JabberOut Business Plan

Business Plan 1 BUSINESS PLAN 1. Executive Summary 1.1. Overview 1.2. Mission / Technology Solutions 1.3. Significant Market Opportunity 1.4. Social Networking Opportunity 1.5. Experienced Management Team 1.6. Financing Need 2. Services 2.1. Competitive Comparison 2.2. Technology 2.3. Future Development 3. Market Analysis Summary 4. Strategy 4.2. Marketing Strategy 4.3. Sales Strategy 5. Operating Plan 5.1. Company Operations 5.2. VoIP network dimensioning 6 Organization 6.1. Personnel Plan 7. Financial Plan 7.2. Key Financial Indicators 7.5. Projected Balance Sheet 1 3 3 3 3 4 4 4 5 5 5 7 8 9 9 10 11 11 11 11 12 13 13 Error! Bookmark not defined. 2 1. Executive Summary 1.1. Overview Our company is an italian start-up aim to be the first VOIP Service Provider developed entirely on the widely-used and open protocol, Jingle/XMPP, and open source software, including Asterisk and Jobill, a billing system developed by us. Jabberout makes international calls available to more than 50 million xmpp/ Jabber users, who would otherwise pay higher fees to benefit from the traditional telephony services. 1.2. Mission / Technology Solutions Xmpp / Jabber is becoming the de facto standard for presence-enabling existing services and applications. Jabber easily bridges legacy and standard protocols to aggregate presence with speed, scale, and security. Users now suffer from incompatibility across the network. JabberOut is challenging the proprietary protocol many VoIP companies are using which has left users vulnerable to security holes, virus attack, memory leaks and abnormal port activities. Our slogan is “Open Your Voice”, inviting everyone to benefit from an open, standardized, secure, feature-rich, widely-deployed service for VoIP communication and collaboration over the Internet. JabberOut is a complete suite of software components that together represent a turnkey solution for VoIP service provisioning. Single state of the art components that make our solution works are : 1) Joim : a Jingle Softphone/Jabber IM. The first jingle enabled Jabber client with outbound phone call capabilities (current development status: alpha version completed) 2) Telephony Server : a custom asterisk implementation that supports jingle standard (current development status: beta version, outbound calls working) 3) Jobill : a Billing Solution for VoIP services that supports multiple service resellers and agents (current development status: production) 1.3. Significant Market Opportunity Voice over IP (VOIP) is one of the fastest growing technologies in the world. Total Voice over IP (VoIP) subscribers worldwide increased by 80 mln subscribers in 2007, In-Stat says. The European consumer VoIP market increased by over 14 mln subscribers in 2006. US wireline operators added only 4 mln VoIP subscribers in 2006. In 2011, the US will represent only 18% of the global consumer VoIP market. By 2011, In-Stat predicts the consumer VoIP market will total nearly $44 bln worldwide. Xmpp / Jabber IM users are estimated more than 50 millions (potential clients) and there are literally hundreds of xmpp / Jabber software for any platform (windows, linux, mac, mobile) many of which will add as default our termination service involved by us with reseller agreement and easy plugin developed by our lab. 3 For this reason The Company projects that sales will grow yearly starting with $1.8 mln in 2008 and reaching $15.6 mln within the next three years, with a gross profit margin of 30% and an EBITDA of 23% 1.4. Social Networking Opportunity XMPP is taking off in the social networking space. Twitter, Jaiku, FireEagle, Dopplr, Seesmic, TiVo — are all either already using XMPP or thinking seriously about it. It seems that there is a big mashup of Web and Jabber in the works. Imagine our IM client connected to Twitter, Jaiku and other Social networks, adding to the VoIP capability of the users!!! Or imagine a Microblogging decentralized infrastructure support from our services. The advantages are limitless!!! But if you are thinking that XMPP (and JabberOut) is only about event notification then you are wrong. The framework is powerful enough to support number of interesting collaboration use cases such as:    File storage and sharing: users are able to share files to common spaces and be notified when new files are added, deleted, or updated. Whiteboards: a whiteboard could be represented as a node. Users could collaboratively modify the whiteboard and see changes reflected in real-time. Auction and trading systems: a system that enables the users to trade and sell numerous items. 1.5. Experienced Management Team Stefano Grini, CEO and co-founder has strong experience in finance management, excellent skills in general management, brand and sales management, obtained after working for 5 years in different sectors – industrial waste management and building materials industry. Andrea Bodrati, CTO, has a strong experience as IT entrepreneur and executive in wholesale telecommunication services. Andrea has over 15 years experience in the telecommunication and Internet industry. He founded the first Italian search engine Shinyseek and Shinystat one of the most famous stat counter. 