to both brands and consumers.
MuCo combines the MuApp (with a custodial wallet for holding Mu and XRTs – eXtreme Retention Tokens, an inbox for aggregating messages with Mu, and an interface to the marketplace and exchange) and the Muniverse platform (a portal for brands to manage Mu, run campaigns, and mint XRTs). A ‘bridge’ enables the transition from the world of Web2 points and marketplace to Web3 tokens and exchange.
MuCo uses gamification and asset appreciation to bring efficiency to marketing and enables better brand-customer relationships. The money being wasted on adtech platforms can be better utilised in rewarding customers for their attention, data, network and voice – thus creating a win-win for both sides. Over time, the use of Mu can be expanded from push messages to a wide array of moments where brands need attention and data. The ‘programmability’ of Mu can in future create its own ecosystem of applications. And it is from the vantage point of the future that we will explore the making of Mu.
Every new venture faces a ‘cold start’ problem. The 0 to 1 phase is the hardest – most new ideas fail because of an inability to find the product-market fit. The challenges for MuCo in the early days are three: distributing Mu, ensuring consumers see the value and utility of Mu, and convincing brands that Mu can indeed change user behaviour when it comes to attention and data.
MuCo plans to solve the distribution problem by partnering with companies like Netcore which can help get Mu to brands and therefore to customers. Netcore’s dominance in email in India is a very good starting point. 75% of India’s email flows through Netcore. Global open rates for marketing emails hover around 10% — which means that 90% of emails are ignored. Netcore’s use of AMP to create dynamic and interactive emails can be supplemented with the use of Atomic Rewards in the form of Mu. Every email can have a reimagined footer which can enable brands to collect feedback and zero-party data, with Mu as an incentive for time. The earned Mu can be redeemed in the same email – via access to microcontent and casual games. The Mu-powered footer can thus work like the Comics page in a newspaper – a magnet for attention. Mu can also be used to incentivise actions in the body of the email.
Push messages are a very good place to start for distribution of Mu. Within push messages, email’s richness and flexibility offer the perfect Mu vehicle. Billions of emails are sent daily and the low open rates provide the perfect challenge to be solved with the use of Mu. The combination of Atomic Rewards to drive more opens and AMP to generate more actions can greatly increase the ‘conversion actions’ that brands crave for.
MuCo’s initial aim is to ensure the large availability of Mu, and the activation of Mu accounts which enable it a direct communications channel with consumers. Consumers will hopefully see value in the rewards, and brands will see the outcomes in the form of an increase in the actions being performed.
Other possible initial partners for MuCo could be influencer marketing platforms. Influencers would be keen to build their own direct hotlines rather than relying only on the algorithms and rules of the intermediaries (and in some cases, ban-happy governments). Influencers could use Mu to incentivise their followers to opt-in to an email channel and provide additional data which can help in personalising offers.
The startup phase is always the trickiest for any new entity. MuCo’s coordination between brands and consumers through partners is what can bootstrap the venture. Two-sided marketplaces are very hard to pull-off; the future success of MuCo depends on how well MuCo can walk the tightrope to deliver value to brands and their customers.
Once MuCo gets past the startup phase, the next focus will be on scaling up. At this point, MuCo is still situated in the Web2 world with the use of points rather than tokens. This keeps the interface for both consumers and brands much simpler. In the early months, the goal has to be to get both brands and consumers coming together in large numbers. Once this is set, then can come the Web3 launch.
The Web2 phase is about expansion in Mu’s earn-burn equation. This will need wider adoption by brands who start to see that the use of Mu with existing customers can actually bring down the spends on wasteful new customer acquisition spending on Big Tech platforms. Mu can be expanded to other push channels beyond email – SMS, push notifications, WhatsApp messages, and nudges. QR codes can also take Mu offline to ads and stores.
The big addition in Phase 2 will be the MuMarket. This is where the redemption options multiply. Brands can start putting up ‘priceless experiences’ available for purchase only via Mu. Bookstores could offer author interactions, OTT platforms could provide early access to new releases, media companies could offer access to their archives, ecommerce companies could prioritise delivery in return for Mu. These offerings would be largely ‘costless’ for brands but very valuable for customers.
The benefit that brands have is that they can now start earning Mu rather than relying on free distribution from MuCo partners like Netcore. Mu earned through the marketplace could be reinvested by brands for giving to their customers across a wider set of interactions. The most loyal (Best) customers could be rewarded disproportionately for their attention and data. For consumers, the utility of Mu expands: from just content and games to a much wider set of options, making Mu even more valuable.
MuCo can learn from how games like Clash of Clans create incentives for driving actions which bring users back daily and for increasing periods of time. Understanding what ‘hooks’ customers will be the key to succeeding with the Web2 scale-up.
For MuCo, this would also be a good time to expand geographically from India to other emerging markets like South-East Asia. Driving the right partnerships for ensuring rapid and widespread Mu distribution would be the key to success.
The two most important metrics to track for MuCo would be: the new Mu given to consumers (directly proportional to the marketer-desired actions done), and the Mu redeemed daily (showing the utility). There needs to be growth and a healthy balance between the two. This would then set the stage for the introduction of Web3 into the world of Mu.
