Uhub

Uhub – The choice

Martin Butina, Ubuntu movement

These days when we’re so much accustomed to big grocery stores and their seemingly endless options and choices that we forget what we are really there for. We are mesmerized the moment we step in the lair and we forget who we are. We see what these stores want us to see and hide the dirty details. When people are presented with lots of choices they don’t strive so much for their power – the strive for something they truly desire. Power and choice are interchangeable. As long as there are lots of options we tend to forget about the origins, economics, ethics behind a product and above all, the abundance of choices makes us forget what we came for.

Have you ever wondered how price is divided from producer to consumer? Typically producers earn only ¼ to 1/3 of the price you pay in the store from which they have to deduct expenses. So where does all the money go than? Well you must have figured by now who is paying all the stores marble, ridiculously high manager wages, all the transport, cooling, storage and all the advertising space. Its you dummy ;)! Have you ever wandered how much of your money actually goes to the growth of the tomato you just bought? Only 1/7 th of the share. All the rest is for petrol based logistics, herbicides, pesticides, fertilizes and cooling. And this 1/7th is than shared for wages.

Imagine your local community as a pool with a fountain in the middle. Water represents economic (monetary) liquidity. If water is bursting beyond the borders of the fountain it is lost forever and must be replaced to keep the fountain running. And new water can sometimes be very expensive. This is exactly what is happening with our modern society. Products and services are being brought in local communities from outside and money is flowing out. The water we are producing is sold cheaply to somebody else while we import a poor substitute through a broker and pay premium price.

Local farmers can’t compete with big agriculture companies even though their products are of much better quality. Since most of the economics is driven through big grocery stores they are much more inclined doing business with someone that can provide enough quantity as cheap as possible. They also tend to consolidate their suppliers, so less suppliers means less problems. Due to the prolonged economic depression people try to conserve money by buying cheaper products, food is especially the target and retailers knows that. In the end shelfs are filled with affordable low quality stuff of dubious origin from only a bunch of suppliers. Not exactly the choice you as a customer had in mind.

If you’re a small producer you’re hard pressed with the economics and most likely sell your produces under price and just barely cover the expenses. And it makes you mad seeing your products in grocery stores 3 times the price you sold to them. Maybe you’re able to sell some of your produces locally for much more but this is just a fraction, you have so much more to sell.

If you’re a customer you know you don’t have much option if you’d like to conserve your time. You know that you’re able to find some local producers where you could buy better quality products with known origin and a good price, however they are so far apart and you have so much needs. Commodity mode applies here, it’s so easy to go to the store where everything is provided at the arms reach. But it’s expensive for what they offer and most of the time no one is listening what you want, what products you’d like to see on the shelf.

But now there is an option to solve all these problems in one stroke. Uhub is a concept that ties consumers and producers in a much more sustainable way, lowering needs for logistics, warehousing, cooling, marketing, while eliminating brokerage, providing infrastructure for communication of needs and grow healthy community.

Image: The schematic picture of the Uhub system

Note from above image that relationship between provider and consumer is by default passive, managed mainly through the online tools and connected through a delivery point. CSA substantially enforces the direct contact and cocreation.

Liquidity – The circulation of money

Various studies have shown (very) interesting results based on the type of the community the study was conducted. With very closed systems 75% of influx money pours away in about 48 hours. Mostly for payments of services outside these communities or buying stuff in a supermarkets. Very little money is retained inside the community mostly for wages. The money left in the supermarkets usually leave the country the same day for payments of suppliers, bureaucracy, taxes and profit for owners of the capital. Most supermarkets are build with loans and the future expected high return on the investment. This is also the reason why products are overpriced and of low quality. The idea of price vs performance is stretched to the limits.

So in many areas, the issue is not that too little money comes in but that most of the money that does enter the local economy flows right out again in the form of spending on and contracts to non-local businesses and labor. The local economy looks a lot like a leaky bucket. Money enters the way we pour water into a bucket. But a lot of that water leaks out of the bucket, just as we spend money on external services. Leaking is not innately bad because economies are connected, and this exchange of money promotes innovation and cultural exchange.

