We need to listen what big investors are saying alias let's make Steem great again

Proposed Changes to Steem Economy has somehow started discussion about changes that are necessary. But it should not end there. We mainly need to listen to people who were and potentially could be investing here any significant amount of money. More they invested, more their voice should be heard. Although I'm not saying they should be always followed, we should not risk loosing such a people and their investments. Purpose of this article is to focus on one of such a voice and elaborate around it with proposing real solutions to make old investors staying and new coming.

I'll quote investor @laonie on this:

I spent 400 BTC on SP a few month ago, it's worth about 20 BTC right now, i am the largest financial investor so far, the follow is what i think:

I think the design of Steem Power is flawed, it should be removed completely, a lot of investors don't want to hold SP because of the long withdraw time, and few of them want to hold STEEM because of the hyperinflation , with the new change, the Steem Power holder only have 1.425% (9.5% * 15%) interest yearly, so most of the users would hold STEEM only, few of them would hold SP in order to earn curation rewards, i think this new change would attract a lot of short term and long term investors.

I don't like the idea of rewarding bloggers with stakeholder's money, there are two kinds of bloggers on steemit, write for money, or write for pleasure, the first kind produce low quality contents, it's not worth to pay them, the second kind, usually produce high quality contents, they do care about money, and appreciate and enjoy it, but they would still write without it anyway.if Amazon.com pays for the e-books with shareholder's money and make the ebooks free for everyone, then the price of their stock would drop as shitty as STEEM. We should use stakeholder's money for promotion purpose and for developers. We should develop features like pay per view, tip, trade etc on steemit.com.

We should focus on entertainment purpose on steemit, I don't like to read those original long posts on steemit, they are boring , if i want to learn, i prefer to read books. I think most of the active users here think the same as me, because they are leaving, the bots are voting, few people read and comment the boring posts.

That's the original post and position of major Steem investor and should be taken seriously because if investors are NOT ok with a direction where Steem is going and how Steem is doing things, there will NOT be additional investments for future and growth of the platform. So far, base on many indicators and on voices like this one, many mistakes have been done and things are still not fixed.

Steem Goals

First, we start with short recap what are our goals for Steemit:

• freedom
• content
• features

There are two additional major goals that people usually don't see as long as everything works:

• profitability
• sustainability

Freedom

Freedom on Steemit is fine IMHO. Yes we have some "flag wars" but nothing serious and there is no real censorship, at least I haven't observed any.

Content

Content is incoming and although there are some filters, it's more or less heap of articles with various quality and focus. We need additional features to address that.

Features

Steem is not that bad and it's slowly improving. That's not good enough. Improvement is still slow and beyond expectations. Don't be angry with me, I think current developers are great and efficient. But, for really great UX and development and features we need much more manpower:

• new developers
• new major UI/UX and feature designer(s)
• new coordinator/financial(s)

You can say Steem has already all of them. That's true but look at the capacity. Facebook has at least several hundreds to several thousands of developers. And let's be honest, it can be seen on the product. Currently it has over 12,000 employees. How many developers Steem have? At github, there are 15 Steem contributors but only 3, maybe 4 are really active. We need to at least ten times or rather hundred times increase on development side. That needs lot of money. Fortunately there are (ehh, were) many investors with hundreds of bitcoins.

Investors

Investors are mostly cool people. They risk and invest their money and expecting to obtain benefits in time of harvest. Talking about long-term investors. There are some quite big Steemit investors. Although some of them can give donation with expecting nothing in return, it's rather an exception and it's usually much smaller amount of money. Therefore we need to take a look at profit-focused long-term investors and profitability to attract them. Let's take a look at one of them @laonie:

• Invested: 400 BTC : ~280,000 USD
• Current value: 20 BTC : ~14,000 USD
• What happened: 95% somehow few away out of the system

Whit this result he/she will not invest more and other as well.

Profitability and sustainability

On current model, profitability is practically killed an sustainability is badly hurt. Let's take a look at the details for this single investment.

What could have been done with these money?

With this, 4 full time professional developers could have been hired and paid for work on Steemit for ONE YEAR. That would boost Steemit quality, features and increase its value. And note that was just one (even big) investor.

Instead, what we really did with those money?

We've rewarded some content creators with several thousands dollars per article. We did it few times and almost all money are gone. No wonder investors are angry or frustrated and no new money are incoming.

What can we do to fix this "mess"?

