empowering the next generation of builders build-it-yourself seeks partners who can help bring our...
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Empowering the next generation of buildersEmpowering the next generation of builders
Build-It-Yourself seeks partners who can help bring our unique online learning environment direct to
kids and their parents at home.
John Galinato617-875-1960
Empowering the next generation of builders
What We Do …
Inspire and guide kids to create, design, build and invent.
Empowering the next generation of builders
Empowering the next generation of builders
The Product
Mission:Inspire and guide kids to use technology constructively, collaboratively and creatively.
What we offer:A unique, online laboratory for builders
Parents pay a $30/mo. membership fee:-Access to project plans, modules-Four live, mentored Webcast lessons/mo.-Invention Universe online virtual community
Empowering the next generation of builders
Content Specialists
Collaboration
Empowering the next generation of builders
Product Differentiators
1) Multidisciplinary projects - Playful, socially conscious storylines - Combine art and technology - Attract broad range of kids 2) Build-It-Blocks (modular construction) - Build complex projects quickly
3) Collaboration with art and engineering students (live webcasts)
- Build mentor relationships
Empowering the next generation of builders
Empowering the next generation of builders
Value Proposition
We provide consistent, high-quality, high value technology enrichment at a fraction of the cost of traditional instruction.
We bring the university student TA (Teaching Assistant) concept, coupled with proven content and online collaboration tools, to kids online.
Empowering the next generation of builders
Empowering the next generation of builders
Target Customers
Boys and girls ages 8-13 interested in art or technology.
Parents who want their kids to go to college and understand the need to be fluent in technology.
Skills exercised in a BIY workshop series:1) Problem solving skills2) Presentation skills
Empowering the next generation of builders
Empowering the next generation of builders
Growth Plan
Validate that parents value the Build-It-Yourself
vision.
Empowering the next generation of builders
Grow the team and infrastructure to serve
1,000+ members
Partner with after school programs like Sylvan, Kaplan and Bright Horizons, publishers and retail outlets to grow
quickly.
Proof of Concept$600K+ revenue3000+ customers
Thru 2012
Proof of Execution1,000+ members
2013
Rollout$50M+ revenue
150,000+ members
2-4 years
Empowering the next generation of builders
1. 3,000+ customers / 20+ schools
2. $200+ revenue per customer
3. $600,000+ revenue
4. 6+ years in development
5. 90% of business is recurring
6. 15% of revenue is on-line.
Empowering the next generation of builders
Proof of Concept Phase – Validation (through 2012)
Empowering the next generation of builders
Proof of Concept Phase - Validation
Proven content and supporting platforms
Empowering the next generation of builders
30Projects
20Lessons
100Build-It-Blocks
Record of attracting talent from the Cornell, MIT, Harvard and Mass Art communities.
Empowering the next generation of builders
Strategy:1. Hire an MBA business developer.2. Evolve our content and supporting platforms.3. Close corporate distribution partnerships.
Assets (2012):1. Repeat customer base. (500 kids/yr. at $200/kid)2. Well-tested content and supporting platforms.3. Access to network of developers and Webcast specialists
from Cornell, Mass Art and MIT communities.
Empowering the next generation of builders
Proof of Execution Phase - 2013Raise our valuation
Empowering the next generation of builders
How big is our market?
College bound Kids:Every kid who goes to college should be technology fluent and therefore is a potential customer.
300K Members:We need 2% of target US market to build a $72M business.
(300K x $240/yr including supplies and embedded advertising)
Empowering the next generation of builders
30 million kids
ages 8 - 13 15 million target market.Half will go to college. 62% have broadband access at
home.
Empowering the next generation of builders
Growth Plan
Validate that parents value the Build-It-Yourself
vision.
Empowering the next generation of builders
Grow the team and infrastructure to serve
3,000 members
Partner with after school programs like Sylvan, Kaplan and Bright Horizons, publishers and retail outlets to grow
quickly to 300,000 members.
Proof of Concept$100K revenue500 customers
2011
Proof of Execution$540K revenue3,000 members
2013
Rollout$72M revenue
300,000 members
2017
Empowering the next generation of builders
1. 3,000+ customers / 20+ schools
2. $200+ revenue per customer
3. $750,000+ revenue
4. 6+ years in development
5. 80%+ of business is recurring
6. 25%+ of revenue is on-line.
