MIT Sloan 50K Competition 1998 Finals & Keynote Address by Bill Porter SM ‘67
BOB ANDERSON: Thank you all for coming tonight. I'm Bob Anderson. And on behalf of the MIT Enterprise Forum of Cambridge, I want to welcome you all to this evening's presentation of the 50K Competition final event. The MIT Enterprise Forum of Cambridge has been hosting the 50K final event since it started in 1990. We are thrilled to highlight the extraordinary talent, ideas, and enthusiasm for entrepreneurship that exist within the MIT student body.
The Forum's mission-- to help entrepreneurs build successful companies-- fits well with the student run activity. And the forum will be a resource for these teams once they've graduated and begun the serious business of building a company. Our jumpstart clinics, startup clinics, [? 10250s, ?] spring and fall workshops, and technology briefing series all help entrepreneurs.
The MIT Enterprise Forum of Cambridge is celebrating its 20th anniversary this year. Begun as an educational service to MIT alumni, the forum has broadened its reach to include not only the MIT community, but the entire entrepreneurial community of New England. There are also 18 enterprise forum chapters worldwide, all dedicated to promoting the growth of technology oriented companies. And in fact, they're often linked.
On May 21, Professor Bob Langer will be giving a satellite broadcast out of [? Crusky. ?] More information on that is in the brochures at the entrance. Here in the Boston area, these teams also find a great infrastructure of resources to help them build their companies. One example are the volunteers and the sponsors of the MIT Enterprise Forum. I want to thank tonight's sponsor, Goodwin, Procter, and Hoar, for their long-term support, both of the forum and entrepreneurs in general. You should all have a fun time tonight I extend my congratulations to all the 50K entrepreneurs, especially tonight's finalists. Thank you.
Welcome everybody to the ninth annual MIT 50K Entrepreneurship Competition. So what's on tap for tonight?
PRESENTER: What is on tap for tonight? First we want to talk for a moment about what is the MIT 50K for some of you who haven't run into the competition before. Then we're really excited to have Bill Porter, founder and chairman of E*Trade [? Group ?] [? Inc. ?] coming to share some words of advice with these teams who are launching their ventures.
Next we'd like to introduce the organizing team that will be running the competition next year. And finally, the part that we're all here for tonight, each of the finalists teams will be presenting their business ideas for you, and you can be the judge. And at the end of the evening, we'll find out who are judging panel chose this year's 50K grand prize and runner up winners.
First, before we continue, we'd like to thank our sponsors. Our sponsors give us the money that it takes to run the competition every year in addition to the $50,000 worth of money we give out as prizes each year. We also take about 50 to $60,000 to put on each of the programs. We have several events sponsors. Motorola New Ventures sponsors our team building dinners each month. Testa, Hurwitz, and Thibeault sponsors the Intellectual Property Seminar. Polaroid sponsors our Ideas and Innovation Seminar. And McKinsey and Company sponsored our first ever Global Startup Workshop for organizers of business plan competitions.
We also have many other sponsors who provide the services, the money that it takes to keep our lights running and our office going and our faxes going out every year. And we have sponsorship from alumni who have given back to the competition Silicon Space, our inclined sponsors who provide services to the teams coming out of the competition, and very importantly, our sponsors within MIT, including all the groups here and MIT Resource Development.
So what are the steps of the 50K we start in the fall. We had 1K warm-up round. We had 120 entries in that. The judges selected 10 teams to identify and honor as teams showing great promise. We came back in the spring with our kickoff, the executive summaries and semifinalist plans due. And tonight, we're here at the 50K final awards.
So we've seen the process. But what are the results of this network, process, and resources? In the past nine years, over 30 companies have come out of the competition. They've created over 500 jobs and have an aggregate market value of over $180 million. And it's not just these large aggregate numbers. It's stories like Virtual Ink, a 1997 winner of the competition just received $1 million worth of seed investment.
They've recently moved into office space with one of our sponsors, Polaroid, and will be launching their product in Q4 in '98. Right? Stylus Innovations sold their company that won the competition in 1991 for $12.8 million in 1995. Web Line, a 1996 winner, received $7 million worth of venture capital last year. And most interestingly, two of our alumni, Flash Communications and Firefly, were both purchased by Microsoft.
You be the judge. The finalists that you see here tonight are tremendous. But they are not the only ones going forward to launch their ventures. And tonight's is a celebration, a commencement of the ventures for all the teams that have participated in the 50K. I'd like to take a moment and have each of these teams stand up so that you can identify them, seek them out afterwards, and say hello.
Beacon Software. Can you turn on the lights? Beacon Software, Exotech, Biomedical Modeling, Frictionless Commerce, Catalyst Software, [? Net ?] [? Pecker, ?] Connected Care, [? Netican, ?] Cortical Technologies, Past Technologies, Ethos Technologies, and [? Vert ?] [? Med. ?]
Just have to get my notes so I don't forget anything really important here. Now I'm very pleased to introduce to you Bill Porter. He's the founder and chairman of E*Trade Group as we mentioned earlier and near and dear to the heart of MIT since he's class of '67. He founded the E*Trade company, formerly known as E*Trade Plus in 1982. Prior to founding E*Trade, Mr. Porter held research management positions at General Electric and Textron. He received a BA in mathematics from Adams State College, an MA in physics from Kansas State College, and an MBA in management from the MIT Sloan School.
Mr. Porter retired as chief executive officer in April 1996. In May 1996, Mr. Porter was named Silicon Valley's emerging company entrepreneur of the year by San Jose Business Journal. And most excitingly, Mr. Porter has just founded a company, which is operating in stealth mode, that promises to be very, very exciting. Bill Porter.
BILL PORTER: Thank you. Well, I feel pretty humbled to be here at MIT. You know, the intellectual stimulation at MIT is not surpassed any place that I know. There are so many bright people on the staff or on the faculty. And the students here are just absolutely outstanding. And so all I can do is tell it like I see it, and I will do just that.
What I'm going to do is talk just a little bit about E*Trade. And then I have some other things that I would just like to pass on as ideas about entrepreneurship. We originated online brokerage in 1982. We were the very first ones to do that. And I started with another fellow. And we spent 10 years getting it going. And so it takes a lot of perseverance to make things happen. And finally, we founded E*Trade the beginning of this decade.
And during the '80s, we actually serviced Schwab, Fidelity, Quick & Reilly, and a number of other broker dealers where we were basically a service bureau. And we formed E*Trade as such in 1992, which was only-- what-- five years ago or six years ago, I guess it was. And we basically have led the market in terms of price decrease. I established the strategy early on to decrease the price as a function of our volumes to maintain profitability and with a total objective of obtaining essentially market recognition and be the brand leader, which we have achieved.
And there's our six years growth. The overall growth-- I forget in the first couple of months, which was infinite, of course-- the overall growth month to month averages today for the whole six years 8% a month. And you'll see a little dip there at the tail end of last year and the beginning of this year. As you may remember toward the end of last year, there was a dump in the market. And sure enough, our market decreased accordingly. But people come right back after-- they forget those things very quickly, thank goodness. And of course, we're in a very hot market as well.
Well, we have arrived at a point where we have very competitive prices. There are some people that are lower than we are. But we're satisfied with where we're at for right now. And it's a very competitive situation. And people do a lot of trading when it's this inexpensive to trade. Now, as an aside, just one of those little gems of knowledge if you ever want to pass it on, one of the things, you'll notice that the prices that you see for online brokerage is all like, you know, 14.95 or 19.95, or 7.95, et cetera, et cetera. Where the $0.05 come from?
