Cycle 14 Final Meeting with i.c.capital

Final Board meeting

PBJ
Introductions not linked to the business
Demo was only 2 slides. No scenario. Not first person/personalized to a user – no showing of what users
Marketing strategy – does not follow 4p model
What specific activities are you going to do with childrens museums?
Kiosk at the children’s museum, make a pbj sandwich,
What is it in the website that gets parents involved and to the website?
Fear factor – statistics – Did a study of 60 students
How are you going to categorize the toys? What qualifies any of you to perform that task? Dr. Davies, teacher analyzes the toys. Getting more teachers involved.
Why would a teacher be interested in this? I have 40 kids, I have to pick one and go with it. Aren’t teachers locked into one or two methods?
Argumentative on teachers (not relevant for the business plan) Going after the parents at start they will demand it of the school board.
Getting hung up on defending the solvability of the problem.
Andre talking to screen
Are your competitors doing affiliate or carrying own inventory?
Have you thought of developing the tools yourself?
Part of growth strategy, revisited end of each fiscal year
How much do you give to Amazon? ToysRUs?
3% trus, 4-10% amazon
PLS are the ones who wrote the test? Do they usually charge for the test?
Will they be redirected off your site to take the test?
Have you vetted the test with educational experts? In terms of the efficacy of the test?
What would it take to develop your own test? (answering in terms of people, not cost, it’s a cost question). Relying on outside source for a huge component of your customer interaction. Have your advisors analysed the site do they have their own thoughts?
PLS was recommended by our advisor, most authoritative.
Is PLS for-profit?
If traffic goes to PLS, will they send people to you? Is the relationship bi-directional?
Financial slide does not contain assumptions/drivers
What will support the growth? Advertising
Sorry, on the operations side. How are you going to support that kind of growth? From 800K deficit. Hiring/support staff? How can you scale this quickly?
Since no inventory…. Hiring… servers… more relationships…revisited every fiscal year
Using calculator on the valuation slide?????? Not simply presenting the ROI, calculating on the fly
How did you decide on the valuation? Why is a company worth 11M when its not operating yet. Why is it worth 11M now?
We have a niche market we’re going after, its passion?
What is the average valuation of companies in your stage of development worth? How do I know it’s a fair price?
We’re a one of a kind company. Amazon is a 10B.
What is the average value of a company at your stage of development?
Guessing – 12M for technology company?
Where did you get that number?
Googling.
I’m seeing a different number on the prior slide and this valuation slide?
Typo, error on my behalf.
Does that change your present valuation?
You didn’t do what bob is alluding to, you didn’t find others in your space, you discounted future profit. If the real earnings are 59M?
How did you get to valuation in year 5?
What are you going to use the 1.2M for?
Startup costs/Payroll/Advertising.
General & Admin is ¾ of the cost, what accounts for so much overhead?
Incentive program
Is that a COGS instead of a G&A expense? Its part of sales, why isn’t it?
What is in COGS?
Servers are administrative expense
Host internally or externally?
For every $10 you net sell, $2 are going to parents. Is that reflected in your revenue? In order to get $30M in net proceeds from amazon, you have to sell 500M, no way.
I can fix that and send a revised spreadsheet.
12K visitors, how are you going to drive that much traffic?
NO OPERATING RESULTS FROM GOOGLE????????????!!!!!!!!!!!!!!!!!!!

CollegeConnect
Personalized introduction of problem. We didn’t finish college.
DEMO on fire. Showing each recommendation of users/colleges/scholarships
How are the recommendations made?
Content, ranks of discussions, personal interests.
Is this technology you developed?
Module from open source community
We’re not matching, we’re just recommending via content.
We’re looking at expanding based on what the colleges need.
Have you investigated where this information is stored? Their servers or yours?
Too much time on problem when its already established and acknowledged. You have the credibility, tell us why it’s a good business.
Talking about competitors on marketing strategy slide
Finance bridging back to partnerships – great!!
Active investor desired (++)
How does valuation relate to number of users each year? What is the value per user/visitor?

Worryfreetrade
Thank you for the opportunity
Happy to be part of this project. What I got from this experience.
Huge difference between promoting art/music and ecommerce. I have not played video games since 7-8th grade
Servicemark (this offers no protection of the process, patents would do that)
Demo not showing anything. No trade process. Talking about groups/etc from one page. Click on a users inbox and see what he has to trade (really? Inboxes are usually for messages)
Do trades have to be two way?
Search out potential trades and allow multi-user trades
Do the users have to figure out the trades themselves or is it a matching engine?
It would be too much work for them to complete a multi-user trade. (—-)
Do you guarantee the process?
It will have a ranking system on how well a user delivers on a trade (why not implemented?)
How do you make money?
Good operating results within marketing slide.
Where did this information come from?
Difficult stuff to find…(-)
If the 800m is because they are taking advantage of customers, then the unit volume is lower and your actual market size is much lower. Not a good point to make.
Too much emphasis on poor gamers. We have the problem. We don’t believe the operations model.
Assuming 2 trades/month/user?
Beta testing – 25 people in survey
Competition could suboptimize your model?
Service mark is a big deal
Bestbuy is coming into competition – that’s bad news, without having a strategy for partnering.
What number of trades do you start losing money on the subscription model?
Still working out details.
UPS shipping details are still being worked out as well?
What keywords are driving the most clicks?
Tired of overpriced games
That’s the ad. What’s the keyword phrase?
Used video games
Target market growing at 2% per year (that’s terrible, slower than inflation)
What do you need from us?
Investment funds. Need to grow efficiency capability.
How much money?
Level field playing transaction don’t take vc money.
How much have you all contributed so far to the effort?
Adwords, service mark, and other fees
Financials has no assumptions. No discussion of expense of operating the distribution centers.
No discussion of exit strategy/options no slide on valuation

Debrief
Steve – one of the things I’ve been trying to hammer is clear statement of problem. Nobody did a good job at that. That should be the easiest part. Clearly talking about the problem should be first and foremost. My theory is that you’re so wrapped up in it, you understand what it is, but others don’t. you need to assume we don’t know anything about the marketplace.

