Misunderstandings Split from PayPal thread

[damion]

So that we do not have any misunderstandings on where I stand, this is the best I can do to explain myself:

I think that an honest site owner who has creative ways of cycling customers and is actually cares will go a long way. I have helped many site owners in the past and felt that they did a great disservice to their customers. Out of the people I helped, Karen at MoveMeUp has got to be ne of the best and I did not have to do all that much for her. I sent out a few emails for her to get her a kickstart and she took that and ran with it. The one thing that seperates her from others is that she is not just about the money - she really does care and the customers know this which is why she does so much better than others.

I try to look at the customers point of view in all that I do so that I can better service them. It is hard to take a stand against something that you have created and I am not saying that I would. I think the matrix concept in itself is a great idea but I am not to proud to admit that it does have some flaws. With creative advertising and a steady customer base (and some changes), the matrix concept could be the next best thing on the Internet but without those changes I will be the first to admit that it will weaken itself. When I ran EZ Expo I spent about 2-3 hours a day trying to think of ways to improve on the system and I believe I came up with some really great ideas, however, it is still not perfect.

I do not think that matrix owners are all out to screw the customer or run with their money. I do believe that there are many out there that do it just to try and make it better and soon realize that they bit off more than they could chew thus forcing them to shut down. These owners are usually the ones that refund everything they can.
There are some people out there that will try and make a dollar any way they can and these are the ones that give others a bad name - I have seen many of these over the past year as well....anyone remember cheaplynx.com? He came up, made a lot of money, and then used the exact same letter of apology/closure that another site owner (Deven Fortkamp - can't remember the site) used and ran with the money.

I understand both viewpoints for the matrix debate and I can see how each side has valid arguments so I do not trash anyone for their opinions. I try to make valid points and let people make their own decisions. Until a court intervenes, I will hold my beliefs that there is a fine line that is being walked here, but a few respected, and well ran, sites manage to stay on the right side of that line.

Until next time,
Damion


I typed this quick so if there are any spelling errors or grammatical errors - sorry.

[ycchen]

Originally posted by damion
I try to look at the customers point of view in all that I do so that I can better service them.

Thanks for your constructive response. Just for debate sake, I like your opinion on how best can matrix serve its clustomers. For most anti-matrix people, one thing we find it difficult to comprehend is that at ANY time, matrix can only serve 2 to 20% of its customers disregard of its size. The larger it gets, the more customers FALL out of owner's 'better service' in absolute numbers.

So, as a matrix ex-owner and supporter, how do you justify the fact that matrix CANNOT provide satisfactory service to >80% of its clients? Correct me if I am wrong, I don't see how >80% customers can get ANY decent service at all? Most of them can't even beg for a refund. What do you mean by better service if only less than 20% of clients benefit from it?

In other words, what do you really mean when you say "I try to look at the customers point of view in all that I do so that I can better service them." ?

From majority (>80%) customer's point of view, I don't think "Sorry, no refund. We are only selling ebooks or whatever. You have agreed with our TOS when you make purchase" or "If I refund you, I will need to refund everyone else" are remosely close to 'better service.'

[damion]

When I came up with the idea of auto-cycling, this was used as a way to better server those 80%. I noticed that the lines getting longer and longer and knew that I had to come up with a creative way to get some of those lists down. The auto-cycle actually worked decently for a while but it was still a far cry when the site traffic really picked up. At one time, I was processing between $30,000 and $60,000 a day and the auto-cycling money I was getting was between $1500 and $10,000 a day - still far from keeping up. I tried using other means by putting a company name as a cycler to be used as cycling funds for stangnant lists and this worked some as well - but still not perfect.
I always tried to come up with creative ways to get people cycled and I think that is one of the reasons that EZ Expo took off and stayed so popular.

As far as the refunds go...I always gave refunds - no questions asked so I really cannot comment on the "No Refunds" policies of the sites now.

Damion

[ycchen]

Damion, thanks again for your sincere response. I think a 100% refund policy is the bottomline service for any ebusiness. It's very sad that NO REFUND is becoming a new norm in matrix cycle.

As a pioneer of the matrix, may be you could advocate "REFUND WITH NO QUESTION ASK" as a new standard to regulate the current matrix business. :)

Back to the topic of this thread -- paypal. I have one quetion: what does paypal do when it freeze matrix owner's fund, beside accumulating interest as suggested by Damion? I assume that clients can readily get refund from this fund. Anyone want to shed some light on this?

[damion]

I would love to see a refund policy enacted that would do this, however, I do not see it coming.

