Progress with Plans - update for April 1997
From: Mark Rauterkus, @sportsurf.netHere is a splash of news to catch everyone up to speed on recent activities. Sorry for the lengthy period of silence, but it was necessary to get a few internal things back in order before moving forward. Some quiet strides on many fronts have occurred in the past number of months.
In the near future, you and the other insiders are going to be able to take a gander at the re-launched public WWW site and the private plans. These notes do not cover the core parts of the actual business, but rather provide you some insight into our planning progress and recent activities.
At this time, nobody needs to make any promises. Hopefully you and the others are going to say, "Sure - keep me under consideration."
As always, thanks for the time and consideration. If you'd like to be removed from future correspondence and updates, or if you would like to widen or increase this communication to you and others close to your operation, please let me know.
Update News with New Partner - MDI.NETA deal is about to be constructed with a local firm, MDI.NET. This established Pittsburgh firm is an ISP with a T1 line and a SUN reseller status. MDI is going to help with the SportSurf.Net efforts by providing in-kind services on a long-term basis. This new "partner" is considered a final cog that is going to allow these projects to advance to the next level.
Timeline ConstructionPhases, goals and milestones with specific time-lines of implementation are now being charted for the future.
Next steps include:
- a re-write of my business plans.
- The plans will appear on a newly constructed private WWW site.
- The plans are going to set the stage for a new corporation with investor financing.
- Angel investors are needed to secure trademarks and retainers, but we quickly seek
- Venture capital funding (>$2 million) - to come in stages of access.
- a reconstruction of the public WWW site (http://www.sportsurf.net).
- The site is going to include offers for sales/services in both a freeware and cash-producing manner. Many chat rooms, forums, mailing lists, and book-content things and such are going to be free. Our product line-up for the near-term is going to be catered to the sports business marketplace and start with small, specialized items -- not comprehensive bundles.
Some of the short-term goals include:
- The Proving Ground is going to be the mechanism for creating alliances with developers/resellers/consultants.
- The Proving Ground activities include satellite services and value-added tech-support. This more formalized line-up of service offerings should provide for the short-term common ground between the smaller, cutting-edge software developers and this organization. Plus the Proving Ground activities are going to expand into future resale operations with the pending bundles.
Bundles of TomorrowThe future bundles are going to be called:
- Sandlot Servers and
- Stadium Servers.
These will be turn-key server bundles (to include software, hardware, customization, integration with the headquarters, leasing options, extra support meetings, value-added content offerings) are to be marketed to the 6,000 sports magazine publishers in North America.
Sandlot and Stadium Server packages provide server platform options for the customers. The servers are going to be built for the following operating systems:
- Linux and
Without Investor StrategyAt this time, there isn't any "investor strategy." However, I am starting to craft a draft INPUT strategy. Without the legally formed business organization, and paperwork for the new one is expected to be filed in the late spring of summer of 1997, talk of "investors" is premature. Instead, these ideas only relate to Input Contributors.
The A-B-Cs of Input...The finance input strategy is soon to turn to the discover and solicitation of much needed "Angels." The input from Angles can fund the next phases. Early finance requirements project a need of approximately $50,000.
Begin with "Angels"
The Angel-level-finance amount, given the scope of these plans, is modest. A great distance has already been traveled through our collective careers and with these associated plans and prototypes. Great cost reductions are in place from lots of sources including family. Present day overhead is low, and nearly all of the tools we've been utilizing are getting crafted to fabulous levels of power and sophistication.
Furthermore, the pending sale of the SSS book business could yield additional income and turn back the tide on some debt issues. The prospective income from the transfer of the SSS book business is a tenuous situation however and not to be counted as a liquid asset.
The goal of the Angel finances is to allow for the growth of the on-line activities to a self-sustaining level while allowing for the completion of the business plans. Angels are needed before any serious audience with the Venture Capital crowd can occur with confidence. For instance, angel income would allow for fees associated with obtaining trade-marks for program-specific names, business plans re-writes, law-team retainers, and expert accounting consulting.
After AngelsAfter the Angels come the Venture Capital investors. This progression from one to the other can occur quickly.