In communities facing economic disadvantage, however, there are two ways to increase the circulation of money: pour more water into the bucket or find ways to ‘plug the leaks’. Plugging the leaks by creating economic linkages in poorer communities between local businesses, labor, and public bodies can build a healthy local economy that can stand on its own long after regeneration funding dries up.

The circulation of money in a given system is called liquidity, the more it rotates, the more liquid it gets. Sometimes the velocity by which money circulates in a system is called local multiplication. When money stays in the same vicinity by spending it where it’s created, the same amount of money enables earnings to more people. Because everyone is spending money in the local environment the money is forced to circulate faster making more “turns”, exchanging more hands. Even though there is a limited amount of money, its liquidity is the main economic driver. Of course the volume of money in circulation is important, raising economic activity is not only a matter of money circulation although it’s the most important one. When economics is growing, more and more money needs to come into exchange. We can either increase the speed of money circulation or raise the volume of money in circulation. Traditionally (and unfortunately) only the later is applied, however by spending money where it is created the flow of money is automatically increased. With current economic system this is about the best we can do with all the money scarcity. If we are unable to increase the money supply we can at least increase the velocity by buying local services and products. However there are also other tools at our disposal, though not necessarily easy to implement.

This shift to local economy (called The Localization) is necessary tied to higher consciousness and awareness of how money is created, distributed and spent. People are accustomed to large supermarkets with seemingly abundant choice, polished marble and all the glitter. This is a sublime indoctrination and it’s hard to resist.

Ever wandered what the word ECONOMY really means? The word has a Greek origins (don’t they all 😉 and is coined from OIKOS (meaning home, family in environment in general) and NOMOS (meaning law, governance, managing and leadership). The idea of economy for the Greeks was governing of local environment in best interests of its members. This also implies fairness, cooperation, equality and creativity which are all necessary to sustain wealth and abundance.

There are certain limitations of current economic system, mainly coming of controlling the money flow by the financial institutions – the volume of money in circulation. We can for sure influence the speed of money circulation ourselves while the volume can only be increased with the export of goods and services out of local communities. This brings up a very interesting question of the community borders. Where do they begin and where and, not only the literal also the psychological ones. We are all connected but it’s very important to understand that corporations are not people. They operate with profit in mind not for the benefit of the people although most of them will present them as such. By moving away from the superstores and corporations we’ll stop the money drain and secure our abundance.

If we really want to make our local economy blooming we can create our own local money, tax and interest free. There is no laws against it, we issue it ourselves and there is no money scarcity. After all money should be only a measure of value.

Uhub at a glance

Uhub is a system of software, services, procedures and exchange sites (called hubs) where products and services exchange owners. It is focused in local producers and local consumers, enabling local money circulation. Uhub is only a middle man that ties people through an information system and delivery points in a coherent social group. It also serves as a policy maker, inspection and a transparent billboard of local needs. The main leverage is the empathic behavior and trust – studies show that people that know each other are much less likely to commit fraud. More likely Uhub will be tied to municipalities that somewhat represent local environment, however this is only a guideline.

Uhub does not necessary have a static representation, due to its design it can be a mobile service. This is necessary in areas that service is still being established or have difficult environment and opposition. However the most impact can have with a static location so people can have a point they gravitate to. This helps also other businesses and expand options.

Uhub can be seen as a peer-to-peer service it’s more alike a torrent site with list of offers and demands. It’s not a free service (unless defined as such) but remarkably lowers the costs of distribution by severely limiting the distribution chain and therefor the prices of goods. It’s also a bidirectional experience. Consumers have opinions, desires, demands, and producers are pressed with environment and social impact. However Uhub is bringing the idea CSA (community supported agriculture) to the table as a practical manifestation. CSA ties consumers and producers in a bond, dispersing risk, lowering price, participation and joint decision making.