As for PayPal:
When the funds are frozen, customers can request a refund, however, it is up to the owner of the account to approve that refund unless their is evidence to suggest that there is business going on that is against PayPal's TOS. Most of the time PayPal is not going to research it and leaves it up to the account holder whether to release funds. Also let us not forget that PayPal will not give ANY refunds after 30 days.

I hope this helps.
Damion

[ycchen]

Originally posted by damion
As for PayPal:
When the funds are frozen, customers can request a refund, however, it is up to the owner of the account to approve that refund unless their is evidence to suggest that there is business going on that is against PayPal's TOS. Most of the time PayPal is not going to research it and leaves it up to the account holder whether to release funds.

Interesting. So, the matrix owners still have the final say on whether to release the fund held by paypal to customers who request a refund. If so, the owners can probably claim that they can't pay the cycled people because their fund has been frozen. BUT they cannot use this excurse not to refund their customers. Am I right? Do you know the procedure on how a matrix customer can request refund from a frozen account?

My own experiences with paypal seems to coincide with what you say.
1) A ebay seller refused to refund me when I returned a wrong product back to the seller.
2) I file complaint to paypal and paypal freeze the seller account. 3) Only then, the seller start replying my email and refund me.
4) After I receive my refund, I lift my complaint against the seller.
5) Case closed and I assume that paypal reactivate seller's account because I did not hear the seller any more.

On other occations, paypal reverse the charge directly. I guess paypal does its own research sometime.

[concerned]

I have also heard from other members here a while back that if you mention the lawsuit, and the fact that they are running a matrix site, they will forgive the 30 day limit. I think if you give them all the facts that you have, and point them to the lawsuits, they don't have to do much research. As Damion said, if they believe the website violates PayPal's TOS, then they don't need the site owners permission.

[damion]

Thank you concerned for elaborating for me.

That is what I meant. When PayPal's TOS has been violated, they will refund without the account owner's approval. It just seems that in a lot of cases, PayPal will not take the steps to see if their TOS has been violated so they just freeze the account based on the complaint and wait and see how many other complaints they get. Once they receive so many complaints then they somehow find the time to investigate (sarcasm)....

Damion

[ycchen]

I see, so paypal is not too efficient in lauching their own investigation.

So, can I conclude that a buyer has better chance of getting refund from Paypal than from owner directly in the case of matrix?

[damion]

It all depends on the matrix owner. A customer has a much better chance of getting a refund through the matrix owner if the owner is honest.

Damion

[ycchen]

Originally posted by damion
It all depends on the matrix owner. A customer has a much better chance of getting a refund through the matrix owner if the owner is honest.

What's your definition of honesty? :) Do you consider owners who design their TOS to deny any refund to customers because they are selling overpriced 'tangible ebooks' as honesty? According to this standard, I believe that most matrix's owners are honest. :)

Let's put it in the other way, how do you consider a honest owner in regard to his/her refund policy.

"Refund with no question ask"? or .....??

[damion]

An honest matrix owner would be defined no different than any other definition of honesty. Keep in mind ycchen that we do not share the same views on the matrix in general.
I would call an honest owner one who realized that they bit off more than they could chew and decided to refund their customers.

I do believe that there should be more of a "no questions" refund policy, but just because they do not offer a refund policy does not make them dishonest. Software manufacturers and ebook providers generally do not offer refunds because once you have the product there is not any way that you can prove you have not read it or are not currently using it - this does not make them dishonest.

A lot of this would fall along the lines of circumstance - what were the events surrounding the request for a refund. Someone that bought into a matrix and then says they want a refund because they are too far down the list and thought they should be higher should probably not get a refund but someone who did not understand the slight complexity behind the matrix concept before signing up would warrant a good excuse and, in my opinion, should be awarded a refund.

Damion

[ycchen]

Originally posted by damion
Someone that bought into a matrix and then says they want a refund because they are too far down the list and thought they should be higher should probably not get a refund but someone who did not understand the slight complexity behind the matrix concept before signing up would warrant a good excuse and, in my opinion, should be awarded a refund.

Despite our major disagreement on matrix, I actually agree with you on the above refund principle, even though it is difficult to draw the line between the innocent and the speculator. If matrix's ranking list is open to public, as most matrix do, there is virtually no room for speculator to request a refund base on the fact that they are not at the top of the list because they know their position before they signup. Only a handful of matrices which require prior signup before their positions are revealed will encounter the problem you mention.

Therefore, in most case, I believe that it is the newbies/innocents who are requesting for a refund after they learn more about how matrix works. Why it takes so much time for newbies to learn about the risk of investing in matrix? Because Matrix owners ALL fail to explain the risk! Worst, they paint a rosy picture of a riskfree investment. On top of that, they deliberately mislead newbies to believe that they are going to get a cheap electronics in a very short time.