This is the phase when MuCo starts to fulfill its mission to truly transform loyalty and rewards. Until now, MuCo has been a traditional loyalty platform with points – albeit solving a different problem by focusing on consumer time rather than money. Web3’s decentralisation and ownership tenets will help bring trust, scale, and longevity to MuCo.
There are two key transitions in this phase: Mu points to Mu tokens, and MuMarket to MuExchange. Tokens would be stored on the blockchain and enable others to build applications leveraging the tokens, akin to what Reddit is promising with the launch of its Community Points. Thus, the applicability of Mu tokens widens. In the world of loyalty, points are closely guarded by the issuing entity (airline, bank, hotel, for example). In the universe of tokens, stemming from the core belief that tokens belong to the consumers, the ability to use and redeem tokens can be widened. A MuExchange can be one such entity – enabling trading and conversion to fiat and other currencies. But the real value unlock will happen when entrepreneurs discover new applications for Mu.
Some additional utilities will also be needed for MuCo to help with the transition. A MuApp will make managing tokens and messages much easier. As I wrote; “[MuApp] has an inbox connected to the two public identities (email address and mobile number), support for AMP and Atomic Rewards (Mu), a wallet to hold Mu tokens, and a link to one or more exchanges for trading … [It] enables the easy flow of Mu between brands and customers, thus enabling the monetisation of attention and data. It integrates Email 2.0 and Loyalty 2.0. It is the hotline that creates a win-win by enabling brands to cut their Adwaste by building better relationships with their existing customers, who can in turn become promoters to assist with better new customer acquisition, providing a Big Tech bypass and an entry point to the µniverse.”
In this phase, brands will be able to purchase tokens directly via the MuExchange. This will bring in many more brands and widen the scale and scope of the Muniverse. It is like going from an invite-only world (for brands and consumers) to completely open access.
A big innovation in this phase will be the introduction of XRTs (eXtreme Retention Tokens). XRTs are a great way for brands to reward their Best Customers. They are a form of status symbol, providing an “Open Sesame”-type access to a set of exclusive experiences. XRTs would be stored in the MuApp.
It is possible that Mu points and tokens would co-exist. Some short-sighted nations (India included) have put severe constraints on the use of crypto tokens, confusing every token to be a crypto-currency. In such countries, Mu points will need to continue. Wherever possible, the morphing of points to tokens would be encouraged, conferring on the owners the benefits of future asset appreciation. (Points cannot be traded, while tokens can be.)
The key success metrics in this phase would be the conversion of Mu points to tokens, and the velocity of tokens. The more the usage, the greater its utility, and therefore higher the prospect of future appreciation.
With Web3, the stage is set for the global expansion of MuCo. There would not be any constraints on the uses of Mu. This will also mean a change in the governance model with rules rather than rulers determining the future – more like a DAO (decentralised autonomous organisation) rather than a corporate entity.
This is the phase which fulfills the original and true potential of MuCo: to eliminate AdWaste by enabling brands to build better relationships with existing customers. It undoes the original ‘sin’ of an excessive focus on new customers and an extreme perversion of marketing budgets brought about by lazy marketers betting blindly on the adtech platforms. Marketing has always been about bringing existing customers back for more and getting them to bring their family and friends. This truth was forgotten in the first decades of the 21st century by brands. The result has been an arms race of acquisition spending which has shifted profits from brands to Big Tech.
MuCo undoes this by enabling brands to build the relationship upstream of transactions with a focus on attention and data. It also powers the downstream of referrals and reviews, which serve as the upstream for future transactions. MuCo thus solves a coordination problem between brands and customers. It also brings excitement and fun in the relationship. Brands spend a lot of time crafting their communications to customers; it is a tragedy when most of those messages are ignored. The loss for brands is that they lose out on mechanisms to bring customers back to their own properties, while customers miss out on offers that could be useful for them. Atomic Rewards in the form of Mu bridges this chasm.
As it grows, MuCo would have multiple revenue streams set up: sales of points/tokens, subscription fees for brand utilities, and transaction fees from the MuMarket and MuExchange. Another significant stream could be from enabling targeted new customer acquisition for brands by virtue of MuCo having a hotline to its base.
The opportunity for MuCo is vast. There are a few billion consumers in the world, each with 20-30 brand relationships across multiple categories. Today, tens of dollars are spent for each new acquisition only to see many of them becoming inactive and dormant. MuCo’s oxygen-like Mu can sustain life in these relationships with its twin benefits of gamification and asset appreciation for consumers. MuCo’s ultimate success lies in how well consumers respond to Mu. First-gen loyalty programs have changed customer behaviour: which airline we fly, which credit card is ‘top of wallet’, which hotels we stay at, and so on. MuCo’s hope with its next-gen loyalty and rewards platform is that consumers will do the same with their time – thus opening a closed door for marketers, converting a barren desert into a thriving ecosystem, maximising customer lifetime value, and driving exponential forever profitable growth for brands.