I: SoftwareDirect.com
SECTION THE BUSINESS
SECTION I: THE BUSINESS
A. Description of Business
SoftwareDirect.com will be a company that takes advantage of a significant market opportunity presented by combining the direct downloading capabilities of the Internet with custom made software products developed by private and company-based software developers. We will be extending these services to small businesses and individuals in the form of discount packages that are ready to be directly downloaded. This service will allow customers to minimize their costs as well as the time spent waiting for the delivery of such packages. Our Company website format is unique because of the social networking service we provide as part of our service. This platform will allow direct contact between the end-users and developers so that specific demands can be voiced, lobbies can be formed, productive communication be achieved, and both ends may have a comfortable online experience. Our team is responsible for checking software solutions for legality, security, and quality. After Software Directs approval, the software will then be made available at a price agreed upon by our company and the developers. The company is based in Ithaca, NY and is the brainchild of Cornell University students: Sina Rahimbasir, Jonathan C. Yale, and Hamzah Sikander. It should be kept in mind that SoftwareDirect.com can have no affiliation with Cornell University, and does not utilize any of Cornells resources or assistance.
B. Market
SoftwareDirect.com will enter the Internet downloading market, which has been growing rapidly in the past decade. We plan to open a new niche market by allowing the customers to ask for customized software products with custom sales packages. Although the average software development pipeline is 6-18 months, we improve communication to synchronize supply and demand to benefit all parties. Also, the current download market is focused mainly on entertainment products such as movies, music, and video games. But, we will enter the slightly less attended
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software market of financing, business and management tools. This market is growing, will boom over the next decade, and our goal is to provide software to facilitate this boom. There are currently a small number of websites that offer a variety of direct software downloads, and many more websites have this capability for specific products. SoftwareDirect will utilize its customized software and social networking space to differentiate itself. Also, we remain open to the possibility of aiming towards the international market as we continue to grow.
C. Products and Services
SoftwareDirect provides the following products and services: Portfolio of Business softwares (Finance & Management tools) Online community for small businesses and software developers Customer service for small businesses seeking software Consulting services for software companies that ensures competitive pricing quotes Advertising space and applications for automatic blogging
Portfolio of Business software: SoftwareDirect.com combines the unique quality control of our team with the comfortable experience of online communities. Our approved portfolio of quality software products includes home and business financing softwares, leasing softwares, macros etc. This will be coupled with our specialized sales packages that will cater to any small business owner's needs at their own pace of comfort. It should be kept in mind that browsing through SoftwareDirect.com is absolutely free. To avoid leeches and spam bots, we intend to screen through subscribers via email domain screening. Online community for small businesses and software developers: It is often a concern for users of online communities to have an uncomfortable online experience due to poor content, excessive advertising, and other intimidating clutter. Our quality control ensures the best experience. Our online community has a variety of benefits for users and developers: 2 Adds comfort to online experience by revealing other buyers and developers.
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Allows for more dynamic feedback for old and new products from users. Improves trust between buyer and seller. Gives greater opportunity to all parties to improve relations with other parties.
It should be noted that to preserve the incentive of maintaining SoftwareDirect as the preferred medium, we offer quality control and pricing. Furthermore, we facilitate the communication between buyers and sellers to improve the portfolio. Consulting services: Small Businesses Registration as a member already allows access to forums and online guides developed by Software Directs staff and members (quality checked) for newer users of our products. Furthermore, we offer our specialized sales packages, which will cater to many users. We offer our personal services to small businesses for those who wish to directly choose software without testing the different softwares. We also have a customer service to report bugs and complaints more efficiently than forums. Developers Developers will receive continuous feedback from Softwaredirect.coms users; however, developers can also consult the SoftwareDirect team in order improve their products. This service extends to non-members of the SoftwareDirect community. The consulting process will be tested via the Software Direct quality control, followed by our price quote if it were to be placed on our server. We will include the popularity of software products as well as its pros and cons versus other softwares on our server. It should be noted that the focus of our quality control protocol is not to create a portfolio of a specific type of software, but rather to serve a general purpose with different features.
D. Technology
Software Direct will develop most of the technology in-house. In preparation for the implementation of our technology, the team assembled a robust and economically viable server that sup-
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ports the SoftwareDirect model via Microsofts SQL server. It allows room for hardware expansion, management involvement, and interface customization. SoftwareDirect has two 50 TB servers, supported by 2 GB of RAM for every 10 TB of data. All transfers are handled via a reliable T3 connection. Each chassis includes heat management, data security and backup, and compatibility for expansion with future servers. A single server can currently support up to 20000 buyers and 15000 developers and their softwares. The server is presently housed in Ithaca, and can be moved at any point in time without interrupting service, since only one server operates at any one point in time, where the other remains as a backup. Direct Quality (DQ): Direct Quality is a protocol that ensures that all uploaded software meets all of the requirements necessary for sale and distribution by SoftwareDirect. DQ guarantees that all available software meets the following criteria: 1. Does not possess viruses. 2. Preserves the privacy of users and their information. 3. Possesses a method of limited licensing 4. Fits a category of softwares listed on our website (financing, management etc.) 5. Does not possess any unethical features. 6. Can offer customer service, debugging, expansion packs, upgrades etc. 7. Form of data storage is encrypted but easily transferable. 8. Intuitive Graphical User Interface (GUI) must have a good end user experience, and be easily customizable. The list is quite extensive, but the intention is to build a positive culture amongst developers and customers such that all software products meet the standards of the customers. This protocol will guarantee product quality. Our website will also help developers relax their efforts in marketing as our site will establish many developer-customer relationships. Copyrighting the checklist is underway since it is the intellectual effort of the team and other experienced industry individuals.
