Webcast In A Box Business Plan
September 7, 2003
Webcast In A Box, Inc.
Executive Summary
Our Mission:
Webcast In A Box Incorporated will revolutionize enterprise communication
with video broadcast appliances that are simple to install and operate.
The Company
Webcast In A Box, Incorporated develops video broadcast appliances for enterprise-wide video
communication over computer networks. These extremely user-friendly, reliable, and scalable
appliances enable users to rapidly deploy and operate solutions with immediate return on
investment through reduced travel costs and increased communication effectiveness.
The Market
Currently enterprise broadcast communication occurs via a diverse collection of hardware,
software, and services, including satellite transmission, video conferencing systems, and, more
recently, computer networks. Webcasting software vendors like Virage, Sonic Foundry, IVT, and
Reflect Systems have developed the first generation of solutions that allow users to broadcast
video over their corporate networks to individual desktops. These solutions are complicated to
operate, fail to meet scalability requirements, are unreliable, and are prohibitively expensive.
Despite these issues, there is a strong demand for an enterprise broadcast communication
solution that will enable people to communicate effectively with their peers, employees, students,
and customers without expensive satellite-based systems, non-scalable video conferencing
systems, or time consuming travel. Video is the most effective means of remote communication.
Video creates intimacy between workers and executives, it increases information retention, and it
adds authority to important messages. People are comfortable with television as a means of
receiving information from their leaders. Webcast In A Box will enable companies to implement a
video broadcast system that will enable workers to view corporate communications content
across an enterprise on their desktops.
We believe that the immediate addressable market of early adopter and network ready customers
for a webcasting appliance to be substantial. This market includes customers who are currently
deploying streaming media solutions in their enterprise, who are deploying video conferencing
and collaboration systems, and who need to expand the reach of their existing satellite-based
video distribution systems.
Products
Webcast In A Box, Inc., is developing the Webcast In A Box appliance. This appliance will provide
easy-to-use, scalable, reliable, and easy-to-deploy communications capabilities for the enterprise.
The benefits achieved using our solution include more effective remote communication
capabilities, reduced travel and communication expenses, and reduced IT costs.
The Webcast In A Box appliance, can be broadly adopted by employees of an organization with
nearly every skill level that includes basic computer operations. This “plug-and-play” appliance
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requires only power, a network cable, and standard video input to be operational. Through its web
interface, people easily schedule and operate a live video transmission from a camera or the
presenter's computer desktop (or both) to any computer within the enterprise that is on the same
network. They can also archive the content for future rebroadcast. It will enable people to easily
communicate with a remote audience with increased effectiveness.
Presenters can simply broadcast a video stream from a camera, or they can broadcast a video
stream of their desktop with audio from a microphone, or they can broadcast audio and video
from their camera while also broadcasting their desktop along side the video. Presenters can
operate a PowerPoint presentation, a web browser, or any application on any desktop system,
including Windows or MacIntosh systems, and allow thousands of people to watch them from
their desktops.
The Webcast In A Box appliance will be built with best-of-class hardware and software. Software
will be linux-based and open source where possible, including a webcast management
application being developed exclusively for this system. This provides savvy customers with the
ability to adapt the product for custom applications, to support the product themselves (if need
be), and to protect their investment. Linux-based systems provide the best price/performance
value, the most reliability, and scalability. Since all user management will be web-based, user
interaction with the system will abstracted into an intuitive user interface.
The product line will expand over time, offering appliances supporting MPEG-4 video and
advanced software features based upon market demand. These may include integrations with
video conferencing systems, collaboration systems, media asset management systems, and
content distribution networks.
Key Personnel
Erik Herz, President, 7 years experience with Microsoft, RealNetworks, and Virage.
Chris Dawson, Chief Technology Officer, 5 years experience with RealNetworks and Virage.
Erik and Chris have had technical, marketing, and sales roles in the streaming media industry for
more than 12 years. They have had extensive experience with customer deployments of
streaming video technologies including: HP, Oracle, Qualcomm, Cisco, Juniper Networks,
Gartner Group, KLA-Tencor, UBS Warburg, Citibank, CSFB, Deutche Bank, Sprint, SBC
Communications, Honeywell, Boeing, Xerox, ABC, NBC, FOX, CNN, Discovery Networks,
Scripps, Stanford University, Notre Dame University, USC, and numerous government
organizations.