Well, as I mentioned, you know, I price decreased over the years. In fact, I cut prices seven times since, I think it was about four years. And in doing that, we were let's say $30 or $35. And so then I'd bounce it down to 30 from 35. And so at one transition of that type, one of my stockholders of the company said let's have our annual meeting. Let's just get together for lunch. So OK fine, so Steve came over, and we went out to lunch. And I said, Steve, guess what, on Monday, I'm announcing the fact that we're going to go from $35 to $30.
He said, no, no Bill. He says go to 29.95. So I said, OK, that's a good idea. Mind you this guy was from car parts business, very successful. He knew how to do the merchandising. So I adopted the 29.95. And the whole industry has followed. Now, you might be interested to know that I have calculated that that $0.05 per trade amounts to about $400,000 a year to the industry. That's a lot of nickels.
Anyway, the customer acceptance, we have about 450,000 accounts, $10 billion in customers. But do we do about 45,000 trades a day currently. We have cracked the $50,000 mark. I'm sorry, 50,000 trademark, which is a lot of trading. And we've done over 10 million trades to date without any real serious problems. We have 9% to 10% or pardon me 8% to 9% per month growth. And we were ranked as the fastest growing company in Silicon Valley.
And on top of that, we have about 200-- this is from the last quarter, so we're a little higher than this now. Shouldn't say that, but I will. 204 million annualized revenues and 20% pre-tax 200 million in cash. And we're saving that cash, because there's a lot of new entrants. They're not all going to make it. And come a drop in the market, they'll be hurting. And our plan is acquisition. And that's the reason we built this work chest of cash.
And we have over a billion dollars in assets, no debt whatsoever, about 750 employees. But again, we're growing at 8% a month. So that number is very dynamic. And we had an IPO a year and a half ago at about $10, and our stock price today is about $25 with a P/E of about 60.
Now I want to turn to a totally different story, because I want to make a point with it for the entrepreneurs in the room. I had an idea. And while I was in college, I didn't have any money, so I had to work on the railroad at night on the D&RG out in Colorado. And I noticed that the roundhouse workers, the fellows that worked in the roundhouse, they understood steam engines, but they didn't know what a diesel electric locomotive was.
And on top of that, they were very highly unionized. They had an attitude of, well, very highly unionized. I'll leave it at that. OK. Then in about 1965 when I was working as an R&D manager at Textron, I found that as a company, we were producing automotive-- or pardon me, checkout equipment for aircraft. And it struck me, why not see if maybe there's some application here on diesel electric locomotives? And so I took that idea.
And I took it to the Southern Pacific Railroad. And there was a fellow there who was actually the finance VP. And he and I got together at MIT and proceeded with the concept. And so we started a development program to produce some automatic checkout equipment for diesel electric locomotives. And GM did not like the idea. You can't touch my diesel engine, et cetera, et cetera. So we had a few battles to fight, which we won.
And the program was highly successful. And the Southern Pacific's data at that time showed that about 20% of their locomotives, including locomotives on the road were not working. In other words, they were not pulling as they should. And they estimated, also, that the Textron-- that's where I was working at the time-- automatic checkout system would cut the losses in half. And of course, we were looking for shorts, opens, and so forth. We put a harness into the locomotive, the electric locker, and had a plug-in piece of equipment sitting beside the track and so forth.
And so we sold the system. I sold the system to a number of different railroads, about a half a dozen major roads. And at the time, there were 33,000 locomotives in operation in the US. And therefore, I really feel that I was instrumental. And somebody else would have done it if I hadn't, but I did it. And I put 3,000 locomotives on the road. And that's a-- you know, I'm kind of proud of this.
And really, I was making, I think, about $25,000 a year at that point in time, which was more money than is today, it seems like, but not a lot. And really, why did I tell you this story? Well, really for two reasons. And I'm really directing this to the folks that are entrepreneurially inclined and leaving here and so forth. And you know, it's the achievement. To me, it's the achievement. It's the accomplishment of doing it that really counts. And--
I mean, don't get me wrong. The money is nice, but it isn't where it's at, you know. Don't pay attention how much money you're making. Get the job done. That's what really counts. And the other thing is that there's all kinds of opportunities for entrepreneurially inclined individuals, who can just look at things in everyday life and see things to be done and go do them. So there's just no shortage of things to be done in our society for the benefit of society.
Well, speaking of opportunities just a little bit, as I see it in the coming century and borrowing on the idea of plate tectonics and so forth, sources of energy. I mean, you know, we're going to run out of coal and oil and so forth. And what are we going to do to replace it? And that is a real problem I see coming in the future. I remember when I first left, got my masters and went to work for the Bureau of Standards in Washington. I met a fellow who was working in the Interior Department, and he said, we're going to be out of oil in 1975, I think it's what he said.
And I don't know what the estimate is today is probably the year 2030, and by 2030 maybe. But someday, we'll run out. And it's really important to pursue that. And unfortunately, I don't think our government does enough in that dimension. But I think there's some real opportunities there. And worldwide commerce, there's no question about it. We are expanding E*Trade, for example, on a worldwide basis. And there's all kinds of opportunities all over the world, particularly in the underdeveloped countries to help them kick start.
And you don't necessarily make money there. But I think there's a lot to be said for the achievement of making mankind's position better. Environmental protection, no question about it. I think this past century has really been one of wars. And I don't think we're going to have any more significant wars. I hope to heck and I'm sure everybody else does, that that is true. But the coming century has just got to bear down on the whole subject of the environment, no question about it.
I was in Manila recently. And it's just almost deplorable the situation there from an environmental point of view. And something has to be done. A lot of things have to be done. And there's opportunity there. The information age, I hardly have to say anything about that. What I see the other day that the amount of content online is doubling every 100 days. And of course, that makes it doubly difficult for some of the internet starts that you hear about and so forth. But the sorting of that and the use of that and so forth provides all kinds of opportunities.
And actually, you've heard of disintermediation and all of the things that brings about in terms of opportunity. But also there's a whole subject of partnership and joint venturing between various organizations on the internet. So it just creates all kinds of opportunity. But you know, if I could ask the good Lord to give me 100 years to watch one science evolve, it would be this one, the life science, engineering, because I really think that what will happen in terms of our ability to change life as we know it today, both people and their plants and foods and everything else, is just absolutely going to explode over the lives of you young folks that are graduating today.
And I just think it's a terrific area to pursue, particularly when you couple it with the information age. I really think it's going to change the whole fabric of our society. And so just the combination of those two, I think is one of the most exciting areas to pursue. Well, just as one of those areas, and I'll just flip through this quickly, is excess trash. You know, my wife and I, our kids are all grown and gone.
We fill one to two trash cans a week. It's absolutely ridiculous. And most of it comes from packaging. And there's all kinds of things that could be done in the packaging domain that are not being done, I believe, and still maintain good marketability of the product. And catalogs, we probably get two or three catalogs every day. It's absolutely ridiculous. And what can be done? There's opportunities in recycling, produce electricity or fertilizer with them, combine with the internet to reduce the number of pages or whatever, thinner paper, paper substitute, pass new laws.
There's opportunities actually in Congress and so forth to do things of an entrepreneurial nature that need to be done. There really just are a multitude of opportunities. I just illustrate this with just one dimension. Well, the essential characteristics, as I see it of an entrepreneur, are the key ingredients. I don't know what you want to call it exactly is first of all basic integrity. And there are so many people who seem to lose that in the business environment once they get into it. And they kind of manipulate things a little bit and so forth.
And I just don't think that's the way to believe. You know, in the long haul, the only person you have to report to is yourself. And when you do that, you want to be able to stand up and say, I did it right. And too many people just go litigious and crazy. And just don't ever do that. That would be rule number one in my book. And look for the opportunities. You know, they're all over the place of things to change and new markets, new products, and services. And they're very good for society. And you know, most of them are pretty obvious things to do.
