An old business plan I worked on few years ago.

1. April 13, 2009
MIT Arab Business Plan Competition
Dear MIT Team,
It is our pleasure to be part of the MIT business plan competition. Our award has been the
finalized business plan; which will form the basis of running our business.
We look forward to learn from the invaluable feedback that each of the experienced and
knowledgeable judges is willing to give to help improve and strengthen both our business
plan and business model.
We would like to thank you for the invaluable workshop that enhanced our business
philosophy in lovely Beirut. We would like express our special thanks to Mr. Ken Morse for
his inspirational words that helped nurture our entrepreneurial behavior.
Best Regards,
Blog SouQ Team
Adey Salamin,
Ahmad Takatkah,
Ammar Ibrahim

2. April, 2009
BLOG SOUQ
BUSINESS PLAN
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3. Executive Table of Contents
A. EXECUTIVE SUMMARY .................................................................................................. 5
B. THE COMPANY, STRATEGY, MANAGEMENT, AND ORGANIZATION .................. 8
C. THE MARKET AND COMPETITORS ............................................................................ 17
D. THE PRODUCT OR SERVICE ........................................................................................ 28
E. MARKETING AND SALES .............................................................................................. 38
F. FINANCIAL INFORMATION .......................................................................................... 42
G. APPENDICES .................................................................................................................... 58
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4. Detailed Table of Contents
A. EXECUTIVE SUMMARY .................................................................................................. 5
B. THE COMPANY, STRATEGY, MANAGEMENT, AND ORGANIZATION .................. 8
B.1. Business Mission ........................................................................................................... 8
The Concept ...................................................................................................................... 8
The Problem ...................................................................................................................... 8
The Solution ...................................................................................................................... 9
Mission Statement ............................................................................................................. 9
Objectives ........................................................................................................................ 10
Keys to Success ............................................................................................................... 10
Growth Plans ................................................................................................................... 10
B.2. Management Team ...................................................................................................... 11
Founders (Adey Salamin, Ahmad Takatkah, Ammar Ibrahim) ...................................... 11
Other Key People ............................................................................................................ 13
Advisory Board of Directors ........................................................................................... 13
B.3. Ownership and Management Structure ....................................................................... 14
Ownership Structure ........................................................................................................ 14
Organizational Structure.................................................................................................. 15
B.4. Other Resources ........................................................................................................... 16
Human Resources Requirements..................................................................................... 16
HR Development Strategy............................................................................................... 16
C. THE MARKET AND COMPETITORS ............................................................................ 17
C.1. Market .......................................................................................................................... 17
Market Introduction ......................................................................................................... 17
Market Analysis .............................................................................................................. 17
Market Potential .............................................................................................................. 20
Target Market .................................................................................................................. 21
C.2. Competition ................................................................................................................. 22
Competitors ..................................................................................................................... 22
Competitive Advantage ................................................................................................... 23
Barriers to Entry and Future Competition ....................................................................... 24
SWOT Analysis ............................................................................................................... 24
C.3. Need for Market Research ........................................................................................... 27
D. THE PRODUCT OR SERVICE ........................................................................................ 28
D.1. Products and Services Description .............................................................................. 28
Type of Tradable Shares.................................................................................................. 28
Blog Auditing Solution ................................................................................................... 28
Online Trading Platform ................................................................................................. 29
Listing Process ................................................................................................................ 29
Trading Process ............................................................................................................... 29
Customer Service ............................................................................................................ 30
Business Model ............................................................................................................... 30
D.2. Product Development .................................................................................................. 32
Technology Used ............................................................................................................. 32
Strategic Partnership........................................................................................................ 32
Technical Overview ........................................................................................................ 32
User Requirements .......................................................................................................... 33
Development Methodology ............................................................................................. 33
D.3. Identifying Costs / Manufacturing and Operations ..................................................... 35
Pre-Startup Cost .............................................................................................................. 35
Operating Cost ................................................................................................................. 35
D.4. Risks and Regulations ................................................................................................. 36
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5. Team Risk........................................................................................................................ 36
Regulations Risk.............................................................................................................. 36
Execution Risk ................................................................................................................ 36
Technology Risk.............................................................................................................. 37
Capitalization Risk .......................................................................................................... 37
E. MARKETING AND SALES .............................................................................................. 38
E.1. Marketing Plan ............................................................................................................. 38
Company Message .......................................................................................................... 38
Strategic Position and Brand Building ............................................................................ 38
Marketing Strategy, 4Ps .................................................................................................. 38
Marketing Methods and Advertising ............................................................................... 39
Community Involvement and Social Responsibility ....................................................... 40
E.2. Sales Strategy ............................................................................................................... 41
F. FINANCIAL INFORMATION .......................................................................................... 42
F.1. Time Frame (Implementation Schedule) ..................................................................... 42
Goals and Milestones ...................................................................................................... 42
Startup Summary ............................................................................................................. 42
Financial Plan Summary ................................................................................................. 43
F.2. Forecast Assumptions .................................................................................................. 44
Basic Assumptions .......................................................................................................... 44
Five Years Revenue Forecast Assumptions .................................................................... 45
F.3. Financial Statements (Five Years) ............................................................................... 46
Financial Assumptions .................................................................................................... 46
Projected Profit and Loss (Income) Statement ................................................................ 47
Projected Balance Sheet .................................................................................................. 49
Projected Cash Flow Statement ....................................................................................... 50
Projected Revenues ......................................................................................................... 51
Projected Payroll Expenses ............................................................................................. 52
Projected Expenses .......................................................................................................... 53
Breakeven Analysis ......................................................................................................... 54
Sensitivity Analysis ......................................................................................................... 55
F.4. Funding: Capital and Debt ........................................................................................... 56
Funding Strategy: Capital vs. Debt ................................................................................. 56
Stages of Funding Required and Use of Proceeds .......................................................... 56
Exit Strategy .................................................................................................................... 57
G. APPENDICES .................................................................................................................... 58
G.1. Detailed Financial Model ............................................................................................ 58
G.2. Founders CVs .............................................................................................................. 58
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6. A. EXECUTIVE SUMMARY
Business Mission
Blog SouQ is an innovative startup established with the mission to empower people to
develop the Blogsphere ecosystem by participating in sustaining, developing and promoting
blogs.
Blog SouQ is establishing a platform to accelerate the process of monetization of original
content created by individuals. As an initial proof of concept the platform is focused on semi
professional / professional bloggers allowing them to solve their traditional problems of
raising capital for development and unlocking value from their efforts.
Blog owners can raise capital and improve their blogs’ performance and revenues. Investors
(whether financial, enthusiasts or corporate), get an opportunity to capture the benefits of this
new exciting market. Blog SouQ will provide a safe, secure and friendly service that bloggers
and investors can trust.
Management Team
Blog SouQ is being established by an ambitious and committed team with a vision and the
desire to stand behind the company in a world full of competition and a continuous moving
landscape of technology. Our team includes three professionals with a proven track record
yet we seek and accept coaching to overcome recognized weaknesses. Team record includes
senior positions with an investment advisory, founders to a management and IT consultancy,
founders of three IT startups, mentors for Queen Rania Center for Entrepreneurship, CTO of
the largest Middle East digital content providers among many other accomplishments.
Ownership Structure
Founders of Blog SouQ are: Adey Salamin, Ahmad Takatkah and Ammar Ibrahim, each
owning 25% of equity. 10% of Blog SouQ’s shares will be held as an incentive scheme for
the potential CEO, while the remaining 15% will be held as an option pool for senior level
employees.
Market
Blog SouQ is targeting a 25 billion dollar market of 200 million blogs and 346 million blog
readers worldwide. It is estimated that there are 7.4 million active blogs worldwide of which
50% (3.4m) have advertising. According to Technorati, it is also estimated that the number of
new blogs are doubling every six months. Across the span of 5 to 7 years we plan to target a
market share of 10% of the active blogs with advertisements (370,000 blogs).
Competition
Currently we have two potential indirect competitors: Tipjoy.com and BlogShares.com.