Wendy – presentation. Make sure spellcheck/numbers match/metrics – no calculators on the fly. Always err on the side of too much information on hand, in your notes. Relating to the material, if you have bullets, refer back to them. Sometimes you skipped over good stuff. Volume, articulate words, do not put back to us, look at your entire audience. I walk around the room to include the entire space. Add agenda.

Matt – great job presenting. Glad you weren’t reading bullets. Knew the material, passionate about it.

Bob – lot of passion – great. It made for a lot of good engagement. Focus on what you were selling. We were the experts with the money. You spent a lot of time selling the product, but not the business. Didn’t tell us why we should buy a piece of your company. First thing you need to do is establish your expertise. The more expertise you establish, the fewer questions. If we start jumping into questions, you don’t have as much credibility. Keep it moving. James Bond advertising hook – 3 things beauty, gadget, explosion. How long before you change the channel on t.v.? Hook us in the first minute to listen for the next 29 minutes.

PBJ
Where was the financial model?

The 59/65M is irrelevant. You have to project confidence. This would be the first in a series of meetings. You can always adjust/alter. Goal is to establish the expertise/credibility.

Turned off by introductions of each other. Mutual love fest. Using overall glowing terms. You are used to that from the Tea setting, its not appropriate in a presentation like this. Here’s my experience here’s why I’m qualified.

Combative. Investors don’t know everything. You want something from us. When we question you its coming from our bias or experience. When we ask questions, don’t fight those. Teachers and set curriculum example. Its my experience in the CPS that these are the pressures, you’re not going to change that, redirect it. If you challenge it, you’re creating an adversarial relationship, and nobody funds that.

A better way to handle that situation was to bridge to homeschool segment. We recognize that issue, that’s one reason why we’re going after the homeschool segment. Products are being sold to parents not teachers. Parent’s are going to spend the time.

Times when the team did a great job thinking on the feet. The expert board. They can rely on the outside advice.

Knew the material.

I didn’t feel a cohesiveness on the team. When someone was getting flamed, the CEO wasn’t around to deflect or help out.

Verbal clean up of problem good, but the slide visually didn’t tell me that. People learn in many ways, generally only taught a few things. Say it again and again.

You got tripped up by a weak demo. We didn’t see it. That’s the main reason we’re all here.

Walk me through a flowchart of how this is going to work. What is involved with each step.

CollegeConnect
Sunil you improved on your nervousness. Not all the way there yet. But making progress. Pacing was distracting. Printed handout didn’t match the slides on the screen. You’re better off not handing something out than have a no match, or at least acknowledge it. You erode your credibility. Everything that chips away at expertise makes it difficult to close the deal. You talked about price/lead before we knew what that meant. We still didn’t know your business model at that point.

Janine got in the strategic relationships in the context of financials. That was great.

Too small of text on handouts. Number slides.

Knew your audience and knowing where we went to college. Amazing. Although your target is African American, the questions tripped you up even though we had talked about that.

Overall, great job. Lack of questions was due to quality not boredom. Assumptions were great, number of leads. Great demo. It would have helped to be live. Homerun for me was the exits, you talked about how we’re going to get out. Active investor reference was great.

You established your expertise. You projected well. Few things to question. Feel really good about that. Its great to be accurate, but you’re really just projecting a sense. Just do round numbers for the audience. Talk in millions, not so much detail. Round on slide and content. I would have asked for a million.

Cohesive team. Played off each other. Backing each other up. Nervousness is ok, you didn’t come across nervous. Sunil other than pacing, it was solid – you’re one step away.

WorryFreeTrade
You recognized we are not your customers, that was good. Better job of recognizing we’re not your customers. Harder to follow the transaction, the diagram/flow was hard to understand. Hard to grasp the revenue model. Multiplayer trades. Took a while to grasp how the model was going to work. Good job talking about barter/point processor. You said we’re not a middleman over and over and then put yourself in the middle on the diagrams.

Here’s how it works now, here’s how we’re going to change it.

Tell me again the complication. I needed you to recap. The complication is where the secret sauce is. How does that feed into the solution.

Volume is extraordinary. Used the space well. Sharrieff was low talker, Eldon brought it back up. Sharrieff was asked to increase volume and didn’t change.

Two reasons for no questions. Financial model assumptions were great. Droning on too much. Know how much time you have. We didn’t need to spend as much time on different things.

What did we talk about would be a good thing to mention today? Where could it scale into other markets. Other verticals like dvd’s, Disney. It’s a platform for lots of different markets. You didn’t do it. You didn’t ask for the investment. That’s the whole point of the meeting. We had to ask you what you wanted. Know what your goals are and what your audience goals are. Know how *we* will make money.

Think about the subscription model further, you got blown out of the water on the loss possibility. Interesting idea for unlimited trades, but not thought all the way through.

Excellent at differentiation from competition. Bottom line and how it translates into dollars. Only group that talked about recurring income with subscriptions. I like to see recurring because it evens out the volatility.

Assumptions were great, both in the model and the slide.

I liked the beta test results. Will the ratio continue for WOM? Mention the analytics and what its doing. We’re monitoring what’s happening and learning.