And do your homework. When you have an idea, really dig into it, see what the competition is, what the market is, what your product is, what it's going to cost, et cetera, et cetera. You really got to do your homework to be absolutely convinced you're right, even though you may be partially wrong. And when you are certain, there is no question, go for it. Don't stand back and say, well, geez, you know, somebody could do to thus and so. Go do it.
This is America. It's OK to go belly up and start again. You know, you can't do that every place in the world. But here, you can. And all it really costs you is maybe you have to go out and get a job for someplace else for a little while. And it's OK to do that. And stick to your guns, because there's going to be many people that tell you, you're crazy, you can't do this, et cetera. If you've done your homework and are convinced of it, just stick to it.
However, you got to be ready to make changes when you find out that, hey, it wasn't really quite that way, and I have to go a little bit to the left to get around this corner. So you do have to make changes. But basically, you gotta plow ahead and stick to it . And I don't know if they ever teach you this in your finance class, but cash is king. You've got to have the money to get there. You've got to protect it. You've got to take good care of it. Fancy offices don't mean an awful lot. What counts is being able to meet the payroll, et cetera.
And along with cash is king, there's another area that I think is equally important. And that is marketing is queen. And without a king and queen, you won't get there from here. You know, particularly for technologists, they think that they have this hot idea, and it probably is real hot, and they maybe have done their homework, et cetera, in terms of technology. But I got to tell you, these two elements are absolutely necessary to get there from here, particularly the marketing. And of course, you've got to have the cash for the payroll and so forth.
And finally, as I said earlier, work for the achievement. Don't worry about the money. If you do a good job, the money will come. And you can quote me.
PRESENTER: That was so cool. Before we continue, we need everybody to stand up. Up. And look into the center and see if there's an empty seat next to you. And if there is, move to the center, because we have people standing in the back, and we'd like them to be able to sit during the presentation. Here we go. Squish. All right, everybody in? You can sit down. That was our intermission.
We're up to the part in your program that says Organizing Team Transition. The competition is organized by students for students here at MIT, and we've had a great team leading the competition this year. It's been wonderful to work with them. And I would just like to recognize them and have them stand up so you can meet them.
We have Maya [? Hansen, ?] who graduated early, leading events, Scott Blanksteen, who took her place, communications who's leading the evangelism part, Pat [? McCormick, ?] operations of communications is Dave Chan, sponsor relations Andy [? Sweaky, ?] and Margo [? Gore ?] [? Stockman, ?] who is graduating this, year but has made a major contribution to the core team as well as [? Lona ?] [? Plantier. ?] Can you please stand? Thank you very much.
Let me tell you a little bit about what the team has put together this past year. Our goals were to really maintain the quantity of entries that we had while increasing the quality and building infrastructure to grow the competition in the future. And we met those goals. This fall, we had 120 1K entries. Our team size match last year with 3.9 in the spring competition. We're up to 5.6 in our finalist teams. We had 30 full business plan submitted. We wiped out our debt. Go, Andy.
And we increased our sponsorship dollars. We've had some tremendous additions to the judging panel from the West Coast venture capital firm from successful entrepreneurs and some great professional services. We sponsored the first ever Global Startup Workshop, which is like a lot of words. But those words really mean it's the first venue for all organizers of business plan competitions around the world to get together and share best practices. We sponsored the first alumni reunion in preparation for our 10th year next year. We've received international media attention from CNN and from Japan Public Television, who are here tonight. And best of all, we have a great team for next year.
Before we go on and introduce that team, I want to say thank you to all our sponsors. And I would read their names. But this competition is really a tremendous network. And if you turn to page nine, you can see all the people it takes to put together a competition like this during the year. It's just a tremendous contribution from each person that is listed here, and we want to thank them.
And now, the part I personally have been waiting for is to introduce the organizing team for next year. They're wonderful people. Gert-Hartwig Lescow is leading events. Our communications person, we're still recruiting. Sponsor relations, definitely in control with Dave Magnoni. You guys can please stand so they can find you later. Eve Phillips is leading the alumni mentor program. And before we introduce Scott and get him up here, we want to introduce the rest of the core team, and I have to get my list, because it's pretty large.
Please stand, [? Sachen ?] [? Devecha, ?] [? Moder ?] [? Fu, ?] [? Chef ?] [? Hong ?] [? Kwong, ?] Richard [? Li, ?] Pat [? McCormick, ?] [? Xtian ?] [? Mersa, ?] [? Monus ?] [? Rafa, ?] Paul Rosenstein, Joel [? Surface, ?] [? Chuck ?] [? Sestak, ?] and Dave Yang. Thanks so much, you guys.
And now I'd like to introduce Scott Blanksteen, lead organizer for next year, first year Sloan MBA, and a good friend. Thanks, Scott.
SCOTT BLANKSTEEN: Thank you. Good evening. I'd like to thank Sally first of all for the great job. She's done this year coordinating all of this and helping us all learn the process a little better.
The other important members of the team that haven't been mentioned yet are the judges who help us choose the finalists from these great set of plans we get. And I'd like to read each of their names individually, because I think they spend a lot of time, a lot of effort writing feedback to each of the teams, providing advice, and just helping out with our own process of running this competition. So we have Mark [? Gorenberg ?] from Hummer [? Winblad ?] Venture Partners. And if you'd like to stand, that would also be great. Dan [? Hart, ?] Fundamental Capital. Adam [? Hoenig ?] from Sea Bridge Internet Solutions. Mitch [? Kapor, ?] founder of Lotus Development.
[? Omar ?] [? Cadari ?] of [? Via ?] Web. Duncan [? McCallum ?] of One Liberty Ventures.
Ed Miller of Testa, Hurwitz, & Thibeault.
David Morgan [? Thaler ?] of Morgan [? Thaler ?] Ventures.
John [? Pitchioni, ?] Sullivan & [? Werster. ?]
Edmund [? Pitcher, ?] also of Testa, Hurwitz, & Thibeault.
Robin Plummer of Wolf, Greenfield, & Sacks.
Bill [? Podeska ?] of Advanced Visual Systems, and also the founder of Prime and Apollo Computers.
Dan Roach of Coopers & [? Librand. ?]
Dan Schwinn of [? Avadine ?] & [? Sheva. ?]
Blair Whitaker of Norwest Ventures.
And George [? Zachary, ?] who made the trip out from California to be with us.
We really appreciate the work this fine team has done. And yesterday, we had them locked up in the room for seven hours because we had such a great set of finalists this year to choose from. And I think that's really reflected in some of the comments that came out of that session. We were told that, in fact, the plans that came in here are better quality than the plans they receive for funding consideration. And I think that's an amazing testament to the effort people put in to entering this competition.
And the judges also were very happy to see how the teams and the plans improved over the course of the competition from the status of an idea in the fall to an executive summary to a full business plan. And we hope we can take some of the credit with some of the educational events and programs we provided during the year. And finally, of course, the disclaimer. You may not agree with the choices the judges have made, and that's great, because as we saw before, at least a dozen teams are planning on going forward, notwithstanding the results of tonight. And I think that's great, too.
So the best part of the evening, we get to introduce and hear from the finalists. As we see, there's no particular order to this. There's no ranking. It's simply the order in which they presented to the judges yesterday. I'll read the names, and then we'll have them each come up here in this order and give a short 10-minute presentation as they made yesterday. First team is SiliconTest.
The second team is CarSoft.
Volunteer Community Connection.
And finally, Direct Hit Technologies.
And to start us off, we'll have the team from SiliconTest up here.
ROHINI CHAKRAVARTHY: Hi, my name is Rohini Chakravarthy I'm a first year Sloan student. And I will go with a brief overview of the business plan for SiliconTest. It will be briefer than the 10 minutes allotted, so we can get to the winners quicker. Let's start with a challenge statement. SEMATECH, which is a semiconductor industry consortium, has articulated in its National Semiconductor technology roadmap that over the next eight years, high frequency [INAUDIBLE] probes will be a major roadblock. SiliconTest plans to address this challenge squarely.