1.6. Financing Need Our goal is to get an initial seed capital quickly in order to set up the company future development and support sales, marketing and the operations for the first year. 4 2. Services JabberOut is a pioneer VOIP Service Provider, developed entirely on open and standardized protocol –Jingle/XMPP – and open-source software, Asterisk and Jobill, a billing system developed by us. 2.1. Competitive Comparison In the broader sense, our competition is formed by all the other VoIP providers. The bulk of the target market wants an easy to use and cheap VoIP provider. Our part of the market is both developing the software for the product and selling the product. . The traditional VoIP leader is Skype. It’s the most used VoIP application. While the Skype-toSkype calls are always free, calling from Skype to phone and mobiles cost as little as €1.7 cents/minute. Users can either purchase Skype Credit or upgrade to Skype Pro for only €2/month (including VAT). In 2006, there were 246 million Skype users1. The most important competitor in Sip is SIPphone Inc.. Sip enables two or more people to make phone calls to each other using the Internet. SIP to SIP phone calls are always free, while when calling PSTN phones the fees are low, with no monthly fees or taxes. For example, to call a US phone number, it costs the user €1.9 cents/minute and the users needs to buy SIP minutes (worth €10, €20 or €50) in order to be able to use the service. Gtalk2voip (www.gtalk2voip.com) uses the Jingle technology, but the company doesn’t effectively promote the product, the product is not user friendly, it’s difficult to use, therefore not a serious current competitor for us. Other popular VoIP providers include: SunRocket, Viatalk, VoIP.com, VoIP Your Life, allo.com, Vonage, VoicePulse, Earthlink True Voice and VoIPGO. Each provider offers slightly differing deals and plans. 2.2. Technology JabberOut is a complete suite of software components that together represent a turnkey solution for VoIP service provisioning. Single state of the art components that make our solution works are : 1) Joim : a Jingle Softphone/Jabber IM. The first jingle enabled Jabber client with outbound phone call capabilities (current development status: alpha version completed) 2) Telephony Server : a custom asterisk implementation that supports jingle standard (current development status: beta version, outbound calls working) 3) Jobill : a Billing Solution for VoIP services that supports multiple service resellers and agents (current development status: production) 1 Wolfgang Gruener, 2005, Analysts: VoIP Users Are 17 Million Strong And Growing, at http://www.vonageforum.com/article1989.html , visited on Thursday, July 05, 2007 5 JOim offers users free PC to PC calls using the XMPP/Jabber protocol, as well as instant messaging. More details about Jabbin can be found on: http://www.jabbin.com Jabber is known as the ―Linux of instant messaging‖2 and is an open source, secure and ad-free alternative to the popular services such as ICQ, MSN, YM or AIM. Jabber is a set of streaming XML protocols and technologies which allow two persons on the Internet to exchange messages and other information close to real time. Jabber technologies offer several advantages. Jabber is open as the protocols are free, public and easily understandable. It’s standard and proven to be stable, decentralized, secure, extensible and flexible, as well as diverse. Jabber is becoming the de facto standard for presence-enabling existing services and applications. Jabber easily bridges legacy and standard protocols to aggregate presence with speed, scale, and security. Jingle provides benefits to those who have already implemented and deployed XMPP technologies. Jingle is a native XMPP extension for setting up peer-to-peer multimedia sessions between XMPP entities for voice chat, video chat, and various types of media sharing and is being standardized within the Jabber Software Foundation’s (JSF) Jabber Enhancement Protocol (JEP) series, and has broad support from a wide range of XMPP vendors and developers. The intent of Jingle is to provide a pure-XML mechanism for negotiating and managing multimedia interactions between Jabber/XMPP users. For one, Jingle re-uses existing XMPP identifiers rather than forcing the use of an XMPP ID; since XMPP IDs are fully Unicode compliant; this is a strong selling point for service providers outside the English-speaking countries. Second, XMPP technologies in general have a stronger security profile than SIP technologies do; for instance, address spoofing is much more difficult in XMPP than in SIP and authentication is mandatory in XMPP but optional in SIP. Third, Jingle provides pure XML formats, thus easing the burden of auditing and compliance through schema checking of the XMPP streams. Finally, Jingle’s modular design makes it possible