Tipjoy allows users to donate money to blogs while BlogShares is a fantasy exchange that
rates blogs based on number of outgoing and incoming links.
Products and Services
We will create a similar structure to a stock exchange allowing bloggers to raise capital
without the hassle of public-company regulatory oversight. Our two main products are a
trading platform and a blog auditing solution. The trading platform will be very much similar
to traditional stock trading platforms with modifications to match our new blog-ad-shares
concept. Our blog auditing solution will be built in partnership with Woopra, a web analytics
provider, and enhanced to investigate blogs contents regarding quality and quantity among
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7. other criteria. The auditing platform will provide live reports including industry and sector
average performance measures and benchmarks to help investors evaluate blogs.
Business Model
We will charge a 5% transaction fee for listing and trading blog shares while charging $10
for an annual subscription to an unlimited number of detailed blog audit and analytics reports
($5 will be for Blog SouQ and $5 will be for our strategic partner Woopra).
Marketing and Sales
Our marketing efforts will mainly focus on blog readers, the buyers and potential investors.
Blog owners will be targeted by our direct sales operations. Our initial strategy is to focus on
indirect advertising methods in the startup phase while moving to direct channels after
receiving the seed investment. We will promote Blog SouQ via a multi-channel targeted
marketing campaign that includes network marketing, word of mouth, PR portals, business
reviews and social media marketing. This will enable us to start with minimal advertising
expenses prior to the seed investment. Sales transactions will be conducted directly on our
online trading platform. In communicating our message with blog owners, we will emphasize
our value proposition of simplifying access to public investments and leveraging blog reader
loyalty.
Financials and Assumptions
Blog owners will be allowed to sell up to 50% of their blog ownership and we have assumed
that the average blogger will only offer 25% ownership in their blog. To be conservative we
will also assume no growth in the number of blogs and only 20% of our target market is
successful in raising funds. We have also assumed that only 0.5% of the total blog readers
market (estimated at 346 million) would be interested in gaining access to our blog audit
reports within the total five year projected period.
It is projected that year one will have zero revenues while our focus will be on finalizing the
platform development for Blog SouQ coupled with the integration with our strategic web
analytics partner.
Given an average blog revenue of $7K per year we have assumed a TTM multiple of 3 for
valuing the blogs prior to listing on Blog SouQ. We have also assumed that during the span
of the investment and for re-trading the shares, the average valuation of the Blog and hence
the transaction value will not change. To be conservative, we have assumed that only 20% of
the listed blogs on Blog SouQ will have their blog shares re-traded and only twice in their
life span.
Given the conservative assumptions, in year one the company will have no revenues and in
year five it is projected to reach $17.9 million. Assuming zero debt, we expect to achieve a
net income margin of 68% in year two and grow it to 266% in year five.
The company is projected to breakeven in year two of operations and at a hypothetical
discount rate (WACC) of 20%, our Net Present Value is estimated at $10.8 million with an
expected Internal Rate of Return in excess of 300%. A detailed financial model has been
prepared in a separate addendum named Blog SouQ Financial Projections
Startup Summary and Funding Request
Our vision is to start small and grow rapidly within the next five years. To jumpstart the
business, reduce time to market, lower startup cost, and get advantage of the offered business
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8. support services, the company will launch its operations from iPark, the Jordanian
technology incubator.
To bootstrap starting the company we need to raise initial funds of $60,000. We are planning
to operate in a lean mode, participate in local and international business plan competitions,
and target freelance consultation projects. The initial funds will be used to develop our alpha
version, file for the business method patent, pay for the incubator’s rent and pay our basic
salaries for the next 6 months. In parallel we will seek to promote our alpha version among
friends and family members that own blogs with advertising. They will be our first batch of
clients and focus group to test the basics of our product and business model.
Next, we will be seeking a seed VC investment of $500,000 to cover our startup operating
expenses of hiring the basic technical team to develop a beta version of Blog SouQ to launch.
We expect to breakeven at the end of the second year.
During the 3rd year, we will expand our team and start sales and marketing campaigns
depending on our own revenues. An experienced CEO and CFO will be hired in addition to
an online sales and marketing team and customer services team. As our user base grows so
will our technical requirements which will be higher and will require a more sophisticated IT
hosting environment.
Exit Strategy
For us, the founders, Blog SouQ is built to last. However, early investors can exit at later
investment rounds, and late investors can exit either via an IPO, which is expected within 7
to 8 years of operations, or a potential acquisition.
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9. B. THE COMPANY, STRATEGY, MANAGEMENT, AND ORGANIZATION
B.1. Business Mission
The Concept
Blog SouQ presents an innovative stock market concept for blogs. It enables blog owners to
raise capital to improve their blogs’ performance and increase revenues by selling blog-
shares to the public without the complications of traditional stock markets. Investors can buy
and trade blog-shares in a safe, secure and friendly online environment.
Building on the traditional stock market concept, Blog SouQ is solving huge problems when
it comes to issuing, selling, and trading blog-shares. Blogs are not limited liability or public
shareholding companies; most of them are not even registered companies at all. So how can
blogs be traded publicly without being registered entities? How can you control and monitor
a blog’s performance? How do you protect shareholders’ rights? For how long will
shareholders/investors hold their shares before profiting from them? How would a price go
up/down? What are the rules and regulations for such a stock market?
The combination of our team experience in web development, business solutions and finance
created answers to all above mentioned questions. We are introducing a comprehensive web
solution backed with solid business and legal processes that enable people to trade blog-
shares and protects everyone’s rights.
The Problem
Blog Owners Perspective
Blog owners need to raise capital in order to invest in:
– Hiring technical support
– Hiring editors
– Improving blog features
– Buying or developing new web applications
– Running online marketing campaigns for the blog
– Renovate the blog design
– Travel and attend overseas events to cover its activities
– Start a new blog
Given the need to raise capital, the challenge becomes in how to raise it. Many blogs are
small in size hence requiring a small amount of investment. Furthermore, in most cases
blogs are not owned by companies but by individuals.
Some of the challenges in raising capital:
– How do I meet blog investors?
– How do I value my blog?
– I need a small investment, who will facilitate it?
– How do I protect my blog ownership?
– Are there any legal issues?
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10. Investors Perspective
There are three core types of investors that we are going to target. The first type is the
financial investors looking for new short term financial products and new investment
opportunities. The second type is the enthusiast investor: people who are interested in
investing because they are loyal readers for those blogs and would like to have some
bloggers to continue their task. The third investor could be a company that wants to promote
its brand through that blog.
From the investors’ perspective, blogs are not actually limited liability or public shareholding
companies; they are not even registered companies.
So the challenges become:
– How do you find Blogs that need the investment?
– How do you introduce and match blog owners with blog investors?
– How do you facilitate the investment in the blog?
– How do you protect the investors’ shares?
– How can investors exit their investment?
– How can you monitor and audit a blog’s performance?
– How do you determine the value of the blog?
The Solution
For blog owners: they can secure investments or raise capital by issuing and trading shares
via Blog SouQ without the need to register as a public shareholding company, without the
need for board of directors, external auditing, or any of the complicated regulatory
requirements and long process of the actual stock market but providing a similar
environment.
For Investors: Blog SouQ has provided a new financial product for the financial investors, a
way for the enthusiast to give money to the blog owner as long as the owner continues to
blog, a better way for the brand owners to sustain marketing their brands of specific blogs by
owning part of it.
The detailed trading process is provided in the products and services section of this plan, in
summary, Blog SouQ will:
– Provide a platform for blog owners to meet blog investors
– Minimize legal process for both the investors and blog owners
– Act as an escrow agent
– Act as an external auditor for blogs
– Perform blog valuations
– Provide the means for investment while protecting both the investors and the blog
owners
Mission Statement
Our mission is to foster to empower people to develop the Blogsphere ecosystem by
participating in sustaining, developing and promoting their favorite blogs..
