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Table of Contents
EXECUTIVE SUMMARY ............................................................................................................ ......... III THE MARKET ................................................................................................................... .................... VI THE COMPANY ................................................................................................................ ...................... X THE PRODUCTS ........................................................................................................................ .......... XII COMPETITION ................................................................................................................. .................. XV BUSINESS MODEL .............................................................................................................. ............. XVII INVESTMENT OPPORTUNITY ........................................................................................... ............ XIX APPENDIX A – PRODUCT ARCHITECTURE ...................................................... .......................... XX APPENDIX B – FINANCIAL PROFORMA .................................................................................... ..... 21
Fireclick has developed patent pending technology to make the web experience more rewarding for consumers thereby driving more traffic to destination sites. By increasing the propensity to view more pages, absorb more ads, and purchase more products, Fireclick helps drive e-commerce revenue.
The World Wide Wait
Most Internet users are frustrated with having to spend a significant part of their online time waiting for web pages to download. Even as users hunger for more speed and greater bandwidth, most Internet sites today are increasing the richness of their content, further exacerbating the problem. Enhancing the quality of the consumer experience is a critical success factor for all e-commerce sites including e-tailers, portals, content providers, and community sites. A recent report from Zona Research estimates lost e-commerce sales due to frustrated consumers at $4.35 Billion annually. Specifically, the study showed that shoppers with slow modems could account for almost $1B by themselves. This lost revenue is recognized and measured by e-commerce retailers in the conversion ratios (aka “looker to booker”) and in the number of abandoned shopping carts due to perceived lack of response from the web site.
“We estimate approximately $362 million in e-commerce revenues could be at risk of being lost each and every month because of the impact of unacceptable download times.” Jack Staff
Chief Economist Zona Research Ju l y, 1 9 9 9
The Fireclick Solution
Fireclick has developed server-based software that can alleviate customer frustration today, while improvements are made to the existing Internet infrastructure, rather than wait for the world to upgrade to higher bandwidth (broadband) connections. This is especially important in light of the Gartner Group estimates that even by the year 2002, more than 63% of users accessing the web will be constrained by voice-grade modem connections. The Fireclick Blueflame™ server operates in front of a web host and performs real-time analysis of site usage patterns to anticipate user clicks and prime their browser cache with required page elements. The server uses patent pending technology to pre-deliver upcoming pages (or elements of pages), thus enriching the consumer’s web experience. Additionally, the server is able to regulate these deliveries within the network’s traffic constraints. Because the Fireclick Blueflame™ server operates as a transparent proxy, it never interferes with normal web server operations. If the server should fail, page requests continue to be processed normally but without the Fireclick acceleration. By deploying server-side software, as opposed to a client-side application, Fireclick ensures maximum deployment flexibility and minimum deployment costs. Control of the consumer’s experience is returned to the web “store.”
Accelerated Content Delivery
The effect for web users is that upcoming page requests are anticipated or directed by the Fireclick server and pre-loaded into their browser cache. When they’re ready to view the next page, it is available immediately with a perceived zero download time. In fact, Median Wait Time the page was simply downloaded while they were viewing the previous page. In this Reduced By 90% way, bandwidth that would normally be unused (but paid for) waiting for the next page request is utilized to deliver an unencumbered browsing experience for the consumer. 100 % of Hits With Fireclick
90 80 70
New Selling Opportunity: Directed Merchandising
50 Fireclick’s Blueflame server is used to accelerate the performance of any Web site 40 regardless of content, but it also represents an additional opportunity for online retailers 30 20
10 0 1
39% “Zero Wait” Page iii
21 41 61 Fireclick Accelerated Performance
Page Wait Time (seconds)
– directed merchandising. While the server typically analyzes usage patterns to prime the user’s browser cache with required page elements, it can also be used as a directed merchandising engine to prime the consumers browser with explicit items the retailer selects. For example, a retailer could ensure that the “specials of the week” behind the blinking icons are always pre-delivered to the consumer’s browser for immediate viewing if and when selected. In this way, online retailers can take advantage of the “impulse buy” in much the same way as traditional retailers who place high margin items near the cash register.
The Value for eCommerce
Fireclick has developed technology to eliminate the frustration of the “world wide wait” and make the Web experience more rewarding for consumers. E-commerce sites increase their conversion rates, minimize abandoned shopping carts, and grab control of directed merchandizing to produce more revenue
Several “Internet infrastructure” and “content delivery” players have emerged to address network bottlenecks on the Internet and offer some performance relief to consumers. New players like Akamai and Sandpiper (acquired by Digital Island), as well as established companies like Inktomi and Network Appliances, approach the problem of Internet performance from the network backbone. By caching frequently accessed content at distributed points around the Internet, the vendors help save bandwidth costs for ISPs and e-commerce sites, but end-user performance is only slightly improved. Additionally, there is a small group of vendors providing so-called “web accelerators.” These are generally applications designed for the end-user client and require some action on the part of the consumer (e.g., install software). These companies have met with limited success. Fireclick is unique in its focus on the “last mile,” the slowest part of the connection to the consumer, and its complete transparency on the client-side through a purely server-side software approach
Fireclick Company Background
The Fireclick team was originally formed at the graduate school at Stanford University. The original founders: Xavier Casanova, a graduate EE student at Stanford University, has successfully led the company through the creation of first prototype and serves as the product manager for ongoing product and business development. Stephane Kasriel received his MSCS with Distinction in Research from Stanford, has won several awards for advanced research and currently functions as the product architect and lead developer. Jean-Pascal Crametz, PhD, has been involved in two other Silicon Valley start-ups and contributes more than 10 years of professional experience.