to interface with a number of popular technologies that are not based on SIP and RTP, such as Asterisk, used in the server-side infrastructure of JabberOut 2 Jabber Overview, at http://www.jabber.org/about/overview.shtml , visited Thursday, July 05, 2007 6 Asterisk3 is the most popular open source telephone system in the world. It is also the most extensible. It offers flexibility, functionality and features that are not available in high cost business systems. Asterisk can be downloaded for free and runs on a variety of operating systems, including Linux, Sun Solaris, Mac OS X, OpenBSD and FreeBS. Asterisk supports VoIP in many protocols. Recently, Kevin Fleming, senior software engineer at Digium and co-maintainer of Asterisk, announced that a team is working on a new, improved 1.6 version of Asterisk which will provide flexible multi-channel bridging, as well as improved call handling capacity and performance. Jobill is the billing system for Jinglephones and Asterisk. Jobill is developed by Andrea Bodrati, our team member, and will be the first billing system for Jingle. 2.3. Future Development The most important factor in developing future products/services is the market need. Our understanding of the needs of our target market segment is one of our competitive advantages. Next, we plan to develop software to connect with JabberOut, at the intersection of mobile phones, telephony and web: a VoIP Firefox Extension (based on Samplace www.sameplace.cc), a Web-based phone, as well as free mobile VoIP software for Linux -embedded phone (qtopia, OpenMoko, Zaurus) that allows customers connect to JabberOut. Based on the market’s need we are also considering launching new plugins for the existing Jabber Clients. 3 About Asterisk, at http://www.asterisk.org/about , visited on Thursday, July 05, 2007 7 3. Market Analysis Summary VoIP is one of the telecommunication industry’s fastest growing markets. By 2010, studies show, that there will be at least 44 million VoIP subscribers, as opposed to 10.3 million at present. On World states that by 2011 there will be 100 million VoIP users and Skype will have 25% of the market share with €1.2 billion in voice services revenues4. Japan continues to be the largest VoIP market with 7.2 million users in 20055. In Japan the market leader is Yahoo Softbank. After Japan, USA cable sector is the most important VoIP sector with 2.1 million subscribers in 2005, according to the market research firm Point Topic. In Europe, France is the largest market, with 1.2 million subscribers in 2005. According to In-Stat’s research ―Europe Leads the Booming Consumer VoIP Market‖ 6, the market for consumer VoIP services boomed in 2006 all over the world. Europe is leading the way with an increase of over 14 million subscribers last year. France, Germany and the Netherlands were the countries with the largest VoIP subscribers in 2006. Also, In-Stat predicts that the consumer VoIP market will total almost €44 billion worldwide, by 2011. The eBay Q3 2007 results present that in that quarter Skype reaches 246 million users and 1.4 billion SkypeOut minutes. VoiceGlo, another soft client, is estimated to have about 605,000 users in 2005. These two soft phone providers therefore account for 33% of the market share in 2005, based upon Point Topic’s estimates. According to studies published recently, the market for VoIP services is estimated at €6.4 billion in Europe by 2008 and is projected to grow steadily each year. 4 Source at http://blog.tmcnet.com/blog/rich-tehrani/voip/100-million-mobile-voip-users.html, visited Thursday, July 05, 2007 5 Wolfgang Gruener, 2005, Analysts: VoIP Users Are 17 Million Strong And Growing, at http://www.vonageforum.com/article1989.html , visited on Thursday, July 05, 2007 6 US Lags Global VoIP Market According to In-Stat, at http://home.businesswire.com/portal/site/google/index.jsp?ndmViewId=news_view&newsId=20070709005758&ne wsLang=en , visited on Thursday, July 12, 2007 8 4. Strategy Our strategy is built on serving niche market well. The world is full of small or medium businesses that develop similar products. We are building our marketing infrastructure so that we can, eventually, rich specific kinds of business across broad geographic lines. We focus on satisfying the needs of small business and home user. We focus on using a technology we can take to the masses and not leading edge technology that aims at the experts. 