• STEEM inflation is nonsense, it blocks investments and it is good that it was (planned) to brought it down to 10%. However this doesn't solve the issue. SP is nonsense, it blocks even more investment, it's good that proposal lowers its impact to 3 months.

What exactly the investor was complaining about

• design of SP is flawed
• investors money goes out from the system without significant improvement of platform
• basically investment is spent on things (specifically rewards) which should be paid from operational earnings (ads, etc.)

Fixes:

STEEM inflation fix - STEEM inflation will go below 10%

That's good (as before STEEM inflation was about which is more than crazy 100%) but as I said doesn't solve the major problem.

Outflow fix - allocation must be changed radically

On current proposal 75% of inflation STEEMs, ie. ~7% of all investment goes to authors/curators. Cool, you can say - author&curation rewards is what people want. True, but not that fast with that. When you want to build something, majority of investment must go to development at least until platform is not mature and profitable enough. You also need good business model. Actually, to pay authors with rewards is (almost) no investment, it's rather "stupid" wasting of money. Why? Because if you pay someone 1,000 or just 100 USD per article, platform value is not increased with those 1,000 or 100 USD, it's rather increased by let's say 2$ or 1$, but investment money are lowered by the reward price (in case that author cashes them which is something that many rational authors do). Now it's not possible (due to low marketcap and SBD relation) but still people are rewarded with SP and STEEMs which is only creating nonsense outflow for the future.

Let's take a look at current allocation (base on proposal) which is even better than the current one but still horrible:

• 75% Reward Fund
• 15% SP buffer
• 10% Witness

Is not something missing here? How about the project development? It can work like only for small community project, but not for something that should compete major social sites.

Important question: Will the investments continue under current model? Definitely NOT

What we really need is this proper allocation:

• 90% to development, design and project management/finance fund
• SP doesn't make sense anymore, it actually never did, but for historical reasons it can stay let's say with 1% inflation bonus
• 10% the rest (reward fund and witnesses)

This is not just some percentage shuffle, it's about investing where it creates major added value for platform and cutting the rest.

I'm quite sure that such an allocation would be appreciated by investors and all people who wish to see Steemit great. In the end, surprisingly - authors and curators and investors who would be cut now would benefit from it in much larger scale.

Like this will be able to make project really growing and make sense to current and also new investors. Of course you can bridge current gaps with some advertisement but in general even if there is other money inflow next to basic investments, this should be done. I don't care if I get 2$ or 20$ per article right now, because two months ago one was able to get 2,000$ for the same quality article and that's quite pathetic how platform rewards the same quality completely differently in time. Frankly, show me any post that objectively has greater value than 50$. I would also apply roof 50$ or at least add some degression, the rest would go to development fund as additional money for development where they are really needed. Or to boost some articles that has many upvotes and reward below 1$ (something that project @better is doing). What I'm interested in is to see platform that can compete with all major market players and have tens of millions users, platform that has quality to attract millions of users on board and also having hi-tech features and best possible UI/UIX and interconnection to all major existing systems.

For that we need at least ten capable developers for now and designer(s) and someone who can properly manage this project to help it growing sufficiently. Don't take me wrong, @ned and @dan are great and respected but we need to initiate Steemit 2.0 and have valid business model and growth projection that will attract investment.

I know, Steem is here just for several months, but is that a reason why not to make it really successful? We have over 100,000 (I guess in many cases very talented) users here so don't tell me there is no manpower here. We just need to allocate proper funds for proper people and avoid investment outflow to places where it doesn't increase value of the platform.

Recap

Not everything is right now and it frustrates investors and (almost) no new investments are therefore coming. We need to add growth, profitability and value to the platform and show to the investors we have a plan:

• Allocate 90% of newly created STEEMs to project development and improvements fund (and hire at least 10 new devs/UI designer(s) & project coordinator and someone who will focus on profitability and RoI aspect of the project from the beginning to the end).
• Allocate remaining 10% to the rest (authors, curators, witness, ...) as there is no more added value in these areas than this anyway
• apply max 10% inflation on STEEM based on the proposal (push for lowering it to 1% as conditions/price allows)

Find and pay the right people, grasp the potential that Steem(it) has. If you have no one better, I'll make sure that your strategy is working from investment and profitability PoV.

I will close it with this statement: Make investors happy again with allocating their money according to where it creates additional platform value. MAKE STEEM GREAT AGAIN!