We enable blog readers to invest in and promote blogs which they love, we enable blog
owners to improve their blogs’ performance and to achieve rewarding financial status by
simplifying access to public investments, and we create new investment opportunities for
financial investors.
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11. Objectives
Long - Term Objectives
– Provide a trading platform for matching investors and blog owners;
– Engage and encourage bloggers to independently grow via attraction of necessary
investment;
– Ensure sustainability of blogs via an independent funding model from loyal
readers of these blogs as investors
Short - Term Objectives
– Build-up an independent blog trading platform;
– Promote Blog SouQ to key blog platforms and blog owners;
– Partner with a blog analytics platform to add our customized auditing and
valuation functions.
– Reach out to blog readers.
Keys to Success
Blog SouQ keys to success are:
– Experienced and highly committed team
– Developing a solid trading platform
– Meeting all development dates in a timely fashion
– Solid marketing execution
– Establishing trust between Blog SouQ and both investors and blog owners
– A strong market entry
– Controlling costs
– Attain independence from any blogs platforms and owners
– Attracting loyal blog readers to invest in their favorite blogs and encouraging
them to promote blogs in which they invest in.
– Flexibility to enrich the management team with a senior CEO for equity
Growth Plans
Although Blog SouQ is initially targeting only blogs for this new stock market concept, we
plan to apply the same concept to any startup website.
All startup blogs and websites could be part of our stock market before going public in the
traditional stock markets.
We have avoided startup websites at this stage because of their countless business models
and revenue streams that could not be controlled in one online auditing solution. Websites
may also have direct physical cash transactions with their customers that could not be tracked
online with our current proposed system. While for blogs, it is simple and straightforward,
most of the blogs depend mainly on affiliate advertising services to generate revenues, which
could be tracked and audited online without the need to have a physical external auditor.
In our future growth plan, we will be developing a new trading process that targets a specific
group of startup websites to include them in our stock market.
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12. B.2. Management Team
Founders (Adey Salamin, Ahmad Takatkah, Ammar Ibrahim)
The management Team is to be governed by an advisory board of directors and will have the
following team members (CVs provided in the appendix):
Adey Salamin
Overview:
Founder and Partner at Singularity Advisors: An advisory firm founded in January 2007to
focus on opportunities across the MENA – India corridor.
Having started his career as an IT professional and subsequently an entrepreneur, he has
moved on to become an investment professional in recent years. Adey has enjoyed an
international career having held senior management positions in the US and Jordan. Adey has
also been involved in setting up technology commercialization strategies and innovation
clusters in Jordan and has worked with and advised numerous IT startup companies in the
MENA region.
Track Record:
Prior to founding Singularity Advisors, Adey founded and managed Strategment Consulting,
a strategic management and IT consulting firm based in Jordan then acquired by Singularity
Advisors. Previously, Adey was an Associate Vice President in the Strategic Management
Group at Merrill Lynch Investment Managers in New Jersey and New York.
Adey’s track record over the past 8 years includes involvement in the development of the
Jordan Innovation Cluster, Technology Commercialization and transfer initiative, Mafraq &
Irbid Special Economic Zones, founder of CST Capital (MENA, India), founder of
Singularity Ventures (India Seed Fund). He has held senior positions with Merrill Lynch
(NY, NJ - USA), International Computer Systems Ltd (London), Computer &
Communications Systems (Amman), founder of Strategment Consulting (Amman). Adey has
also been involved in numerous consulting projects in Jordan, UAE, KSA and Libya.
Adey has worked and lived in Jordan, UAE, Libya, Canada and USA. He is a recognized
figure among entrepreneurs and IT developers and well-reputed investment professional in
Jordan, bringing a wealth of experience to the investment sector having come from a
technology background with an international business-rich exposure.
Exposure:
Current primary area of focus includes 1) Capital Syndication, 2) Market Entry / Cross
Border M&A and 3) Corporate & Financial Restructuring
As a Consultant, Adey advised numerous entrepreneurs and startups in Jordan (tech
outsourcing), India (financial tech startup), Pakistan (web startups) and UAE on the topics of
business planning, business development, deal sourcing, and market entry strategies.
Education:
Adey holds a Finance and Accounting Certificate from the Wharton School of Business of
the University of Pennsylvania and a Bachelor of Computer Science and Engineering, cum
laude honors, from the University of Pennsylvania with minors in Economics and Math.
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13. Ahmad Takatkah
Overview:
Ahmad Takatkah has over five years experience in business development consulting and
training for Technology Startups focusing on: entrepreneurship capacity building and
mentorship, business planning, angel and venture capital investment process and term sheets
negotiations.
Track Record:
Before starting Fruits Ventures, a consulting firm for technology startups, Mr. Takatkah
worked as a Program Manager at the Arab Science and Technology Foundation (ASTF)
working on the “Startups Development” program to help technology entrepreneurs to start
their own business, get incubated, access to capital investment, link with potential partners,
and reach out to clients in the market.
Prior to joining ASTF, Mr. Takatkah worked as a freelance business development consultant
for multiple companies, organizations and venture capital firms between Amman and Dubai
such as Riyada Ventures, Portuguese Trade Center, Access New Markets, RecruitGulf.com,
Epygi Technologies, Fexco, and others to help them access the Middle East market and to
organize local business events.
Previously, He worked as a Marketing Manager for “Empretec”, the United Nations’
entrepreneurship capacity building program under the UNCTAD division.
As an entrepreneur, Mr. Takatkah have founded and managed an online business company
for which he successfully raised angel investment. The company lasted for one year only
before the partners decided to shut it down. The business model was hard to sell and we
didn’t manage to raise a second round of funding.
Exposure:
Mr. Takatkah is a recognized trainer for “Queen Rania Center for Entrepreneurship” and the
“Jordanian Engineers Association” in the fields of business planning, VC funding process,
raising angel and venture capital investment and introducing term sheets for technology
startups. He had successfully mentored three of the winning plans in the QRCE business plan
competition for three consecutive years.
Education:
Mr. Takatkah holds an MBA with distinction from the New York Institute of Technology,
and a B.Sc. degree with distinction in Electronics Engineering from Princess Sumaya
University for Technology.
Ammar Ibrahim
Overview:
Founder and Partner at Indemaj Technology: Web development and consultancy start up.
CTO at Al Bawaba Middle East.
Track Record:
Nearly a decade of experience in developing state of the art web applications. Founded
Indemaj Technology in late 2006 and serves as a CTO for the largest digital content provider
in the Middle East, Al Bawaba. Worked as a web technology consultant for many
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14. organizations, which include: Amman Stock Exchange, Securities Depository Center (SDC)
of Jordan, Ministry of Water and MenaITech an Optimiza company.
Exposure:
Advocate of Open Source technology. Frequent speaker and panelist.
Participated in dozens of events all over the globe.
Interviewed by Linux Journal (http://linuxjournal.com/article/8504)
Worked as a technical reviewer for "Linux System Administration"
Published by O'Reilly, March 2007.
Education:
A graduate of Jubilee school/King Hussein Foundation for gifted students.
Bachelor of Computer Science/Information Technology from Jordan University
Other Key People
Blog SouQ business requires a high level international experience in financial investments as
well as online business management.
Although we can manage to develop Bog SouQ’s beta version and startup the company,
down the road, we believe that we will need a professional CEO with international previous
experience to enrich the company by his/her understanding of how things work on a global
level.
After developing the beta version, Blog SouQ will also need to hire an experienced: Chief
Financial Officer.
Our plan includes incentives for key management team members with equity shares in the
company as described in the ownership structure below.
Advisory Board of Directors
Blog SouQ team appreciates the advice of senior international level professionals. We will be
asking for mentorship, guidance and advice from specific domain experts who are needed for
the success of Blog SouQ.
We define the responsibilities of the board as:
– Sets objectives, goals and strategic direction for management
– Supervises the management of Blog SouQ
– Ensures management succession
We will be targeting well known overseas advisors to leverage their global knowledge and
best practices. Periodic conference meetings will be conducted.
Detailed description of needed advisory domain experts is provided in the organizational
structure section below.