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We can successfully implement the technical operations behind SoftwareDirect.com due to the combination of Direct Quality protocol and the server management systems. Future In-House Server Management Software: SoftwareDirects team intends to outsource to its software developing partners to develop this system in the future for improved efficiency and service. Described below is a basic design for the system: ODIN: SoftwareDirect.com will employ ODIN, a custom made 'community commerce' online software suite, which serves as a secure and high quality database for business software uploads and downloads that cater to the members of the SoftwareDirect community. It also offers members powerful tools to communicate with other individuals, other small businesses and software designers in a secure and relaxed environment. ODIN's suite includes three child softwares: THOR: Defines the Server control, hardware management, and security control. BALDUR: used by the management to hold developed software, check quality, price and upload software to the main database after approval from Direct Quality-DQ (discussed below). BALDUR also approves the sale of an approved product on the server to the customer. VALI: Website interface; customer friendly community experience and sales engine that is simple and relevant to a variety of customers, which includes software buyers, developers and new users. This aspect of the suite will improve our customer service and consulting services by handling the communications between members and forums. In the future we intend to expand with MUSE, a data mining program, which would collect data on buyer trends. This will be an effective measure to track developers performance.
E. Competition
There are many companies that are competing in the original form of our market. Examples of companies with large market capitalizations as of November 2007 are: 1. SAP AG the most well known name in business software solutions industry with a market capitalization of 61.97 billion (USD). The company develops, markets, and vends a variety of
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softwares. With an impressive portfolio, and revenue from sales and licensing of software, maintenance, consulting, development, and training. 2. Intuit Inc. with a market capitalization of 9.73 billion, the company pursues the acquisition of smaller companies with a concentration on small and medium sized business solutions. Their flagship software products aim toward payroll and management processing, personal finance and so forth. 3. Epicor Software Corporation develops enterprise software solutions for mid-sized companies and subsidiaries of larger companies. It aims towards industry solutions that possess vertical layouts of markets and operations. 4. CNET-Download.com although only with a declining 1.1 billion dollar capitalization at the moment, CNETs culture and objective is different from other suppliers of software. It extends itself to a variety of industries and media, and aims towards brand building for software developers. Download.com has relatively strong branding and has expanded laterally with GameSpot.com, MP3.com, and TechRepublic. We aim to tweak this model and specialize in the culture that CNET has failed to reach. Another reason for CNETs decline is due to lack of quality control and involvement in the final sale of product outside of CNETs domain. SoftwareDirect.com aims to be a revolutionary platform rather than a corporate warehouse for software products. Many internet companies fail due to a poor or intimidating online experience. We intend to promote a new culture in order to facilitate involvement, communication, and transactions between new developers and buyers while maintaining a pleasurable online experience.
F. Sales and Marketing Strategy
Softwaredirect.com will provide many unique services along with a variety of software products. In order to satisfy our target market of small businesses, namely financial businesses, and other office professionals, we will offer office productivity software. We will couple this with our unique services that will allow customers to have a social network for acquiring custom software.
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In order to obtain a high profile in the internet software community we will notify the local chambers of commerce and inform them on the benefits that our product provides. Through this medium we will reach the governmental portion of our target market, which could potentially prove to be a large future market for our business. In addition, by providing quality products and services for our customers in these local areas, we will enjoy positive growth in the private portion of our target market through increased brand recognition. Furthermore, we will advance our market share by offering first time customers free trial software which will entice further consumption of our products and services. Offering free software will incur losses; however, we will be able to protect ourselves from insolvency through various methods. First, there will be a membership fee that will grant customers the ability to try a bundle of software products. Second, we predict that many customers will end up buying some of the software products they try, thus adding to our top line. The ease in acquiring software from our site along with our ability to offer our customers custom software through our online community will entice sufficient positive feedback that will offset these initial losses.
G. Management and Board
The founders of Softwaredirect.com will provide all necessary labor for the upkeep of the website until we exceed offering 500 different software programs. Once Softwaredirect.com reaches this threshold we will supplement our labor force by hiring outside software consultants who we would expect to pay approximately $60,000 per annum; however, we expect to be generating sufficient cash flow to take on these extra salary expenses at this point in Softwaredirect.coms lifespan. The founders of SoftwareDirect.com are Sina Rahimbasir, Jonathan C. Yale, Doris Smith and Hamzah Sikander. Sina is a Cornell University junior student seeking a major in Applied Economics and Management with a concentration in entrepreneurship, Sina Rahimibasir contributes knowledge from the realm of start-up business. This coupled with his previous experiences in the Cornell Entrepreneurial Organization and time spent as a co-founder of Marble Slab Creamery, an ice-cream shop in Phoenix, AZ, make him a valuable asset to the management team of SoftwareDirect. Furthermore, Sina plans to pursue a law degree, which will be put to use in order to answer the legal needs of the business.
