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Indybay Feature
The Revolution Will Be Streamed Live…..By Amazon
Expedient Use of Technology May Or May Not Be Subverting Organizational Intent
Last Saturday I attended a showing of the 1972 documentary “Malcolm X” narrated by James Earl Jones at the Answer Coalition meeting place in San Francisco. Answer Coalition is affiliated with the Party for Socialism & Liberation. During the screening of this excellent documentary, there was some technical glitch and it showed that the film was being streamed through Amazon. This surprised me as Amazon is known for its authoritarian and anti-labor actions – not something I think the PSL would support. Yet, there is was, this supposedly revolutionary organization profiting this capitalist behemoth. PSL is not alone in this kind of behavior and it is something that needs to be addressed by all people fighting oppression in this world. The expedient use of technology may be clouding the true nature of organizations. After all, the internet was developed in the Department of Defense. I’m not unsympathetic with the Answer Coalition but I think there needs to be more dialogue on this kind of thing. Socialist, anarchists groups and others are using social media sights such as Facebook, Twitter and Disqus. When you look at some of the actions of these companies and some of their investors and owners, you need to consider who you are in bed with. The employees of these same tech companies are some of the same people gentrifying places like San Francisco. Why should anyone be supporting that kind of thing except that communications in many ways seem limited?
These things need discussion and Indybay may be an example of where the use of the internet is being applied in ways more compatible with the stated goals of many organizations pushing for revolutionary change. Indybay is apparently anonymous. It offers a forum and a calendar. It is available to anyone with internet access. It does have limitations and maybe those need to be addressed so it or sites like it can be utilized as alternatives to the mainstream internet services. People need to slow down and think about what they are doing- who they are supporting and why it matters. So many people just accept Google as the only available search tool. That is untrue and only feeds into the mentality that promotes monopoly. And of course- monopoly is what Google wants. There are alternatives that need more discussion, more promotion. What about Ixquick? It says it is anonymous and does not track people. I think so but how do I know. I do believe it is an alternative to what we know Google is.
Print media is still a great way of connecting locally and it takes another level of effort to create. The Slingshot is a good example. Print also circumvents many of the impositions of the internet and online communications.
There is a lot of hypocrisy going on and plain stupidity. One can almost understand as there is really little transparency on the internet and people tend to sign off on all EULA (End User License Agreements) without reading or understanding them. What if the EULA violates some of your basic principles, beliefs or fundamental legal rights? There is no negotiation – either you sign off or you do not use the tool or app. User rights seem to be ignored and there is no common unity of internet users to fight against the edicts of these companies. Many times the EULAS are multiple pages and frequently written in legalese not understood by the average person. It appears that expediency rules the day. I hope I’m wrong but I don’t think so.
It reminds me of a time I went to a meeting of the International Socialist organization and I asked one of the fervent supporters if he had a bank account and where. He advised that he banked with “Bank of America” and he didn’t see any problem with that – it was convenient for him. Yes, convenient but is that an organization people should be supporting financially or even be associated with? Of course, revolutionaries use phone services that are members of ALEC and probably would use weapons made by capitalist gun manufacturers. We obviously live in a world where we are forced to compromise but there should be limits or alternatives. Can we discuss those and maybe adapt better ways of relating or develop alternatives to the status quo that the internet and social media creates. Would be interested in others insights and how resources like Indybay can become more of a center of communications. Also - maybe some things realistically need to be left offline.
These things need discussion and Indybay may be an example of where the use of the internet is being applied in ways more compatible with the stated goals of many organizations pushing for revolutionary change. Indybay is apparently anonymous. It offers a forum and a calendar. It is available to anyone with internet access. It does have limitations and maybe those need to be addressed so it or sites like it can be utilized as alternatives to the mainstream internet services. People need to slow down and think about what they are doing- who they are supporting and why it matters. So many people just accept Google as the only available search tool. That is untrue and only feeds into the mentality that promotes monopoly. And of course- monopoly is what Google wants. There are alternatives that need more discussion, more promotion. What about Ixquick? It says it is anonymous and does not track people. I think so but how do I know. I do believe it is an alternative to what we know Google is.
Print media is still a great way of connecting locally and it takes another level of effort to create. The Slingshot is a good example. Print also circumvents many of the impositions of the internet and online communications.
There is a lot of hypocrisy going on and plain stupidity. One can almost understand as there is really little transparency on the internet and people tend to sign off on all EULA (End User License Agreements) without reading or understanding them. What if the EULA violates some of your basic principles, beliefs or fundamental legal rights? There is no negotiation – either you sign off or you do not use the tool or app. User rights seem to be ignored and there is no common unity of internet users to fight against the edicts of these companies. Many times the EULAS are multiple pages and frequently written in legalese not understood by the average person. It appears that expediency rules the day. I hope I’m wrong but I don’t think so.
It reminds me of a time I went to a meeting of the International Socialist organization and I asked one of the fervent supporters if he had a bank account and where. He advised that he banked with “Bank of America” and he didn’t see any problem with that – it was convenient for him. Yes, convenient but is that an organization people should be supporting financially or even be associated with? Of course, revolutionaries use phone services that are members of ALEC and probably would use weapons made by capitalist gun manufacturers. We obviously live in a world where we are forced to compromise but there should be limits or alternatives. Can we discuss those and maybe adapt better ways of relating or develop alternatives to the status quo that the internet and social media creates. Would be interested in others insights and how resources like Indybay can become more of a center of communications. Also - maybe some things realistically need to be left offline.
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Case study of the 1% vs. the 99%:
Amazon and venture capital partners and friends vs. one small company, or more precisely:
Jeff Bezos/Amazon
John Doerr (initial funder, and member of the Board of Directors of Amazon and Google)/Kleiner Perkins Caufield & Byers.
Jan Leschly/SmithKline Beecham (principle funder of Pharmaceuticals throughout the USA and the world)
Stig Leschly (Harvard MBA&Law, & Jan's son), Amazon investors who purchased Amazon stock at a bargain when the internet "bubble" crashed in the year 2000.
vs. Roger Raffee/GEMM.com and Amazon investors who sold their Amazon stock at a loss when the internet "bubble" crashed in the year 2000.
------------------------------------------------------------------------------------------------
In the year 1999 Amazon purchased a start-up company by the name of Exchange.com. The founder and principle owner of Exchange was a recent Harvard MBA and law graduate by the name of Stig Leschly. Exchange was comprised of mainly two web sites, Bibliofind.com and Musicfile.com .
Here is the official story of the deal put out there at the time by Amazon and disseminated unquestioningly by the media:
http://www.prnewswire.com/news-releases/amazoncom-acquires-exchangecom-adding-more-than-12-million-book-and-music-items-for-sale-and-auction-74232082.html
and here is Stig Leschly's version of how it went down:
http://books.google.com/books?id=-NA-if_Am0YC&pg=PA329&lpg=PA329&dq=Leschly+was+something+more+%2B+Stig+Leschly+
2B+Shaping+the+Waves:+A+History+of+Entrepreneurship+at+Harvard+Business+School&source=bl&ots=bLLlwz1uSh&sig=pgCrVmg0sbVW5RFALXkdc8gp6ec&hl=en&sa=X&ei=eYBZVPaFDY72igLag4Eo&ved=0CCwQ6AEwAg#v=onepage&q=Leschly%20was%20something%20more%20%2B%20Stig%20Leschly%20%2B%20Shaping%20the%20Waves%3A%20A%20History%20of%20Entrepreneurship%20at%20Harvard%20Business%20School&f=false
In 2009 book store owner Marion Meyer was researching a story he was thinking about publishing on the history of Amazon. He contacted Roger Raffee and the following interview occurred between the two of them. Roger asked Mr. Meyer if he would be publishing the interview and Mr. Meyer said he would rather not because he was afraid that there might be some kind of repercussion against him by Amazon if he did. Roger asked if it would be alright if he posted the interview. Mr. Meyer told Roger that would be OK so long as Roger altered the interview so that it would not identify Mr. Meyer as the interviewer. He didn't mind being referenced in the posted version of the interview, he just didn't want to be identified as the interviewer:
http://gemm-ayudahelper.blogspot.com/2009/10/interview-with-gemm-ceo-roger-raffee.html
It wasn't until after Roger had this conversation with Mr. Meyer that he understood who John Doerr was, and that because he was a principal funder of Amazon it probably wasn't appropriate for John Doerr to pressure him to sell his company to Stig in December of 1998, considering Amazon then bought Stig's company in April of 1999. Also, as you'll note in the interview, Jeff Bezos called Roger in January 1999. So, we can assume Roger's call from Jeff was certainly no coincidence. Jeff Bezos obviously knew about GEMM and the fact that Musicfile was not a practical functioning web site with any measurable traffic or transactional activity at the time Amazon purchased Musicfile/Exchange.com.
