• When users buy mana, we immediately get money in our bank account. To date, we’ve been thinking about this as revenue for Manifold. But this is wrong from an accounting standpoint, and bad for understanding our value.
• The closest reference classes to mana are “video game currency” or “gift cards”. Both of these are both accounted as revenue when the WoW gold or Gift Card points are spent, not when they are initially purchased.
  • How video game currency is accounted
  • “Gift card purchases are generally classified as a deferred revenue liability. The cash received from the sale is paid upfront but does not qualify for revenue recognition as no goods or services have been exchanged.” - Source
• Aside: Mana purchases not being revenue is quite uncomfortable; it means that the $5-10k/month in mana purchases we’ve been getting doesn’t actually mean Manifold can say “we are earning $5k-10k a month”. We can only recognize the parts that have been sunk.
  • This means we have very little idea what our actual revenue even looks like
    • To date, we have boosts, some fees… not much else.
  • It also means our printing of mana cuts against our ability to earn revenue…
    • But all in all, that’s okay! As an early stage growth-oriented startup the explicit goal is to bring on a lot of users, paying them as necessary, to achieve the network effects that come with having everyone on the shared Manifold platform

Focusing on mana sinks is good

• Removing mana from our economy then encourages repeat purchases
  • cf Daniel Reeves: “it’s bad for Manifold that some people make a point to stay on the free-to-play version forever”
• We now have an opportunity to build stuff that users want. A business is something that makes value
  • Users who buy mana are already committed to the Manifold ecosystem, and we know a lot about their interests. It should be very easy to figure out how to
  • When users spend mana, we get a credible signal about which features of Manifold they care the most about
• Users will trust mana more and be willing to pay large amounts for it
  • If we credibly treat mana as a scarce “video game currency” or “gift card points”, and consume mana from the ecosystem at a reasonable rate, then users will be much open to buying some
  • The eventual endgame for Manifold imo is to have a large amount deposited with us, and earn money on the float