Dr. Larson's Blog

Making Money to Self-Fund Fusion: The Dawn of BookWormBiz


Making Money - 1. As described in the previous series of posts, my recent analysis failed to come up with any new idea on how to advance my radical ideas within or outside of the present scientific system. Ideas that come from outside the system are viewed negatively by the body politic; and radical ideas from within the system usually lead to the expulsion of the originator from the system. Years ago I had tried everything that I could think of, as well as everything anyone else could think of, to get ECOFusion funded. Since I saw no way of advancing my ideas within or outside of the system, I came to the conclusion about four years ago that what I needed was a different approach. Or I needed a new system. There were two things left I could think of to try. I could try getting publicity, or I could try and make enough money on my own to fund my experimental work. One typically gets only one shot at publicity, and often times it ends badly. So I thought I should try making money first.


Making Money - 2. While working on my physics ideas I never specifically tried to make a lot of money. But in parallel with our fusion proposals being submitted I also started to think about how to make the money to build ECOFusion on my own. Lots of people have made tens of millions of dollars, so why not me? My first efforts in that regard involved JSFBuilder, which is a computer code that writes web applications that can be used in large businesses. I worked this out back in 2008 or so. JSFBuilder can produce full business applications including an extensive security layer that allows tayloring of who can see which pages and uses a browser as the front end. It used the most up to date software available at the time, and used two of the most popular frameworks for the code it produced. It can produce custom business software in a weekend that likely would cost millions to develop, and the code is bug free. I got a website launched to try and sell it, which is still up at http://jsfbuilder.com/ . Since it was totally unrelated to fusion or steel there was no conflict of interest in trying to sell it, but suprisingly to me I was unable to find anyone that was very interested in it. At least not yet.


Making Money - 3. In the spring of 2011 I resigned my position at UT-A and began to try a couple of things to make money. I couldn't really be free to do that from UT-A due to their lengthy review process of what they do and don't allow. JSFBuilder was fine, since it was academically respectful enough not to cause embarrassment. But now I was about to get into things that might not be approved be deans and provosts, so to spare everyone the hassle and time of all the reviews and approvals, and since I wasn't getting any support there anymore anyway, it was time to go. I first worked for about six months with my son Nate on efforts to get a website ranked high on Google which in turn could be used for sales. After six months I had made about ten dollars. To get that far I had an old laptop that was running so hard I needed to put a room fan and point it at the laptop so it wouldn't overheat. It was running close to 24 7, and I only got my site up to page six on Google. All that for $10 in commissions. So I figured there must be a better way to try to make money online.


Making Money - 4. Having tried a couple of IT money making ideas with little success, roughly three years ago I began work on BookWormBiz, a new Network Marketing company. I had an idea where people could upload their own digital products for sale and sell to each other through multi-level marketing. Many people have made millions in network marketing, and if I could devise a great network marketing system, I might be able to get the money to fund ECOFusion. And aside from the empirical fact that many others have made millions in network marketing, one reason I chose network marketing as a way to fund fusion comes from the fact that network marketing works under a model of exponential growth. One person signs up five, each of those five sign up five, and so on. I have tremendous respect for exponentials. I once thought to do a calculation of how long it would take a single bacteria to consume the entire mass of the known universe, assuming they could travel at infinite speed. Since bacteria reproduce by splitting in two, and can do so every twenty minutes, this means the mass of bacteria would double every twenty minutes. And by doing the calculation, I found that they could grow to the mass of the entire universe in only four days! That showed the power of the exponential function, Clearly, if I could find a money making endevour that worked via exponential growth that was the way to go! Network Marketing was for me!


Making Money - 5. For me, perhaps most important advantage of #networkMarketing is that it is presently lightly regulated. As discussed in the series of posts on politics, corruption can often lead to people getting many laws and regulations put in place. They do that in order to get their competitors frozen out of the market. So far, Network Marketing does not have this problem. A second advantage, as mentioned in the previous post, is the potential for exponential monetary growth as I try to get ECOFusion funded. And thirdly, by focusing on digital products, I had the idea that I could use some of my scientific works as products in a Network Marketing company. With all these positive attributes, Network Marketing has the potential to solve both of the problems I have been having with my scientific work - Network Marketing has the potential to lead to both the money to fund the experiments and it also has potential for the widespread dissemination of my ideas. So Network Marketing was what I was going to try!


