Business Strategy
The existence of Net Shepherd's Internet Community, and their patented system to manage it, gives them a strong base from which they can launch lighthouse companies. Their new companies, which provide services of Net-enabled Market Research, Business Intelligence, and the answers facilities for Customer Relations and Knowledge Management, can be applied to almost every commercial sector in existence.
NSI's revenue model is such that they will charge a development fee for customization of the platform. Their underlying technology platform will be licensed to users and includes hosting, maintenance fees, and software upgrades. Fees will also be charged to maintain community generated databases in real time.
1) They built an Internet Community Management System (ICMS) that enables Corporations, Governments, and Data Collection Agencies to exponentially increase the speed of collection while dramatically reducing the associated costs.
2) Next they secured a relationship with Orbital that allows them to fine tune their research capability. This relationship allows NSI to identify "subject experts" among the members of their Distributed Task Force. This Task Force is really a connected group of thousands of individuals throughout the world who are being managed by their Internet Community Management System. Many of the members of this Task Force are specialists in their respective fields. An example could be a pharmacist who will offer recommendations and guidance to workers in health related agencies around the world.
3) They then signed a licensing deal with Pivotal for the rights to use, and leverage, this firm's Customer Relationship Management software. Because of its effectiveness, this software is has been installed in over 60,000 organizations world wide.
It can be claimed that these three milestones are responsible for positioning NSI as one of the most strategically well placed companies in the Internet.
During this past year, NSI has created significantly greater value for our initial investment. Not only have they developed highly efficient and unique processes for collecting data and business intelligence, but they have also germinated the two other new exciting start ups as well. These other two new companies are private entities that Net Shepherd has created to help it expand its reach and vision into new markets. NSI has expressed their intentions of taking themselves to the NASDAQ, and they have also said that they have plans to take each of these two private companies to IPO on NASDAQ next year. What really makes it interesting is that they have also expressed their intention of continuing this "spin off or acquisition" strategy either through the purchasing or starting up of a series of licensed companies. One business model they are considering is starting a Market Research company. This would be business number four and IPO number three.
Each of these three businesses will be able to claim a common foundation built upon an innovative and patent protected process and technology which has proven to offer a ten times improvement in speed and cost reduction, with a higher level of accuracy, than what is available now. With such dramatic and documented improvements in performance, then it is easy to see how these IPO's will be very well received by the market.
Net Shepherd is planning to set up a holding company in the US. This holding company will license NSI's technology and services. It will also create two new companies, which will be equity plays before they are taken to IPO. The first will be Answers.com.
They have announced the establishment of a new US office for their Answers.com business information company. It is located in Pasadena, CA.. This business will focus on Customer Relations (Call Centers), and Knowledge Management. They have also stated their intention of opening of an office in 'Silicon Alley' on the East Coast for their Business Intelligence company.
They will also continue with their traditional work of supporting the assessment of the suitability of website material with ClickChoice.com.
They are also transitioning their systems integration business into a high growth Internet strategy architecture service. This service will offer organizations both consultancy advice and business solutions, providing its customers with a cohesive, profitable Internet business process.
NSI expects to see significant annuity-based revenue. This could take the form of licensing.
They have set a mid year 2000 as a target for the further development of special tools to enable them to provide an Internet Strategy Architecture service that can combine virtual communities, legacy computing systems and I-commerce together into a cohesive, profitable business process.
The Companies
Net Shepherd (http://www.netshepherd.com) - This company is well positioned for tremendous growth. To a large part, this is due to their development of a unique and effective process for collecting and managing information through a distributed task force. This process gives them the ability to offer their clients with exponentially improved performance results. The speed, accuracy, and low cost service they offer will shatter their customers' paradigms about information gathering. They have a very strong management team who has International ties with some of the most prominent and well positioned companies in the world.
Despite the overtures by other NASDAQ listed companies to merge with them, NSI has publicly stated that they will not do this unless they get what they consider as a fair valuation for their company.
Net Shepherd has stated it will develop, partner with, and invest in, companies that use this technology in a variety of different applications.
Net Shepherd Inc. is traded on The "Canadian Venture Exchange - V" (formerly the Alberta Stock Exchange - ASE) under the ticker symbol WEB. Note: The Canadian Exchanges are in the process of consolidating their exchanges.
Answers.Com - is a private company that Net Shepherd holds a majority ownership position in. As mentioned earlier, it bills itself as an award winning search engine site with a difference. The company provides someone who enters a question on the site with the option of having a human being (not just a computer generated answer data base) search for more information for them. The applicability of this feature in the Business to Business arena is overwhelming.
Answers.com is unique in that it provides answers, often from experts, to questions, not just referrals to other Web sites. Answers.com will use Net Shepherd's Internet community to improve the quality and speed of its service while reducing the cost of the responses generated.
'The use of our proprietary technology will enable Answers.com's customers to radically reduce their costs, improve quality, and increase the speed of responses. The members of the Internet community provide a trained, dispersed, low-overhead approach which can provide a quality-controlled response service for companies at a far lower cost than traditional customer service centres. The service can also be used on companies' Intranets ('closed system' variation). The business model will also provide revenue by distributing the Answers.com service to other companies' sites, branded under their own logos. Answers.com will receive revenue from the installation work, 'per click' transaction fees and a share of resultant advertising and e-business revenue.
