I. GENERAL INFORMATION
D2. Legal Name, Principal Address and Other Information
on Registry Operator
Affinity Internet, Inc. (hereinafter “Affinity”)
101 Continental Boulevard, 3rd Floor
El Segundo, CA
90245
United States of America
Telephone:
310-524-3000
Facsimile:
310-388-1335
TLDapplication@affinity.com
D3. Other
Business Locations.
16607 South Vermont Avenue
Gardena, CA 90247
Telephone: 310-630-2878
Facsimile: 310-354-1592
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Skynetweb1
3500 Boston Street, Suite 231 Baltimore, MD 21224 County of Baltimore Telephone:
410-563-6384 Facsimile: 410-563-5457
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Sitehosting[1] 13200 Crossroads Parkway North, Suite 360 City of Industry, CA 91746 Los Angeles County Telephone:
562-699-3195 Facsimile: 562-699-1891
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Prowebsite1 8432 Veterans Highway, Suite C Millersville, MD
21108 County of Baltimore Telephone:
410-729-1005 Facsimile:
410-729-1001 |
D4.
Jurisdiction of Organization
Delaware
Corporation
D5. URL of
Registry Operator's Principal WWW site.
www.affinity.com
D6. Dun
& Bradstreet D‑U‑N‑S Number (if any) of registry
operator.
124241170
D7. Number
of employees.
Approximately 150
D8. Registry operator's
total revenue (in US dollars) in the last‑ended fiscal year.
Affinity operated for only two months in fiscal
year 1999, which was the year of its start-up.
Revenues for that year were $300,493. Revenues through July 2000 were $4,544,806. A set of
un-audited financials through July 2000 is set forth in Item D13.4.3.
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D9.
Directors, officers, relevant managers and 5% owners.
(i)
Directors
Harry Hopper,
Columbia Capital LLC, director
John McIntyre,
Affinity Internet, Inc., chairman
Scott Perper,
First Union Capital Partners Inc., director
John Van
Hooser, J.P. Morgan Capital Corporation, director
John Watkins,
J.P. Morgan Capital Corporation, director
John Zdanowski,
Affinity Internet, Inc., director
(ii)
Officers
John
McIntyre, Chief Executive Officer
John
Zdanowski, Chief Operating Officer
Von
Cameron, Vice President, Corporate Development
Robert
Murray, Vice President, General Counsel
Christopher
Woodward, Controller
(iii)
Relevant Managers
Elaine Matthews, Director, Customer and Technical
Support
Eric Lissoy, Director Systems
(iv)
5% Owners of Common Stock
J.P. Morgan Investment Corporation
Sixty Wall Street SBIC Fund, L.P. (Managed by J.P.
Morgan)
First Union Capital Partners, Inc.
Columbia eBiz Partners, LLC
D10.
Contacts for This Application.
Philip J. Berent
181 Hudson Street, Suite 7c
New York, NY 10013
Tel. 212 274 8655
phil@berentcapital.com
D11.
Sub-Contractors Information (See Item d15.3)
Information about our Sub-contractor, 7Ways.com,
who will manage the technical aspects of the Registry Operation and who were
responsible for compiling Section III, the Technical Capabilities and Plan, of
this document may be found both in Section III and in the attachment 7Ways
Corporate Information.
II.
BUSINESS CAPABILITIES AND PLAN
D13.1.1. Company information.
Legal and Organizational
Overview
Affinity was found in 1999 with approximately $60
million in venture capital funding from the investors (and others) listed in
Item D.9. Affinity’s original name was
eBiz.net. eBiz.net Inc. changed its name to Affinity Internet, Inc. in May
2000.
Affinity was formed for the purpose of establishing
a dominant web-hosting platform for small-and medium-size businesses. Soon after organization and initial
capitalization, Affinity acquired the three operating companies that form the
core of its present revenue stream:
Affinity Web Hosting, Inc.; ProWebSite; and Dynatek Info World, Inc.
(d/b/a Sitehosting.net). Through its
operating companies, Affinity has been operating since 1996.
Affinity and its related companies employ
approximately 150 persons.
Key Infrastructure and Supply Partners
Affinity has developed supply-based partnerships with
selected infrastructure vendors and service-providers believing that long-term
relationships provide the most efficient supply to Affinity and allow us to
provide better service to our customers. The following firms are infrastructure
members of Affinity:
·
Cisco Systems is the worldwide leader in networking for the Internet.
Affinity uses Cisco equipment in its network.
·
Cobalt Networks allows Affinity to offer powerful, yet simple, dedicated
Web and application hosting solutions. Affinity is a Cobalt TrueBlue partner.
·
eGain Communications Corp. is a leading provider of integrated,
multi-channel customer communications
solutions. The eGain solution allows Affinity to deliver world class customer
care.
·
EMC Corporation is the world's leading provider of enterprise storage
systems, software and services. EMC Enterprise Storage (intelligent disk
arrays, software products and services) is the information storage and
management solution that Affinity employs to offer world class Web and
application hosting.
·
Intel, the world's largest chip maker, is also a leading manufacturer of
computer, networking and communications products. Affinity is a participant in
the Intel ISP program.
·
Affinity uses advanced Lucent technology to manage our Customer Care
Call Center.
·
Oracle Corporation is a leading provider of eCommerce and Web-based
business practices, with database, development tools and business applications
that help Affinity deliver state-of-the-art hosted business solutions.
·
Portal is the leading provider of customer management and billing
software for Internet and emerging, next-generation communications services.
Affinity uses Portal as our billing management solution.
·
Sprint is a global communications company and one of the world's largest
carriers of Internet traffic.
·
Affinity is a member of the Sun Developer Connection program.
In addition to its infrastructure partners, Affinity
has the following product and service relationships:
·
Allaire is the industry's leading Web platform vendor. The company's
products, including ColdFusion and HomeSite, are used by developers to build
and deploy interactive Web applications and sites. Affinity is an Allaire
Alliance Premium Partner.
·
Affinity supports CyberCash, the world's leading provider of secure
electronic payment solutions.
·
Mercantec® is the world's premiere provider of software and services for
the fastest growing segment of the eCommerce market - small and medium sized
businesses. Through strategic
partnerships, Mercantec delivers eCommerce solutions that are simple to use yet
very powerful.
·
Affinity is a Microsoft Certified Solution Provider.
·
Affinity uses RealNetworks technology to deliver media on the Internet.
·
Award-winning TrellixWeb software is now used by thousands of small
businesses, organizations and individuals all over the world to create and
publish great looking Web Sites.
·
NetMechanic's Web site enhancement and promotion tools are designed to
keep Web sites in top shape - and the help businesses ensure that their visitors
experiences on their sites are good ones.
Industry
Associations
Affinity is a Certified Charter Member of the Web
Host Guild (WHG). The WHG is dedicated to raising the standards of the Web
hosting industry. The WHG has established a set of objective, verifiable
criteria for certifying Web host companies. To become a WHG member, a host
company must pass a strenuous certification evaluation.
(1)
References
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Ms. Julie Robertson Silicon Valley Bank 38 Technology Drive, #150 Irvine, CA
92618 Telephone:
949-789-1928 |
Sun MicroSystems File 53640 Los Angeles, CA
90074 Telephone:
800-990-0269 Facsimile:
319-841-6284 |
|
EMC Corp. Dept. CH10648 Palatine, IL
60055 Telephone:
508-435-1000 Facsimile:
508-435-8334 |
Business Account Solutions 333 South Grand Avenue Los Angeles, CA
90071 Telephone:
213-613-5020 Facsimile: 213-613-5040 |
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D13.1.2.
Current Business Operations.
Affinity offers small and medium-sized businesses a full
suite of web-hosting and web-related infrastructure services, including
e-commerce solutions. Affinity has more
than 35,000 customer accounts.