And I believe that it is necessasary for a bad business concept like matrix to mislead the >80% of newbies to donate their money, or else, how can owners make any profit if only speculators/insiders participate in their business?

In any cases, as far as refund policy goes, I think your principle is a pretty good one. 'Honest' matrix owners should use this principle to prove to their customers that they are not merely a money grabbing business.

Thanks again your kind input, Damion.

[damion]

No problem ycchen.

I think to further elaborate on the "Too far down the list" issue, when people sign up for a new matrix opening, it may be the next day before the lists are updated (if it is not automatic) and when this happens, people see they are 25 or 30 on the list instead of 1 or 2 so they immediately want a refund. These people know how the system works and they attempt to get the top of the list so they can cycle quickly and make a quick buck. When they notice they are not as high on the list as they hoped to be - they want a refund.

If you ask me - people like this are worse than any matrix owner who is running a steady site.

Damion

[ycchen]

Originally posted by damion
If you ask me - people like this are worse than any matrix owner who is running a steady site.

Yes, speculators are exploiting the weakness of matrix. I agree.

But isn't that the ONLY 'risk-free' way of investing in Matrix that the ALL owners want everyone to belive in? Only by racing to the top, buyers can "garantee a reward in a short time". If they don't ask for refund at position 25 or 30, they will most likely end up as permanent helpers. Well, it might looks unethical from owner's standpoint. But the whole matrix IS an unethical and speculative game. 2-80% will stay in the matrix as permanent helper! How can owners blame the speculators if they are the most powerful speculator of all!? :D

In other words, it is the matrix (a fundamentally flaw business concept) that CREATE these speculators/addicts. From buyers' standpoint, I think matrix owners should be the one to be blamed for creating them in the first place.

If matrix is FAIR to every buyers, instead of priviledge early birds against latecomers, then the ugly phenomenon that you describe will not happen at all. Any business that priviledge certain groups will only lead to corruption and speculative attack.

Even though I do not like speculators, I can't put all the blame on them. Ironically, they the "true surviver" of this bad business practices, and the owners have only themselves to blame.

If owners are using this excurse (prevent speculation) to refuse refund to EVERYONE, they are punishing MORE newbies than speculators. This will make this unjust and unfair business practice looks even uglier.

[damion]

I agree with what you are saying, however, these people that do this are only trying to "rob" others.
Let me elaborate..
If Joe Somebody jumps in at the to position on matrix A and cycles out on ..say a plasma TV .. then he receives his money. The same guy jumps in another matrix only to find out he is #30 in the queue and immediately requests a refund - definately knowing the risks - then he is more of a crook than anyone has made out a matrix owner to be. Most matrix owners are not purposely out to screw people. They know that it is (although not anymore) a hot business. When EZ Expo was hitting its prime - this was the best business to jump into with little or no capital. This is when the majority of the site owners started jumping on the bandwagon to get their sites started. They were not out to screw anyone and they put their TOS so because to some people it was to difficult to keep up with refunds and adjust the lists to compensate.

In this example, the matrix owner is just another guy (or gal) trying to run business and Joe Somebody is nothing more than a crook trying to make a quick buck at the expense of others, that, once finding out it may be a while before he cycles, attempts to get off quick.

Damion

[ycchen]

If you believe that everyone is 'self-interest', then these crooks or speculators are simply trying to maximize their self-interest by exploiting the weakness of this bad business practice.

If you want to use 'ethnics' (may anti-matrix people like this term) to describe the ugly speculative phenomeon, then you risk of shooting your own foot because matrix is essentially an unethical business.

See, if you start an unethical business (an unethical business will make every owners unethical whether s/he likes it or not). It's really difficult to blame the 'crook' of exploiting your business. That's is probably why it is SO DIFFICULT to regulate the matrixs -- separating 'honest' matrix from 'dishonest' matrix because both of them are based on unethical principle. No matter how honest or 'ethical' the owner claim, they still can't defense WHY, in any given time, you will have >80% of people stuck as permanent helpers. How can anyone run an 'ethical' business this way??

Let me try to explain why matrix is essentially unethical. The answer is simple: Matrix do not create any "new value" (so called "value added") to their service. For example, magazine subscription service has sweepstakes that is free for everyone to participate. They can't substain if they do NOT create new values. Their service create new value through the profit the earn from every new subscription that they take from real magazine companies.

In matrix, no extra value has been created. It's pure money game. Only the same amont of money are taken and redistributed through a very problematic principle-- early bird takes all. No new values was created! You take money in, award a few handsomely and pocket the rest. Absolutely NO extra value (money) is created in the process.

So, how can any one redistrube a fix amount of input (without creating new value) can substain? The answer is: IMPOSSIBLE!