4.1. Marketing Strategy Our marketing strategy is based on a powerful viral marketing and user generated content. We want to create a user friendly web site and promote it via search engine advertising (SEO and Keywords advertising). Hence, we will attract the target audience to the site, making it easy for them to purchase our service. We also plan to involve users and bloggers, who in turn, will promote our product. More specifically, we are going to use the following tools to promote our website and product:    Viral video on YouTube and other similar sites; Screencast and slideshare tutorials; A good ticket management; Create a powerful brand using merchandising tools , photosharing and a Corporate blog; 4.1.1. Pricing & Distribution Strategy We aim at the consumer market with prices intended to be in line with our main competitors (Skype and Sipphone). We do not expect to change the price in the next year. In the beginning, registers users will use Jabbin as client for JabberOut, but after a while it will be possible to use other clients which support the Jingle protocol –such as PSI, kopete, spark. Extremely important for us will be the reseller agreements with open source client teams – PSI, Kopete, Pidgin- which will offer our services using their software. 4.1.2. Marketing Programs Based on early calculations, we can summarise our marketing plan for the next three years, as follows: Marketing Plan 000’s Keyword advertising Viral Marketing Press and corporate blog Web advertising Others Total Start-up € 15 € 20 € 5 € 5 € 5 € 50 2009 € € € € € € 20 100 10 40 30 200 € € € € € € 2010 20 100 10 40 30 200 € € € € € € 2011 50 300 20 80 50 500 9 4.2. Sales Strategy The Sales Strategy is not expected to change dramatically over the years. During 2008 we will focus not on changing the strategy but on improving our implementation, by working on key objectives and better coordinating our marketing efforts related to sales channels. The short term strategy and the selling process depends on point of purchase decisions. The main point of purchase is our website. Then, as a key part in marketing/sales, our service will represent the reseller agreements signed with open source client teams – PSI, Kopete, Pidginwhich will offer our services using their software. 4.2.1. Sales Forecast JabberOut is primarily targeting the USA market (which will count for about 40% of the total future subscribers), but much of the intended growth will also take place in the BRIC (Brazil, Russia, India and China) countries because of the price and because they aren’t locked in to other services/technologies yet. 2009 1.800k 20.000 36.000k 2010 5.400k 60.000 108.000k 2011 27.000k 300.000 540.000k Sales Customers Number of Minuts € € € Revenues in .000 Euro Total User $27.000 300.000 20.000 $1.800 $5.400 60.000 2010 2010 2009 10 5. Operating Plan Currently, JabberOut has a Network Operations Centre (NOC) in which all the networking systems are housed. At NOC, JabberOut also manages network monitoring and critical technical support. 5.1. Company Operations JabberOut’s operations are managed within the Customer Care department. Customer activation, invoicing and monitoring is fully automated. When a new user register using the web interface all his personal details are stored in company database and he is immediately activated Technical support is performed using an online forum. Community Customers invoicing is also automated. The customer can look at the CDRs (Call detail records) and self-configure value added services (like voice mail, call forwarding). Networks, systems and numbering plan used for service provisioning JabberOut's network has dedicated Internet access. Each access is guaranteed by a SLA (Service Level Agreement). Company's server hosts email, ftp, web and billing services. All server services are replicated and backed up to guarantee service availability and reliability. We plan to host backup servers in our housing facility in Redbus server farm in Milan to guarantee service in case of disaster. The company's VoIP network is interconnected with multiple international VoIP providers to guarantee low call termination prices and reliability. The service supports both SIP and H323 signaling protocols. JabberOut also has direct interconnection with Italian landline and mobile networks and the ability to provide Italian geographic numbers. We plan to provide incoming geographic numbering in other countries as well as the VoIP services we are provided using Asterisk software on Linux operating system. 5.2. VoIP network dimensioning The VoIP network has been planned with the projection that all the 4 E1s (120 voice ports) can support 3575 BHCCS (ERLANGb with 0,1 GOS). This assumption is made considering calls terminating on the PSTN network only. Calls between users will not generate any load on JabberOut's VoIP network since these are made using peer-to-peer technology. 6 Organization Jabberout is managed by the corporate executive team comprising of CEO/CFO Mr. Stefano Grini and the VP/CTO Mr. Andrea Bodrati. Jabberout occasionally outsource software development tasks to independent freelancers. Jabberout is a small company organogram which facilitates by the use of a highly automated customer management system, standard work procedures and the free contribution of the Open Source community on software development. 