Submarino's first round official deck.
The original founder team was: Antonio Bonchristiano, Marcelo Ballona, Murillo Tavares and Martin Escobari.
We had on our first round, Henry Kravis from KKR, George Soros, Bernard Arnault from LVMH and Jorge Paulo Lemann, Beto Sicupira and Marcel Telles.
2. Table of Contents
• Our Vision
• The Market
• Business Strategy
• The Competition
• The Team
• Corporate Structure
• Financial Plan
• Financing Strategy
• Overall Rollout Plan
• Appendix
3. Table of Contents
• Our Vision
• The Market
• Business Strategy
• The Competition
• The Team
• Corporate Structure
• Financial Plan
• Financing Strategy
• Overall Rollout Plan
• Appendix
4. Booknet will be the leading online shopping
destination for all Spanish and Portuguese
speaking consumers
Our Vision
5. 5
Our Belief System
• The Internet revolution is fundamentally changing
retail rules
• The Internet is global but e-commerce is local
• The brand is the experience: implementation
matters more than ideas
• The team makes the difference
6. Table of Contents
• Our Vision
• The Market
• Business Strategy
• The Competition
• The Team
• Corporate Structure
• Financial Plan
• Financing Strategy
• Overall Rollout Plan
• Appendix
7. 7
Ibero-America is a large market with favorable
demographics
Argentina
Pop 1998 (mm): 36
% Pop Under 15 yrs: 28%
GDP 1998 ($bns): $ 348
GDP/Capita ($): $ 9,694
Int. Users 99 (mm): 0.5
Brazil
Pop 1998 (mm): 162
% Pop Under 15 yrs: 30%
GDP 1998 ($bns): $ 825
GDP/Capita ($): $ 5,093
Int. Users 99 (mm): 2.7
Mexico
Pop 1998 (mm): 96
% Pop Under 15 yrs: 34%
GDP 1998 ($bns): $ 415
GDP/Capita ($): $ 4,305
Int. Users 99 (mm): 0.8
Portugal
Pop 1998 (mm): 10
% Pop Under 15 yrs: 25%
GDP 1998 ($bns): $ 116
GDP/Capita ($): $ 11,600
Int. Users 99 (mm): 0.7
Spain
Pop 1998 (mm): 39.1
% Pop Under 15 yrs: 22%
GDP 1998 ($bns): $ 563
GDP/Capita ($): $ 14,400
Int. Users 99 (mm): 3.5
Regional Comparisons
Total Ibero America US + UK
Pop 1998 (mm) 546 329
% Pop < 15 29% 21%
GDP 1998 ($bns) 2,997 9,650
GDP/ CAP ($) 5,490 29,296
Int. Users 99 (thou) 9,748 41,500
8. 8
Brazil, Spain and Mexico internet markets
already have critical mass
Argentina, Portugal, Colombia will reach critical mass by 2002
Ibero America
Internet Users
(1999)
Penetration
(users/pop)
Internet Users
(2002)
Penetration
(users/pop)
Spain 3,500 8.9% 7,043 17.5%
Portugal 700 7.0% 1,300 12.5%
Brazil 2,719 1.7% 7,373 4.4%
Mexico 832 0.9% 2,257 2.2%
Argentina 466 1.3% 1,192 3.2%
S. Cone 200 0.0% 596 0.0%
Colombia 388 1.1% 1,053 2.7%
Peru 166 0.7% 451 1.7%
Other LA 777 1.6% 2,107 4.0%
Total Ibero-America 9,748 2.1% 23,372 5.0%
English World
Internet Users
(1999)
Penetration
(users/pop)
Internet Users
(2001)
Penetration
(users/pop)
USA 33,500 12.4% 48,600 17.4%
UK 8,000 13.6% 10,500 17.2%
Total English World 41,500 12.6% 59,100 17.4%
Source: IDC, Computer World Almanac, our estimates
9. 9
Local e-commerce is at its earliest stages in Ibero-
America...