In short, any business which do not creat extra value (money) will FAIL. How can matrix survive? It survive by designing an 'illusion' (everyone will be cycle in short time) to hide the fact that their service create NO EXTRA VALUE. Matrix only redistribute the fix amont of money in a very unethical way. That's why it is a SCAM disregard of owner's good intention.

That is why I keep repeating that an 'essentially unethical business' will make every owners look dishonest. I trully believe many owners are honest and sincere, but their flaw business model will paint them differently, whether they like it or not.

This is a structure problem, and has NOTHING to do with individual intention. That's why it is IMPOSSIBLE to regulate this business. It's fundamentally flaw and there is NO WAY to fix it.
That is why the best exit plan is to close it down and negotiate refund to buyers. Let this immature and flaw business model RIP.

Damion, I know it must be difficult to admit your own creation is fundamentally flaw. It is like killing your own baby ..:) My analysis try not to point finger at individual but on the whole matrix structure. Again, I believe that many owners are kind and ethical individuals who try to run a honest business. Unfortunately, they choose a wrong business, that's all.

[damion]

I do not mind you pointing the finger at me. I am man enough to admit that there are some fundamental flaws in the design itself. I did not invent the wheel - I just made it a little better than what it was by adding "value added services" as you state, ie the autocycling.
I do believe there are other ways to make things better and I believe one site hit a good idea by doing what they called a "random auto-cycle" where they randomly pick someone to send an item to (instead of directly from the top).

There have been some very intelligent people that have came up with ideas to make matrix sites better for what you call the "endless helper" and I think that, with any business model, that time could turn this into a great thing. The main problem is having people stick to their plans and actually come up with creative ways of making things better. As with the "random auto-cycler" - I do not know if they ever really did anything with it. I do not even remember which site it was from, but it was a good idea in theory.

I know that the fundamental elements that comprise a matrix are flawed. I feel remorse that I could not do more to make it better and help all the customers, but at the same time I do believe that there is a great chance of turning things around and finding some way to creatively strategize these lists to move them, make everyone happy, and make the matrix model the next biggest thing on the Net.

There is nothing that cannot be done when a few great minds come together and work as one. The proof is here at MW. There are a few extremely intelligent people here and those few have been able to cut a lot of matrix sites down at the knees by keeping auctions down on eBay and other sites. Imagine what could happen if they used their intellect to try and come up with a better plan for matrix sites.

I bet it could be done.

Damion

[ycchen]

Okay, I will reframe from making long comment since both of us has basically put all the cards on the table ..:)

Just three clarifications:

On MOVING:
Make the list 'move' does not solve the problem. For every one cycled, 10 more people are added (for a cycle of 10). In ANY GIVE time, there will ALWAYS be 80-90% of forever helpers. We are not talking about 10-20% donors, we are talking about majority of buyers are in fact DONORS. See, how do you solve this "80-90% donor" problem?

On getting the bad matrices out of the market:
You assume that if we take most bad matrices out of the market then the $$$ will concentrate on a few good matrices, and buyers will be happy. Absolutely WRONG. More money just make the few surviving owners richer, but it creates MORE unhappy buyers at the same time. It has NOTHING to do with solving the "80-90% donor" problem.

On autocycle fund as value added service:
Nope, that's only a rhetorical game. The only source of money is still coming from the input of buyers. There is no EXTRA money generated other than the input from buyers. Therefore, matrix do not generate what economist will call "value added". Autocycle fund still rely squarely on the input of buyers. It is simply another magic to create illusion to hide the "80-90% donor" problem.

Okay. Let make it easy. If you can't solve the "80-90% donor' problem, all the 'innovative' efforts are just piling one illusion on top of the others.

We have 280+ matrices on the market, and many of them are trying very hard to solve the puzzle. So far, I did not see ANY owners come up with a fundamental way to solve athe "80-90% donors" problem.

I am afraid that matrix might not be the next best thing on the Net as you optimistically wish for. It looks more like the next best scam on the Net :D

[damion]

I ran my autocycle fund from advertising. I am not sure how much you know about banner ads and such but if a site were to put a few banners under a special link section and have all customers (or part of them) click through on a PPC (pay per click) banner then the site could make a substantial amount of extra income each month and that money could be used to increase the percentage of people getting items in turn decreasing the percentage of "permenant helpers".

There are other ways of doing some of this as well - such as opening up a retail www storefront that is linked to the matrix site. All profits from the storefront go directly to an auto-cycle fund.