The company was founded in February 1998 and has its roots in our CEO's graduate work. We plan to provide probe cards for chip testing based on new technology that's more scalable and more cost effective than those currently used. To give you a brief idea, basically chips are made on silicon wafers. And while they're still on a wafer, a probe card sits on them, and you test each chip for functionality. So we plan to make new kinds of probe cards.
The company, Arvind Purushotham is the President and CEO. He is currently working for a large semiconductor manufacturer. I will be the VP of Marketing and Sales, and as I said, I'm a first year Sloan student right now. We also have William Huffman who is not here today, but he will be the VP of Engineering. And he is an expert in testing and packaging and has worked in the area for 14 years now. We also have two future recruits who have committed to join us pending funding.
The market opportunity itself is-- it's a large market, 450 million as assessed by [INAUDIBLE] research for 1997. And it's set to grow at 25% following the growth of the [? IC ?] market at least over the next few years. The industry is characterized by tight customer and supplier relationships. Basically, what happens is every time a new chip is designed, a probe card has to be custom designed to go with it. And so the semiconductor manufacturer and the probe card manufacturer act as partners in developing this probe card. So the relationships have to be really tight as you work with the customer.
It's a fragmented market. There are many important players, but no one player holds the majority of the market share. And all of them seem to use precision machining based technology. So the underlying technology is fairly homogeneous. The major customers are semiconductor manufacturers here in the US, in Japan, and in Southeast Asia. So examples would be Intel, AMD, Motorola, Lucent, and so on.
So to start off with this venture, we plan to request funding in stages. The first milestone will be a prototype development milestone. And optimistically speaking, we will need about 1.3 million to achieve this milestone. We also believe we will need an additional 1.5 million at least to reach the first customer acquisition milestone. So who are the logical investors for such a venture? It's not uncommon in this industry for semiconductor manufacturers to take equity positions in key suppliers since they invest so much time in developing these relationships.
So we will look at those customers as possible investors. Also, industry associations that are a possibility. SEMATECH, for example, although they don't take equity positions, do offer technical and financial assistance to startups that show industry changing potential. And finally, angel investors and seed venture capitalists will be valuable sources of funding. They will bring in financial assistance, as well as their networks within the industry, and we look at them as very positive sources of funding.
So why do I believe SiliconTest is a great investment? We have a very clearly identified market need. We believe we have the right technology and that this is the right time to deploy it. We have assembled a uniquely qualified set of people, people who understand both the technology and the customer environment. And through our contacts, we have unusual access to the customer, to the first customer. Finally, we believe we have a huge upside potential. It's a great market. It's waiting to change. And we believe we can change it. Thank you.
SCOTT BLANKSTEEN: OK, the next team up is CarSoft.
CHUCK MYERS: Hello. We'd like to thank everybody right off, especially Sally and the organizing committee. This has been a stellar event. They have done a fantastic job putting this thing together. And we sincerely offer our thanks for all the hard work and the late nights they put in. Next, we'd like to thank the judges for selecting us to get this far. We were fairly honored to be here tonight.
And next, I think you'll find through the CarSoft presentation that maybe we and Bill Porter have a little bit in common. CarSoft is know what your car is thinking. See if we can find the page down button on this. There we go. First of all, I'm Chuck Myers. I'm on board to offer the strategic and marketing initiatives to the company. I'd like to introduce Diego Borrego. Diego is the father of this brain child. And we classify him somewhat as a little eccentric and our technical leader. And Morten Gunnarshaug is our operations guy. And he's here to make sure that Diego and myself don't kill each other.
What is CarSoft? What we've done is to create a hardware and software product that links the car's computer with an outside processing source, like your home PC or any other database. And with that, I'd like to turn it over to Morten Gunnarshaug.
MORTEN GUNNARSHAUG: Thank you, Chuck. Thanks to all of you. I'll say something about the market. The market we will target basically consist of two segments. The first segments as GearHeads. That is people who work on their cars and also know about computer and look like this.
They are quite easy to target. They are online. And we think that'll be a low cost to find them. The second market, it's consumers, like you and me. And there are about 39 million diagnostic checks performed each year in the US markets of cars. And AAA price for this is about $50, which would in this market would be about 2 billion.
The opportunity for this market-- or the market's pain is that car owners and general fear mechanics and dealers and depending on where you live in the United States, you have to bring your car to a smog test or annual inspections once or twice a year. And the solution for a problem I'll hand over to Diego to tell some more about.
DIEGO BORREGO: Thank you, Morten. CarSoft solution, our painkiller. CarSoft intends to provide consumers with an easy to understand version of the same kind of information that is used by only highly trained automotive technicians and mechanics today. And we plan to do it at a low price.
Why now? Why can we do this now? Why is this the right time for CarSoft? More and more, there are computers in cars. There are more higher power computers in cars. There's more processing in your car. There's more electronic sensors in your car. Wireless technology is coming of age. It's more ubiquitous. It's available at a lower price. There's a proliferation, of course, of the internet and of PCs. We all know that.
Perhaps the strongest reason why now is the time is because of EPA mandated regulations now that stipulate that these cars have to be able to diagnose themselves and have greater and greater capabilities. So the information is there. It's in your car. We plan to give it to the consumers.
Why CarSoft? We have an inexpensive design. We believe it's a unique design. It leverages the processing power in your home PCs or any other type of computer. And also, CarSoft is positioned to provide unbiased information. We don't make money from selling parts. We don't make money from selling repairs. We can tell you the truth about what's going on inside your car.
And with that, I'll let Chuck finalize our presentation.
CHUCK MYERS: What CarSoft has, we have people, we have founders that are committed to this project. We have founders that are committed to moving forward with this business. We think it's a good business. We think it's a strong business. And we think that there's a strong underlying fundamental soundness to it. We have maybe, again, a little bit like Bill Porter, we have some developers already working on some prototypes. And we'll say that they're in stealth mode as well. And our technology is readily available.
And what's our future? We see this as being a service and an information business as we go along. We don't just see it as one device or one product in the beginning. We see it from the continuous monitoring of the vehicle performance. We see us as being that content that a lot of these web-based sites are looking for that we can actually maintain owner profiles, and we can maintain all of the history of the vehicle as the vehicle goes on in its life and as the owner changes vehicles, and they want to know when to service their car.
So again, we think we're a content provider for those sites. And we think around our business, we can build and create these internet communities. As we were saying before, Diego's a member of the fine gearhead community. And these guys are on the web day and night talking to each other. We think this is our business. And we think that we can move forward and really turn this into something. Thank you very much.
SCOTT BLANKSTEEN: Well, thanks, guys. That was really great. As soon as I finish paying off my MIT loans and buy a car, I'm right there. Next up is something a little different, WeddingBell.com.
STEVEN ROSENBLATT: Good evening. Actually, I don't think I was this nervous before my own wedding. So you know, just bear with me. My name is Steven Rosenblatt, and this is my colleague, Peter Stein. And we'd like to welcome you to our WeddingBell.com presentation. You know, most people are under the impression that the most difficult question asked with regard to a wedding is, will you marry me? In fact, this is not true at all.
We found some more difficult questions that are being asked through the course of the proceedings. Well, maybe not. For instance, the engaged couple might ask, how can we let everybody know where we're registered for all our wedding guests? The wedding guests may ask, how could we find out where the engaged couple is registered for without having to ask them? Or they may ask, how could I get to a store and purchase one of these gifts when I'm real busy working all day and don't have time to get to one?