The logistics

Uhub acts as a mediator and is a kind of a hybrid between Internet store and a semi delivery service. All consumers purchase goods online and pick them up at a hub. The calls for purchase are opened according to the predefined schedule, depending on the volume of goods and services offered, consumer frequency and other attributes. All producers market their goods online and deliver it to the hub after the calls have been placed. Using calls for purchase eliminates the need for warehouse infrastructure, the system behaves more like a just in time delivery. Everything is prepackaged by producer or optionally by Uhub as a service. By using calls delivery must be made only several times and not continually and all parties make just one half of the trip. Uhub also does not have to be static. For those consumers that would like their purchase to be delivered to door a local delivery service can be hired or created. Uhub also acts as a customer care service and demand management office. Uhub gathers customer experience, their demands and fulfillment of CSA contracts and other obligations, regulates sustainable policies acts, prevents fraud as much as possible.

Placing Uhub service as close as possible to the consumers has also very important psychological meaning. Being close to consumers leverages the lack of apparent choice from the supermarkets, using Uhub is just of matter of stop by. Remote access is one of the typical failure of “going local” initiatives. It’s all about convenience.

When service matures it is tied with local open markets. This can be once a week or even more frequent, it all depends on the behavior of the local community. It is expected that more and more business will be attached to the hub and also celebration events. Community can decide what events to attach.

The organization units

Uhub consists of two parts – a Uhub service and a Uhub delivery point. While the first part is mainly electronic service it also covers all the bureaucracy, customer care, billing and support. It is a continuous operation and has to operate all the time. The delivery part is mostly a part time operation, it can be either mobile or static, but it’s a human intensive work and it’s customer facing activity. Both parts are very connected however it’s not necessary they are the same company. Uhub service can cover several or even all delivery points. Uhub delivery points might be created by interested parties either producers, consumers or even municipalities. It can be run by volunteers or professional staff. The idea is to run lean. Advised organizational structure is some kind of cooperative where interested parties are having joint interest for promoting and developing the service. Non profit structure guarantees that all profit is diverted to development and continual service improvement. Due to its low energy footprint, promotion of local development and true sustainability, local government and municipalities can be used to jump start the service. Public squares, municipality owned buildings, fire stations and other public places might serve as a very good approach when starting the initiative. However the best results are for sure permanent placements (several in a town), where also other activities might be built around it. Eager supporters with reasonable proximity to established commuter routes are also a good option.

Each hub implements various levels of services. Partially due to the volume of the goods sold, partially service maturity in the specific area. It’s anticipated each Uhub delivery point will develop its own kind of approach due to the culture they operate in.

The benefits

Uhub offers producers to sell their produces locally for a higher price they would normally to supermarkets. Eliminates marketing barriers and competition of the bigger players and enables quality products to reach their targets. It is projected, based on the already established local trading, purchase prices to rise between 60% and 120%. Producers entering CSA program can build trust, guarantee their customer base and dissipate risks. Transparency is the key however CSA is not mandatory. There is no distinguishing among producers, all have the same amount of advertising space, all have the same obligations, the same conditions.

Consumers can buy quality organic produces for a (much) lower price in a local environment. It enables people to engage as producers themselves or to establish a bond through CSA. The idea is that the offer is driven by real peoples demands. Another very important aspect is consumer engagement in the process of feedback information that drives the local economy and separates weed from seeds. This is the most powerful tool community has at its disposal.

The process

The transition to sustainability is a hard one. The most anticipated driver of the change will be increased awareness, product price, product origin and convenience. If the Uhub service would operate in a familiar manner than most people will accept it, however the drive of the change will be carried by early birds, people with higher consciousness and probably all those that would like to save money here and there without sacrificing quality. It is anticipated that lower prices will carry on the majority of the shift once the service is established and enough products and services are provided.

Anyone can start a Uhub service, however support is provided only if it meets certain criteria. It has to be a community enterprise, implement “free world charter” principle, must work in cooperation with adjacent Uhub service and must provide feedback to the central development and knowledge base.