D13.1.3. Company History.
Affinity, the parent company and managing entity
for the Affinity group of companies, was formed in 1999, and is a Delaware
corporation. Affinity seeks to become the preferred web hosting provider for
small- and medium-sized businesses.
Affinity’s strategy consists of the following key
elements:
·
Acquire hosting providers
to quickly establish major presence – build service offerings, deliver benefits of
scale, and create major financial leverage.
·
Build operations to deliver
world-class service – integrate “best-in-class” operations and create unique business model
to continuously reduce costs and improve service delivery.
·
Develop new services to
address customer needs – acquire, develop, or resell services that meet the needs of customers
as they continue migrating to more complex, higher value-added services.
·
Build brand recognition and
sales channels to drive significant organic growth – generate strong demand by
creating unique brand, effective sales channels and strategic partnerships.
Affinity
began its mission after raising $60 million in October 1999. Soon after its organization, it acquired
three companies, SkyNetWEB Ltd., ProWebSite Hosting Corporation and Dynatek
Info World, Inc. (dba SiteHosting.net) to enhance its capacity to offer a full
range of eBusiness hosting services.
·
SkyNetWEB is a leading
provider of completely customizable dedicated servers. It offers a full range of UNIX and Windows
NT ®-based dedicated server options including fully customizable eCommerce
solutions.
·
ProWebSite brings an
outstanding international focus and network of resellers to Affinity.
·
SiteHosting.net utilizes
a dedicated team of experienced and certified professional staff members who
are experts in the Microsoft Windows NT platform.
D13.1.4. Internet Related Experience.
Affinity’s services are
delivered on a flexible, low margin infrastructure that allows Afinity to
provide small- and medium-sized businesses cost-efficient and easy use of the
internet for marketing, sales, payments/billing, customer service, relationship
data mining, and production/delivery optimization. Affinity also has an active resale program, whereby small- and
medium-sized web-hosting and web design-related businesses can “private label”
their services to their customers using Affinities infrastructure.
Affinity offers the following services:
·
Web Hosting – Affinity
offers several hosting packages providing various levels of memory, data
transfer capacity, email accounts and site registration features. Affinity offers both “dedicated servers” to
its customers (where Affinity provides the hardware, software and server, but
where the customer manages the applications on the server), and “virtual
hosting,” where all server and system management responsibilities are provided
by Affinity. Affinity provides 24-hour
customer service to its clients, and through alliances with various partners.
In May 2000, Affinity acquired SkyNetWEB, Ltd.
SkyNetWEB provides dedicated servers to hundreds of business customers all over
the world. SkyNetWEB specializes in customized solutions to customer
requirements and server operations.
·
E-Commerce – Clients of Affinity can choose between a variety of
e-Commerce functionality packages, each priced on a monthly basis. Payment processing can be off-line, or
realtime/on-line. Product page capacity
can be customized to accommodate very small to very large offerings.
·
Affinity’s systems are supported by technology from Sun, Cisco, EMC,
Oracle and Intel. The company has developed a proprietary next generation
hosting architecture that utilizes the newest switching and storage technology,
database software and server hardware.
·
Web Design -- Affinity supports a variety of development tools for its
customers. Trelix Web software is
provided free to customers that purchase hosting services from Affinity.
Affinity is also a Registered Web Presence provider for Microsoft® FrontPage®
2000. Affinity also provides a variety of third-party and proprietary Web site
development resources within its enhanced Web site Control Center,
my.affinity.com. These services include automatic html and cgi script
generators, plus cgi and Java applet libraries. Affinity is an Allaire Alliance
Premier Hosting Partner, permitting its clients to run ColdFusion
technology.
- Business Strategies –
Affinity is presently developing plans for data-mining and similar
value-added services for its customers.
D13.1.5. Affinity’s Corporate Mission.
Affinity is dedicated to guiding small and medium
sized businesses seeking to build a successful eBusiness. Affinity pursues its objective by offering a
wide range of turn-key Internet solutions, including Web hosting, eCommerce,
dedicated servers, and advanced hosting services, to business customers in more
than 100 countries. Its professional staff is committed to setting new
standards in proactive customer support, and providing ongoing training and
education to our customers and sales channel partners.
Affinity guides business transformation by helping
customers make strategic decisions about how to best leverage the Internet. We
use a customer-centric approach to identify the services that meet the current
needs of the individual business. As customers' needs evolve, we move them
through various stages, from Domain Name registration, to a basic Web site, to
one that is eCommerce enabled, to advanced Web and business application
services.
The operation of the registry for the “.biz” and
related domains would be a natural and logical outgrowth of Affinity’s mission
to foster efficient internet usage to small- and medium-size businesses. We
believe that many of our existing customers will be very attracted to the
proposed new TLD and our existing presence as a major provider of hosting
solutions will assist in creating confidence in the new .biz TLD.
D13.1.6. Senior
Management Biographies.
John McIntyre, co-founder, chairman and chief
executive officer. Mr. McIntyre brings more than 8 years of management
experience in the Internet and telecommunications industries to Affinity. John
is an experienced marketing strategist, overseeing corporate development, sales
and marketing, operations and venture fund raising for the company. Prior to co-founding Affinity, John was a
critical part of the original management team for Interliant, Inc. During his
tenure, the company grew from a start-up to one generating more than $25
million in revenue in 12 months. While there, he led the design and launch of
more than 25 hosting services, created and implemented the company's marketing
strategy, and negotiated and managed several strategic partnerships. John earned his MBA from Harvard Business
School and received a BS in industrial engineering from Kansas State
University.
John Zdanowski, co-founder and chief operating
officer. Mr. Zdanowski has extensive technological experience and oversees all
operational aspects of the company, including network operations, customer
operations and integration, support systems and Web site development. Before co-founding Affinity, John was
director of mergers and acquisitions and a senior integration operating manager
for Interliant, Inc. There, he managed all aspects of the acquisition process
from target identification to acquisition integration. John earned his MBA from Harvard Business
School and holds a BS in electrical engineering from Clarkson University and an
MS in electrical and computer engineering from Syracuse University.
Von Cameron, vice president, corporate
development. Von Cameron has more than
10 years of management experience developing and delivering technology-based
solutions. Von oversees Affinity's corporate development, including global
business development, business development for products and marketing, sales
and distribution, mergers and acquisitions, and business planning. Prior to joining Affinity, Von was vice
president of business development for Oracle Business Online. There, he successfully
negotiated key worldwide revenue-generating partnerships with data center,
network, software and service providers. Von has held senior positions with
leading consulting firms, including Cambridge Research Associates and Booz
Allen & Hamilton. Von earned his
MBA from Golden Gate University and received a BS in math from the United
States Air Force Academy.
Robert Murray, vice president, general counsel. Robert Murray is an experienced lawyer who
brings a broad understanding of the law and Internet services to Affinity. He
oversees all aspects of the company's legal needs. Prior to joining Affinity, Robert was vice president, general
counsel and secretary for Newstar Media Inc. (formerly Dove Entertainment), a
diversified entertainment company. There, he was responsible for all of the company's
legal activities, including negotiating and drafting contracts; acquisitions;
regulatory compliance; coordinating all litigation; supervising all outside
counsel; and supervising the business affairs department for all publishing,
television and film production and distribution matters. Robert is admitted to the California Bar. He
earned his JD from Stanford Law School, where he was a member of the Law
Review. He also holds a Ph.D. in inorganic/organometallic chemistry from MIT
and a BS in political science and chemistry, summa cum laude, from the
University of Washington.
D13.1.7.
Staff/employees.
Affinity
employs approximately 150 people at 5 major business sites in the United
States. Affinity maintains employment
and hiring policies designed to foster awareness and compliance with EEOC
and applicable local equal opportunity
laws. Affinity outsources many of its
human resource administration functions to Trinet, a leader in employee
administration services.