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15. B.3. Ownership and Management Structure
Ownership Structure
Initially we plan to register Blog SouQ as a limited liability company (LLC) in Amman,
Jordan. All business, management, and development functions will be performed from there.
As we grow, we plan to register another company in a tax free zone such as the Cayman
Islands, Delaware or British Virgin Island.
Founders of Blog SouQ are: Adey Salamin, Ahmad Takatkah and Ammar Ibrahim, each
owns 25% of equity. 10% of Blog SouQ’s shares will be held as an incentive scheme for the
potential CEO, while the remaining 15% will be held as an option pool for senior level
employees.
Ownership Structure
Other Key
People, 15%
Adey, 25%
CEO, 10%
Ammar, 25% Ahmad, 25%
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16. Organizational Structure
The following is the envisioned long term organizational structure:
a. Advisory Board of Directors
The advisory board of directors will include 5 experts as follows:
1. Financial Auditing Expert
2. Senior Financial Market Analyst
3. Management Expert
4. Technical Expert
5. Laws and Regulations Expert
b. Key Management
1. Chief Executive Officer (To be appointed at the 3rd year of operations)
2. Chief Business Marketing, Ahmad Takatkah
3. Chief Operations Officer, Adey Salamin (for the first two years will also be
responsible for the tasks of the CFO)
4. Chief Technology Officer, Ammar Ibrahim
5. Chief Financial Officer, (To be appointed at the 3nd year of operations)
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17. B.4. Other Resources
Human Resources Requirements
As shown in the table below, Blog SouQ will need the following resources and they will be
hired at the shown years of operation:
Positions Year Year Year Year Year
1 2 3 4 5
Senior Developers (3 people):
1. With data mining background √ √ √ √ √
2. With financial applications background √ √ √ √ √
3. With high scalable web applications background √ √ √ √ √
System Administrator (1 person) √ √ √ √ √
User Interface Designer (1 person) √ √ √ √ √
Quality Assurance (1 person) √ √ √
Accountant (1 person) √ √ √ √
Online Sales and Marketing Officers (3 people) √ √√√ √√√ √√√
Customer Service Officers (3 people) √√√ √√√ √√√
Admin Assistant (1 person) √ √ √ √
HR Development Strategy
Creativity, innovation and risk taking are our motives. Thus, we will focus on hiring
passionate resources that think out of the box to create higher value.
Continuous learning is one of our values. Our staff shall be attending at least two
business/technical/personal development training workshops every year. We also plan to
encourage learning from each other to build the spirit of team work.
Being a client-oriented company is not only a marketing issue. In our team selection process,
we take into consideration the persons' ability to accept feedback and show more effort in
satisfying our clients.
On the long run, an ownership structure for employees will be introduced to create the
feeling of "working on my own business" for all employees.
In addition to social and medical insurance, a trip will be organized every six months to a
local area, and a relaxation session will be organized every month.
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18. C. THE MARKET AND COMPETITORS
C.1. Market
Market Introduction
Our market is the Blogsphere, which is the collective community of all blogs. A blog (a
contraction of the term "Web log") is a web site, usually maintained by an individual with
regular entries of commentary, descriptions of events, or other material such as graphics or
video, in which readers can also post their own comments.
But as the Blogosphere grows in size and influence, the lines between what is a blog and
what is a mainstream media site become less clear. Larger blogs are taking on more
characteristics of mainstream sites and mainstream sites are incorporating styles and formats
from the Blogosphere.
Whether or not a brand has launched a social media strategy, more likely than not, it’s
already present in the Blogosphere. Four in five bloggers post brand or product reviews, with
37% posting them frequently. 90% of bloggers say they post about the brands, music, movies
and books that they love (or hate).
Company information or gossip and everyday retail experiences are fodder for the majority
of bloggers. Companies are already reaching out to bloggers. One-third of bloggers have
been approached to become brand advocates.
There have been a number of studies aimed at understanding the size of the Blogosphere
yielding widely disparate estimates of both the number of blogs and blog readership. All
studies agree, however, that blogs are a global phenomenon that has hit the mainstream. The
Blogosphere continues to evolve - with micro-blogging, long blogging, and video blogging.
The numbers vary but agree that blogs are here to stay; the following are some snapshots
about blogs from different media:
– comScore MediaMetrix (August 2008)
– Blogs: 77.7 million unique visitors in the US
– Facebook: 41.0 million | MySpace 75.1 million
– Total internet audience 188.9 million
– eMarketer (May 2008)
– 94.1 million US blog readers in 2007 (50% of Internet users)
– 22.6 million US bloggers in 2007 (12%)
– Universal McCann (March 2008)
– 184 million WW have started a blog | 26.4 US
– 346 million WW read blogs | 60.3 US
– 77% of active Internet users read blogs
Market Analysis
We have based our market analysis on the 2008 “State of the Blogosphere Report” presented
by Technorati.com which conducted a survey from a random sample from more than 1.2
million bloggers who have registered with Technorati. (For more information, please see
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19. Technorati.com methodology.) The following are the results which form the basis for our
financial and market analysis.
Bloggers are not a homogenous group: personal, professional, and corporate bloggers all
have differing goals and cover an average of five topics within each blog. They are often
described as savvy and sophisticated. On average, bloggers use five different techniques to
drive traffic to their blogs. They’re using an average of seven publishing tools on their blog
and four distinct metrics for measuring success.
According to Technorati.com, bloggers are more affluent and educated than the general
population with 70% having college degrees and four in ten have an annual household
income of more than $75K.
Global Snapshot of Bloggers: (Source: Technorati.com)
Demographics U.S. Bloggers European Bloggers Asian Bloggers
(N=550) (N=350) (N=173)
Male 57% 73% 73%
Age: 18-34 years old 42% 48% 73%
Age: 35+ 58% 52% 27%
Single 26% 31% 57%
Employed full-time 56% 53% 45%
Household income >$75,000 51% 34% 9%
College graduate 74% 67% 69%
Average blogging tenure (m) 35 33 30
% Blogs with advertising 52% 50% 60%
Average Unique Visitors (m) 18,000 24,000 26,000
Segment Snapshot of Bloggers: (Source: Technorati.com)
With No
Personal Corporate Professional
Demographics Advertising Advertising
(N=1015) (N=156) (N=590)
(N=695) (N=595)
Male 64% 70% 72% 66% 66%
Age: 18-34 years old 52% 45% 48% 53% 45%
Age: 35+ 48% 55% 52% 47% 55%
Single 36% 24% 31% 34% 34%
Employed full-time 52% 51% 55% 49% 56%
Household income>$75k 37% 49% 42% 40% 37%
College graduate 70% 74% 74% 69% 72%
Avg. blogging tenure (m) 35 35 38 35 33
% Blogs with Advertising 53% 64% 59% 100% 0%
Avg. Unique Visitors (m) 12,000 39,000 44,000 46,000 4,000
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20. According to Technorati.com 2008 survey, almost half of the blogging happens in the US
while the rest of the world also has a significant share of the pie:
Blogging Geographic Distribution
3%2%
7%
North America
13% Europe
Asia
48%
South America
Austra lia
27% ROW
Source: Technorati.com
Almost all bloggers manage their blogs themselves, while one in ten of professional and
corporate bloggers pay staff to contribute to their blogs. This keeps the costs of maintaining
the blogs at a minimum:
Blog Management
13%
9%
Manage alone
Paid staff
Unpaid help
78%
Source: Technorati.com
Both personal and professional topics are equally popular. Forty percent of bloggers consider
their blogging topics outside of these categories. “Other” blog topics include: 2008 US
elections, alternative energy, art, beauty, blogging, comics, communication, cooking/food,
crafts, design, environment, internet/Web 2.0, Jamaica, and media/journalism.
Three-quarters of bloggers cover three or more topics. The average number of topics blogged
about is five. There were some global differences. Music is more popular and politics is less
popular in Asia, while personal, lifestyle, and religious topics are less popular in Europe.
