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Archive for November 4th, 2010

Sale of MyWire, Inc.

Gerbsman Partners (www.gerbsmanpartners.com) has been retained by MyWire, Inc. (www.mywire.com) to solicit interest for the acquisition of all, or substantially all, of MyWire’s assets.

IMPORTANT LEGAL NOTICE:

The information in this memorandum does not constitute the whole or any part of an offer or a contract.

The information contained in this memorandum relating to MyWire’s Assets has been supplied by MyWire. It has not been independently investigated or verified by Gerbsman Partners or their respective agents.

Potential purchasers should not rely on any information contained in this memorandum or provided by Gerbsman Partners (or their respective staff, agents, and attorneys) in connection herewith, whether transmitted orally or in writing as a statement, opinion, or representation of fact.  Interested parties should satisfy themselves through independent investigations as they or their legal and financial advisors see fit.

Gerbsman Partners, and their respective staff, agents, and attorneys, (i) disclaim any and all implied warranties concerning the truth, accuracy, and completeness of any information provided in connection herewith and (ii) do not accept liability for the information, including that contained in this memorandum, whether that liability arises by reasons of MyWire’s or Gerbsman Partners’ negligence or otherwise.

Any sale of the MyWire Assets will be made on an “as-is,” “where-is,” and “with all faults” basis, without any warranties, representations, or guarantees, either express or implied, of any kind, nature, or type whatsoever from, or on behalf of MyWire and Gerbsman Partners.  Without limiting the generality of the foregoing, MyWire and Gerbsman Partners and their respective staff, agents, and attorneys, hereby expressly disclaim any and all implied warranties concerning the condition of the MyWire Assets and any portions thereof, including, but not limited to, environmental conditions, compliance with any government regulations or requirements, the implied warranties of habitability, merchantability, or fitness for a particular purpose.

This memorandum is not to be supplied to any other person without Gerbsman Partners’ prior consent.  The information contained herein is not subject to the Confidential Disclosure Agreement, however any additional requested information would require execution of the attached CDA attached hereto as Exhibit A.

Overview

MyWire is poised to ignite a paid content revolution that will redefine the economics of online content for publishers and consumers.
MyWire’s publisher program includes:

·     MyWire Publisher Network, a market-based platform that links publishers together, creating a pinball effect that keeps users on publisher sites longer.

·     MyWire-branded multi-publication subscriptions comprised of paid content from hundreds of publishers. Content is viewed on originating publishers’ websites, and subscriptions are sold by publishers on their own sites.

·     A single MyWire user account for organizing, interacting with, and purchasing content as the user traverses the Publisher Network.

The transition to digital presents publishers with both a formidable challenge and an enormous opportunity to achieve outcomes similar to those achieved centuries ago with the invention of the printing press – an explosion in knowledge, a better way of life for consumers, and long-term publishing industry expansion.

A privately held company, MyWire (founded in 2002 as KeepMedia, Inc.) is headquartered in Redwood Shores, California.  Over $30 million has been invested to date in MyWire by Mercury Capital Management, an investment group headed by Louis H. Borders.

Publisher Network

·              Publishers have traditionally been focused on content creation.  To be relevant in the digital age, publishers must add curation to their repertoire – being connected to other content has proven to be the key service of the winning digital-only publishers.

·              MyWire’s Publisher Network provides a menu of web-based services that enables connectivity to other content.  The services are easy to implement, and operate independently of publishers’ own content management systems.  As a result, publishers improve their site metrics with new pages, better ad-targeting, and a network effect that recaptures traffic from search engines.  And unlike aggregators and hubs, the MyWire Publisher Network does not draw traffic from publishers’ sites; instead, it supports each publisher’s own retail presence.

Consumers experience the Publisher Network as enhancements to their favorite publisher sites which provide instant access to content from across the web – curated lists of content, high quality related abstracts, and new topic pages.

Multi-Publication Subscriptions

MyWire multi-publication subscriptions make available, for one modest price, paid content from hundreds of publishers.  Packages are designed to fill distinct and universal consumer needs such as news, business, and knowledge (referred to as Universal Packages).  MyWire has launched or is ready to launch three such packages (see drawing) and has designed a collection of packages that would comprise a “basic digital” service similar to a cable offering.