There are numerous ideas that I would implement if I were back in the matrix world as an owner. Like I have stated before - there are numerous creative ways a site owner can help reduce the endless lists and actually bring his cycled percentage higher. This would, in turn, make his or her site more desirable by the matrix consumer thus also making him more money in the long run despite the immediate loss of advertising revenues and storefront profits. They make many storefronts that you can add to an existing site and sell digital media such as e-books (good ones I might add) and make 50% of the sale. With a site like EZ Expo or MoveMeUp (with the amount of customers on each), this could actually start to turn the whole site around.

While we may disagree as to what needs to be done about the matrix world, I think we both agree on one thing and that is the customers. Neither one of us want to see the consumer screwed. I think that you can agree that some of these ideas would help and with a few more ideas like these the matrix world could turn into a favorable business and be somewhat fair to all involved.

Damion

[ycchen]

Yes, I agree with you that serving customers should be the ultimate goal of any business. I disagree with many pro-matrix people who love to glorify "willing victims" (so call mature customers) who know the risk and will not complaint if they never cycled. I am sure this is not what the majority of the "immature" customers thinks ..:) The lawsuits by customers are good examples of the act of so called 'willing victims' . lol.

Yes, advertisement and storefront are "added value" -- extra value generated other than input from buyers. With more money pouring into the matrix, it will definitely reduce the "80-90% donor" problem. How much will it reduced to? 60-70%? It all depends on how much the owners are willing to put the profit of storefront (forget about advertisement, I think that's minimum, unless I am wrong) to the matrix.

It also depends on how well the storefront can generate profit. Even the storefront and advertisement do generate 'incredible' amont of money to rescues the matrix, I don't believe that it will reduce the "80-90% donor" problem to "50-60%". Then, we still have ">50% donor" problem! Okay, better, but is this ethical? Of course NOT. An ethical business left NO one as pure 'donor', don't you think so?

On the other hand, if your storefront make so much money, why do you want to support a losing money matrix (if you want to cycle more people, matrix is DEFINITELY losing money)? Why don't you just keep the storefront and cut out the matrix?

Okay, some may argue that matrix bring eye bows, popularize the website and bring in potential customers. Well, may be. But if you do a careful analysis, you will know that it is unlikely to happen.

1. You are dealing with two different consumers. Matrix customers want to make money (act like investor), and the storefront customers want to buy cheap products (typical buyers). As buyer, if I know that this store is supporting a money losing matrix, then I know the product price at storefront will not be as competitive as other online store. Your only bet is how to turn the matrix investors into your storefront buyers. These two customers has completely different economic behavior. I don't think that will work, but you can try. Is movemeup chrismas sales similar to your idea? Will they pour the chrismas sale profit to rescue the matrix? I doubt it. But if they do that, their matrix's average cycled rate will probably increase a few percentage (to 20%). They still have "80% donor" problem. The only ways to pay every single donor is to STOP the matrix and continue to use the storefront profit to cycle out all the "80% donor". Then, she will be running a real charity. It does not make sense. But if she continue to run the matrix, the increase in donor will off-set the profit from the store front to cycle tme. And eventually, the average cycled rate will decrease again.

2. Matrix has (or will) acquired a negative image that associate with internet scam. Well, you can disagree with me on this. So, a matrix will not help your storefront business...:)

[damion]

The trick to running a successful storefront that would support the matrix would be in selling something that is fixed price everywhere you go such as digital media through clickbank. This could have the potential of paying quite a bit of the matrix bills down while dropping out the need of customers to shop around. Think about it for a minute. If you are a matrix customer on ABC site and you want to buy this ebook on say...real estate. You know that the ebook is $17 (Trust me I just bought "Master Internet Realtor Secrets" for this price). You know that a portion of that money (roughly half) is commission to the selling site and if you buy it through your matrix site that the money will help cycle you quicker - where would you buy it from?

You are incorrect on advertising. Advertising brings in a lot of money if done correctly. When I ran EZ Expo, I pulled in enough advertising to cut the lists substantially. At the beginning (when things were kind of slow), I was able to keep the lists down to about 50% just off advertising. This changed as the site grew exponentially, but I can see where it would make a drastic change in the numbers if done correctly.

With the correct marketing plan, just using these two ideas, I could see how a medium sized site could drop their numbers down to about 30% that have not received (if implemented before things get to big). Add a few other ideas to move money into the lists and you could drop it to almost nothing.

Keep in mind that the reason someone would not just open a storefront or advertising site regular would be because they would be no different than any other site out there. The fact that people would know it was helping them and others cycle out for free items would be the reason people bought from your site or clicked on banners, etc from your site instead of another one.