Then in August, 2013, Roger gets a message from a feature writer at the New Yorker magazine:
From: Maria Bustillos [dorkismo [at] gmail.com]
Sent: Friday, August 09, 2013 9:21 PM
To: GEMM Support
Subject: media inquiry for Roger Raffee
Hello, I am a journalist working on a piece about Amazon and its effects on the used/rare book business, interested in speaking with Mr. Raffee. If he is available to discuss this, my phone number is 213 XXX 7691 and I'm available anytime. Alternatively, please provide contact details and a good time to call/write. Kind of a tight deadline, will very much appreciate the chance to speak with him.
All best
Maria.
Roger and Maria begin corresponding by email and phone calls. Below is an email from Roger to Maria in which he finds a web posting dated from March, 1999, backing up Roger's claim that the official story of Amazon's purchase of Musicfile/Exchange was false. In reality Musicfile.com was not up and running strong in November 1998 as the official story claimed.
In fact, when Musicfile finally did launch most of the sellers on the Musicfile site were sellers Stig recruited from a list of sellers supplied to him by Roger's developer/partner, Jim Hall. Unfulfilled promises were made to Jim to secure that list, and Roger never agreed to provide a list of GEMM sellers to Stig for the purpose of recruiting them to the Musicfile web site.
From: Roger
Sent: Saturday, August 17, 2013 11:36 PM
To: maria [at] popula.com
Subject: Musicfile start date. March 25th, 1999, not up yet..
The internet is good for research isn't? Look at this page I found, dated March 25th and Stig's site Musicfile hadn't gone live yet. "That site is scheduled to launch in April" and bought by Amazon on April 30th. Way different than stated in Shaping the waves!
http://www.internetnews.com/ec-news/article.php/86871/Exchangecom+Plans+Network+of+Vertical+ECommerce+Sites.htm
Exchange.com Plans Network of Vertical E-Commerce Sites
By internetnews.com Staff | March 25, 1999
Page 1 of 1
Cambridge, MA-based Exchange.com, formerly e-Niche Inc., said it plans to launch a family of highly vertical online marketplaces, and to that end has acquired Bibliofind, a rare and antique book Web site.
The company is also developing MusicFile, a destination site for hard-to-find and vintage music. That site is scheduled to launch in April.
These new marketplaces provide full-service e-commerce solutions for both buyers and sellers within the untapped secondary market for used, hard-to-find and collector items in special-interest categories, the company said.
In addition, Exchange.com closed a $10 million second round of private financing from Polaris Venture Partners, Accel Partners and The Washington Post Co. . The company also said it appointed several key industry leaders to its board of directors and advisory council, including Lotus Corp. founder Mitch Kapor.
Here is an email from Maria she sent Roger after she interviewed Richard Messerschmidt, who was with Roger at the meeting with John Doerr:
Maria Bustillos [maria [at] popula.com]
You replied on 8/11/2013 6:30 PM.
Sent: Sunday, August 11, 2013 6:08 PM
To: Roger
Attachments:
Just talked to Richard! Wow this is a lot to digest but I'm working on it really really hard.
Thanks so much, Roger, be in touch soon---
M.
More back and forth goes on between Maria and Roger for a couple of months. Each week Maria tells Roger that the story is about to be published. A fact checker from the New Yorker contacts Roger:
>From: Margalit, Ruth [Ruth_Margalit [at] newyorker.com]
>Sent: Tuesday, October 15, 2013 1:19 PM
>To: Roger
>Subject: The New Yorker fact checking
>
>Dear Roger,
>
>I'm a fact checker at The New Yorker magazine working with Maria
>Bustillos on her piece about Amazon and origin myths on Silicon Valley.
>Maria mentions GEMM's story and quotes you in her piece, so I was hoping
>we could speak to make sure that everything is accurate. Could you give
>me a call when you get a chance at 212-286-2941, or let me know when's
>the best time to call you? We're hoping to publish this toward the end of
>the week.
>
>Many thanks.
>
>Ruth
>
>--
>Ruth Margalit
>The New Yorker
>4 Times Square
>NY, NY 10036
>p: 212.286.2941
>f: 212.286.5947
Roger phones the fact checker. She reads off the facts of the story as Maria has related them to the editors at the New Yorker. Roger verbally confirms all aspects of the story. Then Maria sends Roger the following message letting Roger know that Stig flatly denies any relationship between himself and Roger or GEMM. In fact, over the phone she tells Roger that Stig denies even knowing GEMM existed. She solicits any documentation to support Roger's version of the story and events so that the story can be published.
From: Maria Bustillos [maria [at] popula.com]
Sent: Friday, October 18, 2013 10:09 AM
To: Roger
Cc: jraffee [at] raffeelaw.com
Subject: Re: FW: 2 + 2 = ? , theory about what's going on.
Hello Roger (and Ms. Raffee!)
Because Stig is flatly and absolutely denying that he was ever interested in buying GEMM, the more information we have to the contrary, the better the chances the New Yorker will publish the piece. I'm sure you both can understand their concern; they would be putting themselves in a bad spot if they were to publish a falsehood. So any documentation at all that you can find to the effect that there was an ongoing relationship between GEMM and e-Niche--any emails, any correspondence, draft offers, anything at all--will help enormously. Much better coming from both you and Jim.
thx!
Maria.
As luck would have it Roger does have copies of email correspondence between himself and Stig Leschly from nearly 15 years earlier. Roger's mother was his office manager in the early 2000's. Even though Roger's old computer and email program from that time has been lost, his mother, sometime around 2003, had logged in to Roger's email, with Roger's permission, and hard-copied everything she thought might be important, including the following correspondence showing the negotiating that was occurring at the time between Stig and Roger. Below is emails sent to Maria with the requested documentation of those negotiations, and evidence of a business plan for Stig's company sent to Roger from Stig.
From: Stig Leschly
Subject: Re: Something missing?
Cc:
Bee:
X-Attachments:
Roger,
I appreciate your request for detailed information on our business
plan. One thing you should understand is that ordinarily full
disclosure of a business plan (including financial projections) comes
after the signing of the letter of intent which includes confidentiality
promises. The business plan is a 50 page document and contains highly
sensitive information. To date, there are only 12 copies of it in
existence.
That said, because I want to move this process along, I will have Tim
federal express a full business plan to you today. It is under strict
confidentiality protection. I will, under these pressing circumstances,
trust you not to copy it. If we don't reach agreement, please return it
to me.
In the business plan, you will see 5 year projections and a variety of
other information on competitors, market size and our growth plans. The financial information includes full revenue and cost projections.
Currently, our preferred exit plan is to sell the company in the next 12
to 18 months. The sale price in 12 to 18 months would be in the $50
miLcion to $150 million range. This number is calculated based on the
trading values today of Internet companies with the types of revenue,
membership and growth prospects that we expect. Ideal acquirers include large search engines, commerce companies, and auction companies. As an alternative to selling the company, we will consider going public. If we go public, we would do so at at a minimum of a $250 million valuation in year 2 or 3. I hope this gives you some sense of my and our investors' expectations. Also, feel free to look at the portfolio companies of Polaris and Accel. These venture investors only invest in companies with the type of exit possibilities that I just described.
One other comment, Roger. At the highest level, the exit strategy is
not that important to you because you have chosen not to own significant
stock in e-Niche. The exit value is more important to Jim who will own
almost 3% of the company. All you need to believe is that e-Niche is
viable and has access to capital over the next 36 months. As long as
that's the case, you will be paid. Note here that we are already 100%
viable for the next 12 months with the cash we have raised.
Furthermore, I have been offered more investment to fund us beyond the
next 12 months. So far, I have turned it down because I will be in a
better position to negotiate with eager investors after 6-9 months of
operation. In short, I have no concerns that e-Niche will have access
to capital and that, therefor, you will be paid. Feel free to
investigate the histories of start-ups funded by Accel and Polaris. I
don't know of any that have not raised a second round of financing.
I am leaving for vacation this afternoon (Thursday) and will be back on
Sunday afternoon. I understand you need to evaluate the information,
and I in no way mean to pressure you insincerely. Can I ask simply that
you have an answer for us by Sunday afternoon. I really can't wait much
longer, Roger. I need to make decisions about hiring sales and
marketing staff which depend on whether we do a deal with GEMM.
Please leave me a voice mail with any question and please let me know if
the Sunday afternoon deadline is okay. I will not be checking e-mail.
Again, Tim will be in touch about mailing the business plan~
Thank you,
Stig.
