Sample Executive Summary Which Brand

BRAND LEADERS INTERNATIONAL 8 Manor House Smiths FL07 Bermuda Ltd Tel 441 292 2670 brands@northrock.bm July 2001 Which Brand.com Profile 1. Business The Company's Business Brand Leaders International Ltd, a Bermuda Exempted company, was formed in 1999 with the specific purpose of developing and building Which Brand.com, a Directory Search Engine Portal specialized in listing the brands of the world's leading manufacturers and linking such listings to the Brand owners Web-sites. The name of Brand Leaders International was purposely chosen to be generic, to maintain confidentiality. The Company's business is currently confined to this Internet Project, although future plans include expansion into a Yellow Pages type feature, again specializing in Branded product listings which are not properly looked after in the Yellow pages or other directories. This is anticipated as being so big that franchising regionally may be the only sensible way to handle this. Additionally, the Company is sitting on lists of brand owners in thousands of Product Categories and Industries which it appears are not in the possession of anyone else. The potential for selling such lists for mail shots is not inconsiderable, although is not at present contemplated as a business activity. The other future spin-offplanned is for Brand Leaders to act as the world's only "Club" for brand-owners to combine forces in seeking to control the multi billion dollar illegal business of the copying of branded products by merchandisers not authorized to do so. The world's great and lesser Brand Owners will pay an annual fee, related to the brand's importance, into a central fighting fund which will be used to take legal actions against brandname infringers. Location of Head Office and Tax Implications The company's head office is in Bermuda. Brand Leaders' Charter guarantees that the Bermuda Government will impose no Corporate income taxes upon the company until 2016. Bermuda is the ideal jurisdiction in which to establish a global Internet company and it was one of the first countries in the world to put in place laws to ensure Internet business is carried on in a well controlled environment. The Bermuda Government encourages the development of global Internet business and has made certain concessions to such companies, including the exemption of import duties on Servers for hosting. In addition to the attractive corporate tax climate, there is no personal income tax in Bermuda. The business infrastructure in Bermuda is one of the most efficient anywhere, since it supports what has become the leading re-insurance market in the world. The capitalization of the Bermuda Insurance companies is in the thousands of billions. Banking, legal, IT and accounting support is outstanding. The Company has provisionally made hosting arrangements with Cable & Wireless, whose direct connection to the internet backbone is deemed essential. C&W's capacity is virtually infinite, based on current and future anticipated usage. also with mega capacity. This is supported by TeleBermuda, a division of 360 Networks, Mission Statement. It is the mission of Which Brand.com to become the definitive global web directory for every internet user seeking to find information about products and branded products and services in any category or industry. It is further the mission that Which Brand.com to become the Directory Engine preferred over all others when users are seeking information on products. Furthermore it is the mission that Which Brand.tom be superior, as a web search vehicle, in every field and category, to the trade directories in such specialized fields or industries. Indeed there are already numerous industries in which the Portal is superior, and in some cases vastly superior, to the corresponding industry trade directories, where such directories exist. The mission is also to enable users to be totally comfortable on the site and able to find their way around in seconds. Search results are pinpoint accurate and lightning fast, thanks to certain smart features built into the search functions. User-friendliness is among the key features. No flashing banner ads is one particularly desirable feature. And the philosophy that there be no need for users ever to have to scroll vertically or horizontally on any page is also arguably among the most pleasing and time-saving features. 2. Products. Product Descriptions Which Brand.com is a Hierarchical Directory Search Engine specializing in listing the products of leading brands and linking such brand names, by product, to their web-sites and the appropriate sub-URLs of such web-sites. The hierarchy is definitive, with three industry/category levels, leading to the brand name and then to the model, a total of five levels. Wine Direetories.eom is a sister Portal, linked from Which Brand.com or found independently. Because there are perhaps 40,000 wine brand names, it was impossible to contemplate incorporating a satisfactory Wine Directory within the Main Portal. Furthermore, the hierarchical structure of Wineries is Regional as opposed to by Industry Category. The internal functionality of Wine Directories.com is based on Which Brand.com, but it possesses a large number of special "smart" features which enable the user to achieve remarkably accurate results, even when apparently unsatisfactory searches are entered. Wine Directories.corn is expected to establish itself as the definitive Web Wine Encyclopaedia. Oracle AOL/server TCL scripting language. Development Schedule. 