Finally, the retail stores may ask, you know, this wedding registry business is growing. How can we expand our customer base and become part of it? Well, WeddingBell.com is aware of these concerns and has found a solution. WeddingBell.com will provide any retail establishment, regardless of its size or location, an internet-based, full-service gift registry system, which will allow end users, being the wedding guests, to purchase gifts from an engaged couple's registry from the convenience of their own home or office 24 hours a day, seven days a week.
Today, we're going to talk about the WeddingBell.com team, the potential market in the online wedding registry business, our value proposition. We're going to present our business model, talk about the risk of an internet wedding registry business, and then we'll have some concluding comments. Obviously the key to success of any organization is its team. WeddingBell.com currently consists of six members who have diverse professional-- I didn't even get to the joke yet.
You all have to laugh when I get to that part again. We have diverse relevant professional experiences and skills. Tonight, I'd just like to highlight for the members. Peter Stein is our President and CEO. Peter will be responsible for the day to day operations of the organization. He has experience in IT project management. And he'll be graduating from Sloan this June. He also has very relevant wedding registry experience in that he's currently going to be married this November.
I am the Vice President of Sales and Marketing. I'll be responsible for selling the systems into the retail stores as well as handling the day to day finances. I, too, will be graduating from Sloan this June, and I still am familiar with the registry process, as I was just married this past June. Next we have Josh Tolman, who's our Vice President of Product Development. Josh will be responsible for system implementation and internet programming. Josh has four years experience as an IT systems consultant, an internet programmer, and fortunately, he will become very familiar with the process as he's currently contemplating engagement. Last but not least, we have Luke Tuttle. Luke is our Vice President of Technology, who will be responsible for network implementation. Luke has a BS and a master's degree in computer science and programming. And unfortunately, he has no idea what the wedding registry process is all about as he's still currently looking for a date.
That's good. Thank you.
Before we talk about the potential market, I think it's important to examine some of the trends that currently exist. First, more people are registering for wedding gifts than ever before. Brides Magazine-- yes, I do read Brides Magazine-- is currently completing a survey, and they found that 90% of the engaged couples register for wedding gifts in 1996 as opposed to only 60% in 1993. Trend number two. This is probably pretty shocking to everybody. More people are using the internet than ever before.
Internet Data Corporation estimated in 1997 that there were 50 million users on the internet, and they estimate this number will reach 175 million in 2001. Trend number three. Not only are more people using the internet, but more people are making purchases on the internet than ever before. American Express estimated that there were $5 billion in purchases on the internet in 1997, and they estimate this number to reach $80 billion in the year 2010.
These trends, based on our projection of a 10% penetration into the wedding gift market, we foresee the total potential online wedding registry gift market to reach $250 million in 1998 and $544 million in the year 2002. Now Peter will talk about the WeddingBell.com value proposition.
PETER STEIN: Thanks, Steve. Steve just hopefully demonstrated to everyone that there is a market for an online wedding registry system. Now I want to show people how it'll help the customers. We have three types of customers-- engaged couples, the wedding guests, and the retail stores. The engaged couples, with our system, will be able to register in any type of store, large department stores or small boutiques that you would find perhaps on Newbury Street.
These little stores, all they need is a computer and an internet connection, and they're all set up with a wedding registry. There's no need for the engaged couple to worry about registering for one gift in a small store. They don't have to alert their wedding guests which stores are registered in, because the wedding guests can go to the internet and purchase the gifts whenever they want right over the internet. They can also purchase the gifts from the store if they want.
While on the internet, they can search by gift type if they want to just get something in the linens category, or they can also search by costs, if they're only willing to spend a certain amount per gift. Lastly, the retail stores. The retail stores, especially the smaller ones and the ones that currently don't have registry systems will have an enormously expanded customer base. Obviously, with the internet, people who aren't located near the retail stores will be able to just, again, go on the internet and purchase gifts from there. Therefore, WeddingBell.com is the entire registry solution, the online solution and the in-store solution.
Our business model, this is the way we're going to make money. We've done some surveying, and we've talked to some industry experts. And we've found that the retail stores are willing to pay a setup fee and a maintenance fee. They're also willing to pay a percentage of sales. This helps us a lot. We get fees from them in two different ways. The wedding guests-- that's the little yellow people there-- we're going to charge them a surcharge, only about $2.95. You might find yourself saying, well, would I be willing to pay that?
But if you think about when you buy a wedding gift, you really have a gift giving threshold that you don't want to spend more than. And as long as the gift you buy falls within that range, we found that the wedding guests we surveyed would be willing to pay. Also note that we're not charging the engaged couple. If anyone out there is getting married, don't worry, you won't have to pay a cent for our service. A lot of our competitors charge you, however. We also found that the engaged couples just don't think it's fair. It's their day. They don't want to be charged to put gifts on their registry.
With any startup, there are risks. So WeddingBell.com has its risks as well. Our first risk is having reliable system operation. A lot of people have tried to buy gifts from certain department stores in the area, and they find that their wedding registry systems are down, or they can't get the printouts, or they can't buy the gifts. Well, we're going to defend that with redundant connectivity to the internet. We're also going to have local front end software that the retailers will have in their store, so that even if the internet connection goes down, they'll still be able to enter all of their registry orders.
We realize also that obtaining customer commitment is vital to the success of WeddingBell.com as a business. But we've developed a marketing plan and through our promotions and our PR, we plan to get the wedding guests, the engaged couple, and the retail stores to buy into this network all at once and have it grow extremely rapidly. Finally, we know that this business has some low barriers to entry. It's not that difficult for people to get into it, but we plan to combat this by having a first mover advantage.
We want to quickly establish our network, and we plan to do that through our business model and getting the engaged couples and the retail stores as well as wedding guests all into this at the same time and through a very specific entry strategy. We hope to raise that entry barrier. Finally, Steve is going to come back and give you some concluding remarks.
STEVEN ROSENBLATT: Thanks, Peter. So why is WeddingBell.com ready to go? First off www.WeddingBell.com is registered with InterNIC. We could already establish a brand identity through this URL. Second, we already have five retail stores have given preliminary commitments to have the system installed into their stores. Third, as I mentioned, the timing's right with the internet and e-commerce boom. And finally, we just have a dedicated team of really good people that are really committed to this project. WeddingBell.com, we're ready to revolutionize the wedding industry today. Thank you.
SCOTT BLANKSTEEN: Thank you very much, guys. OK, the next team is something very special. It's a Volunteer Community Connection. And here they are now.
JOHN: Hi, I'm John, and this is Mike. And we're here to talk to you about revolutionizing volunteerism.
MIKE: Non-profit agencies and volunteers have thus far failed to converge on the internet. We offer an online solution to bridge the gap between these volunteers and nonprofit agencies. Volunteers will now be able to easily find the opportunities for which they are looking, and nonprofit agencies will be able to efficiently recruit and manage the volunteers that they need.
This potential market is, simply put, huge. There are 50 million Americans who volunteered last year. 25% of these Americans are already online. And as you've heard many times today, this number is doubling in the next two years. There are over 10,000 large corporations who are just now beginning to develop company wide volunteering efforts. At $450 per month, this represents a total market of over $50 million. And there over 550,000 nonprofits looking to recruit and manage volunteers. At $25 per month, this represents a market of over $160 million.
This market has been unaddressed today. The internet offers only static and passive access to volunteers. Nonprofit agencies can only list things on the internet. There is no active recruitment of volunteers, and there is no management. As a result, volunteers of today are alone and confused.
We offer the solution. The VCC solves the problems of volunteerism for volunteers, nonprofit agencies, and corporations. Volunteers will be able to find the right opportunities for them, simply by saying things like, I want to volunteer with education, with kids, clicking Search, and it's done. Nonprofit agencies will be able to recruit volunteers on the internet, offline, online, together, and effectively manage them. And corporations will all of a sudden have an easy way to begin company wide volunteering efforts.