From: Roger
Sent: Friday, October 18, 2013 5:59 PM
To: maria [at] popula.com
Cc: jraffee [at] raffeelaw.com
Subject: Correspondence between Stig/myself/Jim Hall/Tim Capron of E-nich, Part 2, Oct. 21, 1998
Maria,
Here's an email from Stig to me, copied to Jim and his buddy Tim, who as I remember was introduced to me as his roommate at Harvard and his number one assistant. He's discussing with me the possible details of the deal. Below is my previous message to Stig.
>> Dear Stig;
>>
>> Thank you for the letter of Intent and the business description you
>> sent me. I am extremely interested in your proposal, however, not having
>> the advantage of my partner Jim Hall I will need to see some more
>> lnformation on your company, it's principles and that $2.5m in start up
>> capital you purport to have in place.
>>
>> I'll need to see the details of that commitment before I can agree to
>> contract to sell to your start-up company. Being a one man band out here in
>> California and literally socked away in my hobbit processing orders, I
>> forgot to mention to you when you and your partner came to see me that I
>> will need some information on you guys and your operation.
>>
>> I believe I did mention this but some how it seems to have been
>> forgotten. I am willing to sign your letter of intent with very few changes
>> if all checks out regarding your information and my verification. Due to
>> the seriousness of this transaction I will be engaging assistance on my
>> part to vet the various papers and proposals and oversee details of the
>> transaction.
>>
>> I am sure you must be under the gun to make a deal or else you would
>> not have insisted upon an immediate response from me. I have spoken to Jim
>> on this and will move as quickly as humanly possible. I will execute a
>> letter of intent wihin 24 hours of receipt and approval of your information
>> I have requested.
>>
>> Sincerely,
>>Roger Raffee
>Date: Wed, 21 Oct 1998 11:42:58 -0400
>From: Stig Leschly
>Reply-To: stig [at] e-niche.com
>Organization: e-Niche Incorporated
>MIME-Version: 1.0
>To: Roger Raffee
>CC: jim [at] gemm.com, Tim Capron
>Subject: Re: letter of credit
>Status:
>
>Roger,
>
>That's terrific news. Let me respond with the following.
>1. First of all, before I get to the due diligence, let me stress how
>happy I am that you are willing to proceed. I have thought much about
>your predicatment, Roger. I totally understand that you need to assure
>yourself about the transaction and your payments. I think there are
>ways to do that, short of an onerous letter of intent. Also, at the
>highest level, I think this is a good deal for all of us.
>2. Secondly, after talking to your sister last night, I thought about
>what I can do -- short of tying up lots of capital in a letter of credit
>-- to address your concerns. One thing that I can do, Roger, which
>might make you feel a little better is to pay you a larger sum on day
>one. One of my constraints, as you know, is that I conserve my cash
>outlay for the acquisition in the first year. That said, I don't mind
>paying you the first 4 months of the payments up front. I am making
>this offer in an unsolicited way -- as a way of communicating to you
>that I am sincere and that I understand your concerns. What this would
>mean is that you get a lump sum of 4 x $13,194 (equivalent to $52,778)
>on day one (probably mid-November) . I hope that goes some way to make
>you more comfortable. Also, keep in mind, Roger, all the ways (other
>than a letter of credit) which you do have to enforce your right to
>receive payment. They include you contract rights under the "purchase
>of assets" agreement that we will eventually sign and your rights as a
>shareholder in e-Niche. Also, at a non-legal level, let me impress on
>you again that my investors would simply not tolerate my defrauding you,
>and it would be short-sighted of me to make enemies since e-Niche plans
>to do many other acquisitions in the future.
>3. Your requests to see our records regarding investors, management and
>financial structure are 100% reasonable, and I have in no way meant to
>ignore them. In fact, I expect to give you and Jim full access to
>information on e-Niche. Let me say two things. First of all, at this
>point, we only need to sign a letter of intent to do the transaction.
>The letter of intent does not bind you legally to complete the
>transaction. The letter of intent on requires you and Jim to observe
>confidentiality and to not enter into acquisition talks with another
>coQpany for the next several weeks while we get to closure on the final
>documents. In transactions like this, a full due diligence period
>typically follows the signing of the ltter of intent. It is in this
>period, that you and Jim (and your lawyers if you wish) should put
>together a list of everything that you want to see from e-Niche,
>including bank statements, referal lists, and so on. You will have full
>access to the information that you need. We will not sign the final,
>legally binding documents until a few weeks from now -- as soon as our
>lawyers can draft them and review them and as soon as you guys can
>complete your due diligence (we, by the way, still have some due
>diligence to do as well, including seeing you bank statements and so
>on). In any case, Roger, I hope that lays out the process for you a
>bit. In all, you will have full access to all the information that you
>neeed. Second of all, for the moment, I will have Tim put together for
>you a quick set of documents that he will fax to you today. These
>documents will include photo copies of our bank statement, balance
>sheets, deposit slips, lease, and whatever else we can pull together on
>short notice. Again, Roger, remember that you will have a few weeks
>after the signing of the letter of intent to get whatever information
>that you need to sign the final documents.
>
>Again, Roger, I am delighted that you are willing to proceed. Three
>final things about how to proceed.
>
>-- First, please have a conversation with Jim and make you the two of
>you are on the same page. There appears to be some confusion.
>
>-- Second, please e-mail to Tim (tim [at] e-niche.com) a fax number (at a
>local Kinko's if need be) so that he can fax you the information that he
>is pulling together on short notice.
>
>-- Third, we need to sign the letter of intent tomorrow. I will have my
>lawyers draft a new one to reflect the lump sum payment to you on day
>one. I will then fax out the letter of intent for all of us to sign.
>Again, after that, we can get to work on drafting the documents and
>swing into the full due diligence process. This should all be wrapped
>up in 2 weeks. I have a board meeting on Nov. 5, and I need to have the
>documents drafted, reviewed, agreed on, and signed by then.
>
>Feel free to call with questions, Roger. I am delighted to be moving
>ahead.
>All the best,
>Stig.
Sent: Friday, October 18, 2013 6:13 PM
To: maria [at] popula.com
Attachments:
Maria,
Below is Stig's rebuttal offer to a counter offer I had previously made to him. This is clearly a legitimate offer by him to buy GEMM. You can also see below he sent us a payment schedule for the cash part of the offer as an attachment.
>Date: Fri, 30 Oct 1998 12:36:00 -0500
>From: Stig Leschly
>Reply-To: stig [at] e-niche.com
>Organization: e-Niche Incorporated
>MIME-Version: 1.0
>To: jim [at] gemm.com, roger [at] gemm.com
>Subject: e-Niche offer
>Status:
>
>Roger and Jim,
>
>Thank you for your offer. I have reviewed it with the Board, and my
>response is below. In summary, I want to do the deal and think it's
>positive for both of our companies. Still, your requests as they stand
>are too large. I have responded below with a substantial improvement
>over the last offer. I think it's a fair final solution.
>
>In all, Jim and Roger, we are at the end of this road. I hope the offer
>below is enough to get this done. If not, we should get on with it. I
>look forward to your response.
>
>YOUR OFFER
>
>As I understand it, your offer at this point involves $1 million in
>cash, a letter of credit for the $1 million in cash, 10% of e-Niche, 2
>board seats, and a $100,000 cash deposit. Please correct me if I am
>wrong.
>OUR OFFER
>
>1. Valuation.
>
>I continue to think GEMM is worth about $1 million. We have analyzed
>the valuation number extensively. In an effort to get this done and to
>bend at the end of this, I am willing to add $200,000 to the value for a
>final offer of $1.2 million. We seemed in agreement about $1 million
>last week, and I hope we can get back to that range. At your requested
>$2 million, I am better off going at this alone.
>
>2. Cash and Equity Payments.
>
>I will stand by the initial agreement of 70% cash and 30% equity. You
>are free to take up to 50% of the payment in equity, as your latest
>offer implies. Assuming 30% of the payment in equity, the offer
>includes $840,000 in cash over 3 years (70% x $1.2 million). Total
>equity in the first year would be 3.6% of e-Niche.
>
>3. Letter of Credit
>
>I understand your need to have the cash payments secured. I am willing
>to agree to a letter of credit in the range of the $475,000 that you
>asked for last week. Specifically, I am willing to include a letter of
>credit for $500,000 from Silicon Valley Bank. The remaining $340,000
>of the cash payments ($840,000 - $500,000) would, as always, be secured
>by contract right as long as e-Niche is viable. In the unlikely event
>of a shutdown, the $340,000 cash would be secured by the hard assets of
>the company.
