This is a great report which was blogged by the "Simmons Report" (Dec 6. 2006). Any one who is already a member of Agloco should read it and any prospective Agloco members who are still sitting on the edge should most definitely read it. It is very in depth and informative.
This report makes very modest estimates in regards to Agloco's member size in one year, how much we will make when Agloco is publicly traded, and how much our direct and extended referrals are and will be worth. This is basically a financial report complete with a list of people involved with the company.
Conclusions the report makes are:
* A user who has no referrals should receive ownership in AGLOCO worth on average about $150. (plus monthly cash distributions)
* The average value of an AGLOCO user’s referral network should be $30 each in ownership shares plus the referrer’s share of monthly cash distribution.
* The average AGLOCO direct referral should be worth in excess of $3,000 each (see example below for details)
* The analysis also shows a range of monthly cash distributions of between $5 and $15 a month per user.
* The AGLOCO business model looks theoretically sound – (assuming they get to a decent size quickly - at least 500,000 users within nine months to a year)
The cost of recruiting new users to AGLOCO can vary. For many users it is simply sending an email to friends or contacts – or talking to them directly. For others it is blog postings or website notices and for some users paid ads on search engines. The privacy and anti-spam policies of AGLOCO and the track record on these issues of Ray Everett-Church (AGLOCO’s Chief Privacy Officer) makes the risk of getting spam, pop ups and other trash as a user a non issue.
In general, given the low level of work needed to recruit new users to AGLOCO and the zero cost in terms of money, the cost/benefit ratio of recruiting new users to AGLOCO seems to be highly favorable. Because there is no limit as to the number of referrals a user can recruit, the upper end on this opportunity could be high (which means it can be worth putting in the effort to promote actively). This analysis was done two weeks after AGLOCO launched and there have been user postings noting referral networks of 4,000 and 5,000 already. At $30 value each this would be $120,000 to $150,000 so far, which means AGLOCO could make some serious recruiting users a high return on their efforts.
Referral Example:
* A user recruits ten people (10 direct referrals)
* If on average, each direct referral recruits 3 new users (some will recruit many and some none, but the average is 3 for each level of your network) -- Value of 10 referrals $300
* The user would have 30 indirect users one person removed. – Value of 30 referrals $900
* The user would have 90 indirect users two people removed -- Value of 90 referrals $2,700
* The user would have 270 indirect users three people removed -- Value of 270 referrals $8,100
* The user would have 810 indirect users four people removed -- Value of 810 referrals $24,300
* Total referrals the user would have in the network would be 1,210.
* At an average value of $30 for each referral the total value would be $36,300
It should be noted that the AGLOCO referral system achieves two tasks:
* AGLOCO saves all the costs of marketing its services to potential new users. This is sometimes a major cost many Internet companies face. Other network companies like MySpace, Skype and YouTube also achieve this goal of users telling users, but in those cases users do not benefit in the value created by the growth of the user base.
* Users who help build the AGLOCO network are financially rewarded for doing so. Because most the value of network oriented companies is based on the size of the network, it is AGLOCO’s stated goal that the people building the network share in the value they help create.
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