Affinity has training facilities and
requires all new employees to undergoe extensive training during an initiation
process. Further, Affinity requires
employee training for any significant new system initiative or product.
D13.1.8. Insurance.
Affinity maintains Commercial General Liability
coverage and Intellectual Property & Casualty Insurance with Federal
Insurance Co., and Chubb Custom Insurance Company, respectively.
Affinity’s Commercial General Liability covers up to
$1,000,000 for each property or casualty occurrence, including fire, and an
aggregate of $2,000,000 (including legal defence costs) or each
occurrence. Affinity’s Intellectual
Property & Casualty Insurance covers risks not covered by the general
liability insurance that are specific to internet, multi-media and similar
businesses. This policy covers
$2,000,000 for each occurrence, with an aggregate limit for each occurrence of
$2,000,000.
Affinity’s Board of Directors intends to review the
insurance coverage of Affinity periodically and increase its coverage in a
prudent and professional way as the business of Affinity expands.
D13.2 Business Plan for New
Registry Operations
The
role of the Registry Operator is to fulfill the policies mandated by the
Sponsoring Organization “.biz TLD
Regulatory and Advisory Council”
(henceforth in this document known as bizTRAC).
In
this section D13.2 we will first give a detailed explanation of our approach
and then, in the light of this summary specifically answer the Application form
questions D13.2.1 – D.13.2.15. Our explanation section will be divided into
sections numbered D13.2.0.1, D13.2.0.2, etc. Note that throughout this section
13.2 we will be referring to the “.biz” TLD. We are also applying under the
same Description of TLD Policies submitted with this application to manage any
or all of the following strings: “.firm”, “.ebiz”, “.real”, “.inc”, “.ebz “. It
should be understood that all of the policies to which we refer in this
document are intended to apply equally to any of these TLD strings.
D13.2.0.1 The TLD Management Group
We
are proposing a Restricted TLD, managed according to the policies detailed in
the “Description of TLD Policies”. The specified policies require that each
application be thoroughly scrutinized by individuals specifically employed to
perform this function. This means that successful management of the TLD will
involve three tasks
The
tasks are:
(2) Management of Computational Operations. These
operations include actually running the registry computers, updating the
registry database, automated interaction with registrars, management of Whois
and data escrow, and so on.
(3) Extensive manual assessment of submitted application
materials to determine whether to accept or deny a Registration Request using
the policies and procedures specified in the Description of TLD Policies.
(4) Marketing and non technical administration
In order to successfully
manage these functions we will establish a group which we will call the “TLD
Management Group” in this document and throughout the application materials. This section 13.2 and all sub sections will
therefore refer to the activities of the TLD Management Group unless otherwise
specified.
The first of the three
tasks given above, the Management of Computational Operations, will be
outsourced to 7Ways.com and carried out as described in section III of this
document. This group, as shown, in the organizational chart in section
D13.2.0.9 will report to the TLD Management Group through the Technical
Operations Officer.
The second function, the
assessment of applications, is a major role that is not carried out to the
extent that we propose by any existing registry operation. This will be
supervised by in-house staff but mainly carried out on an outsourcing basis by
major accounting, law and consulting firms as described below in section
D13.2.0.10
The development and
monitoring of polices under which this group operates will be carried out
by our Sponsoring Organization bizTRAC
as described in the Sponsoring Organization Proposal Submitted with this
document.
D13.2.0.2 Summary of The New TLD
If
our application is successful, our objective will be to establish the “.biz”
(to be pronounced “Dot Biz” ) top-level domain in the public mind as a
prestigious Internet designation that signifies that any company with a .biz
name extension is a “real business.” By
limiting the availability of the .biz designation, we will also very
significantly reduce the problem of
“cyberhoarders” for genuine Internet entrepreneurs and business people.
We
define cyberhoarders as those that buy up Internet names with no intention of
using them for any real business purpose. Rather, they hold the names hostage
until a genuine entrepreneur that wants the name for a legitimate business is
prepared to pay the ransom – which in most cases is many thousands of dollars.
Most “.com” names which are a single word, a recognizable phrase in common use,
or a three or four letter acronym, have been purchased. Less than 30% point to
an active web site. In other words the large majority have been abducted by
cyberhoarders.
This
is a big problem for new Internet entrepreneurs. On the Internet name is
everything. In many cases the entrepreneur has no choice but to settle for a
second-best name or to pay off a cyberhoarder. The .biz designation will give
the entrepreneur an alternative.
Each
application for a .biz designation will be assessed according to various
accounting and business criteria and only approved if the applicant is a real
business. The assessment criteria will probably including current revenues for
an operation that is up and running, or specifically assigned capital and a
credible business plan in the case of a start up.
We
will support the “.biz” designation with an aggressive print and street
billboard advertising campaign telling people that “.biz means you are in
BUSINESS!”
A
real business or an entrepreneur will pay $2,000 for an approved “.biz”
designation. The business can therefore get the domain name that they want (as
long as its not owned by another real business) and the added prestige of being
a “.biz” for a less than the price of paying off a cyberhoarder.
D13.2.0.3 Allocation of SLDs under the .biz designation (All practices of the
TLD Management Group will be in accordance with the policies described in “Description of TLD Policies” established and from time to time amended by
the Sponsoring Organization bizTRAC). These policies are briefly summarized in
this section.
Those wanting a “biz name will have to apply. The name will be awarded if and only if it is determined that the
applicant is a “real business.” The following is a summary of our policies as
specified in the Description of TLD Policies.
(a)
Each application will be assessed according to various simple accounting
and business criteria.
(b)
A start up operation is able to place a Reservation on a name for a
limited period of time. (see Description of TLD Policies section E16.3).
(c)
A .biz name application will only be approved if it does not infringe
trademarks of the country in which the registrant wishes to do business. If the
registrant specifies a “worldwide” market location the specified SLD must not
infringe on US or EU existing trademarks. (See Description of TLD Policies
section E5.0.3)
(d)
Each SLD applied for will be publicly posted on a Listing of Names
Applied For (see Description of TLD Policies section E5.0.4) and those
believing their Intellectual Property Rights would be infringed will be given
an opportunity to lodge protest.
(e)
Each business will only be able to purchase one “Business Name” .biz SLD
and a limited number of “Product Line”
SLDs. (See Description of TLD Policies section E5.0.5). Business Names and
Product Line Names will be referred to in this application as Primary Names.
The fee for the registration of a Primary Name will be $2,000.
(f)
We will not sell “Substantially Similar Names” to different companies.
If you buy dogfood.biz, we will not sell dogsfood.biz or even dogs-food.biz to
anyone else. Substantially Similar names can be names which differ from a
Primary Name by a hyphen or by a regular plural or possessive (in English or
another language) of one or more of the constituent words in the name (See
Description of TLD Policies section E5.0.5). Substantially Similar Names are
referred to as Active if the name points to the same web-site as the
registrants primary name, or inactive it the registrant registers the name to
prevent other registrants from registering or reserving the name. A
Substantially Similar name can not point to a different site than the Primary
Name.
(g)
.biz names must be renewed on an annual basis. Renewal will however be
granted only if there is evidence of significant business activity over the
previous year. (See Description of TLD Policies section E16.9, E16.10 and
E16.17.1).
(h)
In the start up phase we will use a one-time special practice of a Name
Lottery to award the .biz designation to competing entities. Those winning the
Name Lottery will not be granted the automatic right to an SLD. Rather winners
will be given the right to be first in line for the regular Application
process, and may or may not be awarded the SLD depending on the result of that
process. The Name Lottery will also be used as a de facto “sunrise period” to
give priority to those with Major Marks (defined in the Description of TLD
Policies document E11.12), existing trademarks or other prior name rights.