Making Money - 6. Unfortunately, despite its potential for exponential income growth and other advantages, #networkMarketing can have some rather significant problems: 1) One of the problems is the exponential growth itself. What can frequently happen is that the company will erroneously predict its near term growth; it will either have too little product supply or too much, and in either case it can doom the company; 2) Network Marketing also has the drawback that it can divide people if those who are "in" get too aggressive in recruitment; this can damage friendships and relations within families if carried too far; 3) There are the instances in the industry where the product itself may be considerably overpriced; 4) Additionally, people can get hurt if they are paying hundreds of dollars a month even if the products are great. But the biggest problem with is: 5) Network Marketing has some characteristics similar to illegal pyramid schemes. In many systems, only a very few earn significant profit, while others struggle to earn much at all. On the other hand, as long as the money flows from profits on fairly priced products, it is all perfectly legal, people get something of value for what they pay, and it is a good way for small businesses to sell their wares. So the payout structure itself isn't an insurmountable problem. All of the five problems mentioned here are well known, as a Google search can quickly reveal. So what I needed was to come up with a system that didn't have these disadvantages.


Making Money - 7. My idea was to have the cheapest #MLM ever. The idea was to have a system where people would pay $3.33 a month and get a $9.99 eBook every three months. I worked up a system where some of the money would go into random rewards - basically a lottery with a little of the money. I wanted to arrange for monthly payments out of credit cards, with no expiration. People would never really miss a little over ten cents a day, and the primary goal of this was to fund ECOFusion! By joining, people could help bring a new, clean, inexhaustible and safe energy source to the world. And they could make money by getting others into the system, and that would help fund ECOFusion too. And they might also win the random rewards. And they'd get a product that would not be overpriced. It took me about a year to understand how to do all of the computer work necessary to make it work, but I was finally ready to build it. The new company was named BookWormBiz, and I got the domain name for it and arranged for hosting. It was going to be fun!


Making Money - 8. The idea for BookWormBiz solved pretty much all of the problems that can come with a #networkMarketing company while at the same time it maintained the advantages. At such a low price - just over ten cents a day - no one would get hurt. With a product price of $9.99 for eBooks, we had a reasonable price for the product. By having digital goods, production meant a simple copy command on a computer server, so there would always be a perfect match between supply and demand. To prevent the growth from being too fast, which could overwhelm the server, I put in a variable time delay in before someone could recruit too many others. That way, if the server became stressed, we could control our growth while we upgraded our server farm. This system overcame pretty much all of the problems of other MLM's; principally because of the low cost, yet all the fun and possible upsides were still there. Everything looked great! And then I called a lawyer.


Making Money - 9. My initial call to a leading MLM lawyer was free. He asked me to describe my idea. As I did so, he would frequently interject with "well that's illegal!". It turns out that you can't require anyone to purchase anything to be in a #networkMarketing system. Also, you can't run anything that looks like a lottery. There are limits on what you can charge for a starter kit, and you need to take great care concerning what your products are and what you say about them. You can never make statements that promise future income. Some states have specific laws you must abide by. You can't just have people sign up indefinitely for a monthly payment - you have to ask them again at least once a year. I was glad I called, since I wanted to do this properly. (And I it wasn't my goal to end up in jail!) Unfortunately, the price of the legal services was quite high. Nonetheless, I paid for his starter package. Over about six months I worked with him on getting our policies and procedures written, our receipt production properly done, and a slew of other legal documentation.


Making Money - 10. In parallel with working with the lawyer, I also learned about credit cards. #Nate informed me about the problem of charge-backs. When you get a very unsatisfied customer, they can call their credit card company to have the money returned to them from the vendor. The credit card company both refunds the money to the customer and charges the vendor a fee - up to around $50. #MLM companies can have significant chargeback rates. And if I was only charging $3.33, even a small number of chargebacks could doom the business. Additionally, the credit card charges are not just a small percentage of the sales price, there is often also a threshold fee. With a $3.33 price, the threshold fee was also significant. There are also yearly fees and monthly fees, and all of the fees tended to be somewhat higher for #networkMarketing companies. So learning about credit cards forced a change in the business model.


Making Money - 11. Perhaps the biggest headache of all came in the arena of sales tax. Early on, I got some advice that I might not need to charge sales tax at all - that the internet was free of taxes. But the word was always "might" and when I tried to nail this down definitively I finally learned that no, most states now require sales tax to be paid on digital goods. And the sales tax problem for #networkMarketing companies is severe, since the nexis (the point of sale) is determined to be the distributor, not the home office. So one needs to deal with 8,000 taxing jurisdictions just in the US, as counties and cities also get into the act. There are a couple of companies that you can pay to handle this, but their cost is quite large. Eventually I worked out a system whereby the distributor tells me their rate, I check it, and then check with the state on how to pay. If we get large that may prove to be too much work for one man. But if we get large, we can hire help or pay the big guys.


Making Money - 12. The knowledge gained about the legal, sales tax, and credit card situations required some rather substantial changes to the original business model for BookWormBiz. Clearly, the random rewards lottery aspect of things had to go. But I also needed to raise the price to something that a business model could support. I settled in on a plan where it would be mostly a "book of the month" type of deal, and rather than delivering one $9.99 eBook every three months, I switched to a plan where they'd go out once per month. I also bundled a group of six months worth of payments into a single payment of $59. I stayed away from auto-recurring payments, since that was the cause of most credit card charge-backs. I then got all of the legal documentation online and into forms that users could easily access. I had one more review with the lawyer, and things were now legal and the business model looked promising. We had our alpha launch in the spring of 2013.