This founding team has added senior management talent to bring Fireclick to the next stage. Ram Srinivasan, President & CEO, adds 20 years of management experience in engineering and marketing functions at technology companies including Sun Microsystems, H-P, Informix, and Red Brick Systems. Ram was most recently VP Marketing for RightPoint Software (acquired by E.piphany). Dennis Tabuena, VP Development, brings over 18 years of experience in all aspects of development at software companies such as Metaphor, General Magic, & Digital Fabrics, and was most recently VP Product Development for Austin-Hayne. Steve O’Brien, VP Marketing and Business Development brings 15 years of experience in product marketing, branding, and business development from Sun Microsystems, Digital Equipment, & Red Brick, and was most recently VP Marketing for Personic Software.
The Problem: “WWWait”
The Internet has already changed the way we live and work, and the opportunity for ecommerce is virtually unlimited. But the success of e-commerce is jeopardized by consumer frustration with Web performance. Despite ongoing infrastructure improvements frustration with Internet interaction remains a key inhibitor to business. The problem has become so pervasive as to have its own nickname – the “worldwide wait.” Fireclick develops Internet server software that speeds Web access for consumers, thus driving the success of e-commerce.
1998 Holiday Shopping
The Opportunity Cost for eCommerce
The access problem on the Web not only frustrates potential consumers but causes serious revenue loss for e-commerce companies. Any company that relies on the Internet for revenue, whether from subscriptions, advertising, or actual product sales, is at risk. During the 1998 holiday shopping season, for example, only 20% of Internet shoppers actually placed an order online at the site where they sought a purchase. 27% of shoppers became so frustrated they did not purchase the item at all, while the remainder purchased the item through alternate channels, including competing Web sites. [Source: Zona Research] In June 1999 Jupiter Communications found that if response times at a particular Web site did not meet Internet users' expectations, 37% of those users visited a substitute Web site to meet their needs. For 24% of users, the decision to use an alternative Web site was permanent. The potential loss of e-commerce sales due to frustrated consumers is estimated at $4.35 Billion annually. This lost revenue is recognized and measured by e-commerce retailers in the “look-to-buy” ratio and in the number of abandoned shopping carts due to perceived lack of response from the Web server. Recent research indicates that at least 2 out of every 3 shopping carts on the Web are abandoned.
Placed an online order Did not purchase item Purchased off-line Purchased from alternate site
Many Possible Fixes, No Real Solution
Rather than wait for the world to upgrade to higher bandwidth connections, Fireclick has developed server-based software that can alleviate this problem today, in spite of current infrastructure constraints.
Directed Merchandising: A New Opportunity for eCommerce
Fireclick’s Blueflame server is used to accelerate the performance of any Web site regardless of content, but it also represents an additional opportunity for online retailers – directed merchandising. While the Blueflame server typically analyzes usage patterns to prime the user’s browser cache with required page elements, it can also be used as a directed merchandising engine to prime the consumer’s browser with items the retailer selects. For example, a retailer could ensure that the “specials of the week” behind the blinking icons are always pre-delivered to the consumer’s browser for immediate viewing if and when selected. In this way, online retailers can take advantage of the “impulse buy” in much the same way as traditional retailers who place high margin items near the cash register.
Market Size: Macro Level
Fireclick provides Internet server software to drive eCommerce success. Because there are no other vendors providing similar products to those Fireclick has developed, there is no third-party published data on the exact size of the market. However, there are several established markets of which Fireclick is part, and their size can be used to validate the Fireclick opportunity. The Internet caching market consists of those companies providing hardware and software to cache frequently accessed pages at various points-of-presence (POPs) on the Web. Typically sold to ISPs and web hosting companies with the goal of saving bandwidth costs, these devices come from vendors like Inktomi, Cisco, Network Appliance, Novell, and Cacheflow. This market has attracted both new and established vendors due to the forecasted market size and growth. Gartner Group has estimated this market size at $92 million in 1999, growing to over $1Billion in 2003, in excess of 80% CAGR. Industry analysts also track the market for e-commerce software and Fireclick is certainly a part of that well-defined market. In November 1999 Business Week estimated the e-commerce software market at $580 million for 1999, growing to $3.7 Billion in 2002, putting the CAGR at more than 85%. IDC surveys a broader market for what they call Internet commerce applications. According to IDC (4/99) this market will grow by 280% in 1999 to $1.7B. They further forecast growth to $13.1B by 2003, a CAGR of more than 66%. Clearly, broad market forecasts are sensitive to assumptions and differing definitions. The only real conclusion here is that the market for Fireclick’s products is already large and growing extremely fast.