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Presently Jonathan C. Yale is a student enrolled in College of Arts and Sciences at Cornell University. He has worked for financial services firms, namely Morgan Stanley, and consequently has had experience with financial planning and investment management. Jonathan Yale has held leadership positions in his fraternity and has an ability to add value through positive team leadership. Yale will be create value for SoftwareDirect by providing financial expertise and leadership capability. Hamzah Sikander is currently a student in the Cornell School of Electrical & Computer Engineering department aiming towards a masters degree in systems engineering. He has experience with technical design and project management as he serves as a team leader for the Cornell Mine Sweeper autonomous robot project. He has also worked for Siemens Ltd. as a technician and intern. With a strong passion for innovation and success, Sikander plays the role of chief designer and technician for SoftwareDirect.coms technical needs. All individuals are young, energetic and work cohesively. Doris Smith may hold a minor share in the initial investment, and will act as an advisor with her extensive knowledge of industry trends and needs.
H. Investment and Financing
We will launch Softwaredirect.com with seed money acquired from personal finances and the goodwill of family and friends; this exists as a feasible option due to the relatively small amount of seed capital necessary for the launch. In order to cover the initial labor costs of this venture we will leverage the sweat equity of the management team and any other employees by providing labor at rates below their value during the critical gestation period of our business. As softwaredirect.com grows, there will be an increasing appetite for supplementary forms of capital which we will procure from outside investors. Such an investment would be attractive to investors who are knowledgeable about software and technology for the following reasons: 8 We offer an unparalleled combination of products and services to our target market As an online software provider, we expect to enjoy significant growth
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We have high growth potential in a relatively unnoticed market
While the previous reasons are in accordance with the qualities of a typical venture capital investment, we differ from conventional venture investments because we do not have great cash needs. Also, our mission is to provide consistently superior products and services to our customers through quality control; therefore, we will not be poised to exercise a quick liquidity event soon after the launch. Perhaps the most attractive aspect of Softwaredirects launch period is that it will need relatively little capital in its first year of operation. The most expensive portion of our costs is software engineers salary expenses; however, we will most likely not need the supplementary labor from software engineers in our first year of operation. As our clientele and product base increase in size, additional software engineers will be needed in order to ensure quality control. However, we will hedge our susceptibility to high salary costs initially by leveraging our in house expertise in software engineering. After such time additional sources of revenue will be used to pay the various salary costs.
I. Risks and Opportunities
Software Direct is subject to a variety of marketing, legal, growth and operations risks: Poor outreach or appeal to targeted customer Lack of trust or flexibility with software developer Piracy Information security resulting in reduced user appeal Loss of revenue due to loss of premium in transactions (direct contact between parties).
There are many risks, but all of them can be minimized. It should always be kept in mind that although we aim to generate revenue with software sales, our vision is to create a community that is a progressive lobby of software developers and users. Marketing risks:
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We are currently aiming towards offering first time customers a free trial of software, who are reached via the chamber of commerce of local districts. This can be identified as viral marketing, but we run the risk of excessive overhead costs if our growth exceeds our expectations. We will limit the number of first time customers to a few hundred, who will go forth and suggest to peers the benefits of Software Direct. We also have a second free item to give away with a significantly lower overhead cost: free webspace, which is far cheaper to maintain and is a greater attraction to smaller companies. It would cost approximately $50 per new user to have a free trial with software, but only $4 dollars for 2 GB of webspace (almost excessive). So, why even bother with software trials? We want the new users to use our main products and services, not our marketing give away. Having dummy users is completely useless. Piracy and Information Security: Piracy is not issue with regard to out corporate customers because companies now understand the implications of using pirated software in their business. Furthermore, there is almost no chance that a hacker will create a crack or license generator for any software on our domain due to the fact that they are not mainstream. The bigger issue is information security online and on our hardware. Information being exchanged online could result in outside transactions, hence losses for us. Furthermore, users would not like to be spammed by other users inside or outside the community. There are two steps that discourage this behavior. First, Software Direct acts as a legal third party in the transaction process, thus reducing fraud. Secondly, we intend to hide specific information between users; software developers may see each others contact information, but cannot see end users contact information or vice-versa. Hardware security is maintained via firewalls, data encryptions, and a daily backup of all data on different disks on the server (All calculations, with respect to costs and capacity, described in this plan account for backing up data). If company growth exceeds our expectations, we will invest in a third party backup system and a second server exclusively for backup. Poor Growth Rate:
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If we are doing poorly with respect to revenue, we can rely on our server to double as a webspace online server. It is not difficult to run many blogs or communities, and sell advertising space. The hardware system is designed to support up to 35000 users, and the system can be taken in any direction. We intend to avoid these steps until necessary because it will complicate the business model and could result in losing track of our core objectives and vision. In the end, the SoftwareDirect brand and concept will have more value than the hardware and costs.
J. Exit Strategy
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