>
>You are free to allocate the letter of credit between you as you see
>fit. My sense is that Roger is more worried about having secured cash
>and that Jim is more interested in equity, so you might allocate the
>letter of credit accordingly. For example, consider a scenario where
>the letter of credit insures Roger's cash and where, as we initially
>talked about, Roger takes 95% of his half of the deal in cash. In that
>event, Roger's cash payment (95% x 1/2 x $1.2 million) is $570,000. The
>letter of credit would then almost fully insure Roger's payment. I have
>attached a payment schedule for this scenario.
>
>4. Board Seats
>
>I would love to have you on the board, but there are nettlesome legal
>and practical issues with that. Board members have a high fiduciary
>duty on behalf of shareholders, are liably for the actions of the
>company, and need personally to attend board meetings every 2 to 4
>weeks. Additionally, since e-Niche plans to make other acquisitions and
>partnerships, the precedent of putting people on the board could force
>me have an unworkably large board.
>
>The alternative is to have you both take seats on our advisory committee
>which meets bi-annually and which will involve a variety of advisors.
>Under this scenario, you would both be involved withe-Niche's strategy,
>I would have the benefit of your input and involvement in the long-run,
>and we would avoid the complications of a large board.
>
>5. $100,000 deposit
>
>I have no problem with making a $100,000 up front payment. I would only
>ask that it happens after the closing documents are executed.
>
>CONCLUSION
>
>Again, Jim and Roger, we are at the end of this. I hope the offer above
>is workable to you. If not, we should proceed on seperate paths. I
>look forward to your response and hope we can avoid competing.
>
>Sincerely,
>Stig Leschly
>
>Date: Fri, 30 Oct 1998 12:43:19 -0500
>From: Stig Leschly
>Reply-To: stig [at] e-niche.com
>Organization: e-Niche Incorporated
>MIME-Version: 1.0
>To: jim [at] gemm.com, roger [at] gemm.com
>Subject: Attachment
>Status:
>
>Jin and Roger,
>
>Attached is the payment schedule. I didn't attach it to the prior
>e-mail.
>
>Stig.
And here is an email to from Roger which includes part of Stig's actual business plan:
________________________________________
From: Roger
Sent: Friday, October 18, 2013 6:49 PM
To: maria [at] popula.com
Cc: jraffee [at] raffeelaw.com
Subject: Stig's E-Niche Bus. Plan Exec. Summary
Hello again Maria,
Here is the Executive Summary of Stig's E-Niche business plan, supposedly only a few copies are in existant according to Stig's previous email I copied. How did I get it? If Stig continues to deny we negotiated a failed deal you might want to tell him I have the 50 page glossy complete business plan. I never did send it back. It's in storage somewhere. It will be a bitch to find it, but I'm about 99.9% certain it's there.
The discussion with John Doerr, myself, and Richard happend. I told my sister and my parents about it but initially I just told them I met someone name "John" at a mansion above Blacks with Richard where John threatened me if I didn't sell to Stig.
Then, in 2009 when Marion Meyer explained to me who John was, John Doerr, and had me go to Youtube where I positively identified him as the person who I met with at the mansion, I told Jill and my parents again, but they still didn't know who John Doerr was at that time any more than I did...So, they didn't find it to impressive. It was at the UCSD Chancellor's mansion and we met the Chancellor when we walked in. We then sat in a room that was being remodeled at a table with John Doerr where the discussion took place.
Stig had pleaded with me for me to go meet with John Doerr because in Stig's mind John Doerr was going to persuade me to do the deal. I should have been really impressed by John Doerr and what he had to say, but it just happened that I was the one type of person who wasn't..
-Roger
KEHOAiaol.com ,
Fro~: Roger Raffee
Subject: Stig's business description
Cc:
Bee: ...
X-Attachments:
Business Plan Executive Summary Confidential
Stig Leschly e-Niche Incorporated 100 Holton Street Brighton, MA 02135
617-254-2102 stig [at] e-niche.com
June 11, 1998 DExecutive Summary
Ove:~view
I
e-Niche's mission is to solve the inefficiencies of niche collector markets. To
reach this goal, e-Niche will launch a portfolio of Internet sites to serve
individual collector niches. e-Niche's sites will create value as large-scale,
efficient product exchanges and as content-specialized communities for
coLLectors.
Collector markets spanning rare music, sports memorabilia, comic books, coins,
stamps, and dozens of other collectibles categories -- are severely inefficient
as currently organized. They are served by outdated trade magazines, a
fraqmented base of retailers and trade shows, and incomplete Internet offerings.
Buyers and sellers are universally frustrated in their efforts to interact and
transact.
e-N:_che' s comprehensive product exchanges and specialized content will meet the
fuL_ transaction and information needs of collectors:
Transaction Facilitation: e-Niche will allow retailers, dealers and collectors to
create and administer commerce-enabled store-fronts. Commerce features will
inc~ude interactive inventory accounts, online auctions, and access to historic
customer, transaction, and statement information. Through e-Niche, retailers and
dea:ers will lower inventory carrying costs and customer acquisition costs.
Ind~vidual collectors will reduce product search costs and increase the sell-off
value of their collections. Content Specialization: e-Niche's sites will be
ded~cated to individual collector markets and will offer participation in an
informative, member-driven online community. e-Niche's sites will feature a
broad range of editorial, information, and industry content, much of which will
be nember-generated. Market Opportunity
Col:ector markets span dozens of product categories. The five largest
col~ectibles segments are rare music recordings, comic books, sports cards and
memorabilia, coins, and stamps. Additional collectibles markets include toys,
dolJ.s, timepieces, model trains, knives, guns, glassware, brand-specific
memorabilia (e.g. Disney products), communications equipment, entertainment
memorabilia, and military memorabilia.
The market size for the five largest collector segments is $4.2 billion annually
in the US. In these niches, 1.8 million serious US collectors spend between
$1,Li00 and $2,600 annually on their hobby and maintain collections valued between
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$23,000 to $49,000. Collectors routinely purchase product sight-unseen.
Internet access ranges across niches from 25% to 32%.
In all product categories, collector markets are highly fragmented and
inefficient. Traditionally, they have been served by advertising-driven trade
magazines, a fragmented set of unconsolidated retailers and dealers, and local
trade shows. The inefficiencies of collectibles markets impact buyers and
sellers.
Sell-side Inefficiencies: Retailers and dealers suffer from low inventory
turnover, high direct mail and advertising costs, and unpredictable sources of
local supply. Also, when selling private collections, indiv,idual collectors face
below-market prices from a small number of local dealers and retailers. Buy.side
Inefficiencies: Buyers suffer from high costs ,to initiate social interactipns (at
trade shows and in retail stores) and to locate product. Serious collectors
often spend years searching for missing items in a collection.
An opportunity exists to use Internet technology to cure the inefficiencies of
traditional collector markets. e-Niche will pursue this opportunity by
launching a portfolio of market-making and community-building sites. e-Niche's
sites will offer buyers and sellers participation in feature-rich, large-scale
product exchanges and membership in engaged, specialized communities.
Business Description
e-Niche's business model is characterized by a commission-based revenue model, a
no-inventory fulfillment system, and ongoing investments in niche marketing,
product data acquisition, and new product releases.
Revenue Model: e-Niche will earn revenue from commissions charged to sellers who
operate store-fronts. e-Niche anticipates less than 10% of revenue from
advertising and will not charge subscriptions.
Fulfillment: e-Niche's operations and fulfillment infrastructure is designed to
max~mize scaleability and to minimize user adoption costs. When items are bought
online, e-Niche will forward full contact information to buyers and sellers.
Buyers and sellers will privately handle shipping, payment, and returns.
Marketing Strategy: Collectors exist in concentrated populations and are well
suited for highly targeted, cost-effective advertising. To acquire members,
e-N:.che will advertise at trade shows, through trade magazines, on specialty Web
sites, and in Usenet groups. e-Niche's retention marketing program will
extensively track members' online activity as a basis for micro-marketing and
information-push activities.
Data Acquisition. e-Niche will accumulate online inventory both from users who
interactively post items for sale and create auctions and from uploading
arrangements with select retailers and dealers. e-Niche will call directly on
leading retailers and dealers, many of whom currently maintain digitized
inventory information to support their mail-order operations or amateur Web
sites.
Product Release Schedule: e-Niche will launch MusicFile.com, ComicFile.com and
SportFile.com in the first quarter after funding. e-Niche plans to launch
StampFile.com and CoinFile.com in the fifth quarter. From there, as funding and
revenue growth permits, e-Niche will launch or acquire successive sites in
additional niches.
Sustainability
e-Niche's strategy for organizing and rationalizing collector markets is
sustainable and defensible for three reasons. First of all, by creating
comprehensive, large-scale product exchanges (through investments in marketing,
data acquisition, and specialized content), e-Niche will benefit from the
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critical mass effects associated traditionally with airline reservation systems
or stock exchanges. Once at critical mass, e-Niche's sites will see increasing
referral rates and decreasing member acquisition costs.