Empowering the next generation of builders
Proof of Concept Phase Validation
Empowering the next generation of builders
Proof of Execution Phase - Serve 3,000 members
Viral Marketing Program:12 interns10 developers15+ schools500 students / yearNetwork of specialists
Corporate Partnerships:Close a corporate distribution partnership that has the potential to generate 3,000 members in a year. (300K members @ $240/year in 3-5 years)
Empowering the next generation of builders
The Team:We need to recruit, train and manage a network of 30 Webcast specialists.
We need to recruit an MBA deal maker.
Infrastructure:We need to automate and expand our infrastructure.
Proof of Execution Phase - Serve 3,000 members
Empowering the next generation of builders
John Galinatowww.build-it-yourself.com617-875-1960
Investment of $105K is required to:
Empowering the next generation of builders
Proof of Execution Phase - Serve 3,000 members
• grow the team• expand infrastructure • develop distribution partnerships
$540K annual revenue(3,000 members x $15/mo)
Empowering the next generation of builders
Retail outlets promote
Build-It-Yourself memberships because they drive sales of their products, encourage family shopping and monetize their
on-line presence.
5,000 to 300,000 Leverage
Strategic partners place highly valued content in retail outlets such as Home Depot, Radio Shack, Sylvan Learning Centers, Barnes & Nobel.
4 to 5,000 Leverage
Build-It-Yourself sells content branding to highly targeted strategic partners including publishers, after school programs manufacturers and distributors.
1 to 4 Leverage
(Build-It-Yourself) (Partners) (Retail)
Rollout Phase - Serve 300,000 members
Empowering the next generation of builders
John Galinatowww.build-it-yourself.com617-875-1960
Investment of $1.5+ million may be required to:
Empowering the next generation of builders
Rollout Phase - Serve 300,000 members
• grow the team• brand the product • evolve the product and infrastructure • develop distribution partnerships
$72M annual revenue(300,000 members x $20/mo)
Empowering the next generation of builders
Business Plan Support Slides
Empowering the next generation of builders
Market Segmentation
Value Net
Benchmarks
Financials
Team
Comps
Product Development
What We Do
Empowering the next generation of builders
What We Do …
Build-It-Yourself provides after-school and at-home workshops that inspire and empower kids tocreate, design, build and invent.
We engage boys and girls in playful approaches to design, invention and scientific inquiry.
We train kids to apply technology to solve problems.
Empowering the next generation of builders
Empowering the next generation of builders
Our Workshops Are In Demand
• More than 16 schools served:
– 85% are repeat customers
– Include BB&N, Concord Academy, Lawrence Academy
– Growth via word-of-mouth
• More than 2,500 kids served
• More than $500K revenue generated
“Clio was thrilled. She couldn't stop talking about what she did.”
Parent
“I never thought my son would give up soccer for anything.”
Parent
“Wow!”
Program director sitting in on a webcast from China.
Key Statistics Validation
Empowering the next generation of builders
Empowering the next generation of builders
The Product – Invention Universe
Database of Content Elements:Online database of:• Playful storylines and associated
challenges • Building tricks and lessons• Functional building blocks that
enable kids to build complex projects quickly.
Empowering the next generation of builders
Content Specialists
CollaborationTools
Empowering the next generation of builders
• Seth Mastin – BA Computer Science, MIT• Rebekah Gendron – MEd, Rhode Island Univ• Max Seidman – Sophomore BB&N• Valeria Roman – Science Journalist, Argentina• Naseem Makiya – Junior Harvard• Michael Hsu – Sophomore, Choate• Liu Huan – Senior, Shanghai High School• Joan Tarud – MS Mechanical Engineering, MIT
Network of Specialists:Graduates and students from the Cornell/Harvard/MIT community who inspire and guide kids.
Empowering the next generation of builders
Content Specialists
CollaborationTools
The Product – Invention Universe
Empowering the next generation of builders
Effective Collaboration Tools:2-way audio/video webcast platform enables kids to collaborate with peers and specialists in a global laboratory.