Fireclick Benefits: •Improved “look-to-buy” conversions • Fewer abandoned shopping carts • More revenue per visitor • Longer user sessions • Increased site traffic • Improved page views
Market Sizing: Fireclick Focus & Target Customers
Fireclick’s initial target is the market of business-to-consumer (B2C) eCommerce sites that depend on revenue-generating traffic to survive. Included in this target are shopping sites that generate revenue through product sales and content-oriented sites that derive revenue through advertising or memberships. As of mid-1999 there were almost 3,000 non-adult-oriented Web sites with more than 40,000 unique visitors per month. (For the record, over 1,000 of the high-traffic sites tracked by PC Data were adult-oriented.) Of the non-adult sites, 1,700 had more than 100,000 unique visitors per month. There are at least another 3,000 sites in the world with less than 100,000 unique visitors per month, some of which are not tracked at all, and dozens of new sites come online every day. Even if we consider only the high-traffic, name brand, eCommerce sites tracked by PC Data Online in mid-1999, this is a large and fast-growing market. Because Fireclick is priced according to the value it provides to the customer as a monthly fee rather than traditional one-time software licensing fee [see Section VI: Business Model], these sites alone represent a revenue opportunity of $227 million per year, starting immediately. Even assuming conservative growth rates for new sites (40% CAGR) and new Web users
“…the e-commerce software market is finally exploding. It’s expected to top $580 million this year and hit $3.7 billion in 2002.” Business Week
November 1, 1999
coming online (25% CAGR) [Source: NUA Internet Surveys, 9/99], the total available market for Fireclick in just the largest, high-traffic sites is significant.
in worldwide e-commerce revenue generated last year,
Year 1999 2000 2001 2002
Available Market $227 M $425 M $750 M $1.3 B
was invested in e-commerce infrastructure.
Source: IDC, The Industry Standard
Fireclick’s focus and market size is established by determining the largest market segment with the most to gain from using Fireclick products: Internet Player ISP/NSP/RSP Web Hosting Example AOL, Earthlink, Mindspring, MCI Exodus, Digex, AboveNet How they make money? Sell bandwidth Real-estate, rent space for hardware, admin services, value-added services Sell hardware, software product license, CPM, Service revenue
Infrastructure (Hardware, Software tools, Web design, Advertising) Destination sites • Content • e-tailers • Portals • Community Internet Player ISP/NSP/RSP Web Hosting Infrastructure (Hardware, Software tools, Web design, Advertising) Destination sites • Content • e-tailers • Portals • Community
Sun, HP, Dell, Inktomi, Interwoven, DoubleClick, Agency.com, Vivid, US Web, Digital Deli TheStreet.com, Sportsline, Amazon, Yahoo, GoNetwork, AltaVista, TheGlobe.com, Women.com
Ads, subscriptions, product sales
Fireclick’s Value Questionable Differentiator, Better QoS More hardware, complement/leverage Fireclick, increased traffic, more “real” impressions/click-through Conversion rates Minimize abandoned shopping carts More pages/visit Longer stays More Ads Increased Revenue
“If response times Network Bandwidthat a particular Web site did not meet More hits, increased bandwidth, admin/real-estate Internet users' Displace & compete for dollars; expectations, Phantom impressions 37% of those users visited a substitute Reliability, Uptime guarantee site to meet Web their needs.
Return on Investment
The Jupiter findings at right and the Zona Research findings cited earlier (53% of online shoppers during the 1998 holiday season became so frustrated with their initial site that
For 24%, the decision to use an alternative Web site was permanent.” Jupiter Communications Page viii June, 1999
they purchased the product elsewhere) demonstrate exactly the Fireclick value proposition and help quantify the ROI. Fireclick speeds web access for consumers, thus enabling e-commerce sites to generate more revenue. The Jupiter and Zona findings are amazingly consistent and imply that Fireclick could help e-commerce sites generate 40-50% more revenue without increasing site traffic at all. Simply by capturing the revenue opportunity of the shoppers already visiting the site, Fireclick would demonstrate an immediate and consistent return on the investment. Obviously, satisfied customers are more likely to return, so Fireclick also contributes to customer loyalty, return visits, and increased site traffic. Unlike shopping sites, content sites generate revenue through advertising, memberships, or both. In this case the Fireclick ROI is even easier to calculate. Sites relying on advertising generate more revenue every time an ad is displayed. That means that more pages and more visitors contribute directly to the bottom line. A Fireclick-enabled Web site will display 40 – 90% more pages in the same amount of time. Additionally, site visitors are likely to stay online longer due to lack of frustration and the enhanced browsing experience According to Jakob Nielsen, Ph.D., a Web usability guru, “slow download times are the bane of the Web. Human factors research has long held that response times need to be under one second for optimal usability and under ten seconds for keeping the user’s attention. Many web sites even violate the ten-second rule, impelling users to give up and leave.” Fireclick’s ROI is realized when Web site visitors stay longer, view more pages, and purchase more products.
“If the real life benefits are up to the demo, you appear to have a winning technology.” Robert A. Gunst
Former CEO the good guys!