Secondly, e-Niche members will incur switching costs when leaving for substitute
services. e-Niche users cannot easily export to other sites their online
inventory or the historical customer and transaction information accumulated in
customized store-fronts. Similarly, members cannot transport to other sites the
relationships they form with like-minded hobbyists, retailers, and dealers.
Finally, the activity profiles that e-Niche will gather on its members and use
for value-creating retention marketing activities will take time for members to
replicate on other sites.
Thirdly, by operating multiple sites on shared investments in infrastructu~e and
organizational knowledge, e-Niche will have a, cost advantage over smaller .. and
single-niche sites. e-Niche's investments in capital and functional skills
(including niche marketing, data acquisition, and product design) will be
amortized across multiple sites.
Competitors
e-Niche's online competitors are manageable. To date, Internet offerings for
collectors have been variously incomplete, under-funded, and under-managed. All
competitors are vulnerable to e-Niche's strategy of investing jointly in
large-scale, feature-rich product exchanges and in content-specialized
communities.
Direct Competitors: Three companies are currently experimenting with strategies
similar to that of e-Niche. These competitors all manage several sites for
collector markets. e-Niche believes it can out-compete these players. They
are variously under-managed, under-capitalized, and non-scaleable.
Indirect Competitors: e-Niche faces indirect competition from three categories of
companies: trade magazines, general consumer auction sites, and single-niche
aggregators. All of these competitors are manageable.
Trade magazines are constrained because of the Internet's cannibalization threat
to their traditional advertising and subscription revenue.
General consumer auction sites do not have a vertical focus on specific collector
markets and do not have a critical mass of buyers and sellers in any particular
col:ector market. They intend to extend their auction-only sites horizontally
across additional consumer categories.
Sites that aggregate transactions and content in single niches do not benefit
from the advantages of operating multiple sites. They are also uniformly
under-funded, under-managed, and non-scaleable.
Management
e-Niche was founded by Stig Leschly (President) and Sridhar Rao (Director of
Engineering) . Stig holds a JD from Harvard Law School and an MBA from Harvard
Business School. Stig has worked as a business analyst with McKinsey & Co. and
as an acquisition associate at Primedia Inc. Sridhar Rao was formerly Lead
Engineer at Firefly Network where he led the design and development of Firefly's
client-side profile management products. Sridhar holds a BS in Electrical
Engineering from the University of Maryland.
Current Activities and Outlook
e-Niche is currently developing the key database and commerce applications that
will support its product exchanges. These features will allow users to manage
commerce-enabled store-fronts that feature interactive inventory accounts, online
auctions, and historic transaction, customer, and transaction information.
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e-Niche expects to test release MusicFile.com, its product for the collectible
music segment, on July 15, 1998. A prototype is available for demonstration.
To support the full launch of MusicFile, ComicFile, and SportFile in the first
quarter of operations, e-Niche is currently recruiting sales, marketing, general
management, and engineering candidates.
DFunding Requirement and Projections.
To date, e-Niche has been funded by a $100,000 capital contribution from its
co-founder, Stig Leschly. Over half of the seed capital has been spent on
development of MusicFile and infrastructure building. '
To expand, e-Niche is seeking $2 million in equity financing. Investment••
proceeds will fund the full development and launch of MusicFile, ComicFile, and
SportFile. Capital will be invested primarily in product development, marketing,
and data acquisition. e-Niche anticipates raising additional capital in year two
to fund the launch and support of CoinFile.com, StampFile.com, and additional
sites.
The following revenue and profit projections are conservative. They include only
the results from e-Niche's first five sites: MusicFile, ComicFile, SportFile,
CoinFile, and StampFile. All of these sites will be launched by the end of SQ.
The revenue and profit potential of the dozens of additional sites that e-Niche
will launch or acquire is not reflected in these projections.
Page 4 of89
D1YlJ2YD3YD4YD5YDDRevenueD$543,328D$3,509,747D$10,658,509D$23,248,385D$43,104,062DDExpensesD$2,55
of total marketD0.1%D0.8%D2.5%05.2%D9.4%DDShare of online
market04%D12%D22%D32%042%DD# of registered
membersD51,8470162,5830293,238D422,036D549,745DD# of facilitated
transactionsD286,476D1,756,982D5,141,878D10,871,198D19,494,796DD# of items in
databaseD1,794,422D5,234,419D9,148,575D14,080,543D18,996,175DD* These results
pertain only to e-Niche's first 5 sites: MusicFile, ComicFile, SportFile,
CoinFile, and StampFile
The capital efficiency of e-Niche's commission-based revenue model and scaleable
ful=illment mechanism create an attractive investment opportunity. e-Niche
incurs no marginal costs of facilitating transactions among buyers and sellers,
other than infrastructure wear and incidental customer service costs. e-Niche
also benefits from shared investments in infrastructure and functional skills.
Investments in engineering staff and site-related staff (marketing, data
acquisition, editorial, and general management) will flatten substantially after
the second year of operations. e-Niche expects to reach cash-flow break-even on
its first five sites in the Q8, with a total funding requirement for the five
sites of less than $4 million.
[]Conclusion
Collector markets are ideal candidates for rationalization on the Internet.
Collectible products are fully describable online and routinely bought and sold
in remote transactions. Collector markets are inefficiently structured around
outdated retailers, dealers, trade shows, and trade magazines. Finally,
collectors themselves are fanatical, rich in disposable income, and hungry for an
Internet solution to their full community and transaction needs. e-Niche will
take advantage of this opportunity by operating a portfolio of sophisticated
transaction-facilitating and community-building sites.
To: kehoa [at] aol.com
From: Roger Raffee
Subject: Re: letter of credit
Cc:
file://C:\Documents and Settings\oneill_rm\Local Settings\Temporary Internet Files\OLK133TPL_LOCAL_TEXTutboundR... 1/13/2006
This is the next message Roger got after the requested documentation above had been sent to Maria and the New Yorker fact checker:
Maria Bustillos [maria [at] popula.com]
You replied on 11/20/2013 5:15 PM.
Sent: Wednesday, November 06, 2013 7:42 AM
To: Roger
Attachments:
Hello Roger,
We should know something about the New Yorker piece next week, I think. (Who knew this was going to turn into such a thing!?)
Hope everything is good your way!
All best
Maria.
And then this was the last correspondence from Maria in response to a follow-up by Roger:
From: Maria Bustillos [maria [at] popula.com]
Sent: Wednesday, December 04, 2013 11:13 AM
To: Roger
Subject: Re: just checking in
I did the same thing yesterday! It's still alive: that's all I know.
Hope everything is going well with you!
all best
M.
SUMMARY ANALYSIS QUESTIONS:
Why did the New Yorker drop publication of the story, without comment or explanation, despite the documentation supplied by Roger?
Was there ever any real intention by the New Yorker to publish the story?
Was the actual intention of the New Yorker to find out if Roger had documentation to verify the interview he posted back in 2009? If so, why would the New Yorker want to do that, and for whom? Could it somehow be related to Jeff Bezos's purchase of the Washington Post at the same time as the first contact Roger received from Maria Bustillos?
Why was Musicfile.com touted without question in some
contemporary media articles that it was the "premier destination" for music-related buyers and sellers when virtually no one was actually using the site?
Why was GEMM.com ignored by publications at that time when it was, in fact, the actual premier destination on the internet for buying and selling music related items?
John Doerr met with Roger in December, 1998, pressuring Roger to sell to Stig. Jeff Bezos called Roger in January, 1999, not only asking Roger if he'd like to sell to Amazon but also inquiring about GEMM's payments system where GEMM would collect payments, by credit card and other means available at the time from customers and forward those payments to sellers (Paypal did not exist as a person to person internet transfer funds transfer service at that time). This was a key feature that it turned out marketplaces require in order to be successful. Stig's site couldn't compete with GEMM without this feature. Amazon began developing their marketplace and payments transfer service after purchase of Stig's company. Why then did Amazon inflate the importance of, and exaggerate the story of success of a company that they had no need for to their investors and the general public?
Why did they pay approximately $200 million dollars for a book site worth a fraction of that amount and a music site that generated close to zero revenue and had close to zero traffic?
Where did that $200 million dollars go? Who actually benefitted directly from the transaction?
What was the real reason John Doerr and Jeff Bezos wished to purchase Stig's company, or transfer $200 million of Amazon investor wealth to Stig's company, and was this already decided by the time they had contact with Roger in December, 1998, and January, 1999?
How did Amazon benefit indirectly from the transaction? How did this transaction affect the over-valuation of Amazon and the internet in general which in turn led to a huge loss to so many investors in the Spring of the year 2000 when the over-inflated valuation of the internet as a whole came crashing down?