Wiki project management
Invention Universe
Empowering the next generation of builders
Content Specialists
CollaborationTools
The Product – Invention Universe
Empowering the next generation of builders
Product Differentiators
1) Multidiscipline - Attract broad range of kids
2) Build-It-Blocks (modular construction) - Build complex projects quickly
3) Collaboration with art and engineering students
- Build mentor relationships
4) Focus on the presentation of ideas- Kids get positive feedback when
their projects look cool.
Empowering the next generation of builders
Content Specialists
Collaboration
Empowering the next generation of builders
Value Proposition
Empowering the next generation of builders
• Large and growing demand for technology training and constructive, after-school activities.
• Collaboration with MIT.
• Proven and acclaimed content.
• Unique workshop delivery model.
• Access to Cornell/MIT student specialists.
• Project has attracted talented developers.
High-quality technology instruction at a fraction of the cost of traditional instruction.
Empowering the next generation of builders
Value Proposition
High-quality technology instruction at a fraction of the cost of traditional instruction.
Bring the university student TA (Teaching Assistant) concept coupled with proven content and online collaboration tools to kids online.
Empowering the next generation of builders
Empowering the next generation of builders
Proof of Concept Phase Validation
"The goal is to highlight the 'powerful ideas' in the modules -- that is, the ideas that help you understand how the module works, and provide you with a foundation for building other things."
Professor Mitchel Resnick, from the MIT Media Lab, directing the collaboration between MIT and Build-It-Yourself to develop a database of construction modules
"Build-It-Yourself is a fascinating program that engages students in creative projects to design and build robots. Both of my children --ages 7 and 9-- have participated in Build-It-Yourself workshops and learned greatly from it. It's very interesting pedagogy."
Dr. Fernando Reimers, Associate Professor and Director of HGSE's International Education Policy program, describing the Build-It-Yourself program to colleagues at the Harvard Graduate School of Education
"Thanks for putting on one of the best Robotics workshops that I have been to."
Science teacher at the Jamestown Middle School, RI commenting on a Build-It-Yourself workshop for teachers
Empowering the next generation of buildersEmpowering the next generation of builders
Collaborating on-line comes naturally to the next generation!
Proof of Concept Phase Validation
Empowering the next generation of builders
Proof of Concept Phase Assets
Proven content and supporting platforms
Empowering the next generation of builders
30Projects
20Lessons
100Build-It-Blocks
Record of attracting talent from the Cornell, MIT, Harvard and Mass Art communities. (24 contractors)
Empowering the next generation of builders
Opportunity:
1. Summer Camps7.3 Million Kids
2. After-school TimeOrganized by schools2.5 Million Kids
3. After-school TimeOrganized by families15 Million Kids
Sources:American Camp AssociationInstitute for Educational Science, US Dept. of EducationDigest of Education Statistics: 2005
Assume 65% of kids can afford a computer and $120/year15M Kids
Market Segments
26,569 Schools 3M Kids450K Kids (15%)
71,270 Schools 20M `Kids
5 largest for-profit organizations160K Kids
2M kids (10%)
23 MillionKids
Grades 3 to 8
@ Home
Public After-school
Private School
Commercial After-school
Public School
Private After-school
Summer CampsSummer Camps 12,000 Camps 7.3M Kids
Empowering the next generation of builders
The Value Net
Suppliers:Marratech / GoogleCraft StoresRadio Shack
Suppliers:Marratech / GoogleCraft StoresRadio Shack
Customers:Summer CampsAfter-school programsParents
Customers:Summer CampsAfter-school programsParents
Complementors:PublishersManufacturersRetail OutletsSchools
Complementors:PublishersManufacturersRetail OutletsSchools
Competitors:TeachersLocal MuseumsMad ScienceBright Horizons
Competitors:TeachersLocal MuseumsMad ScienceBright Horizons
Build-It-YourselfBuild-It-Yourself
Empowering the next generation of builders
The Demand Factors
1) Kids seek rich, online experiences.
2) Two-thirds of U.S. families are now headed by either two working parents or a single working parent. These families need after-school programs.
3) Many parents want to position kids to get into good schools.
4) Corporations are demanding a labor pool that is better trained in engineering and technology.
Kids Parents Corporations
Empowering the next generation of builders
Empowering the next generation of builders
Customer Profiles
ParentsParents seek engaging, constructive activities for their kids when not in school.