(i)
SLDs can only be transferred on a very limited basis if it is clear that
both the transferring business and the transferee are a real business at the
time of the transfer and that the transfer itself constitutes a transfer of
real business operations rather than just the transfer of the domain name. (See
Description of TLD Policies Sections
E16.11 and E16.15)
D13.2.0.4 The Market
According to
a report from Network Solutions, over 5 million .com, .org and .net names were
registered in the first quarter of 2000.
This was an increase of 446 percent over the first quarter of 1999, and
of 120 percent over the previous quarter.
Our target market segment, however, consists only of those domain name
registrations that are made with the intention of establishing a business
presence on the net. An article
released by CyberAtlas on May 17, 2000 cites a report by Access Market
International (AMI) Partners and Inc.
Magazine. The report estimated
600,000 small businesses were selling their products and services via
e-commerce sites in 1999, up from 400,000 small businesses in 1998. The value of such transactions rose from $14
billion (1998) to $25 billion (1999), representing an increase of 79 percent.
An article
released by CyberAtlas on May 31, 2000 cites a report by International Data
Corporation. The report estimates that
the number of small businesses selling on line will rise to 2.8 million by
2003. If we assume that small business
registrations continue to accelerate at the same rate for at least the next
five years, we can estimate that there will be at least 5 million new small
businesses selling online by the end of this period. We would also expect at
least double this number of start-up businesses to establish an Internet
presence over this period. In other words, probably less than half of the
businesses that set up a web page will ultimately successfully end up doing
business over the Internet.
We also
expect that many new larger businesses as well and existing businesses will buy .biz domains.
D13.2.0.5 Marketing the
.biz Top Level Domain
Objective
Our marketing objective is to sign up at least 10,000 .biz names within
the first year of operations after a start-up period of six months. We will
achieve this through a combination of brand development advertising strategic
partnerships, viral marketing and other promotional strategies.
Brand Development Advertising
We will develop brand awareness through an aggressive print and street
billboard advertising campaign telling people that “.biz means you are in
BUSINESS!”. We will also place Internet
banner advertising on selected business oriented web sites. We estimate that we
can effectively pursue this campaign for a cost of approximately $5,000,000 per
year.
Strategic Partnerships
We will aim to form strategic partnerships with several top registrars.
We have already had extensive discussions with Bulkregister.com and
Alldomains.com. We will also aim to form relationships with those sites that
are not actually registrars but direct business to registrars such as
DomainRegister.com or MyDomain.com or even a major ISP such as Earthlink. We
will offer to pay these partners $100 for each .biz registration that we obtain
by referral from their site This is considerably higher than the fees paid to
registrars for registering .com names. We therefore expect the cooperation of
these businesses and believe that our relationships with them will greatly
assist us in marketing and promoting the .biz TLD.
We will also aim to form a relationship, possibly by giving up some company
equity, with one of the major Internet portals or search engines with the aim
of promoting the .biz designation.
We will aim to form strategic partnerships with newspapers and magazines
and “web publications” which will offer first year free subscriptions or
services to .biz designation companies.
Among others we will target traditional business print publications such
as the Wall Street Journal, Business Week and Forbes Magazine.
Finally we will aim to form strategic partnerships with third party
providers such as accounting firms to provide services to .biz members. For example, we could aim to find an
accounting firm that would prepare tax returns for .biz companies for significantly
reduced costs, say for $150, for the first year. The accounting firm might be
prepared to do this in order to capture .biz customers. Generally second tier
or third tier accounting firms charge $300 - $500 for small business tax
accounts. We could possibly subsidize some of their costs from our sign up
charges. We could then modify our advertising campaign to publicize: “Guess
who’s getting their taxes done for $150? - .biz means you are in business!”
Viral Marketing
We will pay a $100 commission to any .biz business who is quoted as a
“referring business” by someone signing up for a new .biz name. If someone
successfully refers six other businesses we will refund their entire sign-up
cost.
Other Promotional Strategies
We will spend $200,000 on public relations in our first year of
operations. Our objective will be to maximize favorable coverage of the .biz
domain on all branches of the media. We will also aggressively promote the .biz
top-level domain to all of the search engines and browser companies with the
objective of persuading them to give high priority on their search lists to
.biz designation companies.
D13.2.0.6 Competition
As a result of this application process and subsequent open calls for
those wishing to manage new TLDs, it is possible that many new TLDs will be
created. Discussions by the ICANN Working Group C has estimated that ultimately
more than 100 new TLDs may be added.
“.flowers”, “.cars”, “.news” and
“.paper” are given, among others, as examples of the of new TLDs which might be
created. We expect ICANN this application process to result in the issue of
6-10 new TLDs this year and probably a similar number next year. We do not
believe that the issuance of new open TLD designations will solve the problem
of cyberhoarders for the following reasons:
(1)
There will be relatively few good names within each new designation and
these will once again be purchased by cybersquatters. (eg. flowers.flowers,
prettyflowers.flowers, roses.flowers and blooms.flowers will be purchased by
someone within a few minutes of the launch of a “.flowers” TLD.
(2)
If the new designations become popular, the fact that there are
relatively few good names in each one will tend to even further inflate the
prices of these names in the secondary market. “cars.cars” and “wines.wines”,
for example, will probably change hands for very high prices.
We also believe that there will be many businesses that will want a
general designation rather than one of the more product specific new TLDs. In
addition we expect that there will be a gradual introduction of new TLDs. It is
likely therefore that for the next couple of years at least there will be many
business areas that are not covered by the new designations.
For these reasons, we believe that “.biz” names restricted to those who
are actually in business, and sold at a price of $2,000 will be an attractive
alternative to many businesses.
No other existing top-level domain says “business” like .biz. No other
top-level domain is currently restricted to those actually doing business on
the Internet. If we manage to obtain the rights to manage the .biz TLD, we will
have created a service which is very valuable to the worldwide business
community and which we believe will create a very powerful market presence.
D13.2.0.7 Business Risks
The
greatest challenges that we will face, once we have obtained the rights to
manage the “.biz” TLD, is that of building the brand image of the “.biz” Top
Level Domain. We feel we can do this successfully because (a) “.biz” will
offers a low price alternative to paying off a cybersquatters. (b) It fills a
gap in the market (i.e. a top level domain for real businesses) (c) we will
pursue an aggressive advertising campaign (d) We will find web based strategic
partners that will assist us in marketing this idea.
As
stated above, this and subsequent application procedures will result in the
launch of a number of new top-level domains. This may reduce the pressure on
available names and therefore reduce the demand for our heavily promoted .biz
designation. We expect however that if the new designations show signs of
becoming popular, once again cybersquatters will jump in and quickly buy up the
most desirable properties.
D13.2.0.8
Management Team
The
Management team of the TLD Management Group currently consists of the three
principals these are Phil Berent, and Josh Kyle and Margot Lee.
Phil
Berent has
15 years experience in the financial industry as a quantitative analyst and
derivative specialist. Mr. Berent is the is the originator of the .biz idea to
create a restricted TLD available only to companies that are actively in
business. Prior to launching this project Mr. Berent was President of Berent
Capital, a money management firm managing a $600 million interest rate swap
portfolio for European institutional clients. Mr. Berent Established the firm,
raised start-up capital and marketed world wide to institutional investors. He
was also responsible for developing the firm’s investment philosophy and
technology. Mr. Berent also lectures
on derivatives. (Lecturing assignments have included the executive programs of
Carnegie Mellon and Lausanne University in Switzerland). Before founding Berent
Capital he worked for Merrill Lynch as a Director in the fixed income
derivative area. In this role he ran structuring and marketing teams in
Frankfurt and New York and played a large part in building that firms
derivative structuring and distribution capability in Europe and the Middle
East. During this employment he was a frequent contributor to the firm’s
internal publications and wrote papers covering various areas of financial
quantitative research. His final title was that of Director. Mr. Berent obtained an MBA from Columbia
University in 1986 with a concentration in Finance and Management Science.