Who benefitted most by taking advantage of the low valuated stock after the internet bubble crash in the year 2000?
Was this an aberration or was this typical of internet company purchases by public companies? Are, or were valuations of companies to be purchased being purposely over-valuated? If so, was this done to transfer investor funds to friends and associates?
Why is it that GEMM.com has had no success in getting exposure in Google and Bing's organic search results? Despite having had the largest data-base of music related items on the internet and being, still, the oldest marketplace on the internet?
Can John Doerr suppress GEMM in search results? Does he? Does he have friends over at Bing and able to also influence how GEMM appears in their search results?
Why do GEMM's direct competitors come up on top of relevant search results when GEMM is no where to be found, or very hard to find?
Can Google and Bing suppress or drive traffic for their own business interests without regards to fairness in search results? Should search engines be required to drive traffic fairly and not allowed to protect monopolies and the shared interests of their top tiered venture capital investor class?
How was Stig Leschly qualified to be a professor at Harvard?
What role did Stig's father play in his success? John Doerr told Roger that it was at the request of Stig's dad that he met with Roger. How else did Stig's success with his business and sale to Amazon benefit from his father's help? Did Stig's dad benefit directly from the sale of Stig's company to Amazon. Did Stig's father's friends and business associates benefit directly from Stig's sale to Amazon. Was it ethical for John Doerr to pressure Roger to sell to Stig then have a deciding vote as a member of Amazon's board of directors in deciding that Amazon should purchase Stig's company?
Can the idea be dismissed that John Doerr has influenced GEMM's position in Google's search results? If not, then how many other investments by John Doerr, his friends and business associates have been and are being benefitted by Google search positioning?
Is this something that should be considered with regards to Anti-Trust laws?
Amazon and venture capital partners and friends vs. one small company, or more precisely:
Jeff Bezos/Amazon
John Doerr (initial funder, and member of the Board of Directors of Amazon and Google)/Kleiner Perkins Caufield & Byers.
Jan Leschly/SmithKline Beecham (principle funder of Pharmaceuticals throughout the USA and the world)
Stig Leschly (Harvard MBA&Law, & Jan's son), Amazon investors who purchased Amazon stock at a bargain when the internet "bubble" crashed in the year 2000.
vs. Roger Raffee/GEMM.com and Amazon investors who sold their Amazon stock at a loss when the internet "bubble" crashed in the year 2000.
------------------------------------------------------------------------------------------------
In the year 1999 Amazon purchased a start-up company by the name of Exchange.com. The founder and principle owner of Exchange was a recent Harvard MBA and law graduate by the name of Stig Leschly. Exchange was comprised of mainly two web sites, Bibliofind.com and Musicfile.com .
Here is the official story of the deal put out there at the time by Amazon and disseminated unquestioningly by the media:
http://www.prnewswire.com/news-releases/amazoncom-acquires-exchangecom-adding-more-than-12-million-book-and-music-items-for-sale-and-auction-74232082.html
and here is Stig Leschly's version of how it went down:
http://books.google.com/books?id=-NA-if_Am0YC&pg=PA329&lpg=PA329&dq=Leschly+was+something+more+%2B+Stig+Leschly+
2B+Shaping+the+Waves:+A+History+of+Entrepreneurship+at+Harvard+Business+School&source=bl&ots=bLLlwz1uSh&sig=pgCrVmg0sbVW5RFALXkdc8gp6ec&hl=en&sa=X&ei=eYBZVPaFDY72igLag4Eo&ved=0CCwQ6AEwAg#v=onepage&q=Leschly%20was%20something%20more%20%2B%20Stig%20Leschly%20%2B%20Shaping%20the%20Waves%3A%20A%20History%20of%20Entrepreneurship%20at%20Harvard%20Business%20School&f=false
In 2009 book store owner Marion Meyer was researching a story he was thinking about publishing on the history of Amazon. He contacted Roger Raffee and the following interview occurred between the two of them. Roger asked Mr. Meyer if he would be publishing the interview and Mr. Meyer said he would rather not because he was afraid that there might be some kind of repercussion against him by Amazon if he did. Roger asked if it would be alright if he posted the interview. Mr. Meyer told Roger that would be OK so long as Roger altered the interview so that it would not identify Mr. Meyer as the interviewer. He didn't mind being referenced in the posted version of the interview, he just didn't want to be identified as the interviewer:
http://gemm-ayudahelper.blogspot.com/2009/10/interview-with-gemm-ceo-roger-raffee.html
It wasn't until after Roger had this conversation with Mr. Meyer that he understood who John Doerr was, and that because he was a principal funder of Amazon it probably wasn't appropriate for John Doerr to pressure him to sell his company to Stig in December of 1998, considering Amazon then bought Stig's company in April of 1999. Also, as you'll note in the interview, Jeff Bezos called Roger in January 1999. So, we can assume Roger's call from Jeff was certainly no coincidence. Jeff Bezos obviously knew about GEMM and the fact that Musicfile was not a practical functioning web site with any measurable traffic or transactional activity at the time Amazon purchased Musicfile/Exchange.com.
Then in August, 2013, Roger gets a message from a feature writer at the New Yorker magazine:
From: Maria Bustillos [dorkismo [at] gmail.com]
Sent: Friday, August 09, 2013 9:21 PM
To: GEMM Support
Subject: media inquiry for Roger Raffee
Hello, I am a journalist working on a piece about Amazon and its effects on the used/rare book business, interested in speaking with Mr. Raffee. If he is available to discuss this, my phone number is 213 XXX 7691 and I'm available anytime. Alternatively, please provide contact details and a good time to call/write. Kind of a tight deadline, will very much appreciate the chance to speak with him.
All best
Maria.
Roger and Maria begin corresponding by email and phone calls. Below is an email from Roger to Maria in which he finds a web posting dated from March, 1999, backing up Roger's claim that the official story of Amazon's purchase of Musicfile/Exchange was false. In reality Musicfile.com was not up and running strong in November 1998 as the official story claimed.
In fact, when Musicfile finally did launch most of the sellers on the Musicfile site were sellers Stig recruited from a list of sellers supplied to him by Roger's developer/partner, Jim Hall. Unfulfilled promises were made to Jim to secure that list, and Roger never agreed to provide a list of GEMM sellers to Stig for the purpose of recruiting them to the Musicfile web site.
From: Roger
Sent: Saturday, August 17, 2013 11:36 PM
To: maria [at] popula.com
Subject: Musicfile start date. March 25th, 1999, not up yet..
The internet is good for research isn't? Look at this page I found, dated March 25th and Stig's site Musicfile hadn't gone live yet. "That site is scheduled to launch in April" and bought by Amazon on April 30th. Way different than stated in Shaping the waves!
http://www.internetnews.com/ec-news/article.php/86871/Exchangecom+Plans+Network+of+Vertical+ECommerce+Sites.htm
Exchange.com Plans Network of Vertical E-Commerce Sites
By internetnews.com Staff | March 25, 1999
Page 1 of 1
Cambridge, MA-based Exchange.com, formerly e-Niche Inc., said it plans to launch a family of highly vertical online marketplaces, and to that end has acquired Bibliofind, a rare and antique book Web site.
The company is also developing MusicFile, a destination site for hard-to-find and vintage music. That site is scheduled to launch in April.
These new marketplaces provide full-service e-commerce solutions for both buyers and sellers within the untapped secondary market for used, hard-to-find and collector items in special-interest categories, the company said.
In addition, Exchange.com closed a $10 million second round of private financing from Polaris Venture Partners, Accel Partners and The Washington Post Co. . The company also said it appointed several key industry leaders to its board of directors and advisory council, including Lotus Corp. founder Mitch Kapor.
Here is an email from Maria she sent Roger after she interviewed Richard Messerschmidt, who was with Roger at the meeting with John Doerr:
Maria Bustillos [maria [at] popula.com]
You replied on 8/11/2013 6:30 PM.
Sent: Sunday, August 11, 2013 6:08 PM
To: Roger
Attachments:
Just talked to Richard! Wow this is a lot to digest but I'm working on it really really hard.
Thanks so much, Roger, be in touch soon---
M.
More back and forth goes on between Maria and Roger for a couple of months. Each week Maria tells Roger that the story is about to be published. A fact checker from the New Yorker contacts Roger:
>From: Margalit, Ruth [Ruth_Margalit [at] newyorker.com]
>Sent: Tuesday, October 15, 2013 1:19 PM
>To: Roger
>Subject: The New Yorker fact checking
>
>Dear Roger,
>
>I'm a fact checker at The New Yorker magazine working with Maria
>Bustillos on her piece about Amazon and origin myths on Silicon Valley.