Empowering the next generation of builders
Camp DirectorsCamp Directors seek popular programs.7.3 million kids attend 12,000 summer camps.
After-School Program DirectorsAfter-school Program Directors seek educational programs. 3 million kids are enrolled in after-school enrichment programs.
Sources:American Camp AssociationInstitute for Educational Science, US Dept. of EducationDigest of Education Statistics: 2005
Empowering the next generation of builders
The Value Net
Suppliers:Marratech / GoogleCraft StoresRadio Shack
Suppliers:Marratech / GoogleCraft StoresRadio Shack
Customers:Summer CampsAfter-school programsParents
Customers:Summer CampsAfter-school programsParents
Complementors:PublishersManufacturersRetail OutletsSchools
Complementors:PublishersManufacturersRetail OutletsSchools
Competitors:TeachersLocal MuseumsMad ScienceBright Horizons
Competitors:TeachersLocal MuseumsMad ScienceBright Horizons
Build-It-YourselfBuild-It-Yourself
Empowering the next generation of builders
Cost
After-School Enrichment Competitors
Consistent Quality(Control overcontent + instructor)
$25-$50/hr
$10-$25/hr
$5/hr
Mad Science
First LEGO
Invent Now Kids
Local Museums
ID Tech Camps
Private Tutors
Sports Programs
Build-It-YourselfInterns$35/hr
Build-It-YourselfMembers
$5/hr
Empowering the next generation of builders
Technology Program Competitors# kids served Locations
Gross revenue
$/hour per student
Artistic / Playful
Collaborate online
Build-It-Blocks
Focus on presentation Notes
Build-It-Yourself - Camp 440 1 $51K $18.00 Yes Yes Yes Yes Concord Academy Summer Camp
Build-It-Yourself - After-school
170 1 $28K $9.17 Yes Yes Yes Yes Brookline, MA Public School partly subsidized
Build-It-Yourself - @Home 300,000 1 $50M+ $2.50 Yes Yes Yes Yes 5-year plan
First LEGO League G3-8 88,000 8,800 $3.5M $5.00 No No No Yes Manchester, NH: Non-profit, 25,000 volunteer team leaders
US First K-12 130,000 10,700 $15M No No No Yes International
First LEGO Camp 1 $8.33 No No No No Manchester, NH: First School Camp requires one chaperone per group of ten.
MOS / Robotech 1 $28.57 No No No No Boston,MA: Robotech 2D game course (1 day) Director of MOS in 2004 said after-school w orkshops are losing money.
Mad Science (w/o facility) 600,000 166 $25M $7.93 No No No No International, based in Montreal, Canada, Price does not reflect added fees for facility.
iD Tech Camps 30,000 73 $21M $18.00 No No No No National, based in Campbell, CA. Held in 50 universities. Family business. Noah Boskey took Flash course
Children's Tech Wkshp 32 $2M $17.68 No No No No National, Graphic Design; Animation and Digital Video Production; Video Game Creation; Robotics. Jonathan Heckerman took game course,
Science Adventurers …. KLC School Partnerships
200,000 600 $16.00 No No No No Serves 200K kids in 600 elementary schools. Offers content through school partnerships.
Empowering the next generation of builders
Competitive Web Sites
Online Sites Member fee
Build? Work w/ mentors
Resume builder
Portfolio Social networking
Games
Neo Pets Free Virtual No No No Yes Yes
Webkins Free Simple No No No Yes NoClub Penguin $7/mo No No No No Yes Yes
Guia Free No No No Art Yes Yes
LEGO Bionicle Free Yes No No No Yes Yes
Scratch Free Yes No No Programs Yes Yes
BIY Invention Universe $10/mo Yes Yes Yes Projects Yes Yes
Comments
Embeded ads, keep virtual petsBuy stuffed toysDisney, games, socializing, secureAvatars, games, bit of everythingStories, games, buildMIT, galleries, challenges
Empowering the next generation of builders
The Value Net
Suppliers:Marratech / GoogleCraft StoresRadio Shack
Suppliers:Marratech / GoogleCraft StoresRadio Shack
Complementors:PublishersManufacturersRetail OutletsSchools
Complementors:PublishersManufacturersRetail OutletsSchools
Competitors:TeachersLocal MuseumsMad ScienceBright Horizons
Competitors:TeachersLocal MuseumsMad ScienceBright Horizons
Build-It-YourselfBuild-It-Yourself
Customers:Summer CampsAfter-school programsParents
Customers:Summer CampsAfter-school programsParents
Empowering the next generation of builders
Publishers After-schoolPrograms
Retailers Manufacturers
• Monetize web presence.