Mr.
Berent will be Head of the TLD Management Group.
Josh Kyle has 13 years experience as
a senior executive in management of several companies including start-up
operations. He has special expertise in
business enterprises with international interests in the fields of insurance,
venture capital, manufacturing and real estate. Most recently, he was CEO of Film Bond International, a division
of Frontier Insurance marketing completion bonding to the film industry. In
this position he developed, staffed and oversaw marketing and operating
plans. Previously, he served as Vice
President for a venture capital firm, Credit China Corp “CCC” focused on Asian
investments. In this capacity he carried out, investment evaluation,
preparation of business plans, and oversaw the due diligence process for
numerous projects. Prior to this role Mr. Kyle was the co-founder of World
Impact Trading Corporation, a US-China manufacturing organization, where he
served as CEO for six years from 1989 to 1996.
During this period he succeeded in raising annual revenues from $60,000
to $6,000,000.
As
an undergraduate, Mr. Kyle attended Yale University, and TSOA New York
University for film. He obtained an MBA
from Columbia University in 1994 with a concentration in management. He has dual US-UK citizenship and speaks
Mandarin Chinese.
Mr.
Kyle will be head of Administrative operations for the TLD Management Group.
Margot
Lee brings
a diverse background in marketing, finance, media, and technology to the TLD Management Group. After working on the trading floors of JP
Morgan and Merrill Lynch, Margot created Vox Populi Communications, a financial
and business development consulting firm for new media companies. In 1998, she became a producer and Field
Host for MoneyHunt, a national Public
Television program spotlighting the country’s hottest entrepreneurs. As Senior Programming Producer at HBO’s
Volume.com, she oversees the creative operations and strategy for the
content/community portal for urban youth online.
A
graduate of the University of Virginia, Margot was an Echols Scholar and
received a BS degree in Finance with extensive coursework in French. She was
featured in Doing It For Ourselves:
Success Stories of African-American Women in Business (Berkeley Books,
1996) and in 1997 completed the Chartered Financial Analyst (CFA) series of
examinations.
She
currently serves on the Board of Directors of The Learning Project, a
non-profit organization dedicated to creating and managing outstanding public
schools in low-income areas, and is on the board of the John A. Reisenbach
Charter School, the very first charter school approved to operate in New York
State. She is also a competitive
triathlete and cyclist.
Ms.
Lee will be Head of Marketing for the TLD management group.
D13.2.0.9 Organizational Structure and Staffing
The chart below illustrates the structure that
would be required in the first year to achieve all of the development and
administrative objectives of the TLD Management Group described above for
systems, marketing, and business development. We also expect to retain two
contract programmers on a full time basis over the first year. Further hires
would probably be necessary after the end of one year.
Phil Berent, Head of TLD Management Group:
Develops and maintains the vision of the group.
Represents TLD Management Group on board of Sponsoring Organization bizTRAC.
Establishes relationships with strategic partners including domain name
registrars, ISPs, and third-party service providers. Develops relationships
with external providers to whom much of the work of assessing registration
applications will be outsourced. Works with Head of Operations to develop
policy proposals to the Sponsoring Organization bizTRAC for amendments to
procedures for assessing and processing applications for .biz registrations.
Recruits other members of team.
Josh Kyle, Head of Operations:
Works with Head of TLD Management Group to develop
procedures for assessing and processing applications for .biz registrations.
Oversees development of the “.biz” web site. Oversees development of
registrations team and customer Service function.
Margot Lee, Director of Marketing:
Works with each of our strategic partners to
develop a marketing approach. Works with advertising agencies contractors to
develop advertising campaign. Develops relationships and joint marketing
approaches with those that might provide services to .biz designation
businesses.
Group Finance Officer:
Directs financial affairs of TLD Management Group.
In charge of determining group’s financing requirements and managing the
group’s investments. Prepares financial analysis of operations for guidance of
management. Directs preparation of budgets and financial forecasts. Arranges
for audits of group’s accounts.
Manager of Human Resources and
Administration
Develops policies for Human Resources and
administrative issues. Reports directly to Head of TLD Management Group.
Chief Web-Site Programmer
Works under direction of Head of Operations to
develop .biz Registry web site and software necessary for the domain name
registration process.
Head of Registrations
Responsible for overseeing the application process
for every applicant for a .biz domain name registration. Will work extensively
with external service providers to ensure that registrations are quickly and
effectively processed.
Head of Customer Support
Responsible for implementing telephone and e-mail
customer support for TLD Management Group. Will work extensively with the Head
of Registrations.
Technical Operations Officer
D13.2.0.9.1
Building the Management Team
In
the first year we need to hire 15 people for the TLD Management Group. Affinity
Internet has effectively built a team of approximately 150 people since of
October of last year when the company was formed. We will use the same methods
and resources that we used for this effort to build the team of the TLD
Management Group. We employ one full time recruiter who will direct her efforts
to find and screen individuals able to fulfill the required functions. We have
also used good relationships with Corn Ferry International and Heidrich and
Struggles.
The
Corporation will be an equal opportunity employer, seeking qualified
individuals that represent the interests of its broad diversity of
customers. As an employer the
Corporation will honor all legal obligations arising from legislation and
regulation at the federal and state levels.
Compensation of Staff will be negotiated with each individual. All compensation packages will be designed
to comply with relevant state and federal legislation.
D13.2.0.10
Outsourcing of Computational Operations to 7Ways.com
The
establishment and installation of computer systems, the running of those
systems and all computational aspects of the running and maintenance of the
Registry will be run by 7ways.com
7Ways.com
will be paid a fee of a royalty of 5% of revenues in return for providing this
service. Contracts between us and 7ways are currently in preparation but have
not as yet been signed.
D13.2.0.11
Outsourcing of Application Processing and Trade Mark Searches
We
believe that each registration will take average of somewhere between 1 and 2
hours of work. This work will involve the analysis of the firm’s bank and other
financial statements, auditor’s reports, and trademark registration
certificates. In many cases it will involve interacting with the Applicant to
request further appropriate information such as invoices or receipts. The
individuals assigned to this task therefore need to possess intelligence,
initiative and good analytical and communication skills. We envisage that in the
first year of Registrations, (the first 18 months of overall operations) we
will register somewhere between 10,000 and 50,000 SLDs. This will therefore require somewhere
between 5 and 52 people working full time to process applications. As we grow,
we will certainly aim to do more and more of this work in house. Initially,
however, we will outsource much of this work to major accounting and legal
firms. We expect to pay fees of approximately $150 per hour.
We
are currently in discussions with Cap Gemini Ernst and Young about either
providing these services or assisting us to find appropriate providers.
In
order to ensure consistency, one of the first tasks of the Head of Operations
will be to work with the Head of Registrations to prepare a comprehensive
procedures manual which will be used by both internal and external staff in
processing applications.
Trade
mark searches will also be outsourced. We are currently in discussions with Net
Names based in the United Kingdom, who are experts in this area, about
fulfilling this function for us.
D13.2.0.12
Full Listing of Service to be Provided and Pricing of Each
Details of each of the
services provided are given in the accompanying document “Description of TLD
Policies”. Our role as the Registry
Operator is to fulfill and implement these policies. A listing of the services
and the pricing of each service is given in section E9 of this document. This
section is reproduced here – all references in this section refer to sections
in the Description of TLD Policies:
Section
E9 Description of TLD Policies
(Reproduced):
End
of Description of TLD Policies (Reproduced).