2 The Two Portals were initially built by a Development house based in Irvine, California. Subsequently the development was moved to a Developer in Toronto where the ongoing work is being undertaken. This includes a complete re-write which is deemed desirable since many hundreds of changes were made to the code during the Portal's evolution. Differentiation. Which Brand.com is a "niche" Portal concentrating its search on Branded Products. The niche is however very very big indeed and, when fully populated, it may contain a million listings. Products and brands can be found with pin-point accuracy and at lightning fast speeds, due to the search functions and the user-friendly hierarchical category structure. Unlike other search engines, and many directories, there are no flashing ads to distract the user's attention. Because Which Brand. Corn is strictly a data-base, the search results are not random, but totally controlled for accuracy by the Portal's editors, as are the synonyms for categories and in selected cases Brands. Accurate results are given from often vague search definitions. Yahoo, for example, also structured partially as a data-base with human input, sometimes gives good results but at other times they are very poor. And the user tends to need to click three or four times to find what he is looking for, but often is lead down blind alleys. In spite of this perceived "human entry" advantage found in Yahoo, the search results are generally derived from so-called key words found in the description, usually submitted by the webmaster. And this can too often yield unrelated and sometimes absurd results. Furthermore, Yahoo and the other engines are morally obligated to try and be somewhat democratic, and thereby enable more and more items and products to be found, as the web continues to grow at an exponential rate. Which means that Yahoo, and the other search engines, will tend to show more and more matches, many of which will be irrelevant, which is not desirable for the user. Price Point of Listings The revenue model of Which Brand.com is different from other search engines. Since NO BANNER ADS OR OTHER ADVERTISING ARE ACCEPTED, the revenue is derived from the Listings of the brand names of manufacturers and Brand owners. Market surveys have been undertaken to seek to determine the ideal annual subscription level per listing at which brand owners would feel comfortable. The subscription level "comfort zone" tended to rise, according to research results of the 1999, 2000 and 2001 surveys, in fairly direct proportion to the weight of the brand name. Some significant brands indicated their willingness to pay almost any money for listings, provided web users are driven to their sites through Product Category searches. This is partially basic sound business, partially brand ego and partially a sense of frustration and sometimes desperation. So many brand owners have spent millions on their sites and they are just not being visited, and cannot be found through the appropriate category search route. And that is all they ask for. To be able to be found. After analyzing what brand owners indicated they would pay, which in general was substantially over $1,500 per listing, sometimes up to $5,000, management determined that the first subscription price point should be at a "can't refuse" level, namely $1,000 for one category listing, $790 for 2 to 9 listings and $690 for 10 to 19 listings, with a reducing sliding scale for larger numbers of listings. The majority of brands fall into the 10 to 19 products range. For early subscribers, the current thinking is that these subscription levels would be for two years. The subscription levels are not set in stone, but they are at points which appear realistic and very competitive with comparable vehicles in the print media. Once a fair number ofbrandowners have subscribed, it would be the plan to revert to these subscriptions to be for one year. 3 3. Market. Trends. Historically, and before the advent of the intemet, the so-called "better known" or "classier" brands and manufacturers declined to make direct sales to any private customers, selling only to their wholesalers, distributors and sometimes retailers. A private buyer would always be referred to a retailer in his city. With the early advent of the internet, these same brand names in general perpetuated this policy, seeking to maintain the three-tier distribution system. "We protect our retailers" is, or at least was, the holier than thou thrust of this policy. Admirable and very correct. The early Web retailers tended to emulate the bricks and mortar chain of distribution methods. In