• Expand curriculum.
• Generate new revenue.
• Add value to products.
• Drive new product development.
• Sell products.
Build-A-BeariRobot
• Monetize web presence.
PenquinSunset
Mad Science
Potential Distribution Partners
Empowering the next generation of buildersEmpowering the next generation of builders
Potential Distribution Corporate Partners
After School Service ProvidersSylvanKaplanBright HorizonsMad ScienceBuild-A-Bear
Publishers McGraw HillHoughton MifflinPenguinSunsetMarvel ComicsElectronic Arts
RetailersRadio ShackHome DepotWalmart
ManufacturersMicrosoft XboxNintendo WiiMidWest HobbiesFutaba
Empowering the next generation of builders
Everyone Wins in the Build-It-Yourself Eco-system
Kids
Parents
Corporate Partners- Have fun!- Solve problems creatively.- Integrate multiple disciplines.- Reinforce core curricula.- Collaborate and share ideas.- Develop important tech skills.
- Deliver high-quality programs.- Reach kids and parents at-home.- Develop new revenue streams.- Differentiate.- Develop future employees.- Affiliate with a “do-good” program.
- See their kids engaged and excited!- Collaborate and work with their kids.
Investors- Receive an attractive ROI.- Help solve a major social problem.
Empowering the next generation of builders
Empowering the next generation of builders
Scaling to a Global Market
• On-site
• Fee per workshop
• In-person specialists
• Word-of-mouth distribution
• New England area
• On-line
• Subscription based revenue
• On-line specialists
• Distribution partnerships
• National and international
Current Model Going Forward Model
Empowering the next generation of builders
Empowering the next generation of builders
Proof of ConceptPhase
Proof of Execution Phase
Roll Out Phase
Strategic 2,500+ students paid $200+ for BIY workshops. ($10-$20/hr)
Secure $100K investment.Grow from 50 on-line customers to 3,000 online members @ $10/mo.
Grow from 3,000 online members to 300,000 online members.Show profitability.
Infrastructure Content and supporting online platforms developed.Collaboration tools tested.Development team recruited.
Develop Invention Universe to serve 3000 members.Develop program to recruit, train and manage webcasters in university communities.
Expand content.Automate member support.
Distribution Strong testimonials and repeat customer relationships built.
Initiate viral marketing program. Close corporate distribution partnership > $50K
Multiple distribution deals in place.
44
Growth Phases - Milestones
Empowering the next generation of builders
Proof of Execution Phase Strategy / Assets
Strategy:1. Hire and MBA business developer to lead the company.2. Close a corporate distribution partnership that has the
potential to generate 3,000 members in a year. (300K members @ $240/year in 3-5 years)
Assets (2012):1. Repeat customer base (500 kids/yr at $200/kid.)2. Content and supporting platforms.3. Access to network of developers and Webcast specialists
from Cornell, Mass Art and MIT communities
Empowering the next generation of builders
Empowering the next generation of builders