Damion

[Lancer]

If you would want to get more money and profit then freeze the matrix lines. Use the proft from the store front to cycle or refund all the "donors" then what money is left and what profit the store will get will later on you get to keep. You dont have to keep pumping the profit into the matrix. It makes no sense to keep putting all the money you earned through a legitament business into a risky business that is making you a smaller profit than your other business. Open a good store front that sells well and cycle or refund the remaining customers so you get to keep all the profit afterwards. If not then all your hard work that goes into the storefront is useless because it just goes to other people to give them more money than they gave you.

[ycchen]

I agree 100% with Lancer.

To turn this unethical and flaw matrix business into an ethical one, the best way is to stop the matrix and negotiate refund with customers. As many pro-matrix people will ask: where is the refund money come from? Well, it will need to come from the money your make else where, like the online store proposed by Damion or your own pocket.

If you continue to operate your matrix, the burden of cycling MORE matrix buyers (cycling is at least 3 -10 times more expensive than simply refunding), reduce the 80% donor to 50%, will DEFINITELY offset any profit you make somewhere else. It is irrantional, if not insane, to keep this money sucking matrix alive. It will ruin any business that you do around a matrix.

BTW, I am VERY skeptical about how you can reduce 80% donor to 50%. To do so, your 'added value' ($$ from sources other than buyers, e.g. advertisement, storefront...etc) need to be LARGER than the buyer input. Even though I am a moron in internet advertisement, no one will believe that advertisement income will be larger than the buyer input...:) Therefore it is IMPOSSIBLE for you to reduce the 80% donor to 50%. If I have time, I will show you why it is impossible. The only possible way is to use your own bank account to cycle the 80% donors. But why do you want to cycle them? Cycled is 3-10 times more expensive than refunding them.

If owners want to proof themselves to be honest and ethical, they should just borrow money and pay for the mistake they make. Learn the lesson, and get on with life. The other alternative is to take your chance and see if you can avoid a lawsuit sometime down the road. Of course, you can take your chance because you 'might' win the lawsuit, even though your matrix will still die eventually. I am no expert in lawsuit, but my instint tells me that matix will lose. We shall see.

Again, consider all the risks, it would be matrix owner's best interest to close shop and negotiate refund, than doing ANYTHING else. Anything you do AROUND an operating matrix will eventually suck you dry. Again, matrix is money sucking machine. It only survive by burying >80% of donors. When the donors' rebel, it will be the end of matrix. I am afraid that the lawsuit is just the beginning of the story.

ADDED:
Okay, let's not be too negative. I support your idea of opening a storefront to raise fund to help the mess created by matrix. My advice to you is to STOP taking more money from the matrix end and STOP cycle anyone. This will stop the breeding. Then, use your storefront profit to slowly REFUND the 80% donors. This is the ONLY way you can reduce the "80% donor" problem. Yes, if people knows that you are 'doing the right thing', they will be more willing to buy from you. I, for one, will definitely buy from your store! I am sure everyone in the pro/anti-matrix community will do the same...:)

[damion]

Lancer
You are correct about the profits, however, people are not going to buy from your storefront once they have cycled off your matrix lists and your advertisement revenue will drop as less people visit your site so by completely shutting down the matrix you would be shooting yourself, and your customers, in the foot.

ycchen
Let us not forget that you and I share different opinions about the matrix concept. I believe it is a good business model with some creative ways to move the lists where everyone will be happy. The 50% rate was when I was doing a much smaller amount of orders in a day and I was bringing in more money off advertising than I was off of the matrix itself.
This rate (although I do not have exact figures) increased to probably around 65-70% as the site picked up. I do believe it is possible to do other things to change these numbers and get them down into the 20-25% range (which would be an acceptable range to keep the matrix prospering).
Our difference of opinion on the matrix model itself is one of the reason we differ in opinion on these issues as well. I believe that the matrix idea is a great way for people to get things they would not normally be able to afford.
I remember one of my favorite testimonials that I received:
Hey, just to let you know that the 3 Playstation 2 Systems arrived today!!! It felt like Christmas here today after I got home from work! You guys are great!!! If it wasn't for this matrix we would have never had gotten one, much less 3!!! With 3 kids it sure is great!!

This was from Jennifer Hicks, one of my old customers from EZ Expo. Knowing that she was able to get a Playstation 2 for all three of her kids when she really could not afford one really makes me feel good and this was one of my driving forces behind the matrix. I like it when people are happy and I believe that we could continue to make people happy through creative matrix sites that use some sort of other revenue to speed the cycling and reduce the "endless helpers" to around 20-25%. By reducing this number, the site would make better speed and people would not have to wait an eternity to cycle.


Damion

[concerned]

Damion, I thought you were caught inventing your own testimonials. If that is correct, was this your favorite because you wrote it? Also, how many of your customers are now mad at you compared to the ones that are happy? Just because you helped one person out doesn't mean that you are a great guy.