Packages are sold by publishers as co-branded offerings on their own sites.  As has been proven in the cable industry, the simplicity and variety of a package enables each publisher to earn more revenue than it would by selling single publisher subscriptions.  Unlike cable, MyWire packages are easily understood by consumers, and the marketing of the packages leverages existing publisher traffic.
The MyWire subscription program gives publishers complete flexibility to set the pricing of their own content.  Because packages have a higher sell-thru rate than a go-it-alone offer and because of crowd-selling (many publishers selling the same package), MyWire packages are capable of achieving broad adoption and an effective paid content revenue stream for publishers.

Market Opportunity

·     Size According to PWC, $558 billion in non-internet paid content revenue is currently subject to internet competition.  The pace of the transition has been steady and gaining momentum.  With the estimated delivery of 100 million mobile tablet devices in the next three years, the pace of transition is expected to increase dramatically.

·     Need for paid content Many sectors of the publishing industry, such as news, B2B and music, are struggling to successfully transition to a paid digital model.  While they strive to capitalize on a direct retail presence via the internet, they are unable to adequately monetize their content.  For many publishers, an effective paid model is their number one priority.

MyWire Technology Platform – Intellectual Property Assets

MyWire’s end-to-end solution consists of web-based offerings that are easy for publishers to implement, can be used as a menu of services, and work independently of publishers’ content management systems.  The Publisher Network infrastructure has a content engine that ingests and processes content feeds, a set of self-contained web flows to provide end-user services such as subscription forms, and web services invoked by publishers for access control and content delivery.

The main architectural components, focusing on capabilities for publishers, consist of:

·     Content Engine Responsible for ingesting content feeds from publishers and performing the processing necessary to deliver relevant content to users.

·     Loader/Feeder Multi-threaded processes that monitor incoming feeds, preprocess these feeds into a standard format, queue up the feeds for processing, extracting and persisting metadata, write content to the file system, and execute business rules such as price type calculation and duplicate detection.

·     Search Indexer Responsible for adding new and updated items to a scalable pool of search servers.

·     Relatedness algorithms MyWire performs semantic analysis and metadata extraction using a combination of licensed commercial text mining engines and its own proprietary algorithms.  The resulting calculations are used to determine relatedness between content objects and to generate recommendations.

·     Search MyWire implements full-text search on top of open source systems extended with proprietary business logic to support time slicing, boosting and filtering based on price type, package assignments and other metadata.

·     Page delivery Web pages are built using a standard J2EE MVC model and delivered via caching layers to ensure scale and high performance.

·     Service Calls MyWire uses REST-based APIs, all based on the same Spring/Hibernate infrastructure, to deliver its:

·     Access control service to determine if a specific paid item is available for consumption to a specific user.

·     Paywall service to deliver embedded HTML containing a subscription offer around a specific item or package.

·     Widget-based blocks of relevant content, based on curation, related item calculations, or search results.

·     Data Warehouse A separate data warehouse is populated via daily and weekly ETL jobs and stored procedure-based summarization logic.

·     Performance measurement tools Frameworks to enable MyWire and publishers to effectively measure a system’s performance characteristics, identify bottlenecks under load, and verify successful tuning.

MyWire’s architecture uses a mix of traditional, Java-based enterprise open source frameworks, proprietary modules, and when necessary, enterprise systems, such as Oracle databases for transactional customer information.  Designed as a modular system with efficient schema, carefully tuned queries, and appropriate in-memory data caching, the MyWire platform performs well under heavy load and is horizontally scalable.

Intellectual Property Assets

MyWire product development to date consists of:

·     Almost 100 product releases delivered on an Agile basis in a mix of two-week and three-week product cycles.

·     Over 275K lines of Java code, 9K lines of PL/SQL code, and 200 JSP files.

·     All code delivered since 2008 conforms to a documented set of coding standards and code review checklists.  All existing consumer-facing functionality has been redesigned to meet the coding standards.

·     Over 1,500 unit tests covering 50% of the code base.  The covered code has 78% method level coverage.

·     Over 1,800 documented user stories.

·     190 automated test cases.

·     Automated continuous and daily build systems to apply Java, JSP, CSS, JavaScript, and xHTML linting and perform unit tests, performance regressions, code coverage, documentation generation, and deployable packaging.