other words, the Amazons and other big web retailers would buy products from the brand owners, usually take delivery, and sell them on to their web customers. This was fine and did not rock the traditional two or three-tier chain of distribution with which brand owners had been comfortable for a hundred years. Important brands then built their pretty and graphically magnificent web-sites for consumer "information only". Often such "important brands" would specifically say on their sites that their products could not be bought over the web and they would most likely list the names and addresses of regional bricks and mortar retailers. Come the "new" Internet of 1999 and 2000. Enter the world of the "virtual retailer" on the web. And suddenly life is not what it used to be. Thousands of these players set up shop. Some buy products physically, re-sell them and ship them out. But many more are seeking to get the wholesalers or even the brand owners themselves to drop-ship the branded products. Brand owners thus started to re-think the merit of reserving 20% or 30% commission for such virtual retailers when they could possibly be making the sale just as easily themselves and save the 30% - a very significant margin. And at the same time have greater control over the sale of their own brands to the ultimate consumer. Indeed many of the less "self important" brand owners, in 2000, started to make their products available direct to web shoppers, selling of course at full retail, thereby still "protecting" their genuine bricks and mortar retailers while making a more attractive profit for themselves. Our researchers and editors have visited the web-sites of over ten thousand brands, and few make a reference to any intemet or on-line retailer. Then, in 2000, came the slaughter of the on-line retailer. They left the scene by the thousand in a few short months. And this continued into 2001. Although brand owners were not entirely happy with their on-line retailers, when most of them suddenly went away they discovered that a whole level of distribution was lost. This was thus the perfect moment to seek to do what they had for so long wanted but were frightened to do - set up shop as web retailers of their own branded products. In competition with both their clicks and bricks retail distributors? Yes. But what the heck. Think of the MARGINS. They could protect their retailers by charging Retail Prices. So they were being noble. And worthy. And it was good business. In July 2001 the Bluest of Blue IBM mounted a television campaign urging private buyers to shop at IBM.com. Although virtually every brand owner in the world is now a web retailer, many of them are discovering, to their surprise, that the consumer is not finding their magnificent web-sites. Which is why IBM and others have resorted to television. Which Brand.com is thus uniquely positioned as the showcase and web shopping mall of choice for the world's brands, in every field, industry and category. The ONLY vehicle guaranteed to lead the consumer to the Brand owner's web-site in a single click. 4 ? Which Brand.com owns, by analogy, the Shopping Mall real estate, charges a fair rent to the world's Brand Owners for links to their sites, but is not involved in sales or commerce in any way. Historic and Projected size in Dollars. Since there is no specialist Portal or search engine with a parallel revenue model, it is difficult to draw comparisons with the existing search engines who derive their income largely from Advertising Banners, not dissimilar to traditional television and print advertising, with secondary income from referrals. Although, with traditional banner advertising revenues falling, some engines are seeking to obtain additional or alternative revenue from so-called sponsorship listings. These purport to give better "positioning" to the sites "listed". But in practice little improvement is seen. And the categorization continues to be poor on most engines, with categories and sub-categories mingled with other irrelevant sites. Some engines indulge in additional activities to generate revenue, including on-line shopping, auctions and other sometimes difficult to manage businesses. Which Brand.com is defined as a niche, focussed portal and does not anticipate revenues in the billions, but rather in the lower end of the hundreds of millions, probably around three hundred million in year three. If the Yellow-pages type regional extensions are implemented, then revenues in the billions would be expected. Product match to market definition. The gap in the market for a Portal such as Which Brand.com has been identified and Which Brand.com has been built in such a way as to satisfy the need for such a Portal. Millions of users, with above average spending power but who may tend not to be very net savvy, are the core user targets. Such users want to research products before they buy them, but do not necessarily want to buy them on the web. Although, as noted above, they can in most cases now buy direct from the Brand Owner's site. Ergo the value of Which Brand.corn as the "Showcase" or "Shop Window" of choice. WhichBrand.com is equally valuable to the "trade" buyer. Indeed it is anticipated to be seen by retailers and wholesalers as the Brand Name BUYER'S BIBLE - the only vehicle needed for retailers to find info, by product category, of major and minor brands, and to contact the brand owners to conduct business with them. 4. Distribution. Sales channels and Marketing As with any new product, the chicken and egg distribution problem presented itself. From the results of the market research undertaken, we learnt that, although many brand owners were anxious to sign up and subscribe before the Portal was populated and ready to launch, others, mainly smaller brands, showed more caution and indicated their preference to wait and see what the portal looked like before subscribing, a perfectly natural and anticipated response. Management elected to follow the thoughts of the more timid. Thus our researchers and editors have moved rapidly to populate the Portal with thousands of product categories and brand names, with live links to their sites, prior to seeking subscriptions. Although not all categories are fully populated, and some lesser categories are not yet included, the 80 - 20 rule holds valid. Indeed it would appear that already 80% - 90% of the consumer product categories, which users tend to be interested in, have representative brand names listed under them and linked. The Portal is thus ready to launch. Marketing and positioning options are addressed in the annexed paper. But management believes that Which Brand.corn can become a household name inside three weeks, with a well structured marketing campaign. Once it is up on the net, and visited by millions of users, many of those users will themselves be brand owners, creating a powerful auto viral marketing effect. It is anticipated that a large number of brand owners will sign up on line, having seen how valuable the portal is. And having determined that they "must be there", on page one, before other brands sign up. Brand owners will know there is only a page one, and the number of brands on that page is limited. The limit may be set at ten, fifteen or twenty brand names, not yet established. Partnerships. If marketing, promotion and sales are undertaken without a partner, the amount of funds needed for a successful launch and entry into early profitability may be substantial, all things being relative The preferred route however is to enter into a partnership arrangement with one of the major Search Engines or other content providers. Or partner with a large Media group such as one that owns television networks. Management's thinking is that such a partner will undertake the marketing and launch much better than we would on our own, since the marketing vehicle and infrastructure are already in place. We have also noted that the major search engines tend to be weak in the field that Which Brand.com is so strong. We believe one of the search engine majors will find Which Brand.corn exceptionally valuable as an add-on or as a stand-alone Portal with the potential to generate bottom line net revenues in the hundreds of millions within a short time frame. Customers The customers have effectively all been identified - the world's brand name owners. And many of them are already listed under their product or industry categories. The exact number of brand owners, whose brand names would qualify for inclusion in Which Brand.com, is not exactly known. But the number of product categories that will eventually be included is expected to be in the region of 80,000 to 100,000. We anticipate an average of eight or ten brand name listings per product category. 5. Competition. Competitors. The other search engines represent the traditional competition. In general, their search results are poor, often irrelevant and there are nearly always too many results - sometimes hundreds of thousands, when a focussed result would call for just five or six. With every month that passes, there are new "specialized" directories appearing on the net. Some of these will survive and many will disappear. 6 Although, in theory, these may represent competitors, they are proliferating so widely that there are already too many, often half a dozen in each field or industry. Golf, a large consumer category, may have several golf sites. But how can users remember the web addresses of more than a handful of sites. Chipshot.com; Bunker.corn; 18thhole.com; greenflag.com etc are going to have to be remembered in just one field. Multiply this by a thousand categories, or ten thousand, and a user is going to have to remember 40,000 web addresses for so-called specialized directories. As noted above, the Which Brand.corn Portal's mission is to be superior to each category's trade directory or specialized directory, if such directories exist. And always infinitely superior to the generalized search engines. To find info on every product in the world, users need remember only one web site : Which Brand.com. There are other manufacturers' general directories. The Thomas Register is one. But it is very weak