Answers.com was founded by idealab! in 1996 with the goal of creating revenue by providing services whereby consumer questions on any topic would be answered by experts in real time. Answers.com provided this service online and addressed customers through a unique blend of database technology and human expert support.
In the spring of 99, NSI purchased Answers.com from idealab! for the purchase price of 400,000 shares of Net Shepherd. Following the purchase of the company, NSI has hired the bulk of their management team for this new company from idealab! itself. This means that several of their management team have spent considerable time in the trenches at one of the most successful Internet Incubators in the world. Answers.com will utilize Net Shepherd's community technology to employ people's talents on the Internet to provide answers to questions in a wide range of business and consumer applications.
Answers.com's initial market is the two million US businesses already on-line - a number expected to double in the next four years. They will be offering an Internet-based equivalent of call centers for these businesses.
Their primary focus will be on the Business to Business, and Customer Relationship Management markes. As the exponential growth of the Internet continues, this Business to Business and Customer support functions will rapidly transition from telephone and mail support to the Internet.
Answers.com is using new technology together with a unique business process that will be very hard to duplicate. The NSI technology, combined with the Answers.com format, is what makes it unique and powerful.
With the pending re-launch of the site in late November 1999, Answers.com will have a renewed focus of becoming the pre-eminent supplier of 'eRelationship' management tools to companies doing business on the Web. The call centre business is approximately a $5.5 billion dollar market. Answers.com's customer service tool suite will allow companies to create a 'real time' dialogue with their Web visitors and customers. This dialogue can be used to sell and up-sell products, create a product feedback loop, save customer service operating costs, and gain real-time market intelligence.
Business Intelligence - This new 'private' business will be taken to an IPO, with the terms of share issuance will be similar to that of Answers.com.
The company is fully owned by Net Shepherd. Its new CEO was largely responsible for building Dun & Bradstreet's eccelerate.com into one of that company's crown jewels. Both his background and experience make him one of the most qualified people in the business intelligence field.
They have identified several targets for acquisition as the foundation for the business intelligence market. They will be focusing on the collection of highly accurate information on companies at a fraction of the cost of traditional methods. They are confident that they will be able to transform the economics of the business intelligence industry.
Market Research - NSI has stated that they are considering establishing a third private company which would also be based on their proprietary technology and information gathering business model. This company would provides its customers with market research, information and analysis to enable them to understand, and make critical decisions about, their products and their markets. This business would support the ability to carry out other measurement and survey related tasks for its clients.
Market Size and Potential
Based on their business model, NSI and their two new private companies are primarily targeting the huge CRM and Business Intelligence markets. There are other areas that they will have a presence in, however for now their focus will be on these key areas.
Answers.com - Customer Relationship Management (CRM) & Call Centers
As mentioned earlier, Answers.com's primary focus will be on the Customer Relationship Management markets and the Business to Business. The Business to Business market has been estimated to grow to $1.3 trillion by year 2003. Answer.com will be offering an Internet-based equivalent of call centers for these businesses. American businesses currently spends over $5 billion each year on contracted customer support activities.
According to AMR Research's Customer Relationship Management Software Report, 1998-2003, the highly fragmented CRM market will garner tremendous buyer attention over the next several years. They feel that the CRM market will grow to exceed $16.8 billion by 2003. The firm also predicts that the European CRM market will grow to $4.3 billion in 2003 from $500 million in 1998, with a compound annual growth rate of 53 percent, exceeding the 44 percent growth expected in North America over the same time period.
According to the International Data Corporation, the amount of money that businesses around the world spend on running conventional call centers (the activity that Answers.com will be offering on the Net) is already $23 billion and is expected to rise to $56 billion by 2003.
Through Answers.com, NSI will / can provide in organizations with the capability to deliver "Real Time" customer service over the Web.
AMR Research expects leading Enterprise Resource Planning (ERP) vendors to penetrate the market and acquire smaller CRM vendors as more companies move towards e-business models and establish contact centers to achieve a total view of the customer. Analysts have also stated that ERP/CRM integration is a critical starting point for E-commerce. No ERP vendor has hit a home run yet. Baan aquired CRM software maker Aurum in 1997.
ERP vendors are beginning to have a tremendous impact on the CRM market, with Oracle and Baan capturing two of the top five positions in overall CRM revenue. These top five vendors contributed 40 percent of overall CRM revenue, with the market leaders growing a hardy 90 percent combined in 1998.
With these trends, and Answers.com's technology and business model, it can safely be said that the potential for them in the Customer Relationship Management arena is almost Blue Sky.
Business Intelligence
Given the speed, low cost, and accuracy of NSI's Business Intelligence company, the commercial potential for them in this area is enormous. Forrester (the leading US Internet analyst company) estimated earlier this year that the on-line business intelligence market will be worth $11 billion within five years.
Dun & Bradstreet is still working with NSI on pilot projects, such as Web Center. D&B has a database of over 55 million businesses.
Forrester Research estimates that there will be over one million active business websites by the end of 2000.
Danny Rimer - An analyst for Hambrecht & Quist, who follows the Internet infrastructure companies was recently quoted as saying "Infrastructure on the Internet is a huge, huge area . . . 90 percent of all publicly-traded Internet companies are in the consumer space. It is actually the business-to-business sector of the Internet, companies that provide services to other businesses, that will represent 90 percent of the investment opportunity over time . . . business-to-business is ten times bigger than business-to-consumer."
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