Proof of Execution Phase - Serve 3,000 membersRevenue Mo 1 Mo 2 Mo 3 Mo 4 Mo 5 Mo 6 Mo 7 Mo 8 Mo 9 Mo 10# new members (Key Assumption) - - 20 30 50 80 120 200 350 500 Total members - - 20 50 100 180 300 500 850 1,350 Monthly fee 10$ 10$ 10$ 10$ 10$ 10$ 10$ 10$ 10$ 10$ New revenue per month -$ -$ 200$ 500$ 1,000$ 1,800$ 3,000$ 5,000$ 8,500$ 13,500$ Existing on-site revenue 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ Total Revenue 6,000$ 6,000$ 6,200$ 6,500$ 7,000$ 7,800$ 9,000$ 11,000$ 14,500$ 19,500$
Expenses Mo 1 Mo 2 Mo 3 Mo 4 Mo 5 Mo 6 Mo 7 Mo 8 Mo 9 Mo 10Fixed Expenses
Rent, Utilities, ISP, Tax, Debt, Supplies, Misc 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ 6,000$ Labor, John G, Liu Huan, Dev 8,000$ 8,000$ 8,000$ 8,000$ 8,000$ 8,000$ 8,000$ 8,000$ 8,000$ 8,000$ Business Developer (Key Assumption) 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ 3,000$ Total 17,000$ 17,000$ 17,000$ 17,000$ 17,000$ 17,000$ 17,000$ 17,000$ 17,000$ 17,000$ Variable Expense
Members / mentor 50 50 50 50 50 50 60 70 80 100# mentors 0 0 0 1 2 4 5 7 11 14# webcast hrs / member / mo 4 4 4 4 4 4 4 4 4 4# members / webcast 10 10 10 10 10 10 10 10 10 10# classes / mo 0 0 8 20 40 72 120 200 340 540# classes / mentor / mo
compensation / hr 10$ 10$ 10$ 10$ 10$ 10$ 10$ 10$ 10$ 10$ Total mentor compensation -$ -$ 80$ 200$ 400$ 720$ 1,200$ 2,000$ 3,400$ 5,400$ Management
Mentors / Manager 10 10 10 10 10 10 10 10 10 10# managers 1 1 1 1 1 1 1 1 1 1# hrs / mo / mgr 10 10 10 10 10 10 10 10 10 10compensation / hr $14 $14 $14 $14 $14 $14 $14 $14 $14 $14Mentor mgmt compensation $140 $140 $140 $140 $140 $140 $140 $70 $100 $149Total variable expense $140 $140 $220 $340 $540 $860 $1,340 $2,070 $3,500 $5,549Total fixed and variable expense 17,140$ 17,140$ 17,220$ 17,340$ 17,540$ 17,860$ 18,340$ 19,070$ 20,500$ 22,549$
Monthly Cash Flow (11,140)$ (11,140)$ (11,020)$ (10,840)$ (10,540)$ (10,060)$ (9,340)$ (8,070)$ (6,000)$ (3,049)$
Cum Cash Flow (11,140)$ (22,280)$ (33,300)$ (44,140)$ (54,680)$ (64,740)$ (74,080)$ (82,150)$ (88,150)$ (91,199)$
Mo 11 Mo 12 Total
700 950 3,000
2,050 3,000
10$ 10$
20,500$ 30,000$ 84,000$
6,000$ 6,000$ 72,000$
26,500$ 36,000$ 156,000$
Mo 11 Mo 12 Total
6,000$ 6,000$ 72,000$
8,000$ 8,000$ 96,000$
3,000$ 3,000$ 36,000$
17,000$ 17,000$ 204,000$
100 100
21 30
4 4
10 10
820 1200
10$ 10$
8,200$ 12,000$ 33,600$
10 10
1 2
10 10
$14 $14
$189 $287 1,775$
$8,389 $12,287 35,375$
25,389$ 29,287$ 239,375$
1,111$ 6,713$
(90,088)$ (83,375)$
Empowering the next generation of builders
Proof of Execution Phase - Serve 3,000 members
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
1 2 3 4 5 6 7 8 9 10 11 12
Month After Investment
Revenue Fixed Expense Variable Expense
$(100,000)
$(80,000)
$(60,000)
$(40,000)
$(20,000)
$-
$20,000
$40,000
$60,000
1 2 3 4 5 6 7 8 9 10 11 12
Month after investment
Revenue Expense Cash Flow
Empowering the next generation of builders
$91K - Worst case cash flow
Empowering the next generation of builders
Revenue $156K - Online rev $84K - Onsite rev $72K
Expense: $239K -Fixed cost $204K -Webcast cost $ 35K
Worst case cash flow: ($91K)
Break even: Month 10
Capital Required $105KTo grow from $15K => $360K annualized online revenue.
Proof of Execution Phase - Serve 3,000 members
Empowering the next generation of builders
Rollout Phase - Financials
5-year Target: 300,000 customers => $79M revenueAnnualized #'s based on month 12 of each year.