Erik recently managed the professional services business unit at Virage. His duties included the
management of developers and project managers, requirements gathering oversight, customer
management, budget, staffing, contract and specification development, installation oversight, and
specialized training fulfillment. Prior to Virage, Erik was a Program Manager at RealNetworks for
their systems marketing group and the Real Broadcast Network.
Financial Summary
Revenue projections for the five years shown below include sales for the Webcast In A Box
appliance. The values shown are for fiscal years ending on September 30. To attain projected
revenues of $6 million in year 5, Webcast In A Box, Inc. will require an investment of $100,000. In
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return for this investment, Webcast In A Box, Inc. is offering 10% equity in the company.
Projections indicate an annual rate of return of 100% to the investor(s) which values the return on
investment at 1.6 million.
Revenue
2004
$375,000
2005
$750,000
2006
$1,500,000
2007
$3,000,000
2008
Webcast In A Box, Inc.
Executive Summary
1. The Company
2. The Market
3. Products
4. Marketing Plan
5. Organization
6. Financial Plan
Webcast In A Box, Inc.
1. The
Company
1.1 Company Background
Webcast In A Box, Incorporated is a start up business that was founded by Erik Herz and Chris
Dawson on August 14, 2003 as a class C corporation in California. Operations are scheduled to
begin October 1, 2003. The business address is 824 Laurel Avenue in Burlingame, California,
94010. You can reach us at 650-346-4246 or at info@webcastinabox.com. Our website address
is http://www.webcastinabox.com. Webcast In A Box, Inc has applied for a trademark for
“Webcast In A Box”. The company has been privately funded thus far exclusively by Erik Herz
and Chris Dawson.
1.2 Company Objectives
Webcast In A Box, Inc. will create a new category of technology that will enable people to
effectively communicate using video within an enterprise. Our products will reduce travel costs
and increase productivity by allowing workers to watch executive and peer communications from
their desktops. Workers and instructors will be able to utilize video to provide live and on demand
broadcasts for training purposes. Executives and workers will be able to communicate more
frequently, enabling them to keep their companies better informed and motivated.
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Webcast In A Box, Inc believes that the primary barrier to large-scale adoption of video broadcast
technologies in the enterprise is ease of use. The Webcast In A Box appliance will be designed to
provide powerful video communication capabilities to the entire enterprise with utmost simplicity.
Webcast In A Box, Inc.
2. The
Market
2.1 The Opportunity
The use of streaming media, webcasts, video conferencing, live collaboration and other forms of
rich media communication within the enterprise will grow significantly over the next few years.
With ever increasing pressure to cut costs, increase productivity and remain competitive, more
and more companies are realizing the benefits of using rich media enhanced communication for a
range of activities including corporate communications, training, sales and marketing. Analysts
predict that the enterprise streaming market will grow to $2.8B by 2005 1 and that the market for
digital corporate communications technologies will grow to $2.2B by 2004 2. Companies already
using multi-media content for work-related activities are increasing frequency of use and budgets
for technology and services at a dramatic rate. In a recent survey 60% of respondents stated that
their organizations had increased the use of multimedia for work-related activities compared to a
year ago3, and 59% of respondents stated that they planned to increase budgets for webcastenhanced applications in 20034.
Today the bulk of spending on audio and video webcasts and related technologies comes from
large organizations with 2500+ employees; however there is a significant opportunity for growth
with medium-sized companies, half of whom today produce 1-10 webcasts annually5.
Despite this very positive outlook, there remain some significant barriers to the widespread
adoption of video broadcasting to the desktop within the enterprise. These include:
A lack of in-house expertise
The need to install complex and expensive technology
Problems with scalability and reliability
Lack of existing infrastructure to support video distribution
Operational complexity of communication systems
We believe that there is a gap in the market for a technology or service that can address each of
these barriers. A technology that is cost effective, easy to install and maintain, requires very little
domain knowledge for broad adoption within an organization, can easily scale to support
thousands of users and does not require significant infrastructure changes will gain significant
market share and drive the use of enterprise video.