Extreme Concentration in
Countries with “Critical Mass”
7
23
17
24
47
0 10 20 30 40 50
Portugal
Arg. + S. Cone
Mexico
Brazil
Spain
E-Com Spend/ User (US
$/User)
Total Market 1999
(US$ MM)
163
64
14
15
5
Total Ibero-America 29 284
USA 478 16,000
Low Penetration Compared to US
Distribution of E-Com (1999)
57 22
0% 20% 40% 60% 80% 100%
E-Com US$ 284 MM
Spain Brazil Mex Arg
Distribution of Users (1999)
9.7 MM36 28
0% 20% 40% 60% 80% 100%
Users
Spain Brazil Mex Arg Por Other
Source: IDC, Morgan Stanley European Internet Report
10. Table of Contents
• Our Vision
• The Market
• Business Strategy
• The Competition
• The Team
• Corporate Structure
• Financial Plan
• Financing Strategy
• Overall Rollout Plan
• Appendix
11. 11
Our Strategy
Sustainable, Defensible
Model
Increased Richness &
Breadth of Customer
Relationship
Enhanced Revenue
Streams
Long-Term Advantage
• Local Solution
• First to Market
• Clear Positioning
• Scalable Fulfillment
• Product Selection
• Content and Community
• Convenience and Confidence
• Innovative Customer
Acquisition Strategy
• Transactional Revenues:
Cross Sale/Upsale
• Supplemental Revenues:
Affiliate partnerships
• Building the brand
• Technology
• Client Knowledge
Source: Our analysis, BCG/Shop.org
12. 12
First to Market: International Expansion Plans
Difficulty of Implementation
(for BookNet)
HighLow
Competitive
Intensity
High
Low
E-Commerce Potential
(E-Com Market in 2001E)
US$ 300 MM
Spain
Brazil
Mexico
Argentina
Portugal
Acquisition
JV
Start-up
13. Clear Positioning: Focus on Customer Service
• Extensive assortment of local products
• Competitive prices to drive traffic
• Superior service to build loyalty
– Convenience
– Confidence
– Content
– Community
17. Investment in Elefante
Long-Term Partnership
• The sole Brazilian reminder service well positioned to
develop permission marketing
• Existing base of 100 K registered users and 500 K events
• Repositioning as online personal organizer
• Acquisition of 10% of company at pre-money firm value
of US$ 22/customer
• Warrants to increase stake to 25% at pre-arranged price
• Right of first refusal/anti-dilution protection
• Tag along right
19. Table of Contents
• Our Vision
• The Market
• Business Strategy
• The Competition
• The Team
• Corporate Structure
• Financial Plan
• Financing Strategy
• Overall Rollout Plan
• Appendix
20. 20
The competitive battlefield
Type Strengths Weaknesses
International
Pure Plays
(e.g. Amazon)
- Internet focus
- Superior technology
- Need to establish local fulfillment
- Not focused on international growth
(but changing fast)
Brick and Mortar
Retailers
(e.g. Corte Ingles)
- Recognized brand
- Store infrastructure
- Purchasing systems
- Lack of focus, speed
- Channel conflict
Portals
(e.g. Starmedia)
- Access to capital
- Access to eyeballs
- Cannot control the customer
experience
- Lack of focus
- No retail or fulfillment know-how
Local Pure Plays
(e.g. LaLibreria.com)
- Could develop focused strategies - Very poorly funded
- Logistics infrastructure = major
barrier to entry
Virtual Malls
(e.g. BradescoNet)
- Economies of scale through
aggregation of stores
- Well funded (if sponsored by
telco or financial institution)
- Cannot control customer experience
- Ambiguous brand
21. 21
Competitive landscape by country
Type Brazil Spain Mexico Argentina Portugal
International Pure
Plays
•None • Amazon
(planned for
12/99)
• Bertelsmann
(planned for
2000)
• None • None • None
Brick and Mortar
Retailer
• Saraiva (Books)
• Livraria Cultura
(Books)
• Pão de Açucar
(Supermkt)
• Corte Ingles
(Dept Store)
• Crisol
(Library)
• Gandhi
(Books)
• El Pendulo
(CDs/Books)
• Cuspide
(Bookstore)
• Yenny
(Bookstore)
• Disco
(Supermkt)
• ArcoIris
(Bookstore)
Portals • UOL
• Starmedia
(planned)
• AOL
(planned)
• Ole
• Yahoo
• Excite
• Navegalia
(planned)
• Infocell
• Yupi
• Starmedia
