All -
Below is Pat Garaffa's report from the show at the Jacob Javitts Center in New York City on October 7, 1998.
Pat's report was copied from the FTEL thread.
Many Thanks, Pat!!!
========
Some of the questions were difficult to answer as the reps always had someone's ear. It was not my intention to get between the reps and a potential customer in an effort to get my questions answered. In fact, I told each rep to push me aside when an interested party walked by and that happened quite often.
Franklin had 4 representatives in their booth. Peter Buswell, Helen West and Neil Wyenn and we are all familiar with these folks. I also met Eileen Rouse for the first time. She is the east coast sales rep that brought the P & T deal to Franklin.
They were all dressed in their "show" outfits, something I hadn't seen before. Everyone had on beige pants, kind of like dockers and a blue denim shirt with the Franklin logo across the front and the web site URL across the back. Everyone looked good.
They were not using the new demonstration booth to my disappointment. I was hoping to be able to call someone using the "cone of silence". They told me they weren't there to demonstrate the quality of the phone call. They only wanted to demonstrate the billing process. That's why they didn't bother with the new booth. Eileen said they felt everyone already knew they had a good quality product based on the awards at the past shows. They had a much smaller booth than the booth I was expecting but it was still a big improvement over that shoebox they were using last year.
I'm a bit concerned that they did not feel the need to demo the phone. They felt everyone already knew about their quality and I think they should be demonstrating this product at every opportunity they are given. Every missed opportunity is a missed sale. I'm still convinced the majority of the people are not familiar with this IT concept, let alone who the players are and who has the better product.
Even people at the show were there to see what was "new and exciting" and voice over IP is IT! It's going to be a long time before we can stop telling people about this new technology and it's capabilities and start concentrating on second level applications such as billing. People need to be convinced that this is a viable alternative to standard telephony and not some souped up CB radio! We can show them the invoice later. Let's get them interested in the technology first.
I'm convinced that FTEL's mission during this show was to interest other ISP's on the product. Who else would be excited about being able to quickly print out an invoice? That doesn't mean squat to me as a potential phone user but it makes a world of difference if I am interested in buying the products for resale or for use in setting up my own phone network. This is why JM Best is a big customer.
The demonstration itself was very simple. There were two telephones sitting on top of a DVG chassis. Pick up phone # 1 and dial phone # 2. Chat for a moment and then hang up the phones. The call is logged and they would go to a laptop connected to the system, click a few buttons and then print out the invoice. The invoice showed time used, dollar amount and the amount saved over standard calling card rates. The whole process took under two minutes. I would suggest unloading the deskjet printer and demonstrating the procedure with a smaller, much quicker laser printer. I watched a few demonstrations while I was there and things moved quickly until it was time to print out the invoice on the deskjet printer and we all know how fast they are! Other than that, it couldn't be simpler. Very slick and very quick.
They also had a new backdrop to the booth and some real nice new product liturature. I'm sure everyone can get copies if they call headquarters and ask for it.
I was able to spend quite a bit of time with each of the reps (in between customers) and everyone was upbeat and excited about the company and its prospects. Helen was incredibly helpful and had the answer to almost every question. Between the 4 of them, I walked away with all questions answered and then some.
A few individuals emailed me before the show and asked to have a few questions answered. I'll post the questions and answers here for all to see. Many of the answers to FNET related questions were a bit generalized since they (the reps) were all there selling the FTEL DVG billing product and not the FNET phone service. I was told Jim McGruder was to be there the following day (thursday) and I could either return or drop him a line and he'll be able to answer any questions I may have.
Q: How is the revenue from the Bosnia phone company recognized by FNET?
A: Revenue is recognized by FNET (not FTEL) and the FNET numbers are much higher than we are speculating regarding the actual percentages to FNET vs Megaburst. Peter didn't have the exact figures but he told me that FNET pays Megaburst a small percentage each month for maintaining and running the Bosnia earth stations and FNET keeps the lion's share of the revenues. He wasn't sure what those revenue's were at present or the actual percentage breakdown. A phone call to HQ would answer that question.
Someone was speculationing the other day they thought FNET would be recieving some type of admin fee of around six percent and that was it. From what I was told, it is almost reverse of that. I thought about that one after I read the post and wondered why anyone would put up a 150K to invest in an extremely volatile region with hopes of getting a 6% return. Why not play it safe and buy a T-bill! Duh!
Q: Who owns what?
A: The entire system was purchased for 150K and FTEL/FNET owns all assets of the network. It will be completely rolled up into the FNET network.
Q: What happens when the troops come home? Should we hope for a war?
A: The system is primarily used by the US troops but it is not a secure system and anyone can use it with the proper access. They are formulating a plan to market it to the locals so a clean transition can occur sometime down the road. And no - don't hope for a war because I'm positive the margins are better when selling the service directly to the locals then it will be to our troops.
I wanted to ask about the total number of stations but forgot. (I'm more like Jim Olsen than Clark Kent!). The original press release stated they purchased 11 earth stations but Frank mentioned on his pres. message that 11 of the 15 are opporational. Where did the other 4 come from?
Q: What about financing plans?
A: The FNET business plan was made available to prospective investors on Wednesday. Sutro is distributing it and Helen told ne there are already three interested parties. She did not know the amount of the first round of financing through Sutro. I thought she said 30 million but that I may have misheard her and that may have been the second round.