1
Jupiter
Dan Rayburn, Streaming Media
3 Marketers’ Perceptions of Streaming Study Interactive Media Strategies, November, 2002
2
4
5
Marketers’ Perceptions of Streaming Study Interactive Media Strategies, November, 2002
Marketers’ Perceptions of Streaming Study Interactive Media Strategies, November, 2002
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2.2 Industry Description
Online rich media communication can be broadly split into two distinct sectors:
Web conferencing or online collaboration
Webcasting or video over IP-based computer networks
The table below highlights the key differences between these two technology areas:
Webcasting
Larger audiences usually 10s to 1000s
Event dynamic
Video and audio
Low interactivity
Prepared content, advanced scheduling
Managed two-way or one-way communication
Sample vendors: Yahoo, Virage, On24, IVT
Web Conferencing
Smaller audiences usually <20
Meeting dynamic
Audio only
High interactivity
Spontaneous discussion, ad-hoc scheduling
Multi-way communication
Sample vendors: Webex, Placeware, Centra
While there are good indications that these two areas are trending towards convergence, for now
they remain separate and distinct. Webcast In A Box, Inc. intends to stay squarely focused on the
webcasting sector while at the same time exploring any opportunities for partnership with web
conferencing vendors.
2.2.1 Market Segmentation
The Webcasting market can be segmented both vertically by industry and horizontally by
application. The industries driving the use of webcasting are:
Corporate
High-tech
Financial Services
Pharmaceutical/Healthcare
Manufacturing
Consumer/Retail
Energy
Higher Education
Large state universities
Private colleges
Adult education providers
Community colleges
Government
Legislatures
Civilian agencies
Military and intelligence
County and local governments
Each of these industries share some common attributes that make them ideal target segments for
webcasting products and services:
Complex and rapidly evolving product and service offerings
A need to disseminate information to globally dispersed groups as efficiently as possible
Large workforces and communities who require frequent training and continuing education
A need to communicate effectively with external stakeholders such as share-holders,
customers and partners
The table below shows the applications driving the use of webcasting across the target industries:
Internal Communications
CEO speeches and other executive
communications
Sales training
Employee training – work skills
HR, compliance & safety training
Business updates
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External Communications
Product launches
Direct marketing & lead generation
Channel communication & training
Online advertising
Trade shows
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Classroom lectures (higher ed)
Guest speakers (higher ed)
Distance learning (higher ed)
Employee communications (government)
Analyst briefings
Earnings calls
Public lectures (higher ed)
Alumni outreach (higher ed)
Legislative hearings (government)
Intercollegiate sports (higher ed)
Public meetings (government)
In general companies that use webcasting applications start with an internal focus and then shift
to externally focused communications after the first 12-18 months of successful internal adoption.
Internal communications then represent the most valued use of the technology in the short-term
with outbound communications representing a second-wave of adoption and use. Thus
companies who capture the internal market will be best positioned for the growth in external
business.
2.2.2 In-house vs. Outsourced
Today organizations can elect to bring technology in-house or use outsourced services to fulfill
their webcasting requirements, and webcasting vendors fall into two camps - service providers
such as Yahoo and On24, and technology providers such as Virage and IVT.
A company’s decision to bring technology in-house will be determined by a number of factors:
Frequency of use – a service provide becomes less cost effective after 10 annual webcasts
Corporate wide vs. departmental adoption
Availability of qualified staff
Perceived tangible and intangible benefits and ROI
Supporting infrastructure
Desire to have secure internal communications
Webcast In A Box, Inc. intends to target companies looking to bring webcasting technology inhouse, and to reduce the technological barriers, cost and complexity of deploying behind the
firewall.
