HeyAnita Korea Investor Pitch 2000

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HeyAnita Korea Investor Pitch 2000 Powered By Docstoc
					Overview of Business, Technology, and Value

December 2000

This report is solely for the use of discussion only. No part of it may be circulated, quoted, or reproduced for distribution outside the client organization without prior written approval from HeyAnita Korea. This material was used by HeyAnita during an oral presentation; it is not a complete record of the discussion.

CONTENTS

1. Overview of HeyAnita: vision, goal, approach, and value 2. Details of HeyAnita: structure, technology, business model, and advantages 3. Progress to date 4. Projected revenues 5. Appendix

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1. Overview of HeyAnita HeyAnita is a global startup built on the belief that voice is the most natural method of interfacing with the vast amounts of information available today. HEYANITA’S VISION

Available Information

Current Method of Access

HeyAnita’s Vision…

Internet

WAP-enabled wireless handsets

PC

Intranet
Specialized Hand-held terminals

…to provide users with easy, real-time access to valuable information by leveraging ANY telephone

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HeyAnita is striving to leverage the potential of this concept in order to generate a successful and sustainable business.

HEYANITA’S GOAL, APPROACH, AND VALUE

Goal

Approach Phase 1: Direct User Create a solid voice portal in order to build end-user and corporate confidence in the technology AND secure immediate revenues

Value (main drivers)*

Revenues

To transfer the value of the internet and intranet to the ordinary telephone by providing voice-driven access to valuable content

Phase 2: Corporate Clients
Leverage success and reputation from voice portal to draw corporate clients for “solutions” business

Phase 2: • Private label • V-ASP Phase 1: • Rev sharing with KT
Time

* Detailed forecast included in Appendix E

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HeyAnita was founded by Microsoft veterans in the hopes of leveraging the wireless revolution. These founders teamed with Softbank’s money and global reach to create an international presence.

WHO IS HEYANITA? JV: EU JV: South America JV: India US Founders Investor
• Softbank • 4 Microsoft veterans • Headquartered in Los • Currently invested in

JV: China JV: Japan JV: Korea
• Incorporated: March 22, 2000

Angeles
• Experts in creating

operating systems and related technologies
• Experts at building

+

HeyAnita’s US and Korea entities; committed to invest in ANY international entity created by HeyAnita
• Decision to invest in

applications and implementing for Fortune 500 clients

HeyAnita over Tellme based on perceived technical superiority

• Investors: • HeyAnita US • Softbank Korea • Thrunet • Naray • TG Ventures
• PIC: 7.8 billion won • Management Team: • JS Lee (CEO) • James Kim (COO) • Peter Chang (CTO) • Bernard Moon (EVP) • Sue-Lynn Koo (EVP) • Jae Choi (EVP)

30% 30% 20% 10% 10%

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Our belief in HeyAnita’s value is supported by the robustness of our technology.

SUMMARY OF TECHNOLOGY AND SERVICE

Telephone Interface (Dialogic/Intel)

Utterance Recognition (Speechworks)

HeyAnita User

Server (HeyAnita) Natural Language Interpretation (HeyAnita)

Ad Repository (HeyAnita)

Call Forwarding (HeyAnita & KT)

CP Interface (HeyAnita)

Internet or Intranet

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The value of HeyAnita’s business is driven by (1) our ability to create and share value with Korea Telecom and (2) our ability to leverage expertise in delivering voice solutions to corporate clients.

SOURCE OF VALUE Phase 2: Corporate Clients HeyAnita is building multiple revenue streams

Phase 1: Direct User
Revenue Sharing with KT HeyAnita User

• Development • Hosting • V-commerce

ASP clients

Data Center Call Transfer •Sponsorship •Advertising •V-commerce Users’ friends, family, colleagues

Private Label Clients “Powered by HeyAnita”
• Development • Maintenance • License 7

HeyAnita can capture and protect this business value through its technical advantages and its strategic alliances.

SUMMARY OF ADVANTAGES

Telephone Interface HeyAnita User

Utterance Recognition

1. Open system architecture + high robustness in O/S + high ability to provide best-of-breed solutions

Server Natural Language Interpretation Ad Repository

2. Proprietary technology + low licensing fees + low dependence on 3rd party (ie. fast time-to-market)

4. Detailed profiling of users + high ability to track caller and call patterns Call Forwarding

CP Interface

3. Easy interface with CP’s & Clients + no reformatting by CP’s/Clients + no hard coding for HeyAnita

Internet or Intranet 8

In order to execute on this plan, HeyAnita’s management has been driving for and has achieved key outputs during the past 9 months.