In its core the knowledge of the hub management is open sourced however the brand and operation is not. The problem lies in the business model it employs. People perceive brand as a form of trust, so having good experience in each Uhub requires following certain rules and ethic which is impossible if the hub is not is some way or form a part of coherent infrastructure with common processes and policies. Also it doesn’t make sense not to use common infrastructure among many similar hubs, lowering costs of operation and leverage knowledge base. Trust among different Uhubs matters a lot. Each Uhub also has to earn money or other forms of benefits for its service unless it’s created by local producers or municipalities and its operation payed by them. So it’s important that practices are shared among all participants.

Each willing party can establish the hub, but using Uhub will require a franchise. This is necessary to guarantee common processes and policies. To be able to operate location is also essential. Although this is left to each establishing party two hubs must not be too close to each other. This requires somewhat analysis and planing which is another argument for joint (franchise) operation. When hub joins the Uhub operation a set of binding contracts is established that ensures it is operated on the certain ethics, policies and especially is active as a member. This ensures it is not established for private or corporate interests. Operation is regularly checked by the members and random consumers through the “mystery buyer” program. Also service requires extensive use of online tools to track, manage and flag the delivery and customer care process.

The Uhub delivery point has separated billing process so the burden of handling the payments is taken care of. Everything is done as a prepaid service. However there is an option of postpaid services if the hub is able to process payments (infrastructure will be also provided through online tools). This usually ties with permanent placement of hub and developing a traditional store with dedicated staff.

Each Uhub must have a working Internet connection and barcode scanner (through a smart phone or stationary) along with a thin client for interaction for those customers without the connection to the Internet.

Buying & selling

Customers buy products and services from the online Uhub service by browsing the ware each hub has at its disposal. All producers supplying the hub are presented as a unified store, customers are browsing through all the products of a hub or just one specific provider shop or group. There are multiple filters to narrow down the choice, but the purchase is conducted through one unified customer bill which is tied to one hub. Supplier can supply multiple hubs however definition of “local” applies here. The producers are not limited to legal companies only, they can be also private entities however there has to be some consideration regarding engagement and tax issues.

After the purchase call is closed, packaging and delivery is provided to the hub. There all products bought by the customers are packaged in a unified customer baskets waiting for the customers to pick them up. Optionally Uhub can provide (automated) locker system or even cooling facility. There is even a possibility of providing a subscription service for the lockers enabling customers to continuously use the service however hub must be adapted for continuous operation.

Informational infrastructure is heavily empowered to make the experience coherent and unified. The access to the Uhub services is via the Internet and smart phones. Uhub online service takes care of all the messaging, billing and delivery along with customer feedback and group management.

Each purchase has a unique code provided so identification of the buyer is possible. In later stages smart cards will be provided for frequent buyers and especially those having permanent lockers. Using codes, barcodes and smart cards is necessary for security reasons as well to speed up the process and eliminate manual work as much as possible. Since all ordering is done through the online tools each Uhub will have a thin client for customers without the Internet ability. If customer has a smart card this can be used also to authenticate on the online services. Using smart cards or NFC enabled phones later is also a convenient way of payment.

Uhub economics

Uhub’s income is charged per item sold through the system. Each item has an internal tax attached that varies according to the infrastructure usage and other factors. Target tax is typically 10%, meaning for each product sold through the system 10% of its price is collected by the Uhub. The price context is transparently provided for all online buyers so all involved parties can see the price distribution. It is expected that in the beginning tax will be greater until critical volume is reached. After all Uhub operation has a minimum critical point even though it’s highly optimized for lean running. This is a per hub attribute and can be changed at any time. Uhub can operate as a volunteer operation but it’s not the best practice. Uhub performs an added value and charges fair price for that service which is by all standards low. It has multifaceted role and as such strives to be a permanent solution employing passionate people. In some cases Uhub can be established by the local producers and they are paying for the operation however the Uhub contract obliges the business entity to be non for profit and open for new members.