Fireclick was founded in February, 1999 by three graduate students at Stanford University who saw that the Web was not living up to its potential. Xavier Casanova, Stephane Kasriel, and J.P. Crametz formed Fireclick (known then as eRacer) while doing research and studying full-time for advanced degrees at the Engineering school at Stanford. Working in their spare time they were able to produce a working prototype and raise the first round of funding from a group of angel investors and Atlas Ventures. In May they brought in Ram Srinivasan, a Silicon Valley veteran, as CEO to run the company. Ram quickly recruited the other members of the management team. In June 1999 the company became Fireclick and moved into its current headquarters at 289 S. San Antonio Rd., Los Altos, CA 94022. All original founders still hold key roles in the company.
Background & Founders
Xavier Casanova, 24, led Fireclick through the first round of financing. Currently a graduate student in Electrical Engineering at Stanford, Xavier also holds a B.S. in Computer Science and Electrical Engineering from the prestigious Ecole Polytechnique, France, where he received the Carnot Fellowship for entrepreneurship to continue his studies in the US. Prior to attending Stanford, he was a research assistant with Prof. Khuri-Yakub in the Electrical Engineering department at Stanford University. Xavier currently serves as the product manager for Fireclick where he is responsible for overall product direction. Stephane Kasriel, 24, earned his Master of Science in Computer Science at Stanford University, where he received the Distinction in Research. His research at Stanford focused on analysis and monitoring of distributed systems. Before moving to California, he graduated from the prestigious Ecole Polytechnique in France where he was awarded two fellowships: the Fondation de l'X fellowship, which attributes its grants based on outstanding research and the Carnot fellowship which recognizes entrepreneurship. At Polytechnique, Stephane also received an award for research he conducted at Stanford during the spring and summer of 1997. He currently functions as the product architect and lead developer at Fireclick. Dr. Jean-Pascal Crametz, 31, earned his Ph.D. in Operations Research at Stanford University. His research over the past five years has focused on the pricing of bandwidth services for telecommunications and network applications. While at Stanford J.P. was involved as a seed investor and algorithms expert in Izami, Inc., a DSP company. In 1998, in parallel with his research, J.P. was involved in Tomoni, Inc., a consulting business providing professional services to major telecomm players. Before moving to California, J.P. attended the prestigious Ecole Polytechnique, France, and the Ecole Desmines where he ranked first in a class of 200.
“Any wait longer than 8 seconds for a page download frustrates users and seriously jeopardizes the chance of a transaction.” Zona Research 7/99
Ram Srinivasan, 43, President & CEO, adds 20 years of management experience in engineering and marketing functions at technology companies including Sun Microsystems, H-P, Informix, and Red Brick Systems. Ram was most recently VP Marketing for RightPoint Software (acquired by E.piphany). Prior to RightPoint, Ram led Red Brick Systems through the company launch, several product launches and an IPO as the Director of Product Marketing. His sales and engineering positions at Informix, Sun, and HP provide a broad set of experiences from which to draw upon. Ram holds a BS in Chemical Engineering, a postgraduate Diploma in Management and an M.S in Chemical Engineering & Real-Time Computing from the University of California at Santa Barbara. Dennis Tabuena, 41, VP Development, brings over 18 years of experience in all aspects of development at software companies such as Metaphor, General Magic, & Digital
Fabrics, and was most recently VP Product Development for Austin-Hayne. Dennis holds a B.S. in Mathematics from the University of California Berkeley. Steve O’Brien, 36, VP Marketing and Business Development was most recently VP Marketing for Personic Software where he re-branded and launched the company and its core products. Prior to Personic Steve was VP Marketing at Continuus Software and Director of Product Marketing at Red Brick Systems. Steve spent the first ten years of his career in various product management and market development roles at Sun Microsystems and Digital Equipment Corp. He holds a B.S. in Operations Research & Industrial Engineering from Cornell University and an MBA from the Johnson Graduate School of Management at Cornell.
Board of Directors and Advisors
Xavier Casanova, Founder, Fireclick, Chairman. Stephane Kasriel, Founder, Fireclick, Director. Ram Srinivasan, President & CEO, Fireclick, Director. Eric Archambeau, General Partner, Atlas Ventures, Director. Eric Archambeau represents Atlas Venture in the Silicon Valley. Previously, Eric was the President and CEO of RightPoint, a leading Enterprise Marketing Software company and Atlas Venture portfolio company. Eric is a graduate of Ecole Centrale in Lyon, France. He holds a Master of Science in electrical engineering from the University of California, Berkeley, an electrical engineering degree from Stanford University, a PhD in Computer Science from Grenoble University and an MBA from Santa Clara University. Eric is a founding director of eGroups, Trading Dynamics (acquired by Ariba), and SkillsVillage.com. He also serves on the boards of T.sqware, Impresse and Frequency Technology. Steve Harari, Harari & Assoc., Director. Mr. Harari previously served as President of EIT and has worked with other Internet-related companies including CommerceNet, Internet Profiles (I/PRO), Intuit InsureMarket, and ValiCert. He also serves on the board of directors of Searchbutton.com. Steven Aldrich, Board Advisor, is a co-founder and President of Intuit Insurance Services (IIS), the Alexandria, Virginia, based subsidiary of Intuit, Inc. QuickenInsurance (www.quickeninsurance.com), part of the leading Quicken.com financial Website, is the market leader in on-line insurance, providing educational information, decision tools, and transaction capability to millions of visitors since its launch in the summer of 1996. Steven has extensive experience in the financial services and technology sector. He was placed on Institutional Investor’s 1997 list of the top 20 most influential people in financial services on the Internet today. He has worked in the investment banking division of Alex. Brown & Sons and for McKinsey & Company. He was recognized as an Arjay Miller Scholar while completing his MBA at the Stanford Graduate School of Business, and he is a Phi Beta Kappa graduate of the University of North Carolina. Mark Goldstein, Internet Executive, Softbank, Inc., Board Advisor. Mark is currently an Entrepreneur in Residence (EIR) with both SOFTBANK Venture Capital and SOFTBANK Capital Partners. Until recently, he was a vice president at Inktomi Corporation, which acquired the Impulse! Buy Network in April 1999. The Impulse! Buy Network specialized in e-commerce and was considered one of the leaders in online merchandising systems for Internet portals. Mark was also founder and CEO of Reality Online, a leading provider of financial and technology services for individual investors, which was sold to Reuters in 1994. In addition, he founded NetAngels, an early developer of Internet profiling and targeting tools, which merged with Firefly Networks and was later acquired by Microsoft in 1998. Mark serves on the Board of Directors or Advisors of FreeShop.com, salesforce.com, Rentals.com and NetGift Registry. He is former Chairman of the Interactive Services Association, the Internet Industry Trade Association, and the trade group Merch.net, both now a part of The Direct Marketing Association. Mark was the initial recipient of the Information Industry Association's Entrepreneur of the Year award in 1992. He began his career at Apple Computer, as product manager in charge of online banking and online services. He graduated from the University of Pennsylvania where he attended the Wharton School of Business.