PROGRESS TO DATE
Description Partners

• Secured unprecedented revenue-sharing and

• Korea Telecom

Backbone

strategic partnership with dominant telco

• Secured top-tier content for all service areas

Content

• • • • • • • •

MBC/iMBC Maeil Economic Daily & MBN Rotis Ticketlink, MaxMovie, Cineseoul CityNet, Cookand, Unitel Weathernews KSE Korean Air

• Completed commercial launch of 6 services

Services

• Second set of 5-8 services currently under

• Speechworks • HeyAnita US

development

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HeyAnita Korea plans to follow up with 10 additional service on its second phase launch, and plans to introduce continuous stream of new services every one to two months.

PROGRESS TO DATE: SERVICE LAUNCH PLAN
First Phase Second Phase

December 5th, 2000 Launch Date

February 5th, 2001

News
Traffic information Services Movie information Restaurant guides Weather information Stock quotes My Service

Taxi reservation Airline schedule & ticketing World Clock Directory service Horoscope Fan Clubs Music-on-demand Quiz Email & Voicemail Voice chatting service

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HeyAnita forecasts the creation and protection of multiple revenue streams. Usage revenues from direct users serve as the main driver until end of 2002. Beginning in 2003, corporate client users serve as the major revenue stream.

OVERVIEW OF PROJECTED P&L
Million won

Expenses

80000

72,712
70000 60000 8,726 8,400

V-commerce Sponsorship Advertising

50,604
50000 40000 30000 20000 10000 0 0.01 2000 3,129 5,880 4,706

6,841

28,008

Corp Client User

25,076
2,370 2,545 8,182

19,132

6,185
3,036 3,142 2001 11,444 2002

17,756

20,736

Direct User

2003

2004

Total Expenses

2,770

10,802

19,812

27,112

34,301

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APPENDIX

A. B. C. D. E.

Basic foundation Comparison of possible business approaches Differences in Direct User Models models Current state of competition HeyAnita’s financial projections

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A. Basic foundation HeyAnita’s business is built on a belief that wireless access to the internet (as well as similar value-added information sources) will be a widespread reality. BASE CONCEPT

Worldwide Wireless Internet Users
Key Drivers of Use

484 million

• Widespread penetration of

terminals
• Affordable rates for wireless

connections
• Availability and usefulness of

content
• Ease and comfort of user interface • Speed of access

6 million 2000 2005

Current trends support all drivers

Source: Ovum Research

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The bet that HeyAnita has placed is on the medium for this wireless internet access.

X = Advantage

BET ON MEDIUM
Current Thinking

“[Customers] try this WAP, and it is so hard! You go down, down, down all these menus, and you wait, wait, wait…pretty soon you give up…” (Head of Internet Operations, SEB Bank) WAP “Share prices of major European [players] have taken sharp hits recently, despite booming sales, because of concerns about WAP” (Nomura Securities) “We need better hardware and a new generation of mobile transmission to make it work” (Apps Mgr, Ericsson)

• Speech recognition technology is a boon with

successful IPO’s of Nuance, Speechworks, and L&H
• Major players are moving to voice interface (eg. Oracle,

Voice

Motorola, Lucent, Palm)
• Speech portal business alone is forecasted to reach

X

X

X

X

X

$12 billion by 2005
• Regarding the telephone as the wireless internet

appliance of choice: It is already in the market and no one has made one that is easier to use or cheaper to buy (summary of WSJ article)
Source: Kelsey Group, Washington Post, Industry Standard, Wall Street Journal

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B. Business Approach and Model HeyAnita’s approach to this new voice-interface market is designed to (1) build user acceptance of the new medium via our voice portal, (2) secure solid revenues from the portal operations, and (3) leverage assets from the portal business to transition to serve corporate clients. BUSINESS APPROACH HeyAnita Most Competitors

Approach
• •

Direct Users  Corporate Clients
Immediately generate large-scale revenues via sharing agreement with Korea Telecom Build wide-spread acceptance of voice enabled technology to seed Corporate Client market
•

Corporate Client s  Direct Users
Generate attractive margins (>50%) on revenues for development services (where services typically comprise 25% of total voice enabling project; remainder of value will flow to technology provider such as L&H or Voiceware) Tap into a limited pool of clients willing and able to install CTI systems (estimates for total market is less than 500 such clients*) Build market acceptance for voice solutions “oneclient-at-a-time” Enter direct user market when sector has matured Hope that corporate client experience can easily and quickly scale to serve large direct user market

Explanation

•
• •

Create strong brand with decision makers of corporate clients and direct end users (ie. portal)
Selectively build corporate client base via relationships with initial content providers Fully leverage experience built during launch direct user services and shift resources to corporate client users Leverage HeyAnita US’s corporate client success stories and expertise in order to service Korean clients Possess option to shift server assets to corporate client business; thereby capture hardware margins as well as services

VS

•

• • •

•

•

•

Likely to make large capital investments for direct user services when market is already crowded with competitors

*Current CTI install base is about 250 sites with a projected growth rate of 10-20% per annum for 3-5 years Source: industry interviews

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C. Differences in Direct User models Despite the fact that a few competitors are pursuing direct users, HeyAnita’s model is far superior in value.