There is no immediate plan to raise additional cash for FTEL. There is enough in the kitty to keep them "burning" for another year without any problems. Peter said they will be self sufficient and, as long as we stay the course, will be able to function on our own revenues. I'm assuming profitability within a year? Can someone do the math? My fingers are tired!
Regarding revenues, Peter stated he felt they were on track to do about 7 million for FTEL alone in 1999. We just closed the first quarter with about 900K in revenues - about 700K was from FTEL. My math says that's almost a double each quarter until that time.
Q: What happened to the plans to have 200 domestic pops installed this year?
A: Their original plan was to be a domestic carrier with some international POPs but they quickly reversed the plan when they realized the margins are considerably better when using the product to do country to country calls outside the USA. The competition and tarrifs are also much less. The effort is now to move the network to international markets. I'm not sure of the current number of countries on line today but there is already a small number up and running and the plans are pretty agressive to expand it quickly.
Q: What is the status of the FNET cards here and overseas?
A: FNET has no real plan to market the FNET card domestically right now. Their concentration will be abroad where the demand is high and the margins are higher. They are shipping cards to all online countries except one and I don't recall which country that was. The reasons were minor and it had to do with some small gltch. That country will also be getting them soon.
The first batch of cards will not be rechargeable. The next round will and it will be as easy as calling the FNET call Center (or whatever they are going to call it) and giving them a cc number. You will be able to add time in even dollar denominations such as $20 or $50.00. Not too sure what happens if time runs out in the middle of a call. Helen wasn't too sure either. Should be interesting!
Q; Can I use it locally?
A: The current FNET domestic network is fully oporational with the bulk of it being "off net". Their system will route you through a few cheaper domestic carriers and you can connect anywhere in the USA. They are able to do it with a miniscule profit and will do so only to have a presence in the market. Again, the sales effort will be in international markets, not here where there is a phone company on every corner.
Q: What is status of demo systems at Globalcom?
A: The irony here is thet Kevin Kykendal (I know I butchered it) was the person at GlobalCom responsible for bringing the product in for testing and evaluating. They were a little miffed after he left, and came to Franklin, so any additional demo requests fell on deaf ears. Maybe Frank should have waited until they closed the deal before hiring him! (I still think we got the better end of the deal)
Q: Whatever happened to the Intrine order?
A: Hey who through that one in here! Get lost ValueSpec! <ggg>
I didn't pester them with that one and I'm sure we all know. For the record: Frank shot off a news release much too early. They shook hands (FTEL and Intrine) and FTEL had a signed sales agreement. The Intrine financing fell through and they couldn't buy the product. If they (FTEL) were guilty of anything, it was ringing the bell a little too soon. There are many more fish in the sea! Nuf said.
Q: Where is the men's room?
A: Go down to the end of the row and make a right. It's under the escalator.
Q: Will marketing efforts ever be increased?
A: They plan on doing more in the trade rags as they continue to draw attention. (should'nt that be the other way around?) The November issue of Internet Telephony will feature the new JM Best ad's (Ray Burke had posted it on one of the bords the other day). It was real slick. There will also be some type of a profile on some of the Franklin customers who have purchased DVG products. Many of these systems were purchased under the agreement that FTEL would not release their names in a press release or as a reference. They don't want to be bombarded by a bunch of yahoos (us) asking them how they like the product.
A word to the wise - don't pester potential or current clients with FTEL questions. Got a question? Call FTEL! Also they will be doing whatever show is appropriate and I hope they take the darn phones along. Eileen Rouse will be demonstrating the Tempest and the AMAS system in P & T 's booth at a trade show in Atlanta the end of the month. Anybody live down there! Git yer butts on over there an see da show!
Q: What about keeping the investors better informed?
I emphasized the importance of this to Helen and I believe she agreed. If we were better informed about what was going on, we would not be bombarding them with phone calls and emails all day long. That is not too productive. I emphasized that a better use of their time would be to put timely updates on the web sites and that would alleviate most of the calls. Even a paragraph or two is all we need, as long as it is done on a regular basis. She told me they already had some plans to update it on a weekly basis (don't hold their hands to the fire yet) and they realize now how important it is. They are shooting for a weekly update but lets give them a chance to get it going.
Q; What ever happened to Internet Passport?
A: It is alive and well. The only thing that went away was the name. It is all rolled up under the FNET network. They were guilty of keeping the Internet Passport name seperate for too long and it gave us the impression that their plan was to keep it that way. Most of the reasoning behind that was Sparrow Marconi (her parents were probably rebels from the sixties) wanted to continue to seek outside opportunities such as Netwaves, etc and Frank only wanted the darn thing so it could become part of the phone network and nothing more. Most of those additional projects that Sparrow brought in have been de-emphasized to allow all manpower to focus on the DVG and the network expansion. They are now focused on 2 projects, and not 22 as some would have you believe.
Q: What is the status of the conversions?
A: Well beyond the half way point. The total number of converted shares is reported to Helen on a regular basis from their accountinmg department. (Maybe they could give us an exact answer). Swartz originally brought 9 investors to the table. One guy had as little as 100K in investment money. Each was offered the same deal regarding the prefered shares and each was able to convert the same 20% each month. 3 are completely done and the other 6 are way beyond the halfway point. Helen felt as thought the conversions should be coming to an end very soon.
Well that's all that I had. Of course, the small talk went on for over two hours and all of that was positive as well. All in all, things are starting to look up for our fledgling little company. They are much more focused and have an extremly talented management team to get them where they want to go.
Pat "Scoop" Garaffa
|