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21. Market Potential
Blogs are now money makers. According to technorati.com, regular blogs generate mean
annual revenues of $7,000. Blogs with 100,000 or more unique visitors per month generate
$75K+ in annual revenue, while a successful blog might hit an average of $ 20,000+ per
month such as TechCrunch.com.
The majority of bloggers have advertising on their blogs. Investments include hosting,
marketing, staff, and paid contributors. Among those with advertising, the mean annual
investment in their blog is $1,800, but it’s paying off.
Bloggers are sophisticated in using self serve tools for search, display, and affiliate
advertising, and are increasingly turning to ad and blog networks. Many bloggers without
advertising may consider it when their blogs grow – the inability to set up advertising will
not be a factor. Bloggers invest significant time in creating and updating their blogs, as well
as driving traffic and retaining their audiences. One in four bloggers spends ten hours or
more blogging each week.
So if we consider the blog as a “Revenue Generating Unit”, now more than ever, blog owners
can raise capital by issuing and trading shares like any other company.
Average Blogs Investments: (Source: Technorati.com):
US$ Dollars invested in blog over past year
How many dollars have you
invested in your blog over MEAN MEDIAN MAXIMUM
the past year?
ALL $1,020 $50 $200,000
U.S. bloggers 635 80 75,000
Europe bloggers 2,140 15 200,000
Asia bloggers 940 30 70,000
Corporate bloggers 3,790 200 200,000
Bloggers with advertising 1,800 100 200,000
Bloggers without advertising 100 0 5,000
Average Blogs Revenues: (Source: Technorati.com):
Annual revenue from blog (US$)
What is your annual estimated
revenue from advertising on your blog? MEAN MEDIAN MAXIMUM
U.S. bloggers $5,060 $200 $350,000
European bloggers 9,040 200 324,000
Asian bloggers 7,440 120 250,000
Blogs are an increasingly attractive platform for advertisers. The majority of bloggers we
surveyed have advertising on their blogs. Marketers realize that bloggers are creating high
quality content and attracting growing, loyal audiences.
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22. Bloggers with advertising are even more sophisticated in terms of their use of tools,
advertising platforms and even events to build reader loyalty. They also invest more
resources (both time and money) in their blogs.
Active bloggers receive CPMs for advertising on their site on par with large online media
publishers (although the median is considerably lower). On the other hand, some targeted
blogs are enjoying double-digit CPMs.
CPM US$ (cost per thousand impressions)
What is the average CPM that you
receive for advertising on your site? MEAN MEDIAN MAXIMUM
U.S. bloggers $4.20 $1.20 $30
European bloggers 3.31 0.55 50
Asian bloggers 6.21 1.3 55
(Source: Technorati.com)
More blogs are raising venture capital. In 2008, VentureBeat (a blog) reported raising
$320,000 from aVC investment. In 2007, several blogs raised considerable VC investments:
Sugar Inc. ($10 million), GigaOm ($1 million), Xconomy, Blogher ($3.5 million) and The
Huffington Post ($10 million). That’s at least $25 million in 2007 invested in popular blogs
and blog networks that are registered as official companies.
Target Market
Blog SouQ is targeting “Active World Wide Blogs with Advertising Revenues”. We are
targeting low-revenue blogs that are not registered as companies yet and whom owners are
keen to receive relatively small amounts of investments in order to grow their blogs and
increase their revenues to be more attractive to VC investors.
To calculate the market size in dollar value (Source: Technorati.com):
– 184 million blogs world wide
– 133 million blogs indexed at Technorati.com
– 7.5 million active blogs
– Over 50% are with advertising revenues
– Average annual blog revenue is $7,000
This means that our target market includes only 3.75 million (50% times 7.5 million)active
blogs with advertising revenues, each with average annual revenue of $7,000 which yields in
$26.25 billion as the annual dollar value of our target market.
On the other hand, according to Universal McCann (March 2008) worldwide blog readers are
estimated to be 346 million readers.
Blog SouQ is targeting to attract a 10% share of the active blogs market with advertising in
the first 5 to 7 years, and 0.5% of blog readers market. Detailed forecast are provided in the
financial section of this business plan.
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23. C.2. Competition
Competitors
TipJoy.com
TipJoy.com competition to Blog SouQ could be summarized by its ability to enable blog
owners to raise money from their readers in the form of “Tips”, and to enable readers to
support blogs that they love by giving them some donations as tips.
TipJoy applies the idea of a “tip jar” on blogs and other content sites to help bring in a few
extra dollars for bloggers. Their donations and payouts are made through PayPal, and there
are a number of plugins for various blogging platforms to make the process easier.
TipJoy is designed to make it even easier to get people to click that tip button. Readers are
not required to create an account or have a PayPal account to leave a tip, so there is little
friction to them getting started. If they want to leave a tip they just click the button and type
in their email address.
If you leave a tip as a new user, you start to build up an account debit, although no one comes
after you if you choose to skip out on the bill. You can eventually pay that off via PayPal
which gets 2% of the tip, and TipJoy keeps 3% of the tip.
You can also start to ask for tips on your own site, and anything people leave for you offsets
what you’ve given to others. The TipJoy site shows popular sites that have received a lot of
tips, and you can also send any URL or email a tip directly as well. As a tipper, you can
choose the amount you’d like to tip by default (starting at ten cents). Then, every time you
click the tip button on a participating site, that amount is added to your bill.
If you want to cash out of your tips you can choose to either receive an Amazon gift card or
donate the amount to charity. For now, you can’t receive cash since the company wants to
avoid becoming a regulated money transfer service. In the FAQs they suggest they’ll be
adding this functionality eventually.
TipJoy was part of Y Combinator's winter 2008 funding cycle, and in September 2008, it has
closed a $1 million Series A funding round. The round was led by New York-based seed
stage investor Betaworks and also included the Accelerator Group, David Shen Ventures, and
private investors Chris Sacca, Taavet Hinrikus, and Ron Bouganim.
BlogShares.com
Blogshares.com competition to Blog SouQ could be summarized by its ability to enable blog
readers and financial investors to make money out of their favorite blogs, and to enable
bloggers to involve blog readers to help promote their blogs.
Blogshares.com is a fantasy stock market where blogs are the companies. Players invest
fictional dollars in a wide spectrum of blogs. Blogs are valued by both incoming and
outgoing links, and can add value to other blogs by linking to them. Prices increase or
decrease based on trading and the underlying value of the blog. Although real blogs are
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24. listed, but no actual ownership of blogs are transferred. BlogShares.com is purely a fictional
marketplace for entertainment purposes only.
Players can basically play for free with transactions limits that prevent them from conducting
high number of shares selling and buying. Premium membership is available to remove
transaction limits and give access to some powerful tools to help players level up in their
scores. Memberships available:
$2.95 per month
$7.95 for 3 months and our most popular purchase
$15.00 for a full year
However, people can make real money out of this by selling B$ trillions (Blogshares fictional
dollars) for real-world dollars on eBay and via direct sale.
Blgoshares.com fans have created hundreds of blogs to discuss prices, market trends, stocks
analysis, and to educate new players how to get started and how to make money.
BlogShares was written in early 2003 by Seyed Razavi in his free time. The overall objective
of BlogShares was the exploration of an emerging social network while providing an
addictive and fun environment for bloggers to join and help add to the worth of the social
network. Another one of the purposes of this site was to prove the Power Law theory. Part of
this theory is based on the fact that 20% of the population holds 80% of the wealth. This can
also be attributed to weblogs, 20% of the blogs contain 80% of all incoming links.
BlogShares hits a home run with this theory.
BlogShares was taken over by its current owner, Jay Campbell. Blogshares.com now has
40K active users, over 17K blogs have been claimed by their owners and 7.3 million blogs
tracked.
Competitive Advantage
Blog SouQ’s sustainable differential competitive advantages give us an edge over the above
mentioned rivals and it presents a greater value for blog owners, blog readers and investors.
Blog SouQ was created in a way that makes it difficult for competitors to neutralize those
advantages.
To clearly identify our competitive advantages, we went through abstract thinking sessions.
