[foundation-board] Viderum Budget Proposal
Jane Silber
jane.silber at canonical.com
Mon Apr 18 13:15:11 UTC 2016
Of course.
thanks
Jane
On 18/04/16 14:12, Pavel Richter wrote:
> Hi Jane,
>
> thank you for your great comments, I will reply in more detail later.
> But is it OK if I share them with Sebastian?
>
> Pavel
>
> On 18 April 2016 at 15:00, Jane Silber <jane.silber at canonical.com
> <mailto:jane.silber at canonical.com>> wrote:
>
> Hi -
>
> Thanks for the thorough analysis, as always.
>
> I support the proposal but have a few comments/conditions.
>
> A. My recollection differ from yours on some of the assumptions.
> Specifically,
> 1. There was an assumption about a workable, scalable model.
> I think there were ideas to explore (e.g., SaaS) but the state at
> the time was that there was no scalable model. We had
> conversations about the current NRE/consulting model didn't scale.
> When I raised that concern I was told that part of the spin out
> idea was to give time and space to find that business model in a
> way that couldn't be done directly by OKI.
> 2. OKI team would join. I agree that this was an assumption,
> but it don't think it really mattered and is likely for the best
> anyway. I specifically raised concerns about the
> skills/temperament of those folks and whether they were right for
> a start up. I've never met them so this wasn't a performance
> review, but rather an observation that a commercial start up
> requires a different intrinsic motivation than OKI
> 3. I do agree that this was an assumption.
>
> B. I'd like a little more clarity on what will be achieved in the
> period up to July 2016. You say that you'll hire Irina as a
> consultant to give a second opinion. I don't think that's
> enough. If we're going back to basics, then we need to go back to
> basics with a business case, plan and a board level go/no-go
> decision in July. This may be what you mean be "a review in
> July", but I think it should be more explicit that there is a
> clear decision point on whether we reverse the previous decision
> to pursue Viderum or continue (and if we continue, what the
> plan/milestones are). We should avoid the slippery slope of
> funding Viderum in 3 month chunks because it needs a little more
> time/money to figure things out.
>
> thanks,
> Jane
>
>
>
> On 14/04/16 22:21, Pavel Richter wrote:
>> Dear Board of Open Knowledge International,
>>
>> I am hereby asking you to approve the following proposal
>> regarding changed to the business model and the budget of
>> Viderum. You can find the same document as a Google Doc here
>> <https://docs.google.com/document/d/1x3dqMivjA1MfWoKFjkkOCAEj2QLocKSeBsOkszMe8UA/edit>.
>>
>> ________________________
>>
>> Viderum Budget Proposal
>>
>>
>> From: Pavel Richter, CEO
>>
>> To: The Board of Open Knowledge International
>>
>> CC: Mark Gibbs, COO, Sander van der Waal, Portfolio Director
>>
>>
>> Date: 14. April 2016
>>
>>
>> Summary: In this memo, I make the case for a change in direction
>> for Viderum. I propose to move from a model that seeks to raise
>> venture capital quickly to a model that bootstraps our efforts in
>> developing CKAN in a viable business. The reasons for this change
>> in direction are outlined in this memo.As part of this change, I
>> propose to change the compensation package of the CEO of
>> Viderum.We will evaluate the progress of Viderum along this new
>> proposal together with an external consultant, within the next 3
>> months.
>>
>>
>> Back in September 2015, when OKI hired Sebastian as CEO of what
>> was has now become Viderum, all parties involved made a number of
>> assumptions, based on available information.
>>
>>
>> 1.
>>
>> Assumption:OKI commercial has a working, scalable business
>> model.Reality:It turned out that this was not the case: The
>> business model was dependent on one-off consultancy projects,
>> which put a heavy strain on the sales approach. Sales was
>> done by Rufus and through ckan.org <http://ckan.org>. Hosted
>> sites were built on widely divergent, one-off infrastructure
>> with complex support requirements.What did Viderum do about
>> it?Viderum designed a new business model with the team and
>> built a cloud-based highly scalable unified infrastructure to
>> reduce cost of operation (ready in November 2015 - migration
>> of customers from old systems ongoing).
>>
>> 2.