How does this work for you and me, the volunteers? We log into the VCC website. And so we select what we want to do. What could be easier? We hit Search. And right away, we see the agencies that offer the opportunities. We are a nonprofit organization. And as a nonprofit, our primary goal is to serve the agencies and volunteers in our communities. For the agencies in our communities, we recruit groups of volunteers, whom we call the web tutors.
Web tutors work at nonprofit agencies, teaching them about technology, about the internet, and about email. These are things that some of us may think are normal, but nonprofit agencies have thus far failed to achieve the resources to learn these technologies. We recruit volunteers to show them why it is useful and how to use it. We also run volunteer fairs, conferences, seminars, online forums, activities to link nonprofit agencies and us, the volunteers, together in person.
JOHN: But the reason we're here tonight is because of the services we're now planning on offering to our agencies. An example of our value proposition. We look at Boston Cares, a medium sized nonprofit in the Boston area. They send out monthly mailings to about 2,000 volunteers, spending overall $7,000 a year. It's really just a shock and approach to their 2,000 volunteers. And it's only once a month a mailing of about 50 opportunities, not targeted at all. We offer something completely different.
For only $25 a month, we offer targeted e-mailings. We offer unlimited, basically, access to our volunteer base. So if we have 100,000 volunteers, they really only target 10%. But those 10% are committed volunteers to their cause. And we do this constantly as they add new projects, saving them $6,700 or 95% of which I guess you could call their volunteer acquisition cost.
We're planning on taking this value proposition nationally. Starting out slowly this year, recruiting 1,000 agencies and about 39 corporations, moving to 37,000 agencies and 1,000 corporations in our fifth year. And that's only 4% of the market, because this market is huge. In order to expand to these numbers, we need to concentrate on two things-- our sales and marketing efforts. In order to do this, we're going to target three specific markets-- volunteers, agencies, and corporations.
We're going to target these through three very different ways. For volunteers, we're going to use online ads, banner ads on Yahoo, Excite, and other portals. For agencies, we're going to use direct mail and phone contact, utilizing the IRS database of over 700,000 nonprofits in the United States. And lastly, corporations. We're going to dispatch people from the VCC to contact the CEOs and HR people directly to get involved in their corporate volunteer Programs
As we add more agencies and more volunteers, we need to have a management staff in place that's going to be able to handle this. And currently, we have a dedicated management team. We have Emily Sandberg on our board helping to drive and direct the VCC. We have Rich [? Sanford, ?] one of the founders of the VCC, who's in direct contact with the agencies on a daily basis, identifying their needs. Mike [? Bryzyk ?] and [? Umi ?] [? Mehrotra ?] developed our software and have now split up with Mike working on sales and marketing and [? Umi ?] developing the final release of the software. And I'm John, and I'm responsible for the business plan and focusing on sustainability for the VCC.
And the VCC has been running for about a year now. And in order to reach a level of sustainability, we think we need to focus on the following three steps-- funding, management, and partnerships. Let's start with funding. The 50K is really just a stepping stone for the VCC. After the 50K, we're go and approach larger foundations such as the Boston Foundation for larger grants. At the same time, we're going to be working on our management team, recruiting a CEO, someone with national volunteer or nonprofit experience or maybe someone from the corporate world to help us take this nationally.
We're going to work on our sales and marketing materials and work on the final release of the VCS software for release in September. And lastly, while we're doing all this we're constantly working on partnerships, online partnerships such as boston.com, university partnerships, such as Boston College, Boston University, and community partnerships, like Boston Cares. Achieving these three steps will allow us to reach our goal of revolutionizing volunteerism.
The VCC services have never been offered before. We increase the ease of volunteering, and we increase the satisfaction of volunteering because we offer volunteers targeted positions at these agencies. And we've been growing steadily since last year. And additional funding at this key moment for the VCC will allow us to launch in September and reach our goal. Thank you.
SCOTT BLANKSTEEN: Great. And let's see. We're two thirds of the way there now. We've got two more teams to go. Next team, Akamai Technologies.
JONATHAN SEELIG: Hi, good evening. I'm very honored to be here representing Akamai technologies [INAUDIBLE].
Perfect. Look good? I'm very honored to be here representing Akamai Technologies this evening. Couple of technological glitches.
My name is Jonathan Seelig I'm a first year MBA student at the Sloan School at MIT. And I wish to present to you global hosting servers. Akamai Technology intend to change the way that content is distributed throughout the internet. I have three things that I'd like to present to you tonight.
One is the team that we have assembled for this venture. We're very proud of it, and I'd like to show you the people who we have involved in Akamai Technologies. I'd like to introduce you to the technology that we have in place and the technologies that we are developing to push this venture forward. And then I will pass off to my colleague, Preetish Nijhawan, who is a second year student at the Sloan School. And Preetish will give you some information about our market opportunity and how we plan to expand into that market opportunity.
The Akamai team. I can't walk around without the cordless. The Akamai team. The Akamai team has a very strong marriage of technology and business acumen. On our technology side, the leader of our technology effort is Professor Tom Leighton. Professor Tom Leighton is the head of the algorithms group at the Laboratory for Computer Science at MIT. He is joined by Professor David Karger, who is also of the algorithms group and a doctoral student in that same algorithms group, Danny Lewin, who was formerly an IBM Research fellow.
On the implementation side, we have Bill Bogstad, who has over a dozen years of Unix development experience, Robert Thau, who was the primary developer of the Apache server, which is the dominant web server that is used today, so has greater market share than Microsoft or the Netscape, very, very successful product. And added to them, we have Alex Sherman, Yoav Yerushalmi, and we have a group of 10 students on board to bring this product to market.
On the business side, we have the good fortune of having been joined recently by David Crosby, who was formerly of Sitara Networks. David has extensive telecom experience as well as experience in the internet space. Steve Papa, who we are fortunate to have, was formerly with Inktomi, is currently a student at HBS. Preetish Nijhawan, formerly with Intel and Marco Greenberg, who is a public relations expert out of New York City. Our team of advisors has been phenomenal to us. They've done a great job of keeping us on track, a lot of prominent people up there, a lot of prominent names. And we are very lucky to have them in helping us with this venture.
Let me tell you what the mission of content providers is on the internet. Content providers have a very, very simple mission. They want to attract people to their sites, and they want to keep them there. In order to do this, there are some very simple things that they need. They need fast, easy, and reliable access to their sites for the clients. They also need personalized content. Personalized content allows these content providers to make the user experience unique for every single person who makes it to the site.
In order to do that, they use fancy graphics, multimedia, and a variety of other bells and whistles. But there is a problem today. The problem is that the ISPs is who hosts this content can't give the content providers the quality of service that they are looking for. This results in a phenomenon known widely as the worldwide weight.
There are a couple of sources of the worldwide weight. One is flash crowds. People get to a site on the internet because there's something exciting going on there. The Monica Lewinsky story breaks. Everybody floods cnn.com. When this happens, the content becomes phenomenally popular, the servers are swamped, as is the network. This can cause such significant loading that the network will actually go down, and nobody gets access to this content.
A second problem that we have is that there is tremendous distance between the end user and the server. This costs money, and it takes time to get content to the end user. Akamai Technologies-- Preetish-- Akamai Technologies has a breakthrough in this space. We have breakthrough technologies that will allow ISPs to host content at literally thousands, even hundreds of thousands of locations worldwide with the flip of a switch.
In doing this, we will have content that will always be close to the user. Intelligent replication of the content will handle flash crowds. Content that the user receives will always be fresh, and we've implemented these technologies in such a way that they are transparent to both the end user and the content provider and that they will run on standard inexpensive hardware.