“E-commerce companies, while constantly adjusting to operating at lightning speeds to keep pace with Internet technologies, must reconcile themselves to the fact that their customers are living in what amounts to slow motion on the other end of the line. As a result, these businesses have to make difficult decisions about how to attract and keep customers within the limited bandwidth available.”
The eCommerce Report June, 1999
Fireclick has developed server-based software to accelerate web access for end users. From the user’s point of view, connections to the Internet are not optimized and are in fact fairly inefficient. While the end user is reading a web page, the modem connection sits idle. When a link is clicked, the browser takes anywhere from 4 to 45 seconds to display a page, while the user sits waiting idly for the page elements to download. (See figure below)
B A N D W ID T H
ID L E
ID L E
ID L E
ID L E
On the server side, web servers are sized to accommodate the projected peaks of traffic. However, since peaks typically occur only 5-10% of the time, the full capacity of the network is not used most of the time. If there were a way to leverage unused network resources that have already been paid for to alleviate frustration of the end user, e-commerce companies would clearly benefit. Fireclick’s Blueflame does just that – reduces latency by leveraging existing resources.
B lu e fla m e
T ra n s p a re n t s o ftw a re c o m p o n e n t
B lu e fla m e
IN T E R N E T
W EB SERVER
Once installed near the web server, Blueflame performs real-time analysis of site usage patterns. By analyzing the page traversal patterns, Blueflame is able to prime the end user component with information about likely pages or elements that will be requested later. For example, it is very likely that a user reading e-mail will browse their first email, then the second on the list, and the third, etc… While the user reads the first message, Blueflame is priming the second, and so on. A consumer shopping for a book may call up a list of the top ten bestsellers, and then want more detailed information on the top 3 authors. Blueflame primes the user’s browser cache with page elements that will be required to service these upcoming requests, thereby delivering a much faster response to the actual request. On a shopping site, the GIF image of an item can be pre-downloaded into the consumer’s browser while she is reading the item description, thus eliminating the painful wait time typically associated with large images. Blueflame sends a “hint list” to the end user component whenever a web user browses a web page. The hints are actually a list of elements (HTML, GIF, JPG, etc…) that are
Fireclick Confidential Page xii
likely to be requested by the user when she has finished reading the current page. The server prioritizes hints in order of “most likely” elements to be requested. The end-user component then requests those elements from the server and stores the elements in the browser cache.
Blueflame is an end-to-end content delivery system. Blueflame exploits site-specific traffic patterns and the inherent user-view time of each Web page to deliver content of future pages to the browser cache, thus substantially reducing subsequent wait times. As with all end-to-end systems, Blueflame consists of both server and client software. The client component is a small Java applet that is completely transparent to the enduser. Server software continuously analyzes traffic patterns and maintains a database of per-page “hints.” The hints of a page represent the most frequently requested content after that page. The server software then transmits these hints along with each page for use by client software in the user’s browser. Client software serves as a “pump” that receives hints and primes the browser’s cache with future content. Server. Blueflame’s server-side software consists of full-time TCP/IP services hosted at the origin site including: • • • • a prediction engine that continuously analyzes the traffic patterns and maintains a prediction database based on popularity metrics of most likely paths a data collection component that continuously observes and records traffic patterns a content transformation engine that dynamically injects hints into a site’s pages a layer-7 flow switch, implemented in software, supporting the HTTP 1.1 and 1.0 protocols, forwarding user requests to the data collection and transformation engines and well as the origin server(s) Consumer Benefits: •Enhanced QoS experience • Efficient use of time • Minimized frustration
eCommerce Benefits: •More pages per visit •More frequent visits •Increased conversion rates •Decreased abandoned carts •Directed merchandizing
Blueflame Service. The development team has proven architectural feasibility of deploying the Blueflame functionality as a subscription service. Once launched this service will allow customers to take advantage of Blueflame acceleration without the need to provision and maintain dedicated hardware and software systems. Fireclick will have the ability to turn the service on an off remotely with no software or hardware installation required. Longer Term Futures. There are many opportunities for expanding and enhancing Fireclick products and services.