In
addition to the services above we will also provide Registrar Services as
described in E4.1 of the Description of TLD Policies document. We will make no explicit charge for
registration services.
D13.2.0.13 Financial Analysis
Pro-Forma
Financial statement are included in the attachment to this document entitled
Financial Projections in the pages numbered F1 - F19.
D13.2.0.13.1
Scenarios Examined
Pessimistic,
Expected, and Optimistic Revenue Scenarios
For
each report we will present financial projections under three scenarios: the
Pessimistic Scenario (90% probability), the Expected Scenario (50% probability)
and the Optimistic Scenario (10% probability). In all cases we assume that
there will be no Registrations during the first 6-month start-up period. In the
pessimistic case we assume that we register 5,000 Primary SLDs during the first
year of operations (18 months from the start date). In the expected scenario we
assume that we register 10,000 names during the first year of operations. In
the Optimistic scenario we register 100,000 names in the first year.
In
each case we assume that registrations will double in the second year and then
increase at 30% per year in years 3,4, and 5.
Costs Scenarios (Growth and No-Growth):
In
our cost projections given on pages F7-F9 we examine two different scenarios.
The first of these the “Growth Scenario” details the planned level of
expenditures that will be made if our realized revenues in the first year
correspond to either those of our 50% probability “Expected Scenario” or the
10% likelihood “Optimistic Scenario” detailed above. The other cost scenario
examined will be called the “No Growth Scenario” and details the planned level
of expenditures if our realized revenues in the first year correspond to those
of our 90% likelihood pessimistic scenario.
The Growth and the No-Growth cost scenarios apply only to fixed costs.
Variable costs are the same across both scenarios.
The
level of expenditures is the same in the first year for both the Growth
Scenario and for the No-Growth Scenario. Expenditures differ in the second year
and thereafter for these two scenarios are as described in the sections
below. Under both scenarios, however it
is assumed that costs grow at the same rate. It should be noted therefore that
“no-growth” only applies to the level of increase in expenditure in year 2.
D13.2.0.13.2 Pricing of Services
The
following table on shows a break down of the price of each service offered by
the registry.
For
an explanation of each of these services see section D13.2.0.12.
D13.2.0.13.3
Marketing Projections
The
tables on pages F1-F3 show the sales of each of these services on
a quarterly basis over the first five years on a quarterly basis of operations
under the 10%, 50%, and 90% scenarios. The following assumptions were made in
these projections:
(a)
Registration of primary names as given above.
(b)
It is assumed that each registrant registers 1 Active Substantially
Similar Name and 1 Inactive Substantially Similar Name per Primary Name
Registration.
(c)
It is assumed that 75% of existing primary and secondary names will be
renewed each year.
(d)
It is assumed that 2% of names are transferred each year.
This
following table summarizes this data, showing the expected number of Primary
Registration at the end of each year under each scenario.
D13.2.0.13.4 Revenue Projections
The
tables on pages F4-F6 show a break down of revenue over the first
five years of operations under the 10%, 50%, and 90% scenarios.
The
following table summarizes this information by showing revenues on an annual
basis under each scenario.
D13.2.0.13.5
Variable Costs
The
following notes refer to the above table:
(1)
In house staff will carry out some of the work of processing application
materials for registration or renewal. The majority, however, will be
outsourced, to major accounting or law firms who will be instructed to work
according to our policies. We estimate the cost of such work to be $150 per
hour.
(2)
Primary Reg.- Refers to the registration of the main or “Primary Name”
registered.
a.
The cost of the “Trade Mark Check” is based on a survey of companies
providing this service, for a check of a specific trade mark and a few similar
spellings to the requested name in the United States and the E.U. As specified
in the Description of TLD Policies,
section E5.0.3 this is the search that will be carried out if a “worldwide”
Market Location is specified. Otherwise, a trade mark search will be carried
out in the specific country specified as the primary market.
b.
Business Status Check. In the U.S. this is a check to determine that the
“business is in good standing”. In other countries this is a check to determine
that the status of the business is still current with the relevant
administrative authority.
c.
Application Processing. This refers to the check of company accounts for
eligibility criteria as described in section E16.7.1 or E16.7.2 of the
Description of TLD Policies. We estimate that the processing of each
application will take an average of 1 1/2 hours of work.
d.
Other administrative costs include telephone, postage, copying and
documents storage and other miscellaneous costs.
e.
A fee of $100 will be paid to registrars for each Registration. We
estimate that during the first year our registrar services will carry our 50%
of registrations but that this will reduce to an a level of 25% for later
years. In case where our own registrar registers SLDs there will be not need to
pay any commission. (This estimate is fully taken into account in our pro-forma
projections).
f.
Although Insurance is not truly a variable cost, our requirements for
liability insurance will certainly increase with the volume of registrations.
Our preliminary estimate, based on discussion with those in the industry, is
that we can expect to pay 2% of gross revenues as an insurance cost.
(3)
Primary Renewal - refers to the annual renewal of a primary name
a.
Application Processing. As described in Description of TLD Policies
16.9, in order to qualify for renewal a registrant will be required to send a
statement confirming that they meet the specified renewal criteria. We estimate
an average time of 10 minutes of processing time for each renewal.
b.
Active Web Site Check. The web site of each registrant will be checked a
number of times during the year to check that the site is active as described
in Description of TLD Policies E16.7.1
We estimate an annual time of approximately 20 minutes per registrant.
c.
Registrars will be paid a $5 fee for each Registration Renewal
(4)
Sub. Similar Names - refers to Active Substantially Similar Names as
referred to in section E5.0.5 where the SLDs points to the same web site as
that designated by the registrant’s Primary Name. Inactive Substantially
Similar Names are those where the registrant blocks the use by others of that
SLD but where the SLD does not point to the registrant’s web site.
Substantially Similar Names can only differ by hyphens or by regular plurals or
possessives in English or in some other language from the registrants Primary
Name SLD.
a.
The Application processing costs for Substantially Similar Names are the
costs incurred in checking whether those submitted names are actually regular
plurals or possessives and responding to the applicant informing them which
Substantially Similar Names have been accepted and which have been rejected.
b.
There are no significant additional processing costs for the renewal of
Substantially Similar Names.
(5)
Reg. Transfer – Refers to the transfers of registrations from one
registrant to another as referred to Description of TLD Policies in section
E16.11 and E16.15.
a.
Business Status Check and Application Processing are estimated at
entailing costs double those of Registration as the same elements must be
checked for two companies instead of one.
b.
There are costs associated with checking for trademark infringement as
the name has already been registered.
c.
A $150 fee is paid to the registrar for Registration Transfer.
(6)
Reservation. Details of the Reservation process are given in sections
E16.8 and E16.14 of the Description of TLD Policies document. Reservation is
not listed in the above table because the margin is variable. There are no
significant costs associated with processing a request for Reservation as most
of the process is carried out automatically. The cost of Reservation to the
Applicant is $500. If the Reservation is converted to a Registration $350 of
the Reservation cost is allowable against the cost of Registration. The
additional profit from Reservation of a name is therefore $150. If a
reservation is extended then and additional $500 is charged. If an extended
Reservation is converted to a Registration $700 of fees is allowable against
the Registration cost. The additional profit from an extended Reservation is
therefore $300 – ($1,000 paid less $700 allowable against Registration). A $50
commission will be paid to the registrar when a reservation is made. An
additional $25 will be paid to the registrar if the Reservation is extended. An
additional fee of $50 will be paid to the registrar if and when a Reservation
is converted to a Registration.
D13.2.0.13.6 Fixed Costs
Full
projections of costs are given for the first five years of operations in F7-F9 Projections show the first two years on a monthly basis and years
3-5 on a quarterly basis. Projections are shown for both the Growth and for the
No-Growth Scenario. The following table shows summarizes these expenses on an
annual basis:
The
following notes apply to these tables.