We were able to identify the real value of what we are presenting to the market. This could
be summarized in the following:
– Enabling blog readers to financially participate in the development of the blog sphere.
– Enabling the public to invest in popular blogs in very early stages before they become
registered public companies to maximize return on investment.
– Enabling blog readers to make money out of their favorite blogs by trading blog
shares and/or by getting part of their annual revenues.
On the other hand,
– Enabling blog owners to raise funds/investment from their readers and from other
financial investors without being registered entities.
– Enabling blog owners to involve their blog readers to help promote their blogs.
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25. – Enabling blog owners create and retain loyal readers by giving readers the
opportunity to own the blog and partner with its original owners.
Blog SouQ actually solves the basic problem: How to issue and trade real shares of blogs
without being registered companies? We have provided an innovative totally new model of
stocks and a secured process to trade those stocks.
Our core competency that differentiates us from our competitors is the ability to help blog
owners raise real (unlike Blgoshares.com) and considerable amount of capital (unlike
TipJoy.com) from the public to improve the blogs performance and to increase their
revenues.
Barriers to Entry and Future Competition
After consulting with local patent consultants, we found out that this idea could be filed as a
business method patent. If filed in the USA, our new stock type and new process will be
protected from copiers. Although people will still get around it by changing some features or
steps in the whole process and copy the concept, but we think this patent will at least
strengthen our position in front of VCs.
We still don’t have enough financial resources to hire an IP lawyer and file a patent. Until
then, we plan to file a provisional patent (which is valid for only one year) directly after
securing basic required capital targeted by participating in business plan competitions and
local grant programs.
Blog SouQ is also backed with a huge technical barrier to entry. To develop our aimed
solutions, top technical experts are needed. We started negotiating with a technical partner
that has an existing web analytic system (Woopra: that generates live detailed statistics about
the visitors to a website) to reduce our time to market and be the market leader in blog public
investment market that we are looking to create.
Directly after filing the provisional patent and after developing our beta version, we will start
massive proactive direct sales campaigns by contacting potential bloggers via emails and
VoIP calls to promote using our services of raising public capital. We will ask listed blog
owners to place our button (with logo) on their blogs. The purpose is to quickly build our
brand and get the maximum market share to make it harder for new comers to get large
shares in this market.
SWOT Analysis
Strengths
Innovation –
Blog SouQ has an innovative trading model and a new equity stock
type that was created specially for blog stocks and solves the blog
owners’ basic problems.
Strategic Partnership –
Blog SouQ has started developing a partnership agreement with
Woopra, a web analytics service provider to build on their experience
to create our web auditing and valuation solution. This will reduce our
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26. time to market and will leverage Woopra’s team experience in web
analytics.
Ease of Use –
Our trading platform will look and feel the same way investors are
used to in traditional online stock market. There are no sophisticated
special functions and activities to be learned.
Access –
Our system can be used from anywhere in the world without
downloading any software. Any browser on any system can be used to
tap into the full potential of Blog SouQ.
Cost Effective Marketing –
As detailed later in this plan, our creative marketing strategy will
enable us to promote Blog SouQ with minimal advertizing expenses.
Committed and Experienced Team –
We are a highly committed professional team with diverse business
and technical expertise to start Blog SouQ.
Weaknesses
Lack of International Level Leadership –
Blog SouQ’s team is experienced enough to start it, but none of us
could take it to grow and compete globally, that’s why we are planning
to give equity to attract an international CEO with related experience.
Time to Market –
Although we are partnering with Woopra, we will still need relatively
long time to develop our beta version (one year).
Opportunities
Clearly Defined Target Market –
We have clearly defined market characteristics and managed to
segment the market by narrowing it to identify our niche target market.
Increasing Number of New Blogs –
According to Technorati.com, number of new blogs is doubled every 6
months. We are looking into an exponentially growing market.
Bloggers Pain –
Experienced bloggers face huge challenges to convince venture capital
investors to invest in their officially registered blogs as companies, so
what about new unregistered blogs?
Tap into new relevant markets –
Blog SouQ’s innovative platform is not exclusive to blogs. We plan to
tap into similar markets once our business model picks up. This can
prove to be a huge opportunity in the long run for Blog SouQ.
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27. The Global Financial Crisis –
In lieu of the current economic crisis, investors are looking for new
financial investment opportunities.
Threats
Competition –
Currently there are two main non direct competitors. One of them is
very similar to our concept and with long experience in this field but
as a fantasy game. So it could convert to trade blog shares for real
money.
Regulations and Legal Issues –
There are different public investment regulations in different countries
that we might have to comply with.
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28. C.3. Need for Market Research
Our idea is new and still not tested in the market, so we need an extensive market research
targeting potential clients (bloggers and investors) to collect feedback from a focus group.
This would result in solidifying our existing process, business model and marketing plan.
During the development of Blog SouQ, and after filing a provisional business method patent,
we will start discussions on popular blogs about the idea, and collect and analyze all
comments and feedback from blog owners and readers. We will also work on collecting
feedback from financial investors who use online trading platforms.
After developing the beta version, we will offer a number of blog owners incentives to list
their blogs by waving our commissions. We will also incentivize a number of investors to
buy shares by guaranteeing their capital investment in specific blogs if the prices go down.
Our purpose from this is to create a real world test group to collect practical feedback from
people who are using Blog SouQ with their own money.
Continuous development is one of our core values. Although initially we will not include a
budget for R&D, after developing the beta version, our core developers will be dedicated to
work full time on next versions of Blog SouQ.
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29. D. THE PRODUCT OR SERVICE
D.1. Products and Services Description
Building on our knowledge and experience, and after consulting with domain experts from
regional and international stock markets, we have developed solid trading processes for
which we are developing two main web technologies: Blog Auditing Solution, and Online
Trading Platform. The detailed process and the two web applications along with our planned
customer services strategy and the business model are described in the following sections.
Type of Tradable Shares
We are introducing new type of shares because of the special nature of blogs and their
business models. Although our new share represents equity in the blog, it’s treated as a
“Revenue Share”, not as a “Net Profit Share”. i.e., dividends will be distributed directly from
advertising revenues not from blog’s net profits.
Why? Simply, because in the case of blogs, which are not registered companies, only
advertising revenues are auditable and can be tracked by our web auditing solution. Cost of
developing and operating the blog cannot be audited online, they will need official financial
statements and traditional financial auditing, which will be a nightmare for us because blogs
are not legal entities or companies, and a nightmare for personal bloggers who might not
even know anything about financial management and accounting.
Bloggers will be allowed to sell up to 50% of reveuve shares in their blogs. We have come
with this percentage based on the fact that average blogs cost 25% of their revenues (Source:
Technorati.com). Thus, for bloggers to cover their cost and get at least 100% return on their
investment, they cannot sell more than 50% of their blogs. This way we can guarantee that
bloggers will still have stake in their blogs and will keep working on enhancing the blogs
performance.
When blog owners decide to exit the market and convert their blogs into officially registered
companies to receive VC investment, all shares in the market should be bought and
considered part of the investment.
Blog Auditing Solution
Our blog auditing solution is a critical building block in our business model. Public traded
companies always need external auditing firms to gain investors trust.
Since all blog revenues will come directly from online advertising, online sales and online
subscriptions, our auditing solution will investigate all web tools that can give accurate
estimates about money generated by a specific blog, or money that could be generated by this
blog.
Our solution, which will be developed in partnership with a web analytics provider: Woopra
(detailed later in this plan), will investigate: Web Stats, Web Traffic, Members, Search
Engines Optimization, RSS Feeds, links to the blog, its click through rate, number of ad
clicks, number of sales leads directed by this blog, and number of sales transactions directed
and/or conducted via this blog.
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30. In addition, the auditing solution will investigate the blog’s content regarding its quality and
quantity. For quality, it will evaluate its content by comparing it with the most searchable
keywords on the net regarding specific sectors such as: politics, science and technology,
fashion, music, etc…. For quantity, it will simply measure how often the blog is updated with
quality new posts and comments.