•Data acquisition can take place anywhere along the path of content, providing a possible solution for ISPs and web hosting companies to take advantage of Blueflame capabilities. •Popularity metrics can be gathered and utilized with varying levels of granularity for more personalized acceleration services (e.g., providing an “express lane” for the best customers or most profitable products). •Content transformation can be used for a variety of purposes, i.e., detecting network speed, comparisons based on content, geographic distribution, etc.
Fireclick employs “best practices” in the development of its software. Product requirements are determined through a rigorous MRD (market requirements document) process driven by real-world customer/prospect demands. Engineers and product marketing jointly explore the design space for each candidate feature. A list of alternative implementations is developed, and an approach is selected and documented. The release team closely tracks implementation progress for each feature to mitigate technical risks. To date, nearly all of the implementation is done in the Java and other high-level or special purpose scripting languages. We chose to implement the core of the product in 100% Java since that provides us with the greatest flexibility in platform selection. However, our design has isolated the performance-sensitive areas of the code allowing us to reimplement those functions in a faster, more conventional language, such as C or C++.
Fireclick maintains a state-of-the-art lab, equipped with high-performance network processors for testing its products under heavy client loads. Our partnerships (Cisco, Sun, Alteon, Foundry) provide us with access to the latest equipment from the most popular platform and network processor vendors. This allows us to test Blueflame in near “real world” deployments. The software underlying each release of the Blueflame server system undergoes thousands of hours of testing under all supported platforms. Fireclick also tests against up-to-date and legacy versions of the most popular browsers and their derivatives including Internet Explorer, AOL, Compuserve, and Netscape.
According to NetSmart, 85% of Internet users are frustrated by slow web site download times.
Although no companies today currently offer similar functionality to the Fireclick Blueflame™ accelerated content distribution system, the general problem of “speeding up the Web” is being attacked by dozens of companies through widely disparate approaches. Fireclick most closely aligns with the companies doing Internet caching and content distribution. Though we consider all of these players to be excellent potential partners, we acknowledge that in some cases we will be selling to the same prospective customers and may compete for the same budget dollars. This section will be used to explain where Fireclick fits relative to the established players in these markets.
On October 29th Akamai Technologies, Inc. completed an initial public offering of 9 million shares of common stock at $26/share. By the end of the day AKAM closed at over $145 giving Akamai a market cap of more than $13 Billion. Just days before Sandpiper Networks was acquired by Digital Island for more than $600M in an all-stock transaction. By the end of that day, Digital Island’s stock had appreciated almost 40%, valuing the Sandpiper transaction at more than $1 Billion. Akamai and Sandpiper are the leading players in the Content Distribution marketplace. Content distribution service providers have built worldwide networks of servers (thousands of servers) on which they replicate content for e-commerce sites. When a consumer tries to access this content they are automatically routed to the server that can serve the request fastest, often simply the closest server. So if a user in Singapore types www.yahoo.com into their browser they will likely get the dynamic content directly from the Yahoo! server in Santa Clara, but the Yahoo! logo and other large static content will come from an Akamai server located locally in Singapore. In this way, Yahoo! Is able to accommodate more users without significant increases in the traffic or bandwidth required at the Santa Clara Web server farm and the user in Singapore receives somewhat better response times. Content distribution providers sell to e-commerce sites, much as Fireclick, but their value proposition focuses much more heavily on the cost savings for the Web host than on the benefit for users. While commodity bandwidth is available to an e-commerce site for as little as $500 per MB/s, content distributors typically charge $2,000 or more. Ecommerce sites are willing to pay this premium in order to achieve the protection from flash traffic, and decrease in total bandwidth required at the host site. Fireclick competes with content distributors insofar as we are all caching Web content closer to the end -user, we are all selling to e-commerce sites, and we all provide benefits to the consumer. But while Fireclick’s entire focus is on improving the consumer experience, and the improvement in eliminating the delay over the “last mile” is significant (up to 90% reduction in end-user wait times), content distributors deliver only a slightly enhanced end-user benefit almost as a side-effect of their solution. Their focus is really on improving the network infrastructure for the host sites and saving resources. Fireclick’s focus is on making more money through a better consumer experience, more page views, more traffic, and more revenue.