Salaries:
(a)
The following table shows the salaries of each employee and the number of
months worked by each in the first year.
(b)
These operations do not include the cost of running the computational
operations of the Registry. These operations will be run by 7Ways.com in return
for a payment of 5% of gross revenues of the TLD Management Group. These costs
therefore appear as a variable cost as “7Ways.com royalty” in the listing given
above in section D13.2.0.13.5.
(c) Payroll taxes and benefits are estimated to be
25% of salary costs.
(d) In the Growth Scenario it is assumed that salary
costs double over the course of the second year (increasing by 1/12 of the end of first year
value each month.)
(e)
In the No-Growth Scenario it is assumed that salary costs remain constant
during the second year at the same monthly rate as at the end of year 1.
(f) In both the Growth and No-Growth cost scenarios it is assumed that salary
costs grow at an annual rate of 25% per year in years 3 through 5.
Contract Programmers
(a) It is assumed that one contract programmer is retained for the first
year and works 40 hours a week each for 48 weeks at a cost of $100 per hour.
(b) In the Growth Scenario one contract programmer
is retained for the second year and works 40 hours a week each for 48 weeks at
a cost of $100 per hour.
(c) In the No-Growth Scenario No Contract Programmers are retained in the
Second Year.
Rent
(a) Initial rental cost is assumed to be $10,000 per month. In the Growth
Scenario rent is assumed to double in the 18th month. In the
No-Growth Scenario rent is assumed to remain constant in the second year.
Office equipment:
The
expected cost initial cost is $185,000. This includes $28,500 for fixtures and
fittings ($1,500 for each of 19 employees) and the remainder of equipment.
Equipment includes 19 desktop computers and 5 laptops, 10 printers, 5 fax
machines and three high volume photocopiers (we will be a paper intensive
business) and an office telephone system. Further expenditure of $42,750 is
expected after six months. In the Growth Scenario we expect to spend an
additional $42,750 for fixtures and fittings one year after that (month 18 of
operations). In the No-Growth Scenario no further fixtures and fittings are added
in the second year. We will capitalize fixtures and fittings so they are not
reflected in our statement of expenses (pages F7-F9). These expenditures are
however reflected in our cash flow statements (pages F16-F18) .
Computer Equipment for
Registry:
We will supply all initial computer equipment to be
used by 7Ways in running the Registry operation. Further details of the uses
and requirements of this equipment are given is section III of this document.
The initially required computer equipment is listed in the following table.
.
We will capitalize this equipment so it is
not reflected in our statement of expenses (page F7-F9). These expenditures are
however reflected in our cash flow statements (pages F16-F18).
Travel and entertainment:
Expenses
assume 50 trips within the United States, 16 to Europe, and 6 to the Far East
during the first year. The following
breakdown of expenses is assumed:
Total
Travel and Entertainment: $122,600
In the Growth Scenario Travel and Entertainment expenses are assumed to double
during the second year (increasing by 1/12 of the end of first year value each
month). In the No-Growth scenario Travel and Entertainment Expenses are assumed
to remain constant during the second year.
Telephone expenses:
Telephone
expenses are estimated at $9,000 per month in the first year. This includes
domestic and international calls. In the Growth Scenario telephone expenses are
assumed to double during the second year (increasing by 1/12 of the end of
first year value each month). In the No-Growth scenario telephone expenses are
assumed to remain constant during the second year.
Marketing and Promotion
A budget of $2,500,000 been allocated for promotion in the last 6 months
of the first year which will be the first 6 months of operations. In either the Growth or the No-Growth
scenario we intend to spend 5 Million on advertising in the second year. This
will allow us to pursue an aggressive outdoor billboard, print and Internet
based advertising campaign and to allocate $200,000 to public relations in our
first year of operations.
Accounting and Legal
Expenses
Accounting and Legal expenses are estimated at $35,000 per month
in the first year. In the Growth Scenario these expenses are assumed to double
during the second year (increasing by 1/12 of the end of first year value each
month). In the No-Growth scenario Accounting and Legal expenses are assumed to
remain constant during the second year.
Industry Organizational
Fees
We estimate that we will be paying $500,000 per year
in Industry Organizational Fees. $300,000 will go to our Sponsoring
Organization bizTRAC and we estimate that we will be making an annual payment
of $200,000 to ICANN.
Increase in fixed costs
years 3 - 5:
All fixed
costs are expected to increase at 25% per year from the end of the second year
onwards in either the Growth or the No-Growth Scenario. It should be noted
therefore that “no-growth” only applies to the level of increase in expenditure
in year 2.
D13.2.0.13.7
Profit and Loss
D13.2.0.13.8
Cash-Flow Projections
Cash
flow projections are given on pages F16-F18 for the first three years of
operations assuming that all cash is left in the company. Projections are shown for each of the three
specified scenarios. In each case we assume an initial capital injection of
$5,000,000.
D13.2.0.13.9
Capital Requirements
We
will initially allocate $5,000,000 to this project, as this is the amount that
ensures even under the 10% Pessimistic Scenario cash allocated to the project
does not drop below $750,000
At
the time of its organization Affinity Internet, Inc. (then known as Ebiznet,
Inc.) had commitments form its initial investors who are J.P. Morgan Investment
Corporation, Sixty Wall Street, SBIC Fund, L.P. (an affiliate of J.P. Morgan
Investment Corporation), First Union Capital Partners, Inc, Columbia eBiz
Partners L.L.C. ( an affiliate of Columbia Capital), Affinity’s two founders
John Zdanowski, and John McIntyre and Building C Partners (an affiliate of
Morrison and Foerster).
The
initial capitalization was $23,100,000 (see Section 2.2 and Schedule 2.2 of the
Shareholder’s Agreement attached hereto as part of section D13.4). The initial
investors are obligated to fund the remaining $36,900,000 as further set forth
in section 2.2 of the Shareholder’s Agreement. As of the date hereof, the
initial investors have funded approximately $45,000,000 from such $60,000,000
commitment.
The
following sections give answers to the specific questions posed in the ICANN
application in the light of the business plan for new operations presented in
sections D13.2.0.1 – D13.2.0.13.9
D13.2.1 Services
to be provided
The
services to be provided by the Registry are given in full in sections
D13.2.2
Revenue Model
A
listing of the revenues of each service are given in section D13.2.0.12. A
chart is presented in section D13.2.0.13.5 giving a full breakdown of the
anticipated revenues and direct costs associated with each service. Quarterly
pro-forma revenue projections for the first five years in the 90% (Pessimistic
Scenario), 50% Expected Scenario, and the 10% Optimistic Scenario are given in
the attachment in pages F4-F7.
D13.2.4.
Marketing Plan
The
marketing plan is described in section D13.2.0.5.
D13.2.5 Estimated
Demand for Registry Services in The New TLD
Our
estimates of 90% (Pessimistic Scenario), 50% Expected Scenario, and the 10%
Optimistic Scenario are given in the Financial Projections attachment in pages
F1-F3. Revenue and P&L projections relating to each of these scenarios are
given respectively in pages F4-F6 and pages F10-F15. These projections are
based on our analysis of the market as given is section D13.2.0.4
D13.2.6 Resources
Required to Meet Demand
In
the Financial Projections Attachment we and two potential cost scenarios. The
first of these the “Growth Scenario” details the planned level of expenditures
that will be made if our realized revenues in the first year correspond to
either those of our 50% probability “Expected Scenario” or the 10% likelihood
“Optimistic Scenario” detailed above. The other cost scenario examined will be
called the “No Growth Scenario” and details the planned level of expenditures
if our realized revenues in the first year correspond to those of our 90%
likelihood pessimistic scenario. The
Growth and the No-Growth cost scenarios apply only to fixed costs. Variable
costs are the same across both scenarios. We feel that it is reasonable to use
only two fixed cost scenarios as a very large proportion of our costs are
variable as we will outsource the majority of the work involved with
application processing.