11 Stefano Grini is a 32 years old visionary, co-founder and CEO at JabberOut. He has strong experience in finance management, excellent skills in general management, brand and sales management, obtained after working for 5 years in different sectors – industrial waste management and building materials industry. He founded Jabbin, the open source VoIP client for Jabber, using Jingle protocol, instead of the most used SIP protocol. Jabbin is still in beta version but will be released as a final version by the end of this summer. Andrea Bodrati has a strong experience as an entrepreneur and in wholesale telecommunication services, and is CTO at JabberOut. He is born Italy but later moved to Ukraine, where he currently lives. In 2007, he founded MPTelecom in Cyprus. A year earlier he started a project aiming to provide the first open source VoIP PBX and also was appointed International Sales Manager at Telecom64 International, a US-based company which provides wholesale telecommunication services in Europe and the Far East. Andrea has over 15 years experience in the telecommunication and Internet industry. We believe that it will be necessary to increase our labor force when Jabberout service will be released to public by employing:     N.1 Marketing Manager (full time) N.1 C++/QT Junior software developer in charge of customer support and Joim bug tracking (full time) N.1 C++ Senior Software developer in charge of Telephony protocol, data transfer and Asterisk software management (full time) N.1 Copywriter in charge of company Internet site and blog management (part time) Our one of the most challenging task will be maintaining the work force due to the extremely competitive Information & Communication Technology labor market. We will achieve this goal by setting up a highly collaborative and friendly environment and studying incentive and benefit plans based on results for our employees. 6.1. Personnel Plan The personnel plan will be as follows: Personnel Plan Stefano Grini, President CFO/CEO Andrea Bodrati, VP/CTO Technical Development Personnel Technical Development Freelancer General and Administrative Personnel Sales and Marketing Personnel Total People Total Payroll € 50,00 € 50,00 Start-up 1st year € 12,50 € 12,50 € 25,00 € 150,00 € 25,00 € 50,00 5 € 275,00 2nd year € 25,00 € 25,00 € 150,00 € 200,00 € 50,00 € 50,00 11 € 500,00 3rd year € 25,00 € 25,00 € 400,00 € 300,00 € 100,00 € 150,00 20 € 1.000,00 12 7. Financial Plan Our goal is to get an initial €150,000 in the company quickly in order to set up the company future development and sustain the operations within the first year of operations. Ideally, we would like to bring in equity from investors compatible with our growth plan, management style and vision, in return for some equity ownership. The company is raising the money for the purpose of funding growth and operations. The funding will cover the operating expenses and product development as follows:      JoIM / Jabbin development; Creation and changes of our website; Cover all the expenses in the first year of operation; Creating plug-ins for other Jabber VOIP client; Developing a Firefox add-on. 7.2. Key Financial Indicators The following charts show the changes in three key financial indicators: sales, gross profit and net profit after tax. The growth in sales is the most obvious change. We believe that a growing market for our services and a large potential market justifies the growth predictions (all values are in thousands of EURO). Sales Gross Profit EBITDA € € 2009 1.800k 540k (85)k € € € 2010 5.400k 1.620k 645k € € € 2011 27.000k 5.400k 3.360k EBITDA in .000 € 3.360 645 (85) 2009 2010 2011 13 7.3. Projected Profit and Loss The following table shows that we expect to maintain gross margin, while increasing net profit margin during the next three years (2009 -2011). The most important factor in improving our profit margin is the economics of operating expenses. We don’t expect to decrease marketing (advertising) expenses as a percent of sales, since selling software does require a lot of marketing. The values in the profit and loss account don’t contain the investment we hope to get via this business plan (all the values are in thousands of EURO dollars). 2009 in 000 Euro % 100,00% 70,00% 30,00% 2010 % 2011 % Sales Direct Cost of Sales Gross Profit Operating Expenses Salary (Office & Overhead) Payroll (taxes etc.) Technical Freelancer Supplies (off and operation) Repairs/ Maintenance Advertising Car, Delivery and Travel Accounting and Legal Rent & Leasing (Servers) Internet & Bandwitch Telephone Utilities Insurance Taxes (real estate etc.) Interest Depreciation Total Expenses Net Profit Before Tax Income Taxes Net Profit After Tax 1.800 1.260 540 5.400 100,00% 3.780 70,00% 1.620 30,00% 27.000 100,00% 21.600 80,00% 5.400 20,00% 25 100 150 10 10 200 10 20 20 50 10 10 10 10 5 640 (100) (100) 1,39% 5,56% 8,33% 0,56% 0,56% 11,11% 0,56% 1,11% 1,11% 2,78% 0,56% 0,56% 0,56% 0,00% 0,56% 0,28% 35,56% 100 200 200 20 30 200 20 10 20 125 20 20 10 20 10 1.005 615 55 540 1,85% 3,70% 3,70% 0,37% 0,56% 3,70% 0,37% 0,19% 0,37% 2,31% 0,37% 0,37% 0,19% 0,00% 0,37% 0,19% 18,61% 200 500 300 50 60 500 30 40 35 225 40 40 20 40 20 2.100 3.300 1.650 1.650 0,74% 1,85% 1,11% 0,19% 0,22% 1,85% 0,11% 0,15% 0,13% 0,83% 0,15% 0,15% 0,07% 0,00% 0,15% 0,07% 38,89% 14