·     Modular J2EE deployables for:

·     Consumer and Publisher web experience

·     Partner Network services

·     Content Engine services

·     Content Engine processing

·     Batch processes for search-index updates, related-item calculations, near-duplicate calculation, analytics data capture, and expired-item purging

·     Back-end financial reporting and review

·     Batch messaging services

·     Search engine

·     Executive metrics dashboard

MyWire product architecture:

·     Database schema for content targeted to MySQL 5.0.  Master database is replicated to a read-only cluster and a back-up server.

·     Database schema for customer accounts targeted to Oracle 11g.  Deployed to an active/active two-node configuration.

·     Database schema and stored procedures for data warehouse targeted to Oracle 10g.

·     J2EE deployables for middle-tier business logic and UI client code targeted to Resin 3.0 and JDK 1.5.  Deployed to a cluster of web servers and a cluster of search servers.

·     Frameworks for metric calculation, performance monitoring, reporting, logging and caching.

Supporting development resources:
·     Subversion repository containing version history of code base.

·     Automated continuous and daily build infrastructure using Ant and CruiseControl.

·     Jira database recording release history, use cases, and open and closed issues.

·     Company wiki containing coding standards, requirements, UI and technical design documents, and test cases.

Competitive Advantage

MyWire’s platform uniquely empowers publishers.  Several large-scale, high-profile efforts (Project Alesia, Next Issue and Skiff) have attempted to provide publishers an effective paid model. However, their business models weakened publishers by drawing off their traffic.  Existing services in the digital marketplace similarly weaken publishers (see chart below).  MyWire’s platform connects publishers as a network of equals, provides services to publishers to enhance their sites, and enables their users to conduct media commerce directly on publisher sites.  In addition, MyWire has no advertiser relationships, avoiding disintermediation of publishers from their advertisers.

Why MyWire’s assets are attractive

MyWire’s platform has been tested on a modest scale and is ready to deploy on a large scale.  An acquisition of MyWire’s assets can enable the purchaser to realize significant short and long-term value.

·     End-to-end built platform The MyWire team has proven development expertise with visionary, high performance, large-scale deployments.  The MyWire platform is comprehensive, PCI-compliant and designed for scale, speed and high service levels.

·     Market Position that empowers publishers The MyWire Publisher Network harnesses the power of publishers to shift the momentum to paid content, recapture traffic from search engines and even extract fees from them.        MyWire has conducted hundreds of review meetings with senior executives at leading publishing companies, primarily in the news and B2B sectors (the sectors most amenable and in need of a paid model).  The result is a platform that fits publisher needs and supports their direct consumer relationships.

·     Ease of use for publishers The MyWire platform is designed to operate independently of publishers’ content-management systems.  Publisher participation in the menu-based Network services is as simple as placing widgets (similar to ad widgets) on their sites.  Paid content services are handled by MyWire as embedded services on publishers’ sites (again avoiding integration issues with publishers’ content-management systems).

·     Usability for users Consumers experience the Publisher Network as a variety of unbranded enhancements to their favorite publisher sites, such as curated lists of content, instant access to quality related abstracts, and new topic pages. As a result, consumers will use their favorite publisher sites more frequently.

·     Efficient marketing model MyWire’s Publisher Network leverages publishers’ existing traffic by using related links to broadly market publisher content (free and paid).  MyWire pays a “seller bounty” to publishers that sell a subscription package to which they are contributing paid content.  The bounty is paid as a share of subscription revenue and has the dual benefit of attracting publishers to the MyWire program and eliminating front-end marketing expenses for MyWire.

·     Market dynamics MyWire pays out the largest portion of subscription revenue to publishers based on usage.  Since, in the initial stages of a package launch, a subscriber will likely view mostly free items, paid items earn extraordinarily high revenue per view.  This market-driven dynamic will induce publishers to add paid content to MyWire Universal Packages, initiating a virtuous cycle.

·     Antitrust protection MyWire requested and received a business review letter from the Department of Justice regarding its subscription package program which provides a high degree of comfort that the MyWire program will be compliant with US antitrust law.

·     New Category MyWire defines a new category – the organization of publisher-only content (and high-quality, focused search results) for digital delivery,  distributed on participating publisher sites.

·     Scale of business opportunity Cable has 95 million subscribers in the US alone with an average subscription rate of $70 per month.  Digital subscriptions can expect US revenues comparable to this $80 billion annual rate.  Even in the nascent digital subscription market, the leading digital multi-publication subscription, Netflix, has already garnered over 15 million subscribers for its movies package.  The MyWire platform is architected for multiple packages that can roll out quickly, and with minimal development effort once the first package reaches scale.  The Publisher Network is also well suited for extensions that support additional publisher monetization efforts, such as mobile delivery, lead generation and their existing commerce.

