Net Shepherd Inc.
Topics:
Executive Overview
Background
What does this Company Does and Why is it Needed
Business Strategy
Net Shepherd
Answers.com
Business Intelligence
Market Research
Market Size, and Potential
Management
Partners & Licensing Agreements
Competitive Advantage
Competitors & Challenges
Management's stake in the Company
Financials
Share Value Projections
Timeline
NASDAQ Listing
Recognition
Final Thoughts
Executive Overview
This document is as an overview of a Canadian Internet company that I believe has a tremendous future ahead of it. This overview is intended as merely a summary, and not a full analysis of the company. Much of the information in it has already been posted on the Net Shepherd discussion thread on the financial discussion web site Silicon Investor. I have been an active contributor on this site, and have used much of the information on it to help me explain this story. (http://www.siliconinvestor.com/subject.aspx?subjectid=25143)
I want to make it clear that I am not employed by this company, nor have I been reimbursed in any way for preparing this document. I am just a shareholder who believes that they have a compelling story that needs to be told. I took the initiative to do this after reading that Net Shepherd's president, Don Sandford's made the comment that their "greatest challenge is to educate the market on the possibilities of their ICM Version 2.0 and their compelling business models". By way of this summary, I am hoping to help them spread their story.
What first attracted me to this company was the potential I saw in how they planned to leverage their patent pending processes and use of technology. For all intents and purposes, they have created a virtual task force of dedicated and trained individuals who are capable of performing tremendous amounts of work at speeds that can only be described as an exponential improvement over current methods other firms employ. The company manages this task force through their innovative Internet Community Management System V.2.0 (ICMS).
This ICMS has evolved over the past three years. As the company began to fully appreciate the potential of what they had developed, they bit the bullet, and made the transition to their new business model where the ICMS is at the core of what they now do. They quickly realized that with their virtual work force they had the capability to address many tremendous market opportunities in the areas of Customer Relationship Management, Business to Business services, Business Intelligence, and Market Research. In order to take advantage of the low hanging fruit before them, they recently formed two new private companies and have brought in stellar management teams for both of them.
A few months ago, Net Shepherd laid out their plans in a document they referred to as their "Road Map."
In my opinion, this company's award winning Management team has what is needed to take their business (and its shareholders) much further. They have the depth and breadth of experience they need, they have strong partners in both North America and in Europe, and they have a stellar client list of companies and organizations who are strong advocates of what they offer, and whom have also become strategic partners of theirs.
The combination of no debt, low operating costs, tremendous response time, and uncompromising quality controls give them a huge competitive advantage. This business model has at its core a combination of world leading technology and a dedicated, efficient, and virtual task force that can, and will, do great things. I am convinced that they are now poised to use the competitive advantages they have to fully capitalize on the opportunities before them.
Net Shepherd is a publicly traded company on the "Canadian Venture Exchange - V" (formerly the Alberta Stock Exchange - ASE) under the ticker symbol WEB, and their two other businesses - Answers.com and Business Intelligence are currently private companies. Net Shepherd has stated their plans to secure a NASAQ listing for themselves as well as for each of their two private companies they own within the next 6 to 18 months. Over the short, medium, and long term, I see this company as being able to provide its investors with the potential for realizing a significant return on their investment.
I hope you enjoy reading this.
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Background
In 1996, Ron Warris took over a Junior Capital pool company named Enerstar. On March 21st, 1996 Enerstar began trading on the Alberta Stock Exchange (ENR). On August 20th, 1996 the company changed its name to Net Shepherd (WEB). Mr. Warris's original business plan was to evaluate World Wide Web content for suitability to various age groups. It became obvious that he had recognized a business need for this service as they were the first company to create and implement a filtered search engine.
The company's first project was to assess 1.5 million sites and catalogue them in a database. Rather than do the work itself NSI assembled 300 people into a virtual task force, and then developed software to help these people work together. The members of this task force (now known as the Internet Explorers Society) choose their own workloads and are compensated accordingly.
"A real sense of community evolved," Warris says. "That's when I started thinking about creating an environment where people can form communities and work together on these sorts of projects."
Their purchase of Chronologic Systems Inc. in 1998 enabled them to begin the scaling of their Virtual Community based operation.
The result was the Internet Community Management System.
"What we really have is an asset of people, people that we can have do all kinds of different things," Warris says. "We're changing the way work can be done by leveraging the Internet and community advantage."