>Maria mentions GEMM's story and quotes you in her piece, so I was hoping
>we could speak to make sure that everything is accurate. Could you give
>me a call when you get a chance at 212-286-2941, or let me know when's
>the best time to call you? We're hoping to publish this toward the end of
>the week.
>
>Many thanks.
>
>Ruth
>
>--
>Ruth Margalit
>The New Yorker
>4 Times Square
>NY, NY 10036
>p: 212.286.2941
>f: 212.286.5947
Roger phones the fact checker. She reads off the facts of the story as Maria has related them to the editors at the New Yorker. Roger verbally confirms all aspects of the story. Then Maria sends Roger the following message letting Roger know that Stig flatly denies any relationship between himself and Roger or GEMM. In fact, over the phone she tells Roger that Stig denies even knowing GEMM existed. She solicits any documentation to support Roger's version of the story and events so that the story can be published.
From: Maria Bustillos [maria [at] popula.com]
Sent: Friday, October 18, 2013 10:09 AM
To: Roger
Cc: jraffee [at] raffeelaw.com
Subject: Re: FW: 2 + 2 = ? , theory about what's going on.
Hello Roger (and Ms. Raffee!)
Because Stig is flatly and absolutely denying that he was ever interested in buying GEMM, the more information we have to the contrary, the better the chances the New Yorker will publish the piece. I'm sure you both can understand their concern; they would be putting themselves in a bad spot if they were to publish a falsehood. So any documentation at all that you can find to the effect that there was an ongoing relationship between GEMM and e-Niche--any emails, any correspondence, draft offers, anything at all--will help enormously. Much better coming from both you and Jim.
thx!
Maria.
As luck would have it Roger does have copies of email correspondence between himself and Stig Leschly from nearly 15 years earlier. Roger's mother was his office manager in the early 2000's. Even though Roger's old computer and email program from that time has been lost, his mother, sometime around 2003, had logged in to Roger's email, with Roger's permission, and hard-copied everything she thought might be important, including the following correspondence showing the negotiating that was occurring at the time between Stig and Roger. Below is emails sent to Maria with the requested documentation of those negotiations, and evidence of a business plan for Stig's company sent to Roger from Stig.
From: Stig Leschly
Subject: Re: Something missing?
Cc:
Bee:
X-Attachments:
Roger,
I appreciate your request for detailed information on our business
plan. One thing you should understand is that ordinarily full
disclosure of a business plan (including financial projections) comes
after the signing of the letter of intent which includes confidentiality
promises. The business plan is a 50 page document and contains highly
sensitive information. To date, there are only 12 copies of it in
existence.
That said, because I want to move this process along, I will have Tim
federal express a full business plan to you today. It is under strict
confidentiality protection. I will, under these pressing circumstances,
trust you not to copy it. If we don't reach agreement, please return it
to me.
In the business plan, you will see 5 year projections and a variety of
other information on competitors, market size and our growth plans. The financial information includes full revenue and cost projections.
Currently, our preferred exit plan is to sell the company in the next 12
to 18 months. The sale price in 12 to 18 months would be in the $50
miLcion to $150 million range. This number is calculated based on the
trading values today of Internet companies with the types of revenue,
membership and growth prospects that we expect. Ideal acquirers include large search engines, commerce companies, and auction companies. As an alternative to selling the company, we will consider going public. If we go public, we would do so at at a minimum of a $250 million valuation in year 2 or 3. I hope this gives you some sense of my and our investors' expectations. Also, feel free to look at the portfolio companies of Polaris and Accel. These venture investors only invest in companies with the type of exit possibilities that I just described.
One other comment, Roger. At the highest level, the exit strategy is
not that important to you because you have chosen not to own significant
stock in e-Niche. The exit value is more important to Jim who will own
almost 3% of the company. All you need to believe is that e-Niche is
viable and has access to capital over the next 36 months. As long as
that's the case, you will be paid. Note here that we are already 100%
viable for the next 12 months with the cash we have raised.
Furthermore, I have been offered more investment to fund us beyond the
next 12 months. So far, I have turned it down because I will be in a
better position to negotiate with eager investors after 6-9 months of
operation. In short, I have no concerns that e-Niche will have access
to capital and that, therefor, you will be paid. Feel free to
investigate the histories of start-ups funded by Accel and Polaris. I
don't know of any that have not raised a second round of financing.
I am leaving for vacation this afternoon (Thursday) and will be back on
Sunday afternoon. I understand you need to evaluate the information,
and I in no way mean to pressure you insincerely. Can I ask simply that
you have an answer for us by Sunday afternoon. I really can't wait much
longer, Roger. I need to make decisions about hiring sales and
marketing staff which depend on whether we do a deal with GEMM.
Please leave me a voice mail with any question and please let me know if
the Sunday afternoon deadline is okay. I will not be checking e-mail.
Again, Tim will be in touch about mailing the business plan~
Thank you,
Stig.
From: Roger
Sent: Friday, October 18, 2013 5:59 PM
To: maria [at] popula.com
Cc: jraffee [at] raffeelaw.com
Subject: Correspondence between Stig/myself/Jim Hall/Tim Capron of E-nich, Part 2, Oct. 21, 1998
Maria,
Here's an email from Stig to me, copied to Jim and his buddy Tim, who as I remember was introduced to me as his roommate at Harvard and his number one assistant. He's discussing with me the possible details of the deal. Below is my previous message to Stig.
>> Dear Stig;
>>
>> Thank you for the letter of Intent and the business description you
>> sent me. I am extremely interested in your proposal, however, not having
>> the advantage of my partner Jim Hall I will need to see some more
>> lnformation on your company, it's principles and that $2.5m in start up
>> capital you purport to have in place.
>>
>> I'll need to see the details of that commitment before I can agree to
>> contract to sell to your start-up company. Being a one man band out here in
>> California and literally socked away in my hobbit processing orders, I
>> forgot to mention to you when you and your partner came to see me that I
>> will need some information on you guys and your operation.
>>
>> I believe I did mention this but some how it seems to have been
>> forgotten. I am willing to sign your letter of intent with very few changes
>> if all checks out regarding your information and my verification. Due to
>> the seriousness of this transaction I will be engaging assistance on my
>> part to vet the various papers and proposals and oversee details of the
>> transaction.
>>
>> I am sure you must be under the gun to make a deal or else you would
>> not have insisted upon an immediate response from me. I have spoken to Jim
>> on this and will move as quickly as humanly possible. I will execute a
>> letter of intent wihin 24 hours of receipt and approval of your information
>> I have requested.
>>
>> Sincerely,
>>Roger Raffee
>Date: Wed, 21 Oct 1998 11:42:58 -0400
>From: Stig Leschly
>Reply-To: stig [at] e-niche.com
>Organization: e-Niche Incorporated
>MIME-Version: 1.0
>To: Roger Raffee
>CC: jim [at] gemm.com, Tim Capron
>Subject: Re: letter of credit
>Status:
>
>Roger,
>
>That's terrific news. Let me respond with the following.
>1. First of all, before I get to the due diligence, let me stress how
>happy I am that you are willing to proceed. I have thought much about
>your predicatment, Roger. I totally understand that you need to assure
>yourself about the transaction and your payments. I think there are
>ways to do that, short of an onerous letter of intent. Also, at the
>highest level, I think this is a good deal for all of us.
>2. Secondly, after talking to your sister last night, I thought about
>what I can do -- short of tying up lots of capital in a letter of credit
>-- to address your concerns. One thing that I can do, Roger, which
>might make you feel a little better is to pay you a larger sum on day
>one. One of my constraints, as you know, is that I conserve my cash
>outlay for the acquisition in the first year. That said, I don't mind
>paying you the first 4 months of the payments up front. I am making
>this offer in an unsolicited way -- as a way of communicating to you
>that I am sincere and that I understand your concerns. What this would
>mean is that you get a lump sum of 4 x $13,194 (equivalent to $52,778)
>on day one (probably mid-November) . I hope that goes some way to make
>you more comfortable. Also, keep in mind, Roger, all the ways (other
>than a letter of credit) which you do have to enforce your right to
>receive payment. They include you contract rights under the "purchase
>of assets" agreement that we will eventually sign and your rights as a
>shareholder in e-Niche. Also, at a non-legal level, let me impress on
>you again that my investors would simply not tolerate my defrauding you,
>and it would be short-sighted of me to make enemies since e-Niche plans
>to do many other acquisitions in the future.
>3. Your requests to see our records regarding investors, management and
>financial structure are 100% reasonable, and I have in no way meant to
>ignore them. In fact, I expect to give you and Jim full access to
>information on e-Niche. Let me say two things. First of all, at this
>point, we only need to sign a letter of intent to do the transaction.