Items sold should be produced locally. It is expected that bigger resellers will enter the sales cycles but will be uncompetitive due to the inability to match the price of the local supplier for items produced locally. It is also expected that market will regulate itself by emerging producers that will substitute resellers by offering better quality products and lower prices. Due to the self regulated and highly aware market it is expected that producers enter wider distribution chain supplying more than just local hubs. Some calculations show it is viable, in terms of logistics, supplying up to 130 km range, when there are clustered delivery points. Uhub can also enter into hub2hub exchange, taking care of logistics of local producers expanding it to other hubs. This is also a paid service but it enables producers covering more ground while focusing on their products instead on logistics.

Uhub focuses extensively on the social network and the feedback it gathers. Opinions matter a lot, so does the rating of the provider. Even though there are online tools available for consumers to rate producers, demand and overall satisfaction, there is no more effective feedback gathering as personal interaction. The demand management is also an important part of Uhub function. The power of managing demand can create and direct economic activity. It is essential that this is transparent for all participants.

Policies

Due to the idea of ubuntu ideology, “good for everyone” and “service to others” policies are essential for the operations of Uhub. Ethics (and the free world charter) is the primary guideline as well as is mutual trust. Due to the increasing number of various cocktail of harmful additives in form of pesticides, herbicides, artificial flavors, artificial fertilizers the idea of each Uhub is to promote permaculture and organic produces and sustainable services.

The key function is establishing TRUST. Each hub establishes trust in their local area (community) by facilitating the sale, transparency, distribution and customer care. Each provider gathers rating points indicating level of trust. Provider is only banned from trade if serious breach of trust is detected. Each hub’s obligation is to research the claims and offer resolution. Every resolution is public. This is necessary to retain integrity and promote sincere and fair exchange. It is expected that no local producer or provider will dare to break the trust bond first due to the fear of losing the customers, later because it would be deemed unethical. That is also why personal interaction is important. Studies show that people are less inclined to fraud if more personal interaction occurs. One thing fear providers more than anything else – and that is bad publicity. However speculators and other opportunistic individuals have a way of finding interest, especially in a bigger system. That is where customer with their ratings and social circles come in. The idea is to build a self balancing system, where no one tries to take advantage of people, delivers whet he/she says and is honest in their intentions. If some undesired event happens anyway, the provider (or customer) is banned from using the system. Undesired events is everything someone claimed and didn’t fulfill expectations or contracts.

Uhub’s infrastructure also enables CSA members to track their activities and use Uhub as a delivery point for their members. Uhub is an automatic member of each CSA created there. It acts as a guardian of history and a delivery point. The basis of the CSA is a CSA membership contract. There are no safeguards against contract obligation except TRUST. So contracts are only written expectations people are somewhat bound to fulfill. The Uhub acts as an arbiter and helps facilitate disputes. Obligations should be fulfilled however there are no sanctions posed except the participant rating and resolution. Rating is public, so future engagement is difficult for those with poor levels. It is all about perception, people fear bad image the most so no other sanctions are necessary.

There are also other policies and processes each hub must take care for in a unified way. Each product entering and leaving hub must be identified. If products are prepackaged they have to have a declaration of origin, seller, buyer, price, weight and date. There is a unique identification tag to for ease of handling so it can be found in the system. Each seller can use the tools to generate this information and print the label along with the tag. If hub takes care of the packaging seller addresses delivered goods to the hub along with delivery notification details so hub can package the goods. This can be even more efficient since produces can be packaged in a combined boxes resembling veggie box. Nothing is definitive, it’s largely based on the demand and offer as well as with the operational level of each hub. Each step of the processing of goods is taken care of with online tools and is labeled with a time stamp and status.

Demand is a very important process due to establishing new economic activity. Each request is put in the online directory where it waits for at least 10 confirmations in a two weeks timeframe (adjustable). After enough confirmations are reached the request goes into fulfillment – a CSA contract or directly to the marketplace. Not all requests require contracts and projects, some can be simple, demand is only there to determine the scale. However more complex resources require more risk and it makes sense to enter the market through a CSA.