in many respects and our editors advise they have found it useless for any research into brands and brand names. The surprising thing is that there is no such thing as a Brand Directory, on the web or in print. And the Mail shot list sellers also have no such products, in any individual field, let alone in all fields. Competitive Advantages of Which Brand.com 7 Advantages of Which Brand over other sources of info on the web are: 1. Vague and uncertainly defined product category searches turn up pin-point accurate search results every time. 2. No false leads and no wild goose chases. No Hampton Court mazes to fight your way out of. 3. Easy and instant exit from a large and complicated site. Just click on the WB frame at the bottom of the site page and you are back to WB in a second. Some sites get the user "stuck" in them. Never with Which Brand. 4. Lightning fast search results, even with slow modems and slow connections. 5. The hierarchy is clean and logical. Usually one step, one click and the user is there. Other search vehicles may need four or five clicks to get to the same place. Or users may get totally lost, get lead down the wrong path, and have to start again. 6. No flashing ads to distract the user. 7. The number of results is always manageable and total results, at every category level and brand level, may all be seen on one page without scrolling laterally or vertically. 8 User friendly pages. Ergonomic logic holds the hand of the novice user and steers him through, particularly and notably if no match is found. 9. Irrelevant matches are NEVER presented. 10 Search by brand name displays concisely every product produced under that brand name, clearly listing by industry categories and exact products made. Direct links for the selected product, fight to the sub-URL of the manufacturer's site. 11. Product category searches and search results in Which Brand.corn are refined to specific sub-categories, thereby eliminating the need for the twenty word descriptions often found in Yahoo and other engines. 12. A special feature enables the user to click on a mini "info" icon alongside each brand name. When the icon is clicked, a pop-up page appears instantly, showing all products under the brand label, telephone, fax, email and location of head office. Users find this vital and key information impossible to locate on most web-sites, which can be infuriating. Web designers seem intent on making the Contact info a game of hide and seek on the majority of web-sites. The user may send an email to the brand owner direct from the info pop-up page. And, when the technology is in place to support this feature, the user will be able to make a telephone call to the brand owner by clicking on the telephone number. A brand owner's telephone number and email address can be found, on Which Brand.corn, in a matter of three seconds. No other vehicle on the web can claim to display a telephone number so fast or be found so easily. By having the info page as a pop-up, the integrity of the one page, no-scrolling philosophy is maintained, enabling all brand name listings to be viewed at a single glance, on a single page. 13. Brand owners, the customers, love the structure and ease with which users can access their web-sites, either through the product search or by entering the brand name. Link is never to a review, retailer, opinion or privately hosted site, all of which brand owners hate. Which Brand always links to the brand's site. When a brand name is searched on other engines, the link is often first to the corporate headquarters, with investor info, current price of the company's shares etc. The user or retailer seeking product info has no interest in the corporate part of the site. If the user has the patience, he may eventually, after half a dozen clicks, be able to find the products he is looking for. 14. For some insane reason, the search boxes on many search engines are so small that lateral scrolling within the box is necessary even when searches of just 10 or 15 letters are typed in. The Which Brand.corn search boxes are large and the entire search query may always be viewed as a whole. This may be seen as a small point, but it is indicative of how the "traditional" search engines have already remained stuck in their ways and have failed to make improvements. 6. Management. Staff currently engaged are minimal, management having preferred to use outside consultants for programming and other work. Background of Management Robin Blackburne is the Chairman and President. Which Brand.corn is the brainchild of Mr. Blackburne who has nurtured the project from concept to reality. He has worked tirelessly on the project since he identified the need for the Portal and devised the structure and logic for it. A prolific inventor, he has been responsible for a number of start-ups from a very young age. He founded ViniCool Ltd to develop and market his Wine Cooler invention. He remained chairman and CEO until the company was sold to Spong, a publicly listed company, just three years after the first ViniCool was produced. More than fifty million