(planned)
• El Sitio
(planned)
• Sapo
• Portal.pt
• Netc.pt
Local Pure Plays • Microsite
(Electronics)
• Ferrs (CDs)
• Libropolis
(Books)
• Bookonhand
(Books)
• NA • Farobue (CDs
and books)
• MediaBooks
(Books)
• Webdisk (CDs)
Virtual Malls • Visa Mall
(Credit card)
• BradescoNet
(Bank)
• Banesto
(Bank)
• Banamex
(Bank)
• Telmex
(Telco)
• Paginas
Amarillas
(Telco)
• BCP/Atlantico
(Bank)
22. 22
$ 0 $ 2 0 , 0 0 0 $ 4 0 , 0 0 0 $ 6 0 , 0 0 0 $ 8 0 , 0 0 0 $ 10 0 , 0 0 0 $ 12 0 , 0 0 0 $ 14 0 , 0 0 0 $ 16 0 , 0 0 0
Despite competition, Booknet is a leading local retailer of
books/CDs online in the region
Our Competitive Edge
• Focus
• First mover
• Access to capital
• Local team with
internet, retail and
finance experience
• Starting from solid
base in Brazil, Latin
America’s largest
market
Top Online Retailers (Books/CDs) in Ibero-America
Estimated Monthly Revenues (US$ 000s)
Source: Our estimates based on interviews and press clippings
Note: Analysis does not include Ghandi (Mex) and Corte Ingles (Sp) since data was not
available
LaLibreria.com (Col)
MediaBooks.com (Por)
Yenny.com (Arg)
CasaDelLibrio (Spain)
Internbook (Spain)
Cuspide.com (Arg)
Crisol (Spain)
ArcoIris.com (Por)
Saraiva (Bra)
Cultura (Bra)
BookNet (Bra)
23. Table of Contents
• Our Vision
• The Market
• Business Strategy
• The Competition
• The Team
• Corporate Structure
• Financial Plan
• Financing Strategy
• Overall Rollout Plan
• Appendix
24. 24
Key Management
Name Position Age Relevant Experience
Antonio
Bonchristiano
CEO 32 • Partner at GP Investimentos
• CFO of supermarket turnaround
• Investment banking (Salomon)
Marcelo Ballona CMO 29 • SVP MKT at Mandic , Sales Director
Yahoo!
• Direct marketing / consumer products
Martín Escobari Business
Development
27 • Private equity (GP Investimentos)
• Media (Let’s Go and K-III)
• Management consultant (BCG)
Murillo Tavares Operations and
Finance
33 • Two previous start-ups
• Management consultant (McKinsey)
• Two-year logistics project at Brahma
Flavio Jansen CIO 32 • CTO/COO of Mandic, Brazil’s 3rd
largest ISP
• Software consultant
• Systems engineer
Luis Elisio Melo Merchandising 40 • 13 years of experience in retail
• Purchasing / merchandising in Lojas
Americanas and Casa & Video
25. Equity Ownership
• Initial capitalization of
$2.5mm
• Managers contributed
$585k in cash (A and B
shares)
• 3-yr vesting for equity and
options
70
10
16
4
GP B Shares
Mngmt B Shares
Mngmt Options
Mngmt A Shares
Current Equity Participation (%)
26. Table of Contents
• Our Vision
• The Market
• Business Strategy
• The Competition
• The Team
• Corporate Structure
• Financial Plan
• Financing Strategy
• Overall Rollout Plan
• Appendix
28. Table of Contents
• Our Vision
• The Market
• Business Strategy
• The Competition
• The Team
• Corporate Structure
• Financial Plan
• Financing Strategy
• Overall Rollout Plan
• Appendix
29. Summary Financial Plan
99III 99IV 00I 00II 00III 00IV
US$ thousand, except client base
Client Base (a) 52,318 79,204 131,031 204,302 285,876 368,759
Sales 402 837 1,612 2,611 3,905 5,587
Operating Profit (663) (2,503) (1,819) (2,092) (1,380) (2,517)
Investments in Technology 433 535 191 123 135 159
Investments in Booknet - 1,934 - - - -
Investments in Ecommerce Partner 74 111 586 - - -
Investments in Int'l Operations 400 1,350 1,350 800 600 600
Burn Rate (1,570) (6,434) (3,945) (3,015) (2,115) (3,276)
Accumulated Burn Rate (b) (3,072) (9,506) (13,451) (16,466) (18,581) (21,857)
(a) End of period
(b) includes initial set up costs and US$ 1.4 MM investment in BookNet acquisition
30. Table of Contents
• Our Vision
• The Market
• Business Strategy
• The Competition
• The Team
• Corporate Structure
• Financial Plan
• Financing Strategy
• Overall Rollout Plan
• Appendix
31. 31
Financing Strategy
First Round
Target: US$ 8-10 MM
Investors: US