The pending pitch to Venture Capital people includes two main points:
The full extent of the service offerings can be taken into the marketplace in a matter of weeks -- almost everything has proven to work!
Today's venture capital crowd is NOT interested in funding long-term internet research and development efforts. Funding for Sport Surf Net is a sure thing as all the computer systems are proven to work as advertised. The venture funding is needed to enter into the marketplace and handle the resulting demands.
If there are incomplete elements of the project lurking, they can be completed in one quarter and can be tested just before sales get underway.
The first stage of expenditures comes as these plans and finished prototypes head to focus group research stages.
A respected local focus group company that works with advertising agencies is ready to help. The fee is about $100,000. Focus group research is a wise investment.
If these products and services should pass through the rigors of independent demographic-type studies, the the organization is going to need additional funds for marketing (advertising, seminars). The advertising/marketing campaign for dealers and consumers for the new product roll-outs could cost $500,000 or more.
Both of those investments (focus groups & advertising) are "short-term investments" and can offer a quick returns.
Modest Infrastructure CostsSome venture capital money is going to be needed for infrastructure support. The organization will need back-ups, engineer staff, demo units, telephone operators, mailings to magazine publishers, meeting reservations. As far as the net transactions are concerned, today's access capacity is already strong.
The full product launch is going to require available cash for overhead, plus there is the matter of acquiring or retaining our key partners -- with and without stock equity.
Jack, I'm counting on you to be the one who is going to be able to provide the Linux server packages.
Furthermore, this is a pipe dream at this stage now, I'd like to be able to have a section in the pending business plan that is going to deal directly with the acquisition of your services -- either in a retain basis or more -- so that you can be fully-funded and a part of our total mission. I don't think these venture capital people are going to be in the mind set to invest money into this project unless we have a good amount of control/ownership and assurances that things are going to get done/happen at a top priority. Obviously, for this type of control to happen, $ needs to come into play first. Plus, my present business and capabilities are not nearly big enough to engage the type of market-cap potential that is going to lure the interest of venture capital types. We need to have proven assets that are worth the investment dollars or else those guys just are not interested. I feel that my team of cutting-edge developer buddies -- all small guys when you look at the likes of Fortune 500 companies -- could band together in some manner and be able to command a sizable equity investment.
To make this work, we're going to need to go on some type of "acquisitions" spree and be able to circle our wagons and say -- hey -- for $10-million you get A, B, C, D and so forth all the way to L,M,N,O, P -- or Z. But, as you might guess, the hand-holding is going to get to be a chore - and we are going to need to have everything pulled together in tight, neat packages for this to succeed.
So, you can see how it is of prime importance that you work these days with this in-mind for the future. All the players will have to have an eye toward this "summary day" and would be able to present some valuable plug-and-play business facts and figures for inserting into the master plan. I'll create the overall master plan but include parts of your data. I'd even say a 1-page executive summary would be too long for the Venture Capital Crowd to digest.
Then comes the matter of $ amounts. Part of this could be with "funny money" in the form of equity, stock options, etc. But, it will also need to boil down to knowing the following:
1. How much is your present business worth in real money at that point in time?
2. How much value does your contributions bring to the overall value of the whole business?
3. How much (on the low, medium, and high side) would you be willing transfer in your venture's ownership -- given that you are still going to play a most valuable role in the continuation of your efforts.
4. How much investment is really needed to take your products and services to the next level of profitability for the short-term and long-term.
5. How much of your day-to-day challenges, work-load and management can be better optimized with OUTSOURCING to the Headquarters staff - resulting in increased productivity for all? ---- As to the EASY-Server side of things: Here is what I'm thinking.
It is going to be great to be able to go to any magazine publisher and say, you need to buy into either our Stadium Server ($50,000) or Sandlot Server $15,000. You'll get everything you need, plus full integration into our headquarters' site databases, traffic, resources. And, our server line-up comes with many different flavors: Macintosh, NT, Linux, SUN -- with many options. On the low end, a publisher can just rent rooms on our site. So, the Linux solution is more of a middle-line-up product. The Easy-Serve gives great bang for the buck. Plus, it allows for local dial-up support for the magazine staff out of the office. Heck it uses the #1 server in the world wide web - Apache. This is important to our efforts.