Conclusions Yr 1 Yr 2 Yr3 Yr4 Yr5Revenue 739,500$ 2,717,500$ 7,502,000$ 25,470,000$ 78,625,000$ Expense 959,790$ 2,475,850$ 6,621,408$ 18,955,849$ 51,593,173$ EBITDA (220,290)$ 241,650$ 880,592$ 6,514,151$ 27,031,827$ % Earnings / Revenue -30% 9% 12% 26% 34%
Profile Yr 1 Yr 2 Yr3 Yr 4 Yr 5# Online Members 3,000 10,000 28,000 96,000 300,000 Revenue / Member 247$ 272$ 268$ 265$ 262$ # Employees 6 14 31 75 151 # Webcasters (tutors) 10 32 128 480 1,280 Revenue/Employee 87,000$ 123,523$ 119,079$ 130,615$ 166,932$
Empowering the next generation of builders
Rollout Phase - Financial Assumptions1) Sales:
There are 6 revenue streams:
1. Online memberships are the largest revenue stream.
2. Printed pieces in POS displays drive online memberships.
3. Workshops in after school programs drive online memberships.
4. Ecommerce results from projects that require parts, tools and supplies.
5. Advertising revenue results from website traffic.
1/2 of members are repeat customers or from a % conversion from printed pieces
that are placed in schools, store counters and book stores. ($0 acquisition cost)
1/2 of members will come from effective, leveraged, distribution strategies.
2) Membership fee:
The membership fee is equivalent to popular multiplayer game subscriptions.
10M WOW gamers pay $13-$15/mo; Guitar Master - $29/mo
http://www.icelan.com/everquest/part3/everquest_review_p3.htm
Members get access to project plans, Webcast lessons and feedback, online exhibits
and project portfolios, Ecommerce discounts, and master builder certifications.
For a membership fee of $240/yr, typically a member would spend 166 hours
in groups of 8 members at a cost of $1.44/hr
Empowering the next generation of builders
3) Customer acquisition cost is a key assumption:
Customer acquisition cost is zero for printed pieces for 1/2 of customer base.
The customer acquisition cost for 1/2 of customer base is $35/member
$29 - Amazon.com
$60 - Credit Cards
$34 - Various E-Commerce Sites
http://retailindustry.about.com/library/weekly/aa122599a.htm
$31 - Typical Retail Customer
http://www.acroterion.ca/Knowledge_Base_Customer_Acquisition_Costs.html
4) Member / Webcaster ratio is a key assumption:
Live Webcasting is a differentiator. It's fundamental to success.
BIY is selling an opportunity for kids to build relationships with
Webcast 'tutors' from university communities such as MIT and Harvard.
This plan assumes 80 members/tutor in Yr1 to 100 members/tutor in Yr 3.
In practice, members will be online simultaneously with a
Webcast 'tutor' and other members in groups of 1 - 16.
Assume each member is online an average of 4 hours per month or one 1-hr workshop/wk.
Then a webcaster would have to serve 400 member-webcast hours per month.
(100 members x 4 hours / month).
If we assume the average webcast room size will be 10 members,
then the webcaster would have to serve 40 hours per month or 10 hours per week.
Students at MIT are not allowed to work more than 20 hours per week in a UROP program.
We are proposing a firm commitment for 10 hours per week.
This is less than it would take to participate on an athletic team.
Rollout Phase - Financial Assumptions
Empowering the next generation of builders
5) Potential: (Can this be a $50M business?)
There are 20+ million kids between the ages of 8 - 12 in the US.
1.5% market penetration would yield the following results:
$78,625,000 Revenue
$57,116,969 Expense
$21,508,031 Earnings (before tax)
27% Earnings / Revenue Ratio (before tax)
Bright Horizons has a 5.4% Earnings / Revenue ration (after tax)
McGraw Hill Publishing has a 14.4% Earnings / Revenue ration (after tax)
6) Productivity:
4 college student Webcast contractors @ 10hrs/wk = 1 employee
4 college student Webcast contractors @ $10/hr - $12/hr are paid $20K/yr - $24K/yr
Full time base salaries are $60K - $110K/yr
In Year 3, this plan generates revenue of $101,378 per employee
Starbucks productivity is $55K/employee
Microsoft productivity is $500K/employee
Rollout Phase - Financial Assumptions
Empowering the next generation of builders
7) Gross Profit Margins
Gross Margin = Gross Profit/Sales
52% Build-It-Yourself ($25/hr rev - $12/hr webcast fee)/$25/hr
Bright Horizons (BFAM) an after school service program, has a $1.03B market valuation
22% gross margin (44% is industry average)
13% EBITA (19% industry average)
$40K revenue / employee
From Fidelity (Dec 06)
Microsoft (MSFT) has a $294B market valuation
84% gross margin (74% is industry average for software)41% EBITA (27% is industry average)
$698K revenue / employee
From Fidelity (Dec 06)
McGraw Hill Companies (MHP) has a $24B market valuation
61% gross margin (31% is iindustry average for publishers)
24% EBITA (12% is industry average)
$314K revenue / employee
8) Cost / Hr of Instruction
BIY can deliver consistent, high-qualtiy instruction at <1/2 price of typical instruction.