2.3 Customer Need
As outlined in 2.2 above, webcasting is being used for a number of internal and external
communication applications. Through the use of this technology companies seek to gain some
key tangible and intangible benefits including:
Increased revenue
Increased sales leads
Improved employee productivity
Increased audience reach
Reduced travel costs
Improved brand image
Increased frequency of communication
Improved customer experience
Of the applications listed in 2.2, executive communications, training and marketing are the top
three application areas of multimedia presentations. The table below shows the top ROI
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measures for each of these applications areas 6:
Executive Communications
Employee understanding of
business strategy
Increased revenue
Increased productivity
Improved internal
communications
Training
Increased productivity
Marketing
Increased revenue
Increased revenue
Employee retention
Reduced costs
Increased reach
Improved image
Reduced costs
2.4 Target Marketing
Webcast In A Box, Inc. will focus its marketing efforts on the segments and application areas
outlined in 2.2 and 2.3 above. Initially our focus will be on Global 2000 customers with Education
and Government customers being the secondary focus. Target customers will have the following
profile:
Global 2000 companies in the segments described in 2.3
Companies currently doing more than 10 webcasts per year and looking to increase
frequency of use
Companies wishing to adopt webcasting technologies internally behind the firewall
Companies wishing to reduce the costs of communication
Companies that require a reduction in travel costs
Executives who wish to communicate more effectively with their teams
Within these companies we will target the following departments and key personnel:
Corporate Communications – VP, Director of Corporate Communications
Sales & Marketing – VP, Director of Sales/Marketing
Training – Director of HR, Chief Learning Officer
Information Technology – VP, Director of Information Technology
We expect gain the support of IT staff, webcast producers, and media specialists as the
appliance is well suited to make them successful with minimal support and training costs.
2.5 Customer Use Profile
Customer Type
VP of Corp Comm
VP of Corp Comm
VP of Sales
Director of HR
All Directors
Domain specialists
Place
Corporate studio
Auditoriums
Conference room
Conference room
Conference room
Conference room
Use
Company meetings
VP team meetings
Quarterly meetings
Employee training
Team meetings
Peer training
Frequency
Once per quarter
5-10 per quarter
Once per quarter
5-10 per quarter
10-25 per quarter
25+ per quarter
2.6 Competition
We divide the webcasting competitive landscape into three distinct categories:
Service providers - such as Yahoo, On24, Akamai and Loudeye
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Marketers’ Perceptions of Streaming Study Interactive Media Strategies, November, 2002
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Enterprise application providers - such as Virage, IVT, and MediaPublisher – typical
installations start at $75k
Tools providers such as Accordent and Sonic Foundry – products in $15k to $30k range
Webcast In A Box, Inc. intends to compete directly with the third category of tools providers. We
believe we have a number of unique value propositions against each of the competitors in this
category including:
Ease of installation and use
Enterprise class scalability
Standards based platform
More complete webcasting solution
By offering significantly more value at a similar price we believe we can rapidly win market share
from the companies in this category. However, Webcast In A Box could be complimentary with
Accordent and a combined solution would be able to compete against the second group as well.
Accordent authoring tools can be used to prepare stylized playback interfaces and to control
encoder devices; these tools can provide more value to users of Webcast In A Box appliances,
which are more focused on scheduling, encoding, and delivery of video streams.
2.7 Competition Profile
Vendor
Sonic Foundry
Product
MediaSite Live
Cisco
IP/TV
Accordent
Presenter Pro
Virage
VS Webcasting
Reflect Systems
Reflect Suite
IVT
Media Platform
Price
$25,000
Features
Windows-based appliance, video broacast,
desktop capture (as images), polling, Q&A
$30,000 Windows-based appliance, video and desktop
broacasting, PPT, multicast
$15,000 Authoring, PPT, and encoder control only. No
server. Incomplete solution.
$100,000 Video and desktop broadcasting, polls, Q&A,
PPT. Complicated. No video server control, no
multicast.
$100,000 Windows-based. Video and desktop broadcasting,
polls, Q&A, PPT.
$80,000 Windows-based. Video and PPT broadcasting,
polls, Q&A, PPT. Complicated. No video server
control.
Webcast In A Box, Inc.