DIFFERENCES IN DIRECT USER BUSINESSES HeyAnita Dacom-L&H-Chollian (now defunct)*
Dacom
• • •

Telco Partner

Korea Telecom
• • •

Owns the so-called “last mile” of infrastructure to which is critical to reach end users Owns and operates core of Korea’s telecommunications backbone Able and willing to provide full, integrated, and reliable billing services

Relies on KT for use of the incumbent’s “last mile” to end users Owns and operates a small network of trunk lines Billing services plagued with inability to collect on ~30% of gross revenues User must pay extra for the service 48 + a 40 Voceweb does not receive call revenues

VS
Revenue Sharing
(per 3 minutes of land-line call)

45

30

15

8+a User Pays To Dacom KT collects from Dacom Dacom keeps 0 VoceWeb collects from Dacom

User Pays To KT

KT Keeps

HeyAnita Collects From KT

* L&H’s recently exposed financial troubles have halted all efforts with Dacom and Chollian. Chollian (a leading ISP and portal) is currently seeking bids for voice-enabling solutions.

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D. Current state of competition Competitors have chosen varying approaches to the business. Although source of initial concerns, the actions-to-date of these players have given HeyAnita reprieve from concern.

COMPETITION
Vocian (portal)

Description
• Launched no-fee portal services without

Comments
• • • •

revenue sharing agreement
• Quickly “burning” initial $1 million in

funding; seeking additional $10 million to continue operations Dacom-L&H-Chollian (portal services for fee)
• Defunct due to demise of L&H

Using R2 lines (60 ports) Linked to Voiceware technology Is seeking funds with poorly defined focus Informally contacted HeyAnita about potential merger

• DACOM has requested a proposals from HeyAnita

SK Corp-L&H-Voceweb (PC based portal)

• Defunct due to demise of L&H

• SK is currently seeking competitive

proposals for voice solutions

Voceweb (corporate focus)

• Posturing to enter corporate client space

• Activities are currently at a standstill due to

as solutions provider

reliance on now troubled L&H.

Samsung Spinoffs (PC based UI solutions)

• Zenaway being reabsorbed due to glitch

• Closing down shortly.

in technology
• 2nd spinoff likely

Nettus (portal)

• After 6 months of analysis, decided to drop

• Focusing on solutions rather than direct user

portal and pursue for solutions business

services

* L&H, Speechworks, Voiceware, SL2 are technology providers with whom HeyAnita has had reseller/solutions provider discussions. ** Off-shore voice-portals such as TellMe and BeVocal are focused on the US and do not have multi-language capabilities or international plans

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F. Financial projections With the help of these partners, HeyAnita is poised to generate its forecasted revenues and stay within the bounds of our forecasted expenses. SUMMARY OF P&L
Korean Won
(KRW) Usage Revenue Sharing Ad Revenue Sponsorship Revenue V-Commerce Revenue sharing Corporate Business Revenue Revenues 2000 10,535 0 0 0 0 10,535 2001 3,141,674,212 0 0 7,818,844 3,035,907,032 6,185,400,087 2,358,206,833 681,200,000 3,411,892,000 248,020,800 2,040,000,000 262,000,000 1,800,263,927 20% 10,801,583,560 (6,416,447,399) 1,572,355,317 (6,188,538,790) 240,000,000 0 (6,428,538,790) 2002 11,443,816,911 2,545,140,212 2,370,000,000 535,578,107 8,181,770,852 25,076,306,081 9,038,702,165 2,120,800,000 3,686,323,135 233,020,800 2,472,000,000 460,000,000 1,801,084,610 10% 19,811,930,710 3,463,290,762 1,913,622,617 3,350,752,754 240,000,000 0 3,110,752,754 2003 17,756,317,661 4,706,192,124 5,880,000,000 3,128,898,215 19,132,490,788 50,603,898,788 15,122,599,758 3,004,800,000 3,796,912,829 233,020,800 3,204,000,000 460,000,000 1,291,066,669 5% 27,112,400,056 22,200,432,062 2,475,789,812 21,015,708,920 240,000,000 4,231,863,472 16,543,845,448 2004 20,736,245,180 6,841,485,504 8,400,000,000 8,726,287,607 28,007,545,269 72,711,563,559 21,429,049,965 3,495,200,000 3,910,820,214 233,020,800 3,936,000,000 460,000,000 1,122,484,027 2.5% 34,300,693,253 37,288,386,279 2,531,345,367 35,879,524,939 240,000,000 9,979,066,983 25,660,457,956

Leasing Payments 0 Data Center 57,406,296 Personnel 1,301,342,011 G&A 334,150,204 Marketing 987,140,860 Research & Content 90,500,000 Operating contingency 0 Operating contingency as % of monthly expense Operating Expenses 2,770,539,371 Gross Margin Depreciation EBIT INTEREST Taxes Net Income (2,770,528,836) 328,702,517 (3,099,231,353) 60,000,000 0 (3,159,231,353)

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Gut check calculations reveal that HeyAnita’s calculations fall well-within the range of acceptability on many fronts.