Blog SouQ will provide live instantaneous performance and auditing reports about all listed
blogs. We will generate industry/sector average performance measures for people to
benchmark with when they want to evaluate any new blog.
Online Trading Platform
This solution will be very much similar to any online stocks trading platform, except for
some modifications needed to match our new blog-ad-shares concept.
This solution could be developed utilizing already existing open source systems to save time
and effort. Trading will be conducted on the blogs’ stock charts and live performance and
auditing reports will be easily accessible from those charts.
Listing Process
For any blog to be listed on Blog SouQ, it has to meet our criteria of “Accredited Blogs”.
Accredited blogs are blogs that:
- Use one of the automated advertising networks such as: Google Adsense
Commission Junction, LinkShare, Shareasale, ClickBank, etc….
- Have at least 500 unique visitors per day
- Have been active (at least weekly new posts) for at least one year
IPO process starts by either bloggers, or Blog SouQ team. Bloggers who already know about
our stock market can approach us online. Our team will act proactively by scanning blogs on
the net looking for potential blogs to be listed, contacting them to introduce the concept and
incentivizing them to list their blogs.
Next, blogs will be tested against our above mentioned criteria. Then bloggers will be asked
to send us the username and password of the blog’s domain name, in order to transfer the
domain name to our hosting partner. Passwords will be changed so that only Blog SouQ will
have full control over the blog as a third party to protect all shareholders’ rights.
After that, blogs will be audited and valuated by our web auditing system. The output report
will give summaries and analysis of the blog history for the last year of operation regarding
technical and business aspects. It will also suggest the IPO price per share.
If bloggers agree on the IPO price, and indicate how many shares (up to 50% equity) they
would like to list, the report will be published to all public investors, and the blog will be
listed on our online exchange for investors to view.
Trading Process
When blog shares are listed, investors (users) can buy and sell those shares online. They can
search for specific blogs, or browse blogs by sector, by annual revenues, or by keywords.
Investors can choose a blog and view its share price chart. They will be able to trade on the
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31. chart and conduct all required functions from there such as: viewing the blog’s auditing
report, bid for a sell/buy price, place a limit-up/limit-down constraints, etc…
Prices of blog shares will go up and down depending on the blog’s performance and its
ability to generate more revenues or based on investor interest and bids. Basic (free) live
performance reports about all listed blogs using our web-auditing system (described above)
will be published to all users, while detailed reports (paid) with analysis will be only
accessible to subscribed users.
All blogs advertising revenues will be directed to a specific bank account created and
controlled only by Blog SouQ. Bloggers will get 50% of the collected revenues on monthly
basis. The other 50% will be saved in the blog’s account until the end of the fiscal year. At
the end of the year, revenue dividends will be distributed to all shareholders of the other 50%
including bloggers (if they kept a share for themselves in the other 50%).
Investors can keep their shares until the end of the fiscal year to get their dividends, and they
can sell (trade) their shares to other investors.
For the IPO shares, prices will be fixed and investors can buy on “first come first served”
basis. While for the shares trading after the IPO, investors will trade in a free market where
prices will depend on demand and supply and on blogs’ performance.
Customer Service
After developing and testing our beta version, and after reaching considerable number of
transactions per day, we will establish Blog SouQ’s customer service department.
Our customer services will be mainly a 24/7 live chat support. We will be facilitating online
monetary transactions. So to avoid any serious problems, and customer bad experience, all
customer inquiries should be answered immediately to satisfy and even exceed our users’
expectations.
Business Model
Our business model is simple and straightforward. We will charge the seller 5% sales
commission on any sales transaction. Blog owners will not be charged any setup or listing
fees, and investors will not be charged any access fees to trade blog-shares. No subscription
fees will be charged to view the basic blog reports and charts. However, we will charge
investors an optional annual subscription fee of $10 to be able to access our detailed live
blogs audit and performance reports for any blog listed. ($5 will be given to our Web
Auditing partner Woopra, while $5 will be retained by Blog SouQ).
The blog owner will not be charged any IPO or listing fees, but will be charged a sales
commission of 5% when a sale is conducted on our platform. Investors will not be charged
any commissions when buying blog shares. However, they will be charged the 5% sales
commission when they sell their shares to other investors.
Our business model also includes advertising services on the trading platform and on the blog
reports pages. We will not be dependent on advertising revenues in the startup phase. To
focus on our basic business model, and on customer service, we will use third party affiliate
advertising networks. The following is the General Blog SouQ Process Flow:
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32. Sales and
Marketing
Direct Sales Online Marketing
Investors
Staff Contact Bloggers Contact
Subscribe on Blog
Bloggers Blog SouQ
SouQ
Blog
Not Ready Initial Ready
Test
Investors Contact Blog Auditing
Blog SouQ Report
Blog IPO
Suggestions to Get
Valuation and IPO
Ready
Price
Blogger Specifies
No. of Shares to be
Listed (up to 50%)
Blog Domain Name and Ad
Revenues Transferred to
Blog SouQ
50% of Ad Revenues will be
Transferred Monthly to
Blogger
The other 50% will be kept
with Blog SouQ till the end
of the Fiscal Year, then will
be distributed to
Shareholders
Investors View
Blog will be Listed
IPO Blogs & their
Stock Market on Blog SouQ
Reports
For IPO: Fixed Share Price
First com first served Money
Investors Buy
Transferred to
Shares
Blogger
Investors View
Quarter Blog
Reports
No Sell?
Yes
Get Revenue
Dividends at the
End of the Year
Stock Market Offer Shares in the
For non-IPO: Free Market Environment Market
(Supply and Demand)
Rev. up, Demand up, Price up Other Investors
Rev. down, Demand down, Price down Buy and Sell
Shares
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33. D.2. Product Development
Technology Used
Blog SouQ will intensively use open source technology unless a proprietary solution proves
to be a better choice. Blog SouQ’s CTO has around a decade under his belt building and
managing software development using open source technology. He’s a frequent instructor
and speaker in open source events around the world.
Open source has proven to be a very important factor in saving IT costs. The examples of
Google, Facebook and Yahoo are almost entirely reliant on open source technology.
The main technology stack to be used is LAMP. LAMP covers most of technology that will
be used for Blog SouQ, and it stands for the following:
– Linux: an open source operating system.
– Apache: The world’s most widespread web server.
– MySQL: An open source database engine powering the most scalable websites in
the world
– PHP: A general purpose programming language, designed for web development.
Facebook and Yahoo use PHP for their web development.
Strategic Partnership
We are negotiating a strategic partnership with Woopra (woopra.com). Woopra is a real-time
web analytics system and quite comprehensive. We see that Woopra can help greatly in
developing certain components/modules that can save a lot of time, and save our
development resources for other tasks.
The main goal of the partnership is to have Woopra expand on their traffic analytics report
and generate a custom report that will serve as our blog audit report to be published when a
blog signs up on Blog SouQ, and create live audit and performance reports for Blog SouQ
investors.
Technical Overview
Blog Souq software components:
Trading Engine
A high performance distributed trading engine that allows trading stocks in real time. The
only interface to this system is through the web portal.
Blog SouQ Backend Portal
This backend will be accessed by Blog SouQ’s team to manage information on the portal,
manage bloggers, manage investors, and access internal reports and any other portal
management future.
Blog SouQ Portal
This will be the destination where bloggers and investors go to accomplish their goals. All
development will be designed from ground up for internationalization capabilities so that
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34. when the business development unit decides to introduce the service in a new language, it’ll
be merely a task of translating the interface rather than a rewrite or a huge change in the
software.
The portal is divided into the following sections:
Sign Up:
Bloggers and investors sign up. If a blogger decides to sign up, the portal takes the blogger
through a series of steps to explain the IPO process and Blog SouQ’s regulations.
Listed Blogs:
This section will show all listed blogs. The investor can choose to view basic (free) or in-
depth (paid) live information about any blog including our audit report. All relevant historical
and trading information can be found as well.