3. Products
3.1 Benefits for the Customer
Webcast In A Box appliances will enable executives and workers to communicate more
effectively with geographically dispersed workers, will increase productivity, and will reduce costs
through reduced business travel. Benefits can be categorized by user type as follows:
Information Technology staff
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Ease of installation
Low maintenance costs
Low user support costs
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Event Production staff
Content consumers
September 7, 2003
Scalability
Ease of use; simply “Plug and Play”
Low set up and configuration time
Mobile solution
Reliability
Functional value
High quality video of the speaker
Ability to see the presenters desktop
Ability to stay better informed of company
matters
Ability to retain information more easily
Ability to become more familiar with company
executives
3.2 Description of Products
Webcast In A Box appliances are small enough to place on your desk at less than 8” wide and tall
and less than 12” long. They are light and rugged enough to be mobile. They only require power,
video input, and a network connection to be operational. A LCD panel will display its IP address;
type this into a browser to use its intuitive management application to start and stop a webcast, to
schedule a webcast for a later time, or to view an archive of a previous webcast. Thousands of
employees can access this live and on demand content from a single box.
Webcast In A Box, Inc. products are designed to be extremely user-friendly, reliable, and
scalable. Customers will be able to rapidly deploy them across their enterprise and enable its
operation. The Webcast In A Box appliance will allow customers to broadcast video from a
camera and/or from their desktop with a scan converter device (these now come preinstalled with
most laptops). They can be placed in the control rooms of auditoriums, in conference rooms with
cameras, or can be integrated with video conferencing systems to extend their reach.
3.2.1 Initial Products
The Webcast In A Box appliance provides live event broadcast management, event notification,
and archive capabilities. The appliance will be linux-based with a Helix (RealNetworks format)
encoder and server and an open source web-based webcast management application. It will
have a small form factor that is based upon the Shuttle XPC chassis. A LCD display will provide
status information and all administrative management will be from a remote web browser,
therefore, no monitor, mouse, or keyboard is required. This product requires modern networking
systems that support multicast transmission of data. Most global 2000 corporations have
networks that are multicast capable.
The Webcast In A Box appliance will store approximately 1000 hours of video at 300 Kbps. This
is well beyond the yearly requirements of most companies after which the content can be deleted
or exported for off line storage. Webcast In A Box will provide the ability to export a presentation
as an zipped archive of files that can be easily downloaded from the web based interface then
subsequently unzipped to a local hard drive, network file system, or copied to a writeable CD for
playback or management by a separate content management system.
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3.2.2 Follow-on Products
Webcast In A Box, Inc. will continue to develop the Webcast appliance to add features that will
enable it to effectively penetrate its target market. A second model will have the same chassis
and web application but with a hardware MPEG-4 encoder. This second model could ship with
other hardware and software components if current supplier prices increase.
3.3 Customer Support
Customers will be supported by phone and email during regular business hours. Documentation
will be provided on our website, as well as customer forums for technical support. Webcast In A
Box, Inc. will nurture a community of users through our website which will provide customer
support, new feature request tracking, business suggestions, and testimonials.
3.4 Risk Analysis
3.4.1 Third-party component cost and availability
Webcast In A Box, Inc. will depend upon third-party hardware and software that may fluctuate in
price and that may no longer be available for resell. Fortunately Webcast In A Box can source its
components from multiple vendors. This is because it is based upon standard PC components.
3.4.2 Lack of customer multicast-ready network
Webcast In A Box, Inc. also depends upon sales that require customers to have a network that is
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multicast ready. While the system will support unicast broadcasting, this will adversely effect the
network, therefore we will strongly encourage customers to support multicasting. Multicasting
allows an unlimited number of users to access a single copy of a video stream within the same
network, where as unicast video delivery requires an individual stream for each user.
Webcast In A Box, Inc.
4. Marketing Plan
4.1 Overall Marketing Strategy
4.1.1 Leveraging contacts
Webcast In A Box, Inc. will be marketing its initial product directly to existing contacts of Erik Herz
and Chris Dawson. Over the course of the last six years Erik and Chris have acquired a
substantial number of meaningful customer relationships that will be leveraged for sales and
promotional efforts. These include key decision makers at companies such as Oracle, Cisco, HP,
Intel, Nortel, SAS, Sprint, UBS Warburg, and SBC Communications.