The Internet Explorers Society will be offering their researchers a true sense of community, or belonging. This task force is basically a large number of individuals connected by, and performing services to customers of, Net Shepherd over the Internet utilizing NSI's proprietary systems. The Internet Explorers' Society is really a distributed 'Task Force', which can be called upon for various projects. For example, they have the ability to collect comprehensive National and International market research for clients such as competitor pricing and product availability in a matter of minutes or hours, rather than the current standard of days, weeks, and months.
Net Shepherd's online community - the Internet Explorers Society is located at www.netexplorers.com.
On April 20th, 1999, NSI applied for a patent dealing with their unique use of technology and a distributed task force. The patent approval is now pending. They plan to license their innovative technology to new companies they set up, and then take each of those companies public on NASDAQ. They also will be licensing this technology to others.
NSI has just gone through the difficult process of switching their core business focus. They found that the system integration part of their business was very labour intensive and the profit margins were low. Their focus has now shifted primarily to virtual communities and the lucrative spin offs that this has spawned.
The company advertises itself as able to help companies who want to transform the way they do business and create for themselves new opportunities using the Internet. NSI bills itself as a leading provider of virtual community solutions which enables the gathering of information and the management of work - at the speed of the Internet. They have demonstrated a performance standard which shows a ten fold improvement in speed and cost (with a higher degree of accuracy) than any of their existing competitors.
Their main areas of concentration will be to deploy the members of their Internet Community (Virtual Task Force) so that they can focus on commercially viable applications in a number of fields. These include addressing the needs of the huge demand for Customer Relationship Management, Business to Business services, Business Intelligence, and Market Research otherwise known as Knowledge Management.
Net Shepherd is also setting up an Internet Strategy Architecture consulting and software service that can combine virtual communities, legacy computing systems and I-business together into a cohesive, profitable Internet business process for its customers.
NSI, and their partners, are at the forefront of the commercial application of XML. This technology will change peoples' paradigms about the Internet.
They are working on a number of "Game Changing" International Pilot projects which could easily translate into significant revenue streams for them in the near future.
They have also undertaken a number of N. American based Pilot Projects for which they are now building the infrastructure they need to roll out, and more importantly, replicate for other organizations. These are ambitious plans which have applicability on a world scale.
It is their intention to continue to make strategic investments in their technology platform and they plan to continue to aggressively pursue the best route to NASDAQ, either on their own or in a relationship with another company.
NSI has a clear vision for where they are headed, and they have outlined these plans in their "Road Map" document (http://www.netshepherd.com/media/news_releases/archive/pr19990806.asp).
Based on what they have accomplished to date, they are making real progress towards building the required infrastructure to ensure their plans are realized.
What does this Company Do & Why is it Needed?
This company is really three companies in one. First, they have their parent company - Net Shepherd (NSI). NSI helps companies who want to transform the way they do business and create new opportunities using the Internet. They facilitate the gathering of information and the management of work at the speed of the Internet. NSI also helps organizations to develop a complete strategy for the challenges and opportunities that the Internet brings. They combine virtual communities, relationship management, legacy computing systems and I-commerce together into a cohesive business process.
The next company is Answers.com. This company refers to itself as an award winning search engine site with a difference. They provide a person (customer) 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. Answers.com is unique in that it provides answers, often from experts, to questions, not just referrals to other Web sites. Answers.com will be able to use Net Shepherd's Internet community to improve the quality and speed of its service while reducing the cost of the responses generated.
The third company is their Business Intelligence operation. This company will focus on the collection of information on companies at a fraction of the cost of traditional methods. Their demonstrated exponential improvement in time and cost to gather accurate information will transform the economics of the business intelligence industry. A senior manager of Dun & Bradstreet (the world leader in this area) has stated that . . . "Net Shepherd's software is phenomenal."
NSI has also expressed their intention of starting a market research company as well. They have not formalized these plans at this time.
As mentioned, each of these businesses will be utilizing the Internet Community Management (ICM) as a base.
NSI's Virtual Community system exponentially cuts through the costs and time required by an organization to collect and report the information they need. Over the past 3 years, they have worked to develop and refine a radically efficient way to mobilize a task force of thousands who can search for the information clients need and bring it together in a matter of minutes, hours, and / or days. This collection of information can also be compiled either through P.C's or through mobile Palm computers. This mobility of their Virtual Task Force offers an endless number of business applications. To the company's knowledge, Net Shepherd is the first company to have acheived this. They have a significant 'first to market' advantage, and they have made major strides at securing this advantage with their patent application.