[ycchen]

Well, I am not sure about whether this particular testimonial is true or false. But for a monster matrix like Ezexpo, I have no doubt that he can shows us a few legitimate and happy testimonials if he likes..:)

I still don't believe that Damion can reduce the "80% donor" to "50% donor" just by advertising money. In fact, Ezexpo is famous for huge length, such as cycle of 50. For cycle of 50, the cycled rate is only 2%, and the problem is "98% donor", not "80% donor". In order to have 80% donor, you need to have an average matrix lenght of 5 (cycle of 5)! So, I am already very 'generous' to say your have "80% donor" problem. In reality, I beg you have more than ">90% donor" problem.

Reduce the problem to "20-25% donar" ? How?? Unless you can elaborate how you do this. Or else, I can't help thinking that you are 'bluffing'...:)

[Lancer]

Damion wrote
You are correct about the profits, however, people are not going to buy from your storefront once they have cycled off your matrix lists and your advertisement revenue will drop as less people visit your site so by completely shutting down the matrix you would be shooting yourself, and your customers, in the foot.

So you are saying that the only reason they buy from the store is to get on the matrix? If this is the case I bet most owners would consider their site as a storefront;) ,lol. Their store is selling ebooks. But if not then it would fail also if the customers from the storefront were the same from the lines. They have already been drained of money and I dont think they are gonna buy much from the store front just so the profit of what they bought can help them cycle. I thought what you meant is if an owner opened up a store that was seperate of the matrix and that his profit from the store would help his matrix lines out. I have already said that it would be a dumb idea if the owner took all his profits to keep the matrix going. It also would be very hard to start up a succesful online store. Then through the profit from all your hard work into the matrix to help people get money they didnt have to work for. This seems very dumb and risky to me. I doubt any owner would go through so much work and risk just to help some people cycle.

[ycchen]

Okay, let me show you why your good intent to reduce the "90% donor" to "50%" never take place, and never will.

Imaging a matrix with one list.
Cycle of 10, $150 to signup, and $1000 payout (or award).

After sometime, the total signup reach 20 people. The first 2 person cycled with $1000 each. The cycle rate is 10%, which make 90% donor. (2 cycled, 18 waiting/donors)

Total money received = $3,000
Total money payout = $2,000
Owner pocked = $1,000

Now, here come Damion who want to use advertisement money to increase the cycled rate from 10% to 50% (or to cut the 90% donor to 50%). How much does he need?

Damion need to cycled extra 8 persons in order to claim a cycled rate of 50%. 8 x $1000 = $8,000. He need an advertisement revenue of $8,000, or $7,000 if he give up the $1000 he pocketed from the total money received.

In short, to lower the 90% donor problem to 50%, he need to come up with extra $7,000! 2.3 times more than the total $3000 dollars that he received from the 20 signups.

See my point now? How can anyone believe this 'mission impossible'? Unless you are running a charity to please all the moms who can't affort to buy PS2 for thier kids. Or else, no one will believe your formula of turing a matrix into the next best thing on the net, even if you have good intention.

Okay, what if Damion decide to further reduce the "50% donor" to "20% donor". He need to cycled EXTRA 6 people = $6000!

So, for Damion to reduce the "90% donor" to "20%". He will need EXTRA $7000 + $6000 = $13,000 to accomplish his task.

Here is the summary of Damion "charity" matrix
Total received = $3000
Total payout = $2000 + 13,000 = 15,000
Total lost = $12,000 (Can advertisement generate 4 times more than the signups $? )

Now we have: 16 happy moms, 4 "willing victims¡¨ and 1 bankcrupted owner

I don't think I need to say more, the number speaks for itself.

Last scenario that most anti-matrix people advocate. Stop and refund, how much it will cost Damion? Refund 18 donors with $150 each = $2700. $2700-$1000 (pocketed profit) = $1700.

Why would anyone want to settle a mess with $7000 (reduce to 50% donors) or $12,000 (reduce to 20% donors), and not $1,700 (refund)?

[concerned]

This thread was seriously getting off topic. I split this thread. Please don't allow this to happen again.

[Lancer]

good point ycchen. But owners see that $1,700(its different for all owners) that has to come out of their own pocket. So they either very reluctantly pay refunds, dont want to give refunds so they leave their dieing site open which doesnt do anybody good because they will hardly see any more new orders, or they run and close up shop and leave their customers in the dust. I think thanks to MW with the lawsuits and thanks to individuals who just dont do anything when they are scammed less sites are running. And now there is a trend which I think is good, owners are deciding to close and they are starting to refund everyone. Of course the majority of the sites do the option where they stay open and idle because the owner doesnt want to dig into his own pocket for the money and he doesnt want to run because he knows he will not get far.