4.1.2 Google “Ad Words” service
Webcast In A Box, Inc. will also be utilizing the Google “Ad Words” service to promote the product
and to acquire sales leads. This will be in the form of a paid advertisement to be placed near
search results for terms such at “webcast”, “webcasting”, and “video”.
4.1.3 Marketing collateral
Webcast In A Box, Inc. will be creating and distributing product marketing collateral at various
meetings, conventions, and exhibitions, along with in person product demonstrations.
4.1.4 Inside sales representative
Finally, Webcast In A Box, Inc. will contract an inside sales representative to cold call prospective
customers. These calls will lead to face-to-face meetings with qualified decision makers or to
direct sales orders.
4.2 Strategic Alliances
Webcast In A Box, Inc. will seek a strategic alliance with RealNetworks and the Helix Community.
The Webcast In A Box appliance will ship with the Helix DNA server with the RealVideo and
RealAudio codecs, which will be licensed and resold from RealNetworks. Webcast In A Box, Inc.
will seek placement on the RealNetworks website and referrals from their sales force and well as
members of the Helix Community. Accordent has been successful with a similar alliance; a
significant portion of their sales come from referrals from the RealNetworks website.
Webcast In A Box, Inc. will seek a strategic alliance with Accordent which is a leading vendor of
webcast production tools. A co-sell opportunity exists into accounts where customers want a
solution for authoring webcast templates in a windows application and serving webcast content
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from a linux webcast server. Accordent has a substantial install base of webcasting software, but
depends upon third party server systems. Webcast In A Box appliances are well suited as a
server system for the Accordent authoring application.
4.3 Distribution
Initial Webcast In A Box appliances wil be assembled by staff members and shipped directly to
customers. Subsequent units may be assembled and shipped to integrators and resellers.
4.4 Pricing Strategy
Webcast In A Box appliances will cost $15,000 each. Competitive products cost between $15,000
and $30,000 including Accordent, which costs $15,000, Sonic Foundry, which costs $25,000, and
Cisco's IP/TV solution that costs around $30,000.
Webcast In A Box, Inc.
5. Management and Organization
5.1 Key Management Personnel
All business operations will initially handled by Erik Herz and Chris Dawson. Marketing, legal, and
administrative functions will be outsourced where possible.
5.2 Board of Directors and Advisors
Erik Herz and Chris Dawson are the only stake holders at this time.
5.3 Company Structure and Ownership
The Webcast In A Box, Inc. management team consists of two individuals, Erik Herz and Chris
Dawson, who have taken equity positions in the company, prior to the involvement of outside
investors, that total 70%, with each member holding 35% equity. An initial grant of 100 shares
(10%) has been allocated for start-up capitalization. A grant of 100 shares (10%) has been
allocated for a stock pool to incentivize future employees. Finally, another grant of 100 shares
(10%) has been allocated for future capitalization or for future employee incentives.
Webcast In A Box, Inc.
6. Financial Plan
The Webcast In A Box, Inc. financial plan is centered on rapid growth in order to penetrate the
market quickly. The Webcast In A Box appliance version 1.0 will be available by fall 2003.
Projections indicate that Webcast In A Box, Inc. will break-even in 2004. Note that all projections
are for fiscal years ending on September 30.
6.1 Sources and Uses of Funds
Webcast In A Box, Inc. is seeking investors to provide cash in exchange for equity positions in the
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corporation. Investors are sought to contribute $100,000. These funds will be used to develop,
market, and sell the Webcast In A Box appliance. Webcast In A Box's low operating costs and its
immediate delivery of a version one product will enable early access to sales revenues for
operational purposes.