The use of the Internet Explorers Society community gives a company or an individual the added benefit of a Human-Assisted Search. The combined use of the power of computers, as well as human assisted searches (which takes into account both content and context) provides a significantly more relevant and higher quality answer to any query.
NSI has proven that their model is a tremendously viable, economical, and powerful example of the benefits of a virtual task force. This model is extremely flexible and it can be deployed across the Internet, and within corporate Intranets. It utterly transforms the economics of the collection and assessment of on-line and off-line information. In this Information Age, speed and scalability are increasingly strategic, and much sought after resources.
In an earlier pilot test, one of their customers, a major credit card company, utilized their Distributed Taskforce to determine how many of its merchants had enabled their websites to accept credit cards, by credit card type. The information is being used by this customer to develop strategies to increase their card usage. Increased data collection speed via the Web reduces time to decisions and time to market. The Internet Community Management System also provides organizations with the ability to establish new revenue streams from information and create additional value for their customers.
In the field of Business Intelligence, NSI has spent the last few months demonstrating to clients that they are able to collect highly accurate information on companies at a fraction of the cost of traditional methods. They have shown that the productivity and low cost base of the Community is such that in an initial pilot test they collected 200,000 pieces of information collected from corporate websites in only three days. This test was sponsored by Dun & Bradstreet (D&B) and it entailed a corporate Director's search so that they could update their data base. When compared against the more traditional methods of collecting information, the results were obtained at a tenth of the cost, in a tenth of the time, and at a quality level equal or better than their past methods.
More specifically, this test was intended to measure the speed, cost, and accuracy of the collection of information from distributed web sites. D&B wanted some specific information collected off of approx. 10,000 targeted sites. D&B had conducted their own information search and it took them approx. 30 days to collect the information, at a cost of $2.50 per site. Net Shepherd duplicated the same search process. They completed this collection of data in 3 days (vs.. 30 days for D&B), and their average cost was only $.25 per site vs.. $2.50 for D&B. Fifty members of the Net Explorers Society completed the job in three days, and an audit rated the accuracy of their work at 90 per cent.
The demand for this type of performance within the Business Intelligence market is huge. NSI is way out front of their competition in their ability to service this demand. For example, the competition amongst News Service and/or Knowledge based organizations for "real time" (immediate) information is more intense now than ever before. No other organization is close to matching Net Shepherd's performance.
The Internet Community Management System is now in its version 2.0. It provides customers an easy way to capture and analyze new information including market research, data collection and verification, as well as web content categorization and characterization. It extends the functionality of the company's custom community system and allows the community manager to address community member performance and quality assurance issues. The new platform is server-based and multi-use and has a wide range of applications, including Internet content management, business intelligence, call center automation and e-business communities.
NSI is already dealing with over one million pieces of data collection or website evaluations every month. With the new ICM 2.0 system, they have the ability to more than triple that amount.
Now that the Internet Community Management system (ICMS 2.0) is commercially available, they are starting development work on Version 3.0. They state it will have much wider commercial applications than 2.0 and will enable them to provide a richer experience for their on-line community members. Version 3.0 will also use highly sophisticated machine tools such as neural networks to enable them to offer faster, more sophisticated and lower cost services to their customers. This will be available during the second half of 2000.
Net Shepherd, along with their small army of human researchers (currently estimated at 1,500 people) is now well positioned to offer their technology and search capabilities to client organizations. They are confident that with NSI's help, their clients will be able to deliver exponentially improved service and support to their key customers.
NSI also has the capability to conduct Market Research by distributing and retrieving answers to questions in minutes rather than days or weeks. This equates to a fraction of the time and a fraction of the cost of the traditional methods of research. This rapid response of the Community and the analysis of that response mean that follow-on questions can be asked almost instantly. It also means that 'real-time' conversation can be carried out with a sample of a company's market. This transforms the nature of market research, making it possible for companies to use techniques which simply couldn't be done before.
The technology is low cost, easily customizable, high quality and fast. It offers a very significant competitive advantage to companies, who can now conduct strategic market research in real time across the Net. In an era of intensifying competition and shortening product life cycles this service will only increase in value as the advantages it offers becomes better understood.
As the whole industry is moving toward a wider use of knowledge-based technology, Net Shepherd is well positioned as an excellent near, medium and long-term play.
Here is a link to Q & A section of NSI's web site.
netshepherd.com |