ViniCools and me-toos have been sold. He founded Computer Selection Ltd, Bermuda's first Software Consulting House, in 1983. He founded Blackburne Advanced Racquet Systems to develop and market the Blackburne Racquet. Steve Enearnaeao, the CEO designate, has broad experience in business and marketing. Mr. Encarnacao, aged 50, is a resident of Boston and has been associated with Which Brand.com from early 1999. At this point, he is not desirous of moving to Bermuda, although this is a possibility. Mr. Encarnacao's previous engagements have included: General manager of Marketing H.J. Heinz, Pittsburgh, Pa. Director of marketing of Synectics, Cambridge, Mass. Vice President and Chief Marketing Officer Reebok International Senior Vice President Marketing, Research and Development - Converse Inc President of Puma USA Inc Marketing Director of BookTeeh Inc, a publicly listed Internet company. Austin O'Connor, aged 56, a Chartered Accountant and resident of Luxembourg, has been assisting management in a number of ways, particularly relating to European research, accounting, IT and fund raising. It is anticipated that the European office will be opened in the Fall of 2001 and it is planned that Mr. O'Connor will assume management of this office. He is a British subject and thus has working privileges throughout the EC countries. Mr. O'Connor's previous engagements have included: Coopers & Lybrand, London Managing Director of van Ommeran Group, Rotterdam Managing Director Bermuda Trust (Far East) Ltd, Hong Kong 9 Senior Vice President Bank of Bermuda Europe Managing Director Bank of Bermuda SA, Luxembourg Currently consulting for Banks in Europe. Research for population prior to data entry has been undertaken by individuals in Canada, the USA, Bermuda, England, Luxembourg and France. Mr. Blackburne and Mr. Encarnacao, assisted by Marcus Richmond, a former programmer, have assumed the roles of Editors, until a research and editorial director is appointed. It is intended to keep the Company lean although, to achieve rapid market penetration, a fair number of skilled people will be needed. If the launch goes forward without a major partner, the Company will seek to fill the following management positions : CEO, whose role is to run the company and co-ordinate the hiring of technical, marketing and sales staff. The successful candidate will not necessarily be drawn from the Internet industry although he will have strong internet experience. Technical Director will initially double as IT Officer and hire the necessary programming and other staff. Project Director will supervise the final development of the Portals, which will probably be undertaken by a third party development house. If it is elected to develop in house, then the developers and programmers will report to the project director. Marketing Director will devise the methodology of rapid market penetration and, together with the CEO and the Sales Director, will implement the sales plan and decide if subsales organizations, such as third party telemarketers, are desirable or if all sales activities would remain in house. Sales Director will be responsible for all aspects of sales, together with implementing the various methods of selling. He will undertake the setting up of the telemarketing department, if in house, in addition to all other departments generating sales. He will be innovative in his approach to selling. Advertising Manager will be responsible for all advertising, through the medium of the internet itself, in addition to traditional channels. He will also undertake the Public Relations role. CFO. General Accounting management and he will have a strong background of the secure movement of funds through the Internet. He will supervise the integration of the on-line sign-up and subscription system with accounts receivable. Senior Editor will be responsible for the ordered assembly of the product categories, editing the synonyms for each category and co-ordinating category and brand name research and data entry. Additional support staff for administration. Board Composition. The Board of Directors comprises: Robin Blackburne, British - Resident of Bermuda Stephen Encarnacao, American - Resident of Boston, USA Austin O'Connor, British - Resident of Luxembourg Jan van der Schalk, Dutch - Resident of Sidney, Australia 10 7. Financials Historic P&L Since the company has very little financial history, and has made no sales, historic accounts are not deemed relevant. The Company's assets are the built and populated Portals, the Provisional Patents and other intellectual property, a number of Web Domain names, the Servers and cash. Projected Revenues. It is anticipated that, with competent marketing undertaken by a Search Engine, Media Group or other established entity, the revenues of WhichBrand.com, as a stand-alone Portal, will reach some $200M to $300M in year two or three. Because of the unique subscription revenue model, and because of relatively low overheads, much of the revenue will find its way to the bottom line. Wine Directories.corn is expected to contribute around $5M. END 11