One of the things that we've done in this is that we've introduced some revolutionary technology that is the first step in truly building an intelligent internet. Let's show you just a couple of little examples of how we are going to make this world of the internet a better world using our technologies. The way the world looks today as a user at CNN-- a user somewhere over in Europe anywhere in the world wants content from, for example, cnn.com out of Atlanta. In order to get there, there is a long and winding and terribly complex path that they need to go by to get to the cnn.com site. The content needs to travel a long distance through a complex network.
What we propose through the Akamai network is a distributed series of servers that we have called global hosting servers or ghosts. The name ghost is used because these servers are invisible to the users, they are invisible to the content providers, and they basically perform this service of speeding up access on the internet while being completely invisible to all users.
How does the network look with these ghosts in place? A big mesh that gets built out and looks terribly complex, but is easily understood by these ghost servers. They have dynamic ways of finding each other on the internet. They're completely fault resistant, because it doesn't matter if one of them goes down, the rest of them know how to find other elements in this network. And what's going to happen to the content from cnn.com is it will arrive to the user from one of these closed servers, not necessarily the closest, but certainly one of the ones that's very, very close geographically.
We do this in such a way that we still allow the content provider that is cnn.com to personalize pages and to know exactly who arrived at their page. And this is something that is unique to our solution, and it is something that content providers have specifically asked us for in our dialogues with them. That's a brief overview of the technology, and I will hand off to Preetish. He will give you some introduction to the market opportunity.
PREETISH NIJHAWAN: Hi. My name is Preetish Nijhawan, and I'm a second year student at Sloan, all set to graduate, I think. The market potential for this technology is huge. There are various internet projections out there, most of which are wrong. We know that. But we have to take what we have. They range from $12 billion to $16 billion in 2002, currently less than a million. According to the Wall Street Journal, the hosting market is expected to grow at about 250% per year. And we intend to ride that wave. This does not include the potential applications for the enterprise market or the internet market. We intend that to be a follow on market that we will consider. John.
So how are we going to do this from a marketing standpoint? We intend to build partnerships with the hosting services, which are the ISPs, or the internet service providers. And very importantly, we want to build partnerships with the content providers. We're the only solution out there that looks out for the content providers. As Bill Porter just said today, the content on the internet doubles every 100 days. We love that. That's very good for us.
We want to inform the content providers that there is really a solution out there that's going to get their data closer to the users, make it faster, keep the users there, and nobody else does that. We intend to go on identifying market demand for our technology and also carve out an exclusive market niche for our Akamai to dominate. I'd like to conclude by saying four things.
One is that we have a unique technology that really is poised to change the way the content is disseminated over the internet. We have a capable and committed team. You saw the whole list. It's a large and rapidly expanding market share. One thing we learned in business school is always be part of an upward exponential curve. We intend to do that. And finally, we intend to continue to build partnerships and a customer base to really revolutionize the internet. Thank you so much.
SCOTT BLANKSTEEN: Excellent. We've now come to our last presenters, Direct Hit.
GARY CULLISS: We are Direct Hit Technologies, and we are a company that takes existing search engines that you use on the internet. We make them a lot better, so that you can stop looking for information and start finding it. The problem is that with the internet being such a huge mass of data, it's tough to locate relevant information. As you all know, search engines often return a lot of irrelevant results. And in fact, 90% of all users in a recent survey have said that they want more targeted search results.
So this problem is only to get worse as the internet continues to grow. It's currently estimated to be about 300 million documents. And that number is expected to exceed 1 billion by the year 2002. The way current search engines work, take Infoseek, Alta Vista, Excite, the other search engines, they look to the keywords that authors put in the document in the meta tags to provide the relevancy rankings. This is the position of the search result in the list that you get back.
The problem with this is that you can get a lot of irrelevant documents, and quite frankly, you get too many results. So the editors at Yahoo have a different approach. They actually have a staff of people surfing the internet and looking for websites. They classify them according to categories and keywords. Problem with this is that it can be labor intensive, expensive, and quite frankly, they're struggling to keep up with the growth in the web. Right now, they have approximately 1% of the internet indexed.
Direct Hit is going to take a totally different approach to this problem. We're going to actually empower the users to organize the search results. Our rankings are based on what people actually select from the hit list. So what you get is a market for information, where the sites that people select move up in the rankings. The ones that they ignore move down in the rankings.
So our premise is that with each search engine being visited by approximately 20 million people a day, there's a high likelihood that somebody else has already found what you're looking for. Direct Hit allows you the 20 million searchers out there to automatically rank those documents for us. You don't have to do anything that you're not already doing.
Now, how does all this work? The searches are re-ranked by what searchers like. We have proprietary software algorithms that know exactly what sites previous searchers liked and did not like. And it's totally automatic. The searchers don't have to do anything that they're not already doing. The result, as I mentioned before, is a market for information where the good stuff rises to the top, the bad stuff sinks to the bottom.
Let's take a look at a current search engine. This is a search query for Boston MBTA, which is a local transit authority. People go to the site to look for subway schedules and commuter rail schedules. And you can see that this is actual results from a current search engine on the internet, and it's giving pretty irrelevant results. You've got Boston apartments, internet search tools, the Hong Kong students will know about and Boston links for information.
With the Direct Hit technology, by monitoring what people actually pick from the list, we can provide much better relevancy ranking. You can see here that the official website of the MBTA, which is the best hit is actually listed number one, along with a few other highly relevant documents. These are actual results that are generated with our current prototype.
So how do we make money from all this? Well, our business model is not to compete with the search engines, but in fact, to partner up with them. We've already got two of the four major search engines who have agreed to add a link to our site. And what's going to happen is if a user types in a search query and gets results that they're unhappy with, they can click on our button, a direct hit will deliver a page that's re-ranked by what other people have actually selected for a similar search query. We're going to be co-branded with the existing search portal. And the way we actually make money is we present a new ad banner.
We've created some additional real estate that we can sell ad banners on, and that we have an ad revenue sharing agreement with our search partners. Additional markets for the technology include search driven commerce sites, like netmarket.com and Chemdex which sell specialty chemicals. Corporate internet document servers can also benefit, and smaller website owners who we can sell separate software for their search driven sites.
Our competitive advantages include our current strategic alliances with two engines. We are complementary, our technology. It's not competitive with search engines, because users can choose between the pure search results and the results that other people have found. We're going to be the first to the market with the technology. Our business model is technically and financially risk free to the search engines, doesn't interfere with their existing legacy systems. We have a competitive pricing because all of our deals are non-exclusive. And if none of that works, we still have four patents pending.
And with that, I'm going to turn it over to Mike Cassidy to explain the numbers bind the business.
MIKE CASSIDY: Thanks, Gary. The important thing to notice from this chart is actually the number of daily page views being generated, including Alta Vista, which is not shown, today there being 120 million page views a day, 120 million times people are searching and seeing result. And the growth rate is incredible, between 100 and 200% per year.
The key for our revenue generation is what fraction of those pages we can capture. This model shows that by the end of the year, there'll be 200 million pages. If we can capture 30 million of those with our partner, and if we can get a 25% ad share revenue, which is quite typical in the industry, typically we partner up with Alta Vista or someone like that, they will take 20% off the top from the ad revenue and then split the remainder half and half between us and them.
So if we can do even less than that and assuming a much lower ad revenue also, typically in the industry today, you'll be able to charge $50 to $60 per 1,000 for keyword search. We're only assuming $20 per 1,000. We can quickly generate, as you can see, $30 to $40 million worth of revenue. I just want to talk briefly in a conclusion about the team we have. Gary, who you've already met is the inventor of the technology. Despite the fact that he's from Harvard Law School, he's got an entrepreneurial mind.
He was a patent agent for four years. He's giving up his law career. And as a patent agent for four years, he did a lot of searching. So it's one of the nice stories where he saw firsthand every day the weaknesses of the existing technology. Steven Yang, a key member of our team, an MIT senior, created the prototype that we showed to these two search engines, who were so impressed by the prototype that they agreed to work with us.