If member pays $10/mo and does a 1hr workshop each weekend,
that member is paying $2.50/hr for live collaboration.
In addition the member gets access to
on demand content and web space to post projects.
$10/hr - babysitter
$10-$20/hr - camp or after school enrichment program
$10/hr - cost of public school (per GLTS inner city school 2006 budget)
$50/hr - private tutor
Rollout Phase - Financial Assumptions
Empowering the next generation of builders
Manage business development
Specify and manage courseware.
Specify and manage platform development
Manage network of workshop leaders and specialists
Build-It-Yourself will recruit a business development team
John Galinato – Content ManagementMEE, Cornell University. More than 25 years of software project management experience.
Liu Huan – Platform Management
MIT class of 2010, Computer Science and Electrical Engineering
Build-It-Yourself will recruit a workshop delivery team of students from
prominent Universities.
http://www.build-it-yourself.com/support/support-biy/biy-team.html
Responsibilities
The Build-It-Yourself team is experienced and dedicated to bringing our highly valued programs online.
Team Members – Background
Empowering the next generation of builders
Platform Architecture and Development.
Platform Architecture and Development.
Content development and webcasting
Lesson plan development
Pete Buletza – EngineerBS in Computer Science, Harvard University. 10 years experience with the CIA, Intuit, and start-up companies developing Internet based technology.
Seth Mastin – EngineerBS in Computer Science, MIT 2005.
Rebekah Gendron – Teacher
Masters Degree in Technology Education, University of Rhode Island. Technology Coordinator in Rhode Island School of the Future.
Ann Butler – Content AdvisorMEd, Harvard Graduate School of Education. 10 years experience in training and teaching. Presently writes for the Boston Globe.
Responsibilities
Build-It-Yourself has a long history of attracting talented, highly skilled contractors.
Contractors – Background
Empowering the next generation of buildersEmpowering the next generation of builders
CompsIn $K In $M In $MBIY K-12 (Q1-11) LRN New Oriental Ed (FY11)
Sales 100 100 193 193 558 558Cost of Sales 50 100 50% 108 193 56% 206 558Gross Operating Profit 50 100 50% 85 193 44% 352 558Selling, General, Admin Exp 45 100 45% 58 193 30% 238 558R&D 5 100 5% 6 193 3% 0 558Operating Income (EBIT) 87 100 13% 21 193 11% 114 558
Market Cap $1,140M $3,990MAnnual Sales $680M $558MPrice / Earnings 31.6Price / Sales 1.7 7.2
K-12, Inc. Nov-11 Q1-2012 LRNhttp://www.marketwatch.com/story/k12-inc-reports-first-quarter-fiscal-2012-results-2011-11-15New Oriental Education 11-May EDUhttp://www.thestreet.com/quote/EDU/details/company-profile.html
Gross Operating ProfitAirline Industry 5%Software Industry 90%Retail 15% - 50%Publishing 50% - 60%General Media (best of Pub) 80%
Build-It-Yourself Membership 76% ($50/hr rev : 1 wkshp leader @$10/hr + mgmt exp)Build-It-Yourself On-site 71% ($125/hr rev : 2 wkshp leaders @$12 + mgmt + supplies @ $1/student exp)
EDU
37%
63%
43%
0%
20%
Empowering the next generation of buildersEmpowering the next generation of builders
Build-It-Yourself seeks partners who can help bring our unique online learning environment direct to
kids and their parents at home.
John Galinato617-875-1960