GUT CHECKS ON P&L
Users, Korean Won

Gut Check Direct user base Average monthly add Annual churn Net new users (EOY basis) Total users (EOY basis) Avg monthly cost to avg direct user Corporate client user base Average monthly add Total users (EOY basis) Avg monthly cost to V-ASP client

2000

2001

2002

2003

2004

2,220 30% 100 100 967

76,750 30% 830,384 830,484 7,000

100,000 40% 663,030 1,493,514 8,000

100,000 50% 362,535 1,856,048 8,917

100,000 50% 217,545 2,073,593 9,000

0 0 0

7,500 90,000 9,000,000

42,500 600,000 15,375,000

75,833 1,510,000 21,000,000

70,000 2,350,000 21,000,000

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SUMMARY OF CASHFLOW
Korean Won

(KRW) Revenues Operating Expenses Depreciation EBIT EBIT Margin Tax Net Income Return on Sales Depreciation CapEx Free Cash Flow

2000 10,535 2,770,539,371 328,702,517 -3,099,231,353 -29418428% 0 (3,099,231,353) -29418428% 328,702,517 9,996,822,181 (12,767,351,017)

2001 6,185,400,087 10,801,583,560 1,572,355,317 -6,188,538,790 -100% 0 (6,188,538,790) -100% 1,572,355,317 1,023,801,900 (5,639,985,372)

2002 25,076,306,081 19,811,930,710 1,913,622,617 3,350,752,754 13% 0 3,350,752,754 13% 1,913,622,617 1,023,801,900 4,240,573,472

2003 50,603,898,788 27,112,400,056 2,475,789,812 21,015,708,920 42% 4,231,863,472 16,783,845,448 33% 2,475,789,812 1,000,000,000 18,259,635,260

2004 72,711,563,559 34,300,693,253 2,531,345,367 35,879,524,939 49% 9,979,066,983 25,900,457,956 36% 2,531,345,367 0 28,431,803,323

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ESTIMATED VALUE*
Korean Won

Discounted Cash Flow 25% discount rate

NPV (5 year; g=6% inflation) 76,211,250,947 2000 938,573 105,350 52,675 2000 2001 551,062,916,876 61,854,000,874 30,927,000,437

NPV (10 year, inflation growth from yr6-10, no g thereafter) 93,573,834,289 2002 2,234,070,905,426 250,763,060,813 125,381,530,407 2002 1,493,514 4,613,957,189,190 2,940,340,073,167 445,456,681,451 298,702,731,002 2003 4,508,347,346,573 506,038,987,881 253,019,493,940 2003 1,856,048 5,733,946,270,617 3,654,076,382,933 553,586,557,611 371,209,645,045 2004 6,477,939,298,932 727,115,635,594 363,557,817,797 2004 2,073,593 6,406,013,811,333 4,082,365,385,369 618,471,636,541 414,718,590,100

Sales Multiple (based on total annual sales) 89 Daum Multiple 10 times 5 times Users Multiple (based on direct users only)** HA users (at EOY) 3,089,330 SKT multiple 1,968,740 KTF multiple 298,261 Daum 200,000 Estimate

2001 100 830,484 308,933,043 2,565,638,228,862 196,874,000 1,635,006,262,140 29,826,087 247,700,757,586 20,000,000 166,096,717,915

* **

All valuations derived from market capitalization of respective organizations as of June 2000. Current values will cause variations in calculated numbers Calculated valuation based on User Multiple accounts for user base of Direct Users only. Users of corporate clients have not been included in current calculations for simplicity.

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DOCUMENT INFO
Description: Sample investor presentation. Our old slides for HeyAnita Korea from 2000. HeyAnita was a voice portal and technology platform. We raised a total of $14.5 million and eventually became a profitable company. Just sharing for other entrepreneurs to look at.
Bernard Moon Bernard Moon Managing Director http://bernardmoon.blogspot.com
About Bernard is Managing Director of the Lunsford Group, which is a private holding company consisting of entities in technology, media, research & consulting, health care, investment boutique and real estate. Previously, he was Co-founder and VP of Business Development at GoingOn Networks, a social media platform for companies and organizations. He led the initial product development where BusinessWeek recognized the GoingOn platform in their "Best of the Web" list for 2007. He continues to serve as an advisor and also serves as an advisor to Innotive (interactive multimedia platform) and Privy.net (social network/travel resource for Asian influencers).