The dreaded visit post!
NOTE: This darn thing is so long, there may be problems with editing... give me a break on that, please :o)
I feel I should have intro music playing or something. :O)
I will try to remember and give you a synopsis of everything I remember honestly and clearly at the time. Make your own assessment and do your own DD.
Before we begin, I want you all to know that I feel that Tom Burgess was upfront and straightforward as much as he was allowed. I find him to be a man of integrity and character, two qualities necessary to grow these small companies into great ones. He was very personable and gave us a great deal of his time... even after he had to go meet someone he stayed and talked to us. I have nothing but good things to say about him and David will also agree. I trust my money with this company now more than I ever have.
I called Tom Burgess the night before and left a message on his machine as to whether or not we could meet with him at Echomedia. He called me back in the morning and was more than enthusiastic about us coming down. He said it was a casual dress day at the office and we could just dress in whatever we wanted.
We(David and I) got into Newport, RI at about 2:30 and stayed until 4:00. We found Echomedia as soon as we entered Washington Square. It was a sizeable brick building(two stories), with a black sign that said "Echomedia" etched in gold finish on the side of the building. Mr. Burgess told me to enter through the back on the phone, because there was construction going on the first floor, and they had it locked up.
David and I both entered the office, which was on the second floor, and were asked to wait until Tom Burgess could come out. The office had a secretary answering the phones, with a man inside an office off to our left. There was another office with another man right next to that sitting in the computer. That seemed to be the big tech room and where they work on their software for the internet.
We waited for about 3-5 minutes and Tom Burgess came out. He greeted us and we walked inside. Here, the conversation begins.
FINANCIALS
Tokyo, let's face it... they're not going to tell us when the financials are going to be released. We can't do anything about that. Burgess doesn't have an exact day. All he could say was soon... a very short amount of time... we couldn't get the info out of him and we weren't gonna try.
With the release of these financials, there will be a release of the other "really exciting things" that are going on within the company. Netmaster Group's base is moving to NY, along with Echomedia's sales' team, and probably occupy the headquarters for Softbank Interactive Marketing.
If I could please ask all investors to stop ringing Burgess' phone off the hook, it would be appreciated. He's not primarilly interested in financials; he's interested in growing this company. That's why I'm in this. That's why I can relate to what he's going through with investors right now.
One point I want to drive home to all investors here: What Tom Burgess cares about is the company itself, not the investments. He has grown three companies, Echomedia being his third, and the only one being private. He did not know a great deal about the financials, other than the fact that they are working on them in El Segundo, California. They are working on getting the services of a New England investment bank. They have retained the financial services of a "big 6" accounting firm. The person heading the overseeing of the financials from the company is Lawrence Howorth. You can read about Lawrence Howorth at:
internetworld.com
I have a number to contact Lawrence Howorth, but I am witholding it because I do not want his phone ringing off the hook. If you have questions for him, contact either me or David or post the questions. This is a way we can streamline the calls to the company and not get them angry at us so they withhold all info.
HISTORY
The history of this company is simple. Tom Burgess needed some money for Echomedia, and he went around looking for someone to give him some. He got a few offers, such as a company out west offering him money to move out there with Echomedia. There were several others, but Tom told us he wanted to stay put. Star Medical came along, which consisted of British investors. They said that they were willing to give him the money that his company wanted in exchange for the company itself. They(the british investors and Burgess) all agreed that Burgess would stay on as CEO and become VP of the new entity that was to be called Netmaster Group. There was no outstanding debt to this shell company prior to the acquisition from what I could gather. They were offering him a chance to stay in Newport, which is what he wanted. And because this was a public company, it was a perfect way of evaluating the worth of this company. It's easier to do deals that way. I could relate to that comment. In order to attract clients, sometimes, you have to show them how much you're worth. Unfortunately, without a guage, it's next to near impossible to guage a worth to any software/internet company that does not have anything tangible except for some guys, a few computers, and an idea. Aside from the valuation of the company, Mr. Burgess pointed out that it was an easy way for this company to go public, and in a cheap way. It was also an easy way. He told us that DoubleClick tried to go public three times; they failed twice. The third time they finally did it.
When he got the money, he went out and stole some people from Digital Equipment corporation. Because I'm stupid, I didn't write these people's names down. But I do remember that these people were heading the video streaming project over at DEC. The people's names are listed somewhere on this thread, but I have no idea where.
While he was talking about this, I noticed a diagram on his window that consisted of Netmaster Group and Bellcore and an arrow from each boxed name feeding into NETZ-Autotrak. I realized that we still don't know just what NETZ-Autotrak was, and apparently it's the product of this press release:
biz.yahoo.com
They have put this project on the backburner, however, and have donated a great deal of time to the construction of Echomedia's ground floor and the completion of the financials. Mr. Burgess assured me, however, that there are people working on this still. I'm assuming they are writing code as we speak. :o)
Now we come to Softbank Interactive Marketing.
1)How much did they pay?
ANSWER: Mr. Burgess didn't tell us exact numbers because, again, he doesn't know what he can/cannot tell us that would classify as insider info. But I asked him, as TokyoMex alluded to, whether or not they paid more than 2 million. He stated that they paid a lot more than that. He then went on to tell us that the budget they have for acquisitions in '98 lost a big chunk of it after the acquistion of Softbank. How much? Insider info.
2)Were they looking for other companies?
ANSWER: Yes. They had been in talks with other companies, including one i had never heard of called "Cats" and one I have called Cybereps. They were in talks with Mike Warsinske, with the possibility of getting Cybereps acquired. A background on Mr. Warsinske and the company can be found at:
cybereps.com
and
cybereps.com
3)Why did they finally choose Softbank Interactive Marketing?
ANSWER: They did it for two reasons. First, the deal they got on it was pretty good, considering the revenues it did last year. They already have a network of sales forces in Boston, NY, Los Angeles, and a lot of other ones. They had one in Chicago, but closed it. They are looking to add one in Detroit.
Next, it was better than anything at the time. Unfortunately, the company is not profitable. One of the ways he was going to make it profitable was to cut salaries. He stated that there was absolutely no way that they were going to pay the salaries of these bigtime executives. So they dumped some dead weight. Others they kept on because they needed them.
See guys? All very reasonable explinations.
THINGS WORTH MENTIONING:
Mr. Burgess honestly was not aware of the 42 million outstanding. Last he heard, it was 33 million. Also, he was surprised to hear that Neil Miller owns only 8% of the company. He said those numbers were odd and possibly wrong, and that Mr. Burgess, even with the 42 million outstanding, owns about 10%. I am assuming these investors own the other locked up ones... along with softbank holdings.
His role is being reduced to the Director of Business Development. He has taken a backseat in this company, but he assures us that he will remain with the company as he believes in the potential. He likes where he is now and he wants to stay there.
Echomedia was profitable when purchased. That's what made it so darn attractive. That's outstanding for a company such as this with a revolutionary idea for web advertising.
Questions that I will ask in a follow up phone call with Tom Burgess:
1)Echomedia... what does it make a year?
2)Where is the NY address(I've already made the assumption it's Softbank's headquarters)?
3)I need a list of clients using WYW and Sesame Ad.
4)What's going to go on at Jupiter(a trade show that they already are planning to go to)?
Matty Gregg
PS Does someone please wanna help me do DD on HRCT?!?! Please check it out! There could be sumpin worth the darn. :O)
I'm outta here. Going to supper with my love. This is the first time in my life I can say that I deserve it. :O) |