Payment Module:
An online payment system that integrates with payment gateways to allow investors to
transfer payments to Blog SouQ. Payment methods may include credit cards, PayPal or wire
transfer.
Trading Area:
From this section, the investor can buy/sell shares.
Corporate Information:
Information about Blog SouQ, the team, investment opportunities, financial reports …etc
Support:
Support area with FAQs, knowledge base, guides, and possibility to contact support team for
any other enquiry.
Blogger Area:
Blog owners will have an area to manage the settings and trading information of their blogs.
This also allows owners to communicate with investors. It’ll also include any alerts, or up to
date news regarding blogs.
Investor Area:
This will be similar to the “portfolio” section of traditional trading platforms. Investors can
see their portfolio and other relevant information in this section. A detailed report of
revenues and revenue earned for investors will be shown in this area as well.
User Requirements
Any user with basic computer skills can fully use Blog SouQ as either a blogger or investor.
The online system is accessible using any browser on any computer.
Development Methodology
Development will follow an iterative incremental process called SCRUM for managing our
software development activities. Scrum is a "process skeleton," which contains sets of
practices and predefined roles.
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35. SCRUM has the following attributes:
– Scrum is an agile process to manage and control development work.
– Scrum is a wrapper for existing engineering practices.
– Scrum is a team-based approach to iteratively, incrementally develop systems
and products when requirements are rapidly changing. Blog Souq needs to
identify and implement features very quickly in order to serve the
exponentially growing blogsphere.
– Scrum is a process that controls the chaos of conflicting interests and needs.
– Scrum is a way to improve communications and maximize co-operation.
– Scrum is a way to detect and cause the removal of anything that gets in the
way of developing and delivering products. Efficient and focused
development means the success or failure of Blog SouQ. Using SCRUM
ensures that we are focused and any obstacles are acted upon instantly and
resolved.
– Scrum is a way to maximize productivity.
– Scrum is a way for everyone to feel good about their job, their contributions,
and that they have done the very best they possibly could. Employees’
satisfaction is top priority to Blog SouQ’s management team. We need to
make sure everyone is happy and they are well appreciated and trusted.
From the previous attributes, we can see that SCRUM is very suitable for Blog SouQ’s
dynamic small team. It also copes very well with requirement changes and the nature of
Blog SouQ web development. In a nutshell, SCRUM is all about delivering a high quality
running product every 30 days increment. This works very well with the web trend of
release early, release often. Bloq SouQ intends to release new development changes
every one month.
The SCRUM process (source: controlchaos.com)
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36. D.3. Identifying Costs / Manufacturing and Operations
Pre-Startup Cost
As explained below in the startup summary, our startup cost will be basically covering Blog
SouQ expenses for 6 months before we hire any employees. Founders will be working full
time on it. This will include the following items:
Item Cost
Founders Salaries (2,000 per each x 3 x 6 months) $36,000
Incubator office rent (including fully furnished offices, internet and utilities) $1,200
Patent filing and legal consultation fees $20,000
Others $2,800
Total $60,000
Operating Cost
The detailed operating costs over the next five years are provided in the financial section.
Following is the summary:
Positions Year1 Year2 Year3 Year4 Year5
Payroll Totals 203,490 283,815 549,007 603,907 664,298
Capital Totals 0 0 0 0 0
Expenses Total 21,751 74,051 166,551 305,551 462,551
Total ($) 225,241 357,866 715,557 909,458 1,126,849
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37. D.4. Risks and Regulations
Team Risk
Being a small startup company, employees might not feel job security. Staff members might
find a better job offer and simply leave us any time. To overcome this problem, we plan to
introduce an ownership structure for our employees, and we already included an option pool
of shares above in the company’s ownership structure section.
In addition, while developing our application, we will insist on having a content management
system that allows any team member to catch up with previous efforts and continue on the
planned schedule. This way we will not have serious problems with essential team members
leaving the company any time.
Regulations Risk
One of our biggest challenges is complying with several different public investment
regulations in different countries. Especially in Jordan, where there are previous public
investment companies that were shut down by the government because of continuously
changing regulations. To mitigate this risk, we are consulting with an international lawyer to
recommend the best country to register Blog SouQ. However, we can always operate from
Jordan as a registered regional office of the mother company to take advantage of the low
salaries and high quality of technical professionals.
Another legal issue is related to the tax authorities. Although blogs are individual non-official
business, but some countries require financial records of all income resources of citizens
even if conducted online. So we will be archiving all financial transactions on our systems
and provide annual reports to individuals and/or government authorities.
Execution Risk
To reduce time to market, to avoid reinventing the wheel, and to avoid any serious executing
risk, our developers will not start building the solution from scratch.
As detailed above, we have partnered with a blogs analytics company that has been operating
in the market for 3 years. They have already developed, tested and promoted their web
analytic application. We are negotiating with them a partnership agreement in which they add
more components to their system that are required for Blog SouQ’s operations regarding
financial auditing of blogs for a share of revenues. Then we will integrate the new release
into Blog SouQ. Our technology partner will get a percentage from our auditing reports
revenues.
Online trading platforms are not a new concept hence will depend on existing open source
components that could be customized to suit Blog SouQ’s business functions.
In other words, our developers will be working on integration and customization more than
developing totally new web technologies from scratch. This will ensure simplifying and
accelerating our execution plan.
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38. Technology Risk
We are aware of the need to run an IT infrastructure audit and web applications audit on
periodic basis to ensure that our technology infrastructure is perfectly maintained and up to
date.
Blog SouQ platforms will be developed using the latest web and software technologies with
top level experts hired to work on it. Our internal HR strategy will offer developers ongoing
training to be familiar with any new technologies that emerge in the market and could
contribute to the development of Blog SouQ platforms to keep us ahead of any new entry
competitor.
Capitalization Risk
Delay in raising required investment will not affect our commitment and persistence to
pursue our dream. However, this delay will affect our time to market and our ability to
acquire needed resources to develop a high quality application.
To mitigate this risk, and in parallel with pursuing seed VC investment, we are targeting
required funds from grant programs and business plan competitions.
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39. E. MARKETING AND SALES
E.1. Marketing Plan
Company Message
All our marketing efforts will be targeting blog readers, the buyers and potential investors.
Blog owners will be targeted by our direct sales operation because they are the sellers, the
ones who will pay our commission.
Building on Blog SouQ’s mission, we will emphasize the concept of empowering people to
develop the Blogsphere ecosystem in our marketing message.
As a blog reader, Blog SouQ will help you to participate in sustaining, developing and
promoting your favorite blogs. It will also enable you to invest in and promote those blogs.
Strategic Position and Brand Building
Our suggested slogan is: “Invest in blogs that you love”. This slogan will encourage both:
blog readers to invest in their beloved blogs and it will encourage blog owners to promote
Blog SouQ indirectly by asking their readers to invest in their blogs.
We have developed a free branding tool to ensure that Blog SouQ will be known for
investment in blogs within a very short period of time. In our direct sales communication via
email and VoIP calls, we will encourage them to add a specially designed button with Blog
SouQ logo on it in their blog pages saying:
“Love this blog? Invest in it”.
Marketing Strategy, 4Ps
Product: (Solution)
We believe that a product is all about solving a problem. For blog owners, Blog SouQ
simplifies the process of accessing public investments. Blog SouQ offers new investment
opportunities to the public. Investors can buy and trade blog-shares in a safe, secure and
friendly online environment. Our legally safe trading process can guarantee protecting
everyone’s rights. Our secured payment tools will create trust in conducting business
deals. Our interactive, friendly and easy to use interface will allow any user with little
financial and technology literature to use and benefit from our services
Place: (Accessibility)
Our market and all related services will be fully conducted online. Thus, it could be
accessed from anywhere any time, even from mobile phones. There are no special
technical requirements that can’t be easily attained, and no desktop installation will be
required.
In addition, blog readers will find links to our market in their favorite blogs that directs
them to those specific blogs charts. They will also have the ability to receive price alarms
based on their choice on their mobile phones or their emails.
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