The move to an alternative monetary system

Establishing Uhub model brings in the local circulation of resources, however even if the system propels the liquidity of money it can’t generate it. This also means that if money becomes even more scarce the effect will also be felt in the Uhub system – people would not be able to buy products and services although they are cheaper. To leverage this problem a shift towards alternative currencies is needed. A currency that is not governed by private institution and can be created by anyone. Mutual credit seems like a the most conscious way to go however to be able to implement it enough trust in the community has to be reached to make the switch. Or some other definitive event like economic collapse even though this will not be a momentary event. The ability to present each product in alternative currency will be available from the start.

The transactional infrastructure of alternative currency is not part of the Uhub system but it is a part of the same movement towards sustainability. All transactions made through the system are transparent and private. Since it operate outside admirality law it cannot be subverted under government control. This is an important issue. As soon as the community moves away from the official currency it also moves away from official laws governing trade. This is why trust and ethics is so important. There is no court it can help facilitate the disputes or government taxing your sales. Admirality law by which economics is bound also governs courthouses, banks and administration. It can only be applied to companies – legal entities which are in essence a trade entities. So implementing alternative currencies brings other very important issues along with it, different but not necessary bad ones.

The staircase approach

The Rome was not built in a day is the saying. This also is true for a Uhub system – it will not work in all its glory the first day. It will take some time to gain traction but obvious economic, ecological and social aspects will propel it very fast. There are no real alternatives although somewhere there are already initiatives for local markets though not all of them are of “open” type. The shift has already begun.

Priorities:

Establish awareness of the product cycle, monetary cycle and options
Establish MVP of the basic IT infrastructure, the marketplace and transaction system
Establish first distribution point with local support and optional mobile unit
Bind local customers to it with events and offers
Bind local producers and invite all customers to participate as a producer
Create draft of Uhub rules and policies as a binding contract based on trust and free world charter
Establish second distribution point
Upgrade the IT infrastructure for billing, resource management, warehouse management and CSA
Establish the first permanent distribution point with continuous operation

The core of the solution is to get the system going through a Minimum Viable Prototype and create best practices along the way. There is not much time left. We must act now.

Issues

There is one important issue also with the implementation of each phase – the critical mass. There are both suppliers and consumers needed. Sometimes this is referred as the chicken and the egg problem. To start the hub anywhere at least 13 different suppliers have to be connected. In essence this should not be too difficult, however there is a psychological effect present. Bigger suppliers want volume immediately, some others won’t bother for just a couple of pieces. Than customers have to start buying. Here the concept of “local” will be tested, due to producers apathy or consumers or even both. The local supporters will probably have to kick start the project.

People are usually weary of new things that impact their local environment (too much). So service will have to be cautious and adapt as much as possible the approach appropriate for the local environment.

It is a possibility that service might get attacked from other vendors in the second phase. No bigger retailer feels that such service might make an impact. But on the long run they can’t match the price, but can offer wider assortment of goods, which is their only strength until Uhub becomes bigger. Retailers might choose the arguments of power with municipalities Uhub is operating in or even higher power. The Uhub service has an exponential potential, once it reaches more people the producers will be drawn to it like a moth to the light. The transparency is the only defense

There is also one other issue with psychology – the envy. People are very vocal when protecting “the way of life” even if that is not in their best interest. Sometimes influenced by “hidden powers”, people envy the success of entrepreneur when it’s working in their midst. This is usually culture related. There is no real counter action except transparency and education. This is why price distribution is public.

The endword

After working several years in change management, as a healer and business consultant, and as a true Ubuntu movement evangelist promoting free and money-less society I see no other options when it comes to changing our society to a better place. We can’t alienate ourselves in some remote island (or village) and pretend that outer world doesn’t exist. We are all connected and have the same problem. People of the world unite in love and light!