·     Location MyWire’s location is ideal to build a major internet consumer-branded platform company.  MyWire is located within 30 miles of Google, Facebook, Twitter, Yahoo and eBay.

Executive Development Team

·     Louis H. Borders – Founder and CEO Founder/co-founder of Borders Books & Music, Webvan and Synergy Software.  B.A. in Mathematics from the University of Michigan, graduate studies in mathematics at MIT.

·     Dan Climan – Vice President, Software Engineering 18 years of engineering, media, and retailing experience; Principal at Booz Allen & Hamilton; Webvan.  B.S. in Computer Science from Yale University, M.B.A from Wharton.

·     Daniel Lipkin – Vice President, Architecture 18 years of software architecture and engineering experience; Director of Development at Visible Path; Chief Architect & Director of Development at Saba Software; Oracle.  B.S. in Computer Science from Stanford University.

·     San Mai – Vice President, Product Management 20 years of product management experience; Vice President, Product Management at WorkingPoint, MarketLive and Inktomi Corporation; Netscape.  B.S. in Computer Engineering and M.B.A. from Santa Clara University.

The Bidding Process for Interested Buyers

Interested and qualified parties will be expected to sign a nondisclosure agreement (attached hereto as Exhibit A) to have access to key members of the management and intellectual capital teams and the due diligence “war room” documentation (the “Due Diligence Access”).  Each interested party, as a consequence of the Due Diligence Access granted to it, shall be deemed to acknowledge and represent (i) that it is bound by the bidding procedures described herein; (ii) that it has an opportunity to inspect and examine the MyWire Assets and to review all pertinent documents and information with respect thereto; (iii) that it is not relying upon any written or oral statements, representations, or warranties of Gerbsman Partners, or their respective staff, agents, or attorneys; and (iv) that all such documents and reports have been provided solely for the convenience of the interested party, and Gerbsman Partners (and their respective, staff, agents, or attorneys) do not make any representations as to the accuracy or completeness of the same.

Following an initial round of due diligence, interested parties will be invited to participate with a sealed bid, for the acquisition of the MyWire Assets.  Sealed bids must be submitted so that they are actually received by Gerbsman Partners no later than Friday, December 17, 2010 at 3:00 p.m. Pacific Time (the “Bid Deadline”) at MyWire’s office, located at 275 Shoreline Drive, Suite 100, Redwood Shores, California 94065.  Please also email steve@gerbsmanpartners.com with any bid.

Bids should identify those assets being tendered for in a specific and identifiable way.  In particular, please identify separately certain equipment or other fixed assets.  The MyWire fixed asset list (attached hereto as Exhibit B) may not be complete and bidders interested in the MyWire equipment must submit a separate bid for such assets.

Any person or other entity making a bid must be prepared to provide independent confirmation that they possess the financial resources to complete the purchase where applicable.  All bids must be accompanied by a refundable deposit check in the amount of $250,000 (payable to MyWire, Inc.).  The winning bidder will be notified within 3 business days of the Bid Deadline.  Unsuccessful bidders will have their deposits returned to them within 3 business days of notification that they are an unsuccessful bidder.

MyWire reserves the right to, in its sole discretion, accept or reject any bid, or withdraw any or all of the assets from sale.  Interested parties should understand that it is expected that the highest and best bid submitted will be chosen as the winning bidder and bidders may not have the opportunity to improve their bids after submission.

MyWire will require the successful bidder to close within a 7 day period.  Any or all of the assets of MyWire will be sold on an “as is, where is” basis, with no representation or warranties whatsoever.

All sales, transfer, and recording taxes, stamp taxes, or similar taxes, if any, relating to the sale of the MyWire Assets shall be the sole responsibility of the successful bidder and shall be paid to MyWire at the closing of each transaction.
For additional information, please see below and/or contact:

Steven R. Gerbsman
Gerbsman Partners
(415) 456-0628
steve@gerbsmanpartners.com

Kenneth Hardesty
Gerbsman Partners
(408) 591-7528
ken@gerbsmanpartners.com

Dennis Sholl
Gerbsman Partners
(415) 457-9596
dennis@gerbsmanpartners.com

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