A little bit about me. This is a sort of a second time around for me. It's a lot different than in 1991. In 1991, [? Christina ?] [? Holly ?] and I were part of Stylus Innovation, which won the contest. We sold the company in '96 for 13 million. I went to Berkeley School of Music last year, was minding my own business, but sort of got the bug again and saw what Gary was doing. And they had the whatever you want to call it, enough guts to say, let's bring on a CEO who's done this before.
We also have some expert developers on the team, some people from Fidelity who've done a lot of their hot online transaction processing stuff, people who've previously worked for Yahoo and other companies like that who have a lot of expertise. Also, we have [? Eileen ?] [? Lang, ?] the former CEO of Alta Vista, who is equity owning member of our board of directors. So in conclusion, I'd like to say, I guess since we're the last team, I get the last word, I certainly hope we win. But I hope I speak for everyone here that the quality of our competitors and the presentations, which is the first time I've seen them, is phenomenal. And I certainly will have no regrets if we lose to one of them. Thank you very much.
SCOTT BLANKSTEEN: I'd like to echo Mike in saying that I thought these were really great teams, great ideas. And I wish them all the best of luck, and I'd like to applaud them myself.
PRESENTER: About eight years ago, something very important to me happened. I met John [? Barris ?] and Mike Cassidy. And why is that important? They're incredible teammates that pretty much would be the people I'd work with for the next six years of my life, probably the most exciting six years of my life. We started Stylus Innovation. And as people have already mentioned, we won the 10K. It was a 10K back then.
And it pretty much kicked off very exciting times. We grew incredibly fast. We invented Visual Voice, which was a computer telephony development tool for Windows. We became very successful. We hired 20 people by the time we sold it for $13 million. And I have to also say, enough about me. I have to say that this competition has also grown incredibly fast and furiously since we won in 1991.
And I'm so impressed with the work that they've done. I think that if the organizers were putting their efforts and their talents into actually starting companies right now, I think there'd be more millionaires amongst us. And I'm sure that they will be doing that in the future. So the reason why I'm here is because we thought Stylus, it would be very nice for us to finally be able to give back to the competition that really gave us a lot, wonderful networking opportunities, I can say, you know, just great push to actually put a business plan together and great advice and, of course, $10,000 isn't bad either. So we would like to give back $10,000 to one of the two runners ups of this competition this year. So going to open up the envelope here to find out. It is CarSoft.
DIEGO BORREGO: Well, of course, this is a surprise. But just once again, I'd like to thank the organizers, the judges, everybody who's helped us out. We had a lot of different inputs from a lot different advisors. They've all been of great help. And hopefully, you'll be able to buy our product pretty soon.
SCOTT BLANKSTEEN: Our second presenter tonight is Mr. David [? Morgan ?] [? Thaler, ?] longtime friend of the competition, provided us with our bridge round of financing when we were on the rocks a few years ago and ensure the continued functioning of this organization. And we'd like to have him come up here and introduce the next team and present his own surprise announcement. Additionally Mr. [? Morgan ?] [? Thaler ?] was the recipient just recently of the 1998 National Venture Capital Association Lifetime Achievement Award and Mr. [? Morgan Thaler. ?]
[? DAVID MORGAN THALER: ?] Thank you very much, Steven. It's a great pleasure to be with this group again tonight. About five years ago, Lester Thoreau and I were talking about what should be done with Sloan School for a gift that my wife and I were going to make and wanted to dedicate it to Sloan. And Lester deserves credit for saying that the enterprise, the 10K program deserved support, and it needed some continuing financial support. So we made a two-year commitment and joined in the program in that those years.
We were so happy with the work that the students were doing and the quality of the contest, the quality of the business plans, that we have continued to support. We renewed and we have continued now. And I think we're into about five years. And I must say that I remain extremely impressed with the teams, with the work that the students have done, with the work and dedication of the judges, with the extremely fine business plans that result out of this. And so I'm very happy to be with you again tonight.
And Sally and Steve deserve-- Sally and Scott deserve tremendous credit for what they've done with their teams working on this. I'm not deliberately stalling about giving you an answer as to the grand prize winner. I simply want to tell you we had a very unusual and very, very pleasant occurrence in the judging this year. The quality of the plans were so good, and there was so much discussion among the judges, a tie vote at the end among it.
And so it was decided that there would be two first prize winners. Now, customarily, in the Nobel prizes and things of that kind, when that sort of thing happens, it's customary to split the prize. But no, that will never do for MIT.
And so for the first time in the history of the contest, with the help of an extremely generous donor, who absolutely insisted that he or she must remain anonymous, there is a full first prize available for each of two contestants.
And I have the honor to announce the first of the co grand prize winners. And this winner is-- the co grand prize winner, Volunteer Community Connection.
MIKE: Thank you very much. We are just completely shocked we are a nonprofit organization.
As all the teams competing know, it's about silent heroes. And we have had the fortune of having one of the greatest teams. And a lot of these team members are people you have yet to meet. And so I'd like to introduce them now. You already know myself Mike and John [? Allen. ?] Next to John this is [? Umi ?] [? Mehrotra. ?] He's been one of the key software developers. And next to [? Umi, ?] Emily Sandberg, Director of the Public Service Center. And on my right here, this is Rich Stanford, who is just-- this team has just really come together.
In addition, we'd like to finally think the 50K staff. You guys have been wonderful. And the entire staff of the MIT Public Service Center and the judges. And there's one other silent hero in the audience tonight who has just been a complete resource in terms of the business plan and support. And my father, [INAUDIBLE] flew out from California this afternoon to be here with us, and he has just been a support all the way through. So thank you to everybody. And we hope you volunteer.
SCOTT BLANKSTEEN: Well, that was exciting. And finally, for our last grand prize winner-- four to choose from. We have Mr. Ronjon Nag, currently the general manager of Motorola Lexicus division, which may remind you of the team that was also in the competition in 1991, Lexicus Longhand was his team, was recently bought by Motorola. And he is currently working there. And he will-- well, of course, we must mention that he was the fastest MIT alumni ever to make it to the cover of Fortune Magazine after graduation.
Mr. Ronjon Nag.
RONJON NAG: Thank you. This is a very exciting event. I'd just like to say a few words for the people who haven't won today. I was one of probably the equivalent of the 84 teams in the first round who didn't even get to the first round. And really, I'd like to echo Bill's comment. It's really taking part can generate so much enthusiasm for doing something more. And it's not just winning, but taking part. But let's get to the exciting part. It says here co grand prize winner, and the team is Direct Hit.
GARY CULLISS: This is absolutely amazing. I just want to say how incredible this competition is it. We are here because of the competition. We would have never met each other. I am just-- I want to introduce Steven Yang, one of the team members that you've heard a little bit about already, David [? Doe, ?] also another very valuable team member. And I just want to thank everybody, all the lead organizers. This is incredible. Thank you.
MIKE CASSIDY: Wow. And I have one more small surprise announcement, too. We have been extremely fortunate. And between the time we turned in our plan until tonight, we actually had been approached by venture capitalist and have achieved funding. Because that puts us in a slight imposition, we have decided to give the $30,000 to the other finalists. We'll split it up among the other finalists. So thank you very much.
SCOTT BLANKSTEEN: This was certainly an unpredictable evening. I don't think there was anyone in the room who knew everything that was going to happen at the end of this, including the judges. So here we are. First of all, let's, again, just give our congratulations to everybody who took part this year.
And to reward you for your patience and your interest, we have some food afterwards, some light refreshments, and a little time to mingle and network a little more. Before we go, don't forget to sign up for our mailing list, to keep in touch with all the great stuff we'll be doing next year on our 10th anniversary. And the final thought, maybe-- goodnight.