>>
>> Assumption: OKI’s commercial team (Jo, Arturas, Adria, Brook)
>> will join ViderumReality:Only Arturas accepted to join,
>> others preferred involvement in non-commercial efforts at
>> OKI. This let to loss of domain knowledge for Viderum, which
>> in turn resulted in slower business development capabilities.
>> It also let to some morale-reducing priority conflicts and
>> time-consuming coordination tasks between Viderum and
>> OKI.What did Viderum do about it?They had to hire whole new
>> staff (currently one new product manager, one new project
>> manager, two developers) that needed onboarding and training
>> on the technology used.
>>
>> 3.
>>
>> Assumption:Most importantly, we assumed that OKI has a
>> profitable commercial services business in September
>> 2015Reality:The visibility into the actual financial
>> situation was not given for a long time, and only recently
>> could we assess the actual financial situation. It turned out
>> that profitability of the OK commercial services was
>> dependent on heavy resource sharing and cross-project
>> bookings between commercial and noncommercial projects.This
>> made the search for VC capital over the last couple of months
>> impossible, because we were not able to show a viable and
>> sustainable business model to potential investors.What did
>> Viderum do about it?Worked with OKI finances to properly
>> account for commercial services and developed a business case
>> that is attractive to outside investors.
>>
>>
>> None of these things are really show-stoppers; given the state of
>> administrative processes of OKI in September 2015, and given that
>> OKI never invested in commercial services as a sustainable
>> business, it is no surprise that things turned out different than
>> we expected them in September 2015.
>>
>>
>> But this has two consequences, that OKI needs to address:
>>
>>
>> 1.
>>
>> We initially expected Viderum to be able to take on larger
>> amounts of external funding from VCs in order to grow its
>> business. But because development of Viderum will take more
>> time and effort than we expected, I now propose to bootstrap
>> Viderum until July 2016. Therefore, OKI needs to make the
>> decision to continue to support the development of Viderum.
>> We expect this process to be funded out of the current
>> business of Viderum
>>
>> 2.
>>
>> The contractual agreements between OKI and Sebastian (as CEO
>> of Viderum) were very much dependent on the key assumptions
>> listed above. We were expecting Viderum to get VC funding
>> much quicker than it turned out to be possible, and we
>> expected the whole business to grow faster than it actually did.
>>
>>
>> Regarding the development of Viderum, Sebastian, at my request,
>> has put together a budget that addresses the additional work and
>> the new circumstances under which Viderum needs to operate.He has
>> broken it down to three possible scenarios:
>>
>>
>> Viderum Budget March 2016 - July 2016 (5 months)
>>
>>
>>
>>
>>
>> Worst
>>
>>
>>
>> Likely
>>
>>
>>
>> Best
>>
>> Revenue
>>
>>
>>
>>
>>
>> *
>>
>> One-time
>>
>>
>>
>> 118,300 €
>>
>>
>>
>> 313,300 €
>>
>>
>>
>> 400,800 €
>>
>> *
>>
>> Recurring
>>
>>
>>
>> 66,682 €
>>
>>
>>
>> 66,682 €
>>
>>
>>
>> 66,682 €
>>
>> Total Revenue
>>
>>
>>
>> 184,982 €
>>
>>
>>
>> 379,982 €
>>
>>
>>
>> 467,482 €
>>
>>
>>
>>
>>
>>
>> Cost of Sales
>>
>>
>>
>> *
>>
>> 33,902 €
>>
>>
>>
>> *
>>
>> 130,152 €
>>
>>
>>
>> *
>>
>> 152,027 €
>>
>> Gross profit
>>
>>
>>
>> 151,080 €
>>
>>
>>
>> 249,830 €
>>
>>
>>
>> 315,455 €
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>>
>> Expenses
>>
>>
>>
>>
>>
>> Staff
>>
>>
>>
>>
>>
>> *
>>
>> Staff
>>
>>
>>
>> 127,235 €
>>
>>
>>
>> 131,631 €
>>
>>
>>
>> 144,818 €
>>
>> General Expenses
>>
>>
>>
>>
>>
>> *
>>
>> Technical
>>
>>
>>
>> 19,167 €
>>
>>
>>
>> 19,167 €
>>
>>
>>
>> 19,167 €
>>
>> *
>>
>> Marketing
>>
>>
>>
>> 5,500 €
>>
>>
>>
>> 12,500 €
>>
>>
>>
>> 25,000 €
>>
>> *
>>
>> Others (Rent, legal, supplies)
>>
>>
>>
>> 17,900 €
>>
>>
>>
>> 17,900 €
>>
>>
>>
>> 17,900 €
>>
>> *
>>
>> Accounting
>>
>>
>>
>> 15,266 €
>>
>>
>>
>> 15,266 €
>>
>>
>>
>> 15,266 €
>>
>> *
>>
>> Travel
>>
>>
>>
>> 5,000 €
>>
>>
>>
>> 5,000 €
>>
>>
>>
>> 5,000 €
>>
>> Total general Expenses
>>
>>
>>
>> 62,833 €
>>
>>
>>
>> 69,833 €
>>
>>
>>
>> 82,333 €
>>
>>
>>
>>
>>
>>
>> Net income / loss
>>
>>
>>
>> *
>>
>> 38,988 €
>>
>>
>>
>> 48,366 €
>>
>>
>>
>> 88,304 €
>>
>> For a detailed breakdown of these numbers, please see this
>> spreadsheet.