6.2 Income Statement
Pro Forma Income Statement - Fiscal Year Ending September 30
2004
2005
2006
2007
2008
Appliance Sales
$375,000
$750,000
$1,500,000 $3,000,000 $6,000,000
Total Revenue
$375,000
(25 sales)
$750,000
(50 sales)
$1,500,000 $3,000,000 $6,000,000
(100 sales) (200 sales) (400 sales)
$62,500
$125,000
$250,000
$500,000
$1,000,000
$100,000
$150,000
$200,000
$250,000
$300,000
$100,000
$150,000
$200,000
$250,000
$300,000
$100,000
$50,000
$412,500
$125,000
$75,000
$625,000
$150,000
$100,000
$900,000
$175,000
$200,000
$125,000
$150,000
$1,300,000 $1,950,000
-$37,500
$125,000
$600,000
$1,700,000 $4,050,000
$0
-$10,500
-$40,740
-$142,800
Profit Before Fed Tax
-$37,500
$114,500
$549,600
$1,557,200 $3,709,800
Fed Tax (34%)
$0
-$37,500
-$38,930
$75,570
-$186,864
$362,736
-$529,448 -$1,261,332
$1,027,752 $2,448,468
Revenues
Cost of Goods Sold
($2,500 per unit)
Sales and Marketing
Research, Support,
and Development
Administrative
Misc
Total Expenses
Profit Before Tax
CA Tax (8.4%)
Net Income
-$340,200
6.3 Cash Flow Statement
Strict cash flow management will be critical to the success of the rapid growth plan for Webcast In
A Box, Inc. For planning purposes, purchases and operational expenses are assumed to be
primarily cash transactions while sales are on accounts receivable. The capital investment of
$100,000, in conjunction with steadily increasing revenues, will ensure Webcast In A Box's
liquidity.
The estimated cost per unit for the Webcast In A Box appliance is $2,500. This includes $1,500
for hardware, $500 for software licensing, and $500 for assembly, packaging material, and
shipping. The retail price of $15,000 covers the required costs of business operations, support,
sales, and marketing. The retail price is market priced as it offers similar value to Sonic Foundry’s
MediaSite Live product that is priced at $25,000.
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Webcast In A Box appliances may ship with an embedded Oracle database and application
server for increased reliability and brand value, this will increase the per unit cost by $1,500.
Similarly the MPEG-4 version will have an additional $1,500 to cover the cost of a hardwarebased encoder device.
The miscellaneous costs reflect the business infrastructure, legal, and insurance costs of
business operations. Chris and Erik will each draw salaries of $100,000 per year; these are
reflected in the R&D and administrative costs, respectively. These costs will grow as projected
over the course of five years to include supplemental contractor expenses and additional staff as
needed to conduct business operations.
Initial marketing and sales costs reflect required travel and other expenses incurred through the
conduct of sales as well as fees to be paid to marketing services such as Google’s “Ad Words”
campaign and contractor fees to inside sales personnel. These costs will grow as projected over
the course of five years to include supplemental contractor expenses and additional staff as
needed to conduct sales activities.
Pro Forma Cash Flow Statement - Fiscal Year Ending September 30
2004
2005
2006
2007
2008
Cash Flow From Operations
Net Income
-$37,500 $75,570 $362,736 $1,027,752 $2,448,468
Beginning Cash
$100,000 $62,500 $138,070 $500,806 $1,528,558
Ending Cash
$62,500 $138,070 $500,806 $1,528,558 $3,977,026
6.5 The Investment Opportunity
The initial investor(s) will receive 10% equity in exchange for their cash infusion of $100,000. The
remaining stock will be retained by the management team, employees, and the company, which
includes 70% for the founders, 10% for an employee stock pool, and 10% for either employee
incentives or for additional capitalization as needed. Webcast In A Box, Inc. will not dilute or split
the equity of the company within 5 years, rather new cash (if required) will be acquired through
loans or through use of the remaining 10% equity reserve.
After 5 years, the investor(s) will have the option to remain in the company or have Webcast In A
Box, Inc. repurchase their shares at fair market value. Terms for repurchase will be negotiated
with the investor(s). Based on a conservative valuation (P/E of 6.5), the investors' share is
projected to be worth $1.6 million, providing a 100% annual return on investment.
One Share
10%
35%
100%
2004
$1,000
$100,000
$350,000
$1,000,000
2005
$2,000
$200,000
$700,000
$2,000,000
Copyright 2003 Webcast In A Box, Inc
2006
$4,000
$400,000
$1,400,000
$4,000,000
2007
$8,000
$800,000
$2,800,000
$8,000,000
2008
$16,000
$1,600,000
$5,200,000
$16,000,000
14