“These highactivity, highcontent sites are finding it harder and harder to deliver their content with high quality and acceptable performance to users around the world.” Caching.com November, 1999
The Internet caching market has been expanding rapidly in the past few years. As stated earlier, Gartner Group has estimated this market size at $92 million in 1999, growing to over $1Billion in 2003 (80+% CAGR). The size and growth of this market has attracted a number of players, including Inktomi, Network Appliance, Cisco, Novell, and Cacheflow. Internet caches are devices installed at various points-of-presence (POPs), such as ISPs and web hosting sites, that store frequently accessed web pages. For example, if an ISP in Boston deployed an Internet caching device and thousands of users attempt to access the ESPN site on Sunday evening to get the details of the Patriots game, not all those requests need to be routed to ESPN’s servers in Seattle. Rather, one request can be
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served from Seattle and the page cached in Boston. All other users requesting the same page are served from the cache device in Boston, thus saving tremendous amounts of bandwidth for the ISP, who would otherwise need to process all those cross-country requests separately, paying for the bandwidth utilized each time. Like Fireclick and like content distribution schemes, cache devices bring content closer to the end users. But like content distributors, the primary reason for deploying a cache is the bandwidth savings for the ISP. The end-user benefit is miniscule because 90+% of the time spent waiting for the requested page occurs in the “last mile,” the connection from the ISP to the user’s desktop. Caches do nothing to address the “last mile” problem, which is Fireclick’s focus. Fireclick caches Web content as close to the consumer as possible, in the browser cache. Caching vendors typically sell a system (hardware and specialized software, sometimes packaged as an appliance) for a one-time licensing fee and charge a moderate percentage of that license for ongoing maintenance, much like traditional enterprise software. Fireclick’ first products will not compete directly with caching vendors because we are selling to a different audience with a different value proposition. Fireclick sells to ecommerce sites while caching vendors typically sell to ISPs or even enterprises. But because we are all caching content from the Web, we can be considered part of the same overall market space.
Fireclick Target Market B-to-C sites - Speed Web access for consumers - Incremental page views, traffic, revenue for e-commerce
Akamai, Digital Island B-to-C sites - Speed Web access for consumers - Conserve host resources (bw/server) - Flash traffic protection Network infrastructure Distribute static content; cache at numerous POPs; not including ‘last mile’ Large, static content; Streaming media; Content sites Network optimizations; Private server network; Content distribution algorithms
Cisco, Net Appliance ISPs - Save bandwidth - Quality of service
Cacheflow Enterprises - Save bandwidth - Quality of service
Focus – what part of the problem? Basic Technology
“Last mile” Click stream analysis; Cache at consumer’s browser
Network infrastructure Cache frequently accessed pages at the POP/ISP
Enterprise Inside firewall Cache frequently accessed pages for the enterprise
Uniquely well-suited for Intellectual property
Dynamic pages; Interactive sites; Shopping, content Online Prediction; Transparent client; Server-client communications
Frequently accessed static content
Enterprise or campus-wide usage
Caching software; refresh algorithms; Appliances
Content refresh algorithms
Fireclick drives e-commerce success by providing Internet server software that speeds web access for consumers. What does this really mean? E-commerce success: Fireclick’s software products make the user experience more rewarding and therefore drive more traffic to destination sites. By increasing the propensity to view more pages, absorb more ads, and purchase more products, Fireclick drives e-commerce revenue. Internet server software: Server based, no end-user action required. Fireclick’s Blueflame™ server software is installed near the web host server and automatically downloads a tiny 100% Java applet with no user intervention required. Users need not even be aware that the site they are viewing is Fireclick enabled, except that the browsing experience is greatly enriched. Speeds web access for consumers: Because user page requests are pre-loaded into the browser cache, the user perceives download times of near zero. Pages requested are immediately viewable. By eliminating the frustration of the “world wide wait,” more productive user sessions result and e-commerce sites enjoy longer sessions, more traffic, and increased customer loyalty.
“Slow download times are the bane of the Web. Many Web sites even violate the ten-second rule, impelling users to give up and leave.” -Jakob Nielsen, Ph.D. Useit.com
Fireclick’s proposed pricing model meets four main goals: 1. 2. 3. 4. appeal to e-commerce sites on their own terms and thus be easy to do business with, generate fees proportional to the value delivered and share in customer success, become part of an operating budget, rather than a capital expense, and generate an ongoing revenue & profit annuity for Fireclick.
In order to accommodate these goals simultaneously, Fireclick Blueflame will be priced as a service instead of a traditional enterprise software product. Rather than a prohibitive one-time licensing fee with a difficult-to-justify ROI, Fireclick products are priced in terms the e-commerce site operators can easily relate to, namely Web advertising. Fireclick’s pricing will be a monthly fee based on site traffic. Fireclick’s price will fall into five different bands based on the number of unique visitors per month. The bands, and example sites that fall into this category, are as follows: # Sites This Size 3,000+ 1,500 950 350 250 Average Annual Fireclick Fee $13,800 $34,200 $63,000 $90,000 $168,000
Unique Visitors/Month Fewer than 100K 101 to 200K 201 to 500K 501K to 1 million Over 1million
Examples automallusa, godiva, movieweb, sjmercury, stockmaster, jobtrak autobytel, movies.com, thestandard, eddiebauer, nfl.com, jobbankusa borders, jcrew, cooking.com, hotjobs, newsweek, foxsports eToys, garden.com, walmart, wired, moviefone, etrade, headhunter.net Amazon, drugstore.com, onsale, disney, mtv, msnbc, drkoop, monster
By pricing on a CPM (cost per thousand) metric based on site traffic, Fireclick shares in customer success and generates more revenue as the site realizes the Fireclick benefits and generates more traffic. By pricing as a monthly fee rather than one-time charge, Fireclick generates an ongoing revenue stream while eliminating large start-up costs as a potential objection. And by pricing relative to site traffic, Fireclick is able to offer its product/service to sites of all sizes while maintaining a fair and consistent pricing model.
