Internet Entrepreneurship Course Presentation of Case Study Joey

Internet Entrepreneurship Course Presentation of Case Study Joey Edelstein Ron Oliver Dalit Shalom Dganit Shalom Amichai Nitsan Michal Regev Gilad Shadur

Presentation Outline: The Company The Competition The Technology The Partners The Products The Investors Legal & IP Issues Human Resources The Business Model SWOT The Market Our Analysis

Dimionet, Webglide , Rich. FX was founded in 1997 by three entrepreneurs: Tal Kerret Tomer Ben-Kiki Yair Mann CEO President CTO Recently completed a fourth investment round of 33 M$ from first class investors Today employs ~130 workers in 3 locations: Tel Aviv, N. Y. and Atlanta

DEMO

Rich. FX - The Technology Rich. FX compression algorithm enables the streaming of high quality Computer Generated Video over low band-width connections. Rich. FX data size is 1%-5% of MPEG files. Innovative and differentiated patent-pending technology, providing a unique solution through: 1. Better Compression (smaller size) 2. Better Streaming (shorter waiting time)

Rich. FX - The Product The Rich. FX product facilitates building, transmitting and showing 3 D stores. Natural User Interface Single page store Immersive Experience And there a few new features in the works.

Rich. FX - Patent Registration Process A patent serves to protect the Intellectual Property (IP) Stages at Rich. FX: 1. TA University research project. 2. Negotiation with Ramot. 3. Negotiation with the Professor. 4. Company registration & patent purchase.

Rich. FX - The Company’s Strategy Product Strategy Evolution: Stage I: Technology Stage II: Chosen Application - Advertising Stage III: Chosen Application - E-Commerce Phase 1: Penetration through site construction & training Phase 2: Server licensing Expected Revenue Stream is hard to determine: * Rich. FX plays its cards very close to the chest * Analysts don’t seem to agree on market potential

Rich. FX - The Market Definition In the short term: Leading American high-end retailers of goods that require a “shopping experience” In the longer term: 1. Diverse retailers? 2. “Catalog” products? 3. Outside the US? 4. Other applications?

Rich. FX - The Customers First big customer. Blahnik shoe collection Amazing results: 800% growth in sales!

The Competitors Surrounding Rich. FX is a sea of fierce competition. Among these competitors:

Rich. FX - The Partners Strategic marketing, distribution & development alliance Alliance to develop e -commerce solutions Familiarization with Rich. FX Encoder through 3 D Studio

Rich. FX - The Partnership With Real. Networks First and only time Real. Networks invested in a partner. Personal involvement of Real’s CEO in Rich. FX Agreement signed for two years Benefits: For Rich. FX: Reputation, distribution. For Real. Networks: Streaming of computer generated video

Rich. FX - The Investors 1998 First Round (Seed) 1999 Second Round Third Round - 2000 Fourth Round - Polaris, Veritas, Yossi Vardi, Giza, Poalim (2. 5 M$) Led by Coral Ventures (8 M$) Real. Networks (9 M$, Valuation 36 M$ before the money) led by Morgan Stanley Dean Witter (33 M$, Valuation 105 M$ before the money)

Rich. FX - Acquisition of Blue Rock Target: To build a strong sales and marketing force Means: Acquisition of Blue Rock, producer of Gift. Mail Rich. FX acquired Blue Rock for its people, not for its product.

Strengths Weaknesses Superior technology Narrow focus Strong financial backing Hard sale Alliance with Real. Networks Lack of management experience Market presence CEO Opportunities Strong growth potential for 3 D e-commerce Many potential applications Gift. Mail Threats Competition… Unclear market for 3 D -commerce “. com” crisis e

Lessons learned A good VC can make all the difference Sell a product, not just a vision Comprehensive solutions are hard to sell You can open you own doors, but it’s easier to have someone do it for you Shortcuts are dangerous