Making Money - 13. The first year after our alpha launch involved many, many programming changes. The comp plan was improved, different payment plans were put in, and the occasional bug was fixed. But by our second year we got into a beta launch and things have stabilized. Everything appears to be running quite smoothly. I took about three months during beta to build my own server so that I can run everything out of my house, rather than having it hosted. This saves a lot of money, gives me complete control, has resulted in a system with better uptime, and really allows me to lock down the system to make it quite secure. Corporate costs are now low enough that the business is sustainable indefinitely. We have seen some growth from one year to the next, but so far we haven't really had much of a recruitment effort and so we are still quite small.


Making Money - 14. In an effort to learn more about the #networkMarketing industry, I went to the Association of Network Marketing Professionals conference last year. I couldn't attend every meeting due to a schedule conflict, so at the end of it I bought disks and a ticket to this year's conference. When I watched the videos I learned about the importance of tax advantages - they are huge! I had always thought that you could only take a business deduction if you made a profit, so I had paid all of the startup costs out of pocket. But I learned that I could have actually deducted them, and many other things, from my personal taxes! I've been spending considerable time since then trying to get things correct, as I further learned that I hadn't lost the deductions and I can likely still use them, but I need to make sure I do everything correctly. Conference speakers also mentioned how important social media is, which is what got me going on these Facebook posts. That has had an important side benefit, as it has also kept me in contact with several of you. So I am very happy I went to the ANMP conference last year, and hope this year works out well too!


Making Money - 15. After getting a few more things in order, I spent a couple of months last summer and fall doing recruiting, and I had quite good success. Often in #networkMarketing you need to contact many people for every one that gets in, but I had a much better early success rate. Of my initial 34 contacts, 10 got in, 7 said no, and 17 said I should get back to them. Now in full disclosure, 3 of the 10 were my sons, but even one out of five is an excellent conversion rate for an MLM. Part of the high rate was that I really believe this can financially help anyone who does it, due to the comp plan and tax advantages possible by running a small business. Yet on the next level, of my recruits recruiting others, progress was very slow. So I checked back with both those who got in and those who did not and I got a lot of feedback. It was clear that my website and sales materials were not clearly presenting what we were about. So that sent me back to upgrading the website and electronic sales materials, and that kept me busy up to about January 2015. I continued to study, and I next learned that the best #MLM growth these days is often achieved online.


Making Money - 16. One thing was mentioned often as I tried to get BookWormBiz going, and that was the lack of products. The opportunity of making money and saving money on taxes was great, but what do we have to sell? I had posted a philosophy book, an instructional set for a computer language, and several scientific works, but I knew that the target audience for those were small. The reason I posted them was to serve as an example for others. The idea behind BookWormBiz was that members would offer their own works for sale, and when we get large we would likely have the best product line in the MLM industry. But there was a chicken-and-egg problem - while we are small we really don't have many high demand products. This has been a serious issue for BookWormBiz over the past couple of years.


Making Money - 17. Early on, there was some thought of using public domain works as products at BookWormBiz. A couple of years ago there was some reason not to, which I no longer recall. Only this month (April 2015) did I investigate that possibility again. I learned that it is indeed possible to take public domain text, package and format it nicely, and offer such works for sale. However, such works don't typically sell for the $9.99 price we charge on products. Sometimes they are even "free" if you have already purchased some hardware to read it on. In other cases, the price can be in the neighborhood of a few dollars or less. So I am now working to package three works with two formats each into single $9.99 product. One format is designed to read on larger screens such as laptops or pads, and the other one formatted more narrowly to fit on smaller screens such as phones. So over the coming months we'll be adding a lot of very high quality, popular reading material as products at BookWormBiz.


Making Money - 18. Conclusion and recap. As mentioned in the posts on ECOFusion, written roughly a year ago now, I tried everything I could think of, as well as everything anyone else could think of, to get ECOFusion funded. About four years ago I knew of only three other possibilities - publicity, charity, or self-funding. My thoughts were that if I pursued publicity first, and it went badly, I would have squandered the publicity for no gain. (And publicity going badly is a definite possibility.) If the publicity goes well, perhaps ECOFusion will be funded by someone directly. But if BookWormBiz is fully ready, perhaps enough people will join BookWormBiz (where the publicity effort will be directed) to get BookWormBiz going well, and then perhaps ECOFusion can be funded by BookWormBiz. By doing things in this order (BookWormBiz first, publicity second) even bad publicity might be good for funding ECOFusion. All that remains now is to get enough high demand products on BookWormBiz, and then it will be time to seek publicity.