[damion]

First off - there was one fake testimonial and that was only because once people cycled they basically said screw it.

As far as the advertising revenue goes ycchen - you are pretty good on the numbers. What you do not realize is that I generally advertised other matrix sites for a percentage of the orders over a week or two or I would do it for the first one or two placements on a list and then take the payout as normal. It was not uncommon for me to make $15,000 plus on advertising one site - this was all used (no profit from advertising) to cycle the lists - I am sure you can do the math from here if you were part of my mailing list back in October-January.

Damion

[concerned]

Originally posted by damion
What you do not realize is that I generally advertised other matrix sites for a percentage of the orders over a week or two or I would do it for the first one or two placements on a list and then take the payout as normal.

Thanks for proving one of my points from a long time ago. I guess there were some sites that were playing favoritism with the first few spots, ALSO KNOWN AS the few spots that would ACTUALLY pay out.

So while your AUTOCYCLE was supposed to be working, there were other sites that were paying you, so they couldn't afford to cycle their own members.

[ycchen]

Lancer,
It is good to know that some small matrices are willing to end these flaw business and refund their customers to avoid complaints and possible lawsuit sometime down the road. Paying some price for starting a flaw business is very common in market place, so I don't know why many are still 'hanging there'? I think a lot of people are just waiting for the result of the lawsuit. If the customers win, then, I am sure that most matrices will rush to close shop and refund. At the same time, more customers will start to sue their matrices. However, if the class lawsuit lose, then, these idle matrices will stay forever, even though their sales might be completely halt.

I have a feeling that they are 'waiting' to see what's happen to the lawsuit. The bottomline is whatever the result is, matrix will continue to decline.

Damion,
Okay, your advertisement revenue (from other matrix sites) is extra-ordinary high. However, I only do 1 list with 20 signups. If I expand this list to 40 signups. In order to pay 50% of the signups, you will lose $14,000. Let say you have 10 lists, the amount your lost will be $150,000 if you want to maintain "50% donor". Basically, base on the hypothetical matrix I mention above, for every $1 you receive, you lost $2.3 dollars, and you need other source of income to cover this lost. So, you can get advertisement revenue of 150,000, and still make money? Wow, I am very impressed. Unfortunately, if that's true, it will NEVER happen again.

Why? Because you have a 'first mover advantage'. As the pioneer in this flaw business, you have the advantage of getting ALL the clients and the MOST out of advertisement. So, you are really lucky to get so much advertisement revenue that I bet NO other matrices can match. That's because you are in the honeymoon periold, just like the dotcom myths in the late 1990s.

Now what? Your first mover advantage has basically gone, no way anyone can get any advertisement revenue (what I consider 'value added'). Now, do you expect one of the matrix can adapt your storefront idea to make $150,000 to cover the lost of their matrix?

[damion]

concerned
The way I did this was to save people money on advertising. Look at it this way. If I took the top two spots on a matrix - say it costs $150 to get in - This would only cost the site owner $300 (which actually was made up by profit from my cycles) - the rest was paid by the people that signed up, to cycle me off the list. This was the best way for me to get top dollar for advertising and able to move my lists quickly as well.

ycchen
I realize that I had the "first mover advantage". This is how i was able to keep EZ going so well. I know that advertising will not be so well in that aspect. My point is that there are other ways to cycle these lists off and keep people receiving gifts while decreasing the "helpers" percentage and increasing the cyclers percentage.
I am only stating what I was able to do previously and I know that people with a little creativity could find other ways to move these. I do not own a site anymore - haven't since February so it is not up to me how things go. My statements on this whole issue is that these owners who do nothing are doing nothing but hurting them and their trusting customers. I would rather everyone on every list get their item than a refund - this will make them much more happier. Wouldn't you rather $5500 (or plasma tv) over $150 refund? Who wouldn't if it could be done in a relatively short amount of time. For that matter - if it could be done in 2, 3, 0r even 5 years it would be good. Where else could you ever see that kind of return on your money (other than getting lucky in the stock market or winning at the casino)?

I realize you are very intelligent, as am I, and we could go on about this forever back and forth but it solves nothing. You have your opinion and I have mine.

The one thing that we both agree on is that the customers should be first - and I think that is where site owners are failing. They simply are not coming up with anyway to really help the customers.

Damion

[ycchen]

Damion,
It's really nice to debate with you on how best a matrix can serve its customers. I think 'customer first' attitude are very rare in matrix community today. Most attitude is how to create more "willing victims".

Happy birthday!

[damion]

I agree with you on that - and thank you.

Damion