Fireclick’s initial distribution channel will be through a direct sales force. By targeting e-commerce sites with more than 200K unique visitors per month (see table above), Fireclick marketing efforts will be able to generate high-quality leads that convert predictably to sizable sales. [See Appendix B: Operating Plan for the sales force staffing plan.] Beyond the first year of direct sales activity, there are multiple opportunities for alternate channels of distribution for Fireclick products. Below are some examples of the types of partnerships Fireclick will pursue in order to expand our distribution channels beyond the direct sales force. Web Hosting: Companies like Exodus and Verio compete head-to-head every day for new e-commerce accounts. Fireclick will approach these companies with an opportunity to differentiate themselves by offering Fireclick acceleration to their customers. By placing multiple Fireclick Blueflame servers on-site at a web hosting facility, dozens or hundreds of web sites could be accelerated. Hosting companies can charge a premium for “accelerated hosting” and Fireclick can share the monthly fee, thus turning a competitive differentiator into a revenue opportunity as well. Web Design & Services: Many e-commerce enterprises outsource the development and maintenance of their Web sites to service provides like Scient, eForce, or USWeb/CKS. These Web service providers are an ideal distribution channel for Fireclick. By ‘designing-in’ the Fireclick acceleration these service providers can create a competitive advantage for their customers and for themselves as well. Caching: Internet caching players are continually looking for features to add to their products, or partnership integrations to give them a competitive advantage. Companies like Inktomi, Network Appliance, and Cacheflow make excellent potential distribution partners (or OEMs) for Fireclick technology. Content Delivery: Though a fairly new space, content delivery is gaining popularity among e-commerce sites. Many rely on vendors like Akamai and Digital Island (Sandpiper) to replicate and distribute their static content around the world and optimize access for users. Fireclick’s technology is highly complementary and actually extends the distribution of content from multiple POPs around the world directly to the enduser’s browser. A distribution or technology-sharing partnership with an established content distribution company is another potential channel for Fireclick. Networking: “Companies like Alteon WebSystems, Foundry Networks, ArrowPoint Communications, Cisco, and others have paved the way in the market to make the Web run smoother with new hardware and software technology,” said CNET News in November, 1999. There is opportunity for Fireclick to approach these companies with a proposal for integrating Fireclick technology at a very high level in the network protocol (e.g., Level 7 switch) to provide their switching and load balancing products with new features and competitive advantages.
“The only meaningful way to differentiate a site, and reliably bring users back to it, is to build a great customer experience.”
ZD Internet, Inc. White Paper One 1999
“The hallmarks of any successful e-commerce Web site are crisp response times, reliable service and consistency for the user experience.” Network World November, 1999
Accomplishments to Date
Fireclick has used financing proceeds to invest in three main areas: Market Validation: Both a top-down and bottom-up evaluation show a significant market opportunity for Fireclick products [see Section I: Market Opportunity]. We have segmented the market and targeted the most profitable prospective customers. Product Validation: Early customer enthusiasm shows that the product works in realworld environments and provides the expected benefits. We have taken the product from concept/prototype to Beta-level release. Intellectual Capital Accrual: To the original team we have added world-class engineering and management talent. We have filed a patent for our core technology. We have added features and functionality to the original product concept to cope with real-world challenges and new opportunities. We have achieved the benefits of fieldtesting and customer/prospect feedback. At this point we have achieved enough significant milestones to be convinced that the technology works and is valuable, the market for it is large and growing, and we have significant advantages in terms of time-to-market and barriers to entry.
“Frustrated online shoppers cost ecommerce $4.35 Billion annually.” Zona Research July, 1999
Fireclick requires financing at this point to reach the next stage of growth. The next round of financing will be used for: Development: We will finish development of the core product and prepare for general availability of a commercially viable software release in Q1 CY00. We will continue to evolve the product architecture and release a second-generation offering before the end of CY00. We will build an infrastructure capable of providing world-class service & support for all customers. And we will continue to build a high quality development team in order to produce more intellectual capital and build higher barriers to entry for potential competitors. Marketing: We will formally launch the company and our core product in Q1 FY00. Beyond the initial launch we will invest in awareness marketing programs designed to keep Fireclick at the forefront of a fast-moving market. In addition, we will invest in lead-generating marketing programs to support the direct sales force in achieving corporate revenue goals. Sales: We will build a direct sales team capable of capturing a large number of customers and producing rapid revenue growth ($0 to $600k in the first three quarters) while upholding our company value of “service to the customer.” In addition to meeting revenue objectives, the sales team’s goal will be to produce predictable results, generating many new accounts rather than a few large deals. The goal for CY00 will be to have many happy, referenceable customers to help us win even more new business in the future. Detailed budgets and headcount plans are available in each of these key areas.
Appendix A – Product Architecture
HTTP Responses HTTP Requests
Appendix B – Financial Proforma
Financial Highlights (Fiscal year ends Dec 31)
FY’00E Revenue Operating Expenses Operating Profit/Loss Headcount at End of Year $633,150 $5,322,651 $(4,702,164) 35
Operating Plan FY 2000
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