D13.2.7 Plans for
Acquiring Necessary Systems and Facilities
Plans
for outsourcing our Application Processing and trade mark search functions are
given in D13.2.0.11.
D.13.2.8
Availability of additional management personnel
Plans
for building the management team are given above in section D13.2.0.9.1
D13.2.10 Term of
Registry Agreement
In
this proposal we request a five year term for the Registry Agreement. The
establishment of operations is considerably more complex than for the
.com/.net/.org registries. We expect that the registry will therefore only be
able to become active after approximately six months of initial start-up
operations. For this reason we request a period slightly longer that the NSI
agreement with ICANN.
D13.2.12 Expected
revenue associated with the operation of the proposed registry
A
break down of marketing projections in each scenario is given in D13.2.0.13.3
and the referenced tables, and the resulting revenues are given in D13.2.0.13.4
and the referenced tables. The resulting profit and loss in each scenario is
given in D13.2.0.13.7 and in the referenced tables.
D13.2.13 Capital
Requirement
Capital
required will be $5,000,000 as specified and explained in section D13.2.0.13.9.
This will be drawn from existing commitments from our investors as detailed in
section D13.4.4
D13.2.14 Business
Risks
Business
risks are discussed in section D13.2.0.7. The break-even analysis shown on page
F-19 shows that we break even at very low levels of obtaining only 5,879
registrations in the second year of operations and 5,521 in the third year. As
a result we believe that the probability of non-profitability under the
proposed plan is very low.
D13.2.15 Registry
Failure Provisions
Technical
failure of the Registry is addressed in the Technical Capabilities and Plan
Section III of this document.
The
break even charts on the attachment for page F-19 show that an extremely low number of registrations is
necessary to make our operation a viable concern. We therefore believe that it
is extremely unlikely that the .biz registry will fail as a business.
In
addition, Affinity Internet Inc established a capital fund of $60,000,000 of
which only $9,000,000 has been drawn. We therefore have ample funds to support
the Registry even in the case that the world shows almost no interest in the
.biz TLD.
Minimum
Maintenance Scenario
In
the worst case, our Sponsoring Organization bizTRAC has agreed that if in any
given year there are less than 1,000 registrations under the new TLD that our
fees payable to that organization would be reduced from $300,000 to $100,000.
Under these circumstances we would also request ICANN to reduce our annual
payment to them from $200,000 to $50,000. We would expect that this request would
be granted in the interests of Internet Stability. Under these circumstances we
could also dramatically reduce other costs
by discontinuing all marketing, cutting back staff and employing only a
small number of people (possibly just one or two) to process applications in
house. Our minimum annual maintenance budget is given in the following table:
In
order to support this budget we would need only 397 registrations in the .biz
TLD. If this was not achieved we could certainly make up the short fall from
our existing capital.
For
all of these reasons we feel that the business failure of the “.biz” domain
during the term of our contract is close to impossible.
D13.4
Supporting Documentation
The
following documentation is included with this submission
III. Technical Capabilities and Plan.
As all of the technical operations of the new
Registry will be carried out by 7Ways.com, the remainder of this section III of
this document as far as section D15.2.14 was prepared by 7Ways and relates to
their personnel, and proposed methods of running the new TLD Registry. This plan forms part of our submission and
we fully support and intend to have them implement the systems described herein
if our application is approved. This material is enclosed separately at the end
of this the document and entitled Registry Operator’s Proposal Section III
Technical Capabilities and Plan.
D15.3 Subcontractors
Details of the operations of our subcontractor
7Ways.com are given in an attachment to this document 7Ways Corporate
Information. Further details are also given as part of their technical analysis
in Section III Technical Capabilities and Plan.
Although an agreement has not yet been signed we
are in agreement on the general terms which are:
(1) 7Ways.com will establish and run all computational operations of the new
Registry.
(2) We will provide the computer equipment necessary for them to start the
Registry.
(3) We will pay the an annual fee of $500,000 or 5% of revenues from
registrations, whichever is greater.
(4) The will bear all ongoing costs, including staffing, of running the
computational aspects of the Registry
(5) The contract term will be 5 years.
Conclusion
This proposal is
consistent with the continued expansion of the TLD name space, and a globally
unique public name space. This proposal
would not create an alternative root structure, but rather seeks to be
included. in the root managed by ICANN.
Please see the remainder of the proposal. For details of how the
particular implementation plan would address issues such as security,
redundancy, and reliability, and the escrow of data to protect the interests of
the domain holders and the sponsors. As the technology for the Internet and the
DNS change over time, the applicants anticipate continued attention to deployment
of new technologies and new protocols that will improve the functionality and
reliability of the DNS.
This last conclusion
section answers fully the concerns of ICANN as the first criteria for assesing
TLD proposals
Provisions to minimize
unscheduled outages of registry or registration systems due to technical
failures or malicious activity of others;
Key points are:
- The registry server
and TLD names servers are redundant, hot-swappable multiprocessor systems.
The systems are safeguarded by two uninterruptible power supplies (UPS).
RAID mass storage are used for fault-tolerancy and disk mirroring.
- Operating system of
the registry server is an security enhanced version of Linux (buffer
overflows exploits proof).
- Communications
between registry server and remote elements such as whois and TLD name
servers are done by using authentified, encrypted network links (Virtual
Private Networks implementing IPSec technology).
Provisions to ensure
consistent compliance with technical requirements in operation of the TLD;
Key points are:
- The use of common
DNS software such as BIND (The use of open source software can help).
- The respect to the
relative RFCs and drafts.
- An intensive test
phase before going live (see point g).
- While TLD in live,
Zone files for new domain names will be systematically tested, only valid
ones will be transmitted to TLD name servers.
Effects of the new TLD on
the operation and performance of the DNS in general and the root-server system
in particular;
The small volume of new domains
(30,000/year) comparing to others gTLDs will have no effect on the root
servers.
Measures
to promote rapid correction of any technical difficulties that occur (whether
or not due to the TLD's operation), such as availability of accurate,
consistent, and helpful Whois information;
- Fast reactivity is
first done by the quality of our engineering staff.
- Multiple TLD name
servers are located at different physical locations and connected on
different backbones.
- Whois servers: a
load balancing system between multiple Whois servers will be implemented
according to the RFC 1794 (DNS Support for Load Balancing), coordination
will be done by incremental updates thru Virtual private networks.
- Technical choices
are done to increase our reactivity such as, unique operating system and
tools used on all elements of the registry (registry server, TLD name
servers, Whois servers).
The protection of
domain-name holders from the effects of registry or registration-system
failure, such as procedures for rapid restoration of services from escrowed
data in the event of a system outage or failure;
Protection of domain-name
holders is done by the following ways:
- Two registry servers
called central registry and mirror registry will hold exactly the same
data. In case of failure of one of those systems, automatic switching is
provided to the other system.
- Daily backups are
performed, data are compressed, encrypted by using PGP and stored on a
magnetic device. Additionally, the
encrypted backup file is transmitted to data escrow service providers thru
virtual Private Networks. The information will be stored in an encrypted
form. ICANN will hold the private key for accessing data.
Provisions for orderly and reliable
assignment of domain names during the initial period of the TLD's operation.
The live operation of the
TLD’s operation will be preceded by an extensive test phase, with a complete
simulation on an intranet of the elements of the network, thus including
registry, TLD name servers, whois servers and “pseudo” root root-servers.
Analyses of the DNS
request for the new gTLD on this intranet should match the DNS requests on the
internet using the existing TLD (.com,.net,.org). This test phase passed, we
will be confident of the compatibility of our architecture with the existing DNS
system.