investors with previous
e-commerce
experience
Aug. - Sept ’99 Nov -Dec ’99
Second Round
Target: US$ 20-30 MM
Investors: “household
names”, strategic
investors
IPO
Target: US$ 70-100 MM
Investors: US institutions and
retail
Second Sem. ‘00
Other Notes:
• GP will probably participate in future rounds
• New option plans will be granted to managers and employees
32. Table of Contents
• Our Vision
• The Market
• Business Strategy
• The Competition
• The Team
• Corporate Structure
• Financial Plan
• Financing Strategy
• Overall Rollout Plan
• Appendix
34. Table of Contents
• Our Vision
• The Market
• Business Strategy
• The Competition
• The Team
• Corporate Structure
• Financial Plan
• Financing Strategy
• Overall Rollout Plan
• Appendix
39. 39
Investments in telecom and increased ISP competition will increase internet usage
Poor telecom infrastructure contributes to lower internet usage in
developing countries
40. 40
Brazilian internet is benefiting from massive investments
by telecom operators
1993 1994 1995 1996 1997 1998 1999E 2000E
Demography
Population (000s) 151,570 153,740 155,820 157,872 159,880 162,278 164,712 167,183
Telephone Network
Telephone Lines in operation (000s) 11,303 12,269 13,263 15,106 17,039 22,300 25,999 29,499
Telephone Lines per 100 inhabitants 7.5 8.0 8.5 9.6 10.7 13.7 15.8 17.6
% digital main lines 27.9 35.7 46.7 57.1 69.0 72.0 81.0 91.0
Telephone Lines per 100 inhabitants (SP Only) 18.0 22.0 27.0
Telephone Lines per 100 inhabitants (Rio Only) 16.0 20.0 25.0
Mobile Services
Cellular mobile telephone subscribers 182 574 1,286 2,498 4,400 9,102 11,900 14,675
Cellular subscribers per 100 inhabitants 0.1 0.4 0.8 1.6 2.8 5.6 7.2 8.8
Annual Telecom Investment (US$ MM) 105 2,395 4,043 6,834 7,471 10,000 11,000 10,000
Source: ITU Yearbook of Statistics 1999, Anatel
41. 41
Internet Monthly Access Price (US$ 20 hours off-peak use)
Brazil ISP charges are still high by international standards
Increased competition between ISP has already reduced rates in Brazil by 50% this year
42. 42
Brazilian internet users are young, predominantly male and
relatively affluent
Male Female >19 20-29 30-39 40+
Aug/98 71% 29% 27% 38% 20% 16%
Nov-96 83% 17% 30% 35% 20% 15%
Yes No <5 5-20 20-50 >50
Aug/98 75% 25% 5% 44% 38% 14%
Nov-96 74% 26% 2% 34% 43% 21%
(1) Number of minimum salaries, each minimum salary equals US$ 1,000 per year.
Source: Cade/Ibope 1996,1998
Gender Age Group
Has a credit card? Household Income(1)
Profile of Brazil´s Internet User
43. 43
Computer owners
City Penetration at households (%
▼ São Paulo 43
▼ Rio de Janeiro 43
Economic Class
▼ A 76
▼ B 45
▼ C 16
The number of households with a computer in São Paulo and Rio
is relatively high
Source: Datafolha 1999
44. 44
Books, CDs and Software are already the leading
categories in Brazilian e-commerce
Source:Fnazca/Zipmail, May 1998
38.06
38
35.17
23.4
15.05
7.45
6.41
5.51
5.37
4.02
3.87
3.58
2.98
2.83
2.68
2.38
2.24
2.09
1.64
22.35
0 10 20 30 40
Others
Car / Motorcycle / Boat Accessories
Vitamins
Fitness Equipment
Personal Hygiene Products
Perfumes/ Cosmetics
Video Cameras / Cameras
Toys
Printers
Scanners, Digital Cameras
Video games and Cartridges
Office supplies
Clothes, shoes, apparel accessories
Household goods
Videos/ movies
Computer Accessories
Magazine Subscriptions
Software/ upgrade
CDs
Books/ Magazines
45. 45
Time savings, comfort and product availability are main reasons
Brazilians have made online purchases
58.87
51.86
50.52
43.67
32.34
32.34
26.08
25.78
23.25
22.5
18.63
15.65
9.84
8.79
5.96
14.31
0 20 40 60
Others
Access to other clients’ opinion
Return
Warranties
Cancellation
Famous Brands
Fast Delivery
No pressure from sales people
Variety
High quality products
On-line Support
Product Information
Price
Products which are hard to find
Easiness to order
Time saving
Source:Fnazca/Zipmail, May 1998