>> <https://docs.google.com/spreadsheets/d/1e27qBfXC-x8uS2dA3nQKalDWVhq70BjEK7ZMKypzIjQ/edit#gid=1821942248>
>>
>>
>> Our new COO has been actively working through the figures that
>> have been accrued against the projects that Viderum have taken
>> over. Although we are still having a difficulty to forecast we
>> do perceive that the CKAN projects that are now in viderums
>> portfolio would yield a net profit in excess of £30,000. This
>> would then mitigate a proportion of the perceived loss in regards
>> to the worst case scenario listed above, further reducing the
>> maximum potential loss to 9.000 GBP.Mark Gibbs is actively
>> working with our auditors to define the best way to breakout that
>> income from OKI.
>>
>>
>> Part of this budget is a revised compensation package for
>> Sebastian as CEO. Based on the positive case presented in the
>> fall by Rufus (who was himself relying on an incomplete overview
>> of the actual financial situation), Sebastian agreed to a
>> considerable discount in expectation of external investment
>> within six months. Since September, Sebastian earns just 2,500 €
>> / month. His monthly pay would have been raised to 7,500 € as
>> soon as outside investment would have been secured.
>>
>>
>> Due to the factors detailed above, finding external investment
>> has been significantly delayed. While Sebastian (and I) are still
>> confident that it is possible, it will definitely require a more
>> patient, long-game approach than anticipated. Based on this new
>> approach, I want to increase Sebastian's monthly costs to 7,500
>> €, which would give Viderum the needed management attention while
>> allowing Sebastian to focus on Viderum exclusively. This is
>> already part of the budget scenarios above.
>>
>>
>> Both myself and Mark Gibbs believe that the above listed approach
>> should be supported and then make a full review of Viderum in
>> July 2016. In order to be able to make a full assessment of the
>> potential of Viderum with this new business model, I am planning
>> to hire Irina Bolychevsky as a consultant. She will be tasked
>> with evaluating the business model and giving me a second opinion
>> on the proposed way forward for Viderum.
>>
>> _______________
>>
>>
>>
>> --
>> Kind regards
>>
>> Pavel Richter
>> CEO
>> Open Knowledge International
>>
>>
>> _______________________________________________
>> foundation-board mailing list
>> foundation-board at lists.okfn.org
>> <mailto:foundation-board at lists.okfn.org>
>> https://lists.okfn.org/mailman/listinfo/foundation-board
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>
> --
> Jane Silber | CEO | Canonical
> Dir:+44 (0)20 7630 2472 <tel:%2B44%20%280%2920%207630%202472> | Mob:+44 (0)7899 891 943 <tel:%2B44%20%280%297899%20891%20943>
> www.canonical.com <http://www.canonical.com> |www.ubuntu.com <http://www.ubuntu.com>
>
>
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>
>
> --
> Kind regards
>
> Pavel Richter
> CEO
> Open Knowledge International
>
>
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--
Jane Silber | CEO | Canonical
Dir: +44 (0)20 7630 2472 | Mob: +44 (0)7899 891 943
www.canonical.com | www.ubuntu.com
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