>The letter of intent does not bind you legally to complete the
>transaction. The letter of intent on requires you and Jim to observe
>confidentiality and to not enter into acquisition talks with another
>coQpany for the next several weeks while we get to closure on the final
>documents. In transactions like this, a full due diligence period
>typically follows the signing of the ltter of intent. It is in this
>period, that you and Jim (and your lawyers if you wish) should put
>together a list of everything that you want to see from e-Niche,
>including bank statements, referal lists, and so on. You will have full
>access to the information that you need. We will not sign the final,
>legally binding documents until a few weeks from now -- as soon as our
>lawyers can draft them and review them and as soon as you guys can
>complete your due diligence (we, by the way, still have some due
>diligence to do as well, including seeing you bank statements and so
>on). In any case, Roger, I hope that lays out the process for you a
>bit. In all, you will have full access to all the information that you
>neeed. Second of all, for the moment, I will have Tim put together for
>you a quick set of documents that he will fax to you today. These
>documents will include photo copies of our bank statement, balance
>sheets, deposit slips, lease, and whatever else we can pull together on
>short notice. Again, Roger, remember that you will have a few weeks
>after the signing of the letter of intent to get whatever information
>that you need to sign the final documents.
>
>Again, Roger, I am delighted that you are willing to proceed. Three
>final things about how to proceed.
>
>-- First, please have a conversation with Jim and make you the two of
>you are on the same page. There appears to be some confusion.
>
>-- Second, please e-mail to Tim (tim [at] e-niche.com) a fax number (at a
>local Kinko's if need be) so that he can fax you the information that he
>is pulling together on short notice.
>
>-- Third, we need to sign the letter of intent tomorrow. I will have my
>lawyers draft a new one to reflect the lump sum payment to you on day
>one. I will then fax out the letter of intent for all of us to sign.
>Again, after that, we can get to work on drafting the documents and
>swing into the full due diligence process. This should all be wrapped
>up in 2 weeks. I have a board meeting on Nov. 5, and I need to have the
>documents drafted, reviewed, agreed on, and signed by then.
>
>Feel free to call with questions, Roger. I am delighted to be moving
>ahead.
>All the best,
>Stig.
Sent: Friday, October 18, 2013 6:13 PM
To: maria [at] popula.com
Attachments:
Maria,
Below is Stig's rebuttal offer to a counter offer I had previously made to him. This is clearly a legitimate offer by him to buy GEMM. You can also see below he sent us a payment schedule for the cash part of the offer as an attachment.
>Date: Fri, 30 Oct 1998 12:36:00 -0500
>From: Stig Leschly
>Reply-To: stig [at] e-niche.com
>Organization: e-Niche Incorporated
>MIME-Version: 1.0
>To: jim [at] gemm.com, roger [at] gemm.com
>Subject: e-Niche offer
>Status:
>
>Roger and Jim,
>
>Thank you for your offer. I have reviewed it with the Board, and my
>response is below. In summary, I want to do the deal and think it's
>positive for both of our companies. Still, your requests as they stand
>are too large. I have responded below with a substantial improvement
>over the last offer. I think it's a fair final solution.
>
>In all, Jim and Roger, we are at the end of this road. I hope the offer
>below is enough to get this done. If not, we should get on with it. I
>look forward to your response.
>
>YOUR OFFER
>
>As I understand it, your offer at this point involves $1 million in
>cash, a letter of credit for the $1 million in cash, 10% of e-Niche, 2
>board seats, and a $100,000 cash deposit. Please correct me if I am
>wrong.
>OUR OFFER
>
>1. Valuation.
>
>I continue to think GEMM is worth about $1 million. We have analyzed
>the valuation number extensively. In an effort to get this done and to
>bend at the end of this, I am willing to add $200,000 to the value for a
>final offer of $1.2 million. We seemed in agreement about $1 million
>last week, and I hope we can get back to that range. At your requested
>$2 million, I am better off going at this alone.
>
>2. Cash and Equity Payments.
>
>I will stand by the initial agreement of 70% cash and 30% equity. You
>are free to take up to 50% of the payment in equity, as your latest
>offer implies. Assuming 30% of the payment in equity, the offer
>includes $840,000 in cash over 3 years (70% x $1.2 million). Total
>equity in the first year would be 3.6% of e-Niche.
>
>3. Letter of Credit
>
>I understand your need to have the cash payments secured. I am willing
>to agree to a letter of credit in the range of the $475,000 that you
>asked for last week. Specifically, I am willing to include a letter of
>credit for $500,000 from Silicon Valley Bank. The remaining $340,000
>of the cash payments ($840,000 - $500,000) would, as always, be secured
>by contract right as long as e-Niche is viable. In the unlikely event
>of a shutdown, the $340,000 cash would be secured by the hard assets of
>the company.
>
>You are free to allocate the letter of credit between you as you see
>fit. My sense is that Roger is more worried about having secured cash
>and that Jim is more interested in equity, so you might allocate the
>letter of credit accordingly. For example, consider a scenario where
>the letter of credit insures Roger's cash and where, as we initially
>talked about, Roger takes 95% of his half of the deal in cash. In that
>event, Roger's cash payment (95% x 1/2 x $1.2 million) is $570,000. The
>letter of credit would then almost fully insure Roger's payment. I have
>attached a payment schedule for this scenario.
>
>4. Board Seats
>
>I would love to have you on the board, but there are nettlesome legal
>and practical issues with that. Board members have a high fiduciary
>duty on behalf of shareholders, are liably for the actions of the
>company, and need personally to attend board meetings every 2 to 4
>weeks. Additionally, since e-Niche plans to make other acquisitions and
>partnerships, the precedent of putting people on the board could force
>me have an unworkably large board.
>
>The alternative is to have you both take seats on our advisory committee
>which meets bi-annually and which will involve a variety of advisors.
>Under this scenario, you would both be involved withe-Niche's strategy,
>I would have the benefit of your input and involvement in the long-run,
>and we would avoid the complications of a large board.
>
>5. $100,000 deposit
>
>I have no problem with making a $100,000 up front payment. I would only
>ask that it happens after the closing documents are executed.
>
>CONCLUSION
>
>Again, Jim and Roger, we are at the end of this. I hope the offer above
>is workable to you. If not, we should proceed on seperate paths. I
>look forward to your response and hope we can avoid competing.
>
>Sincerely,
>Stig Leschly
>
>Date: Fri, 30 Oct 1998 12:43:19 -0500
>From: Stig Leschly
>Reply-To: stig [at] e-niche.com
>Organization: e-Niche Incorporated
>MIME-Version: 1.0
>To: jim [at] gemm.com, roger [at] gemm.com
>Subject: Attachment
>Status:
>
>Jin and Roger,
>
>Attached is the payment schedule. I didn't attach it to the prior
>e-mail.
>
>Stig.
And here is an email to from Roger which includes part of Stig's actual business plan:
________________________________________
From: Roger
Sent: Friday, October 18, 2013 6:49 PM
To: maria [at] popula.com
Cc: jraffee [at] raffeelaw.com
Subject: Stig's E-Niche Bus. Plan Exec. Summary
Hello again Maria,
Here is the Executive Summary of Stig's E-Niche business plan, supposedly only a few copies are in existant according to Stig's previous email I copied. How did I get it? If Stig continues to deny we negotiated a failed deal you might want to tell him I have the 50 page glossy complete business plan. I never did send it back. It's in storage somewhere. It will be a bitch to find it, but I'm about 99.9% certain it's there.
The discussion with John Doerr, myself, and Richard happend. I told my sister and my parents about it but initially I just told them I met someone name "John" at a mansion above Blacks with Richard where John threatened me if I didn't sell to Stig.
Then, in 2009 when Marion Meyer explained to me who John was, John Doerr, and had me go to Youtube where I positively identified him as the person who I met with at the mansion, I told Jill and my parents again, but they still didn't know who John Doerr was at that time any more than I did...So, they didn't find it to impressive. It was at the UCSD Chancellor's mansion and we met the Chancellor when we walked in. We then sat in a room that was being remodeled at a table with John Doerr where the discussion took place.
Stig had pleaded with me for me to go meet with John Doerr because in Stig's mind John Doerr was going to persuade me to do the deal. I should have been really impressed by John Doerr and what he had to say, but it just happened that I was the one type of person who wasn't..
-Roger
KEHOAiaol.com ,
Fro~: Roger Raffee
Subject: Stig's business description
Cc:
Bee: ...
X-Attachments:
Business Plan Executive Summary Confidential
Stig Leschly e-Niche Incorporated 100 Holton Street Brighton, MA 02135
617-254-2102 stig [at] e-niche.com
June 11, 1998 DExecutive Summary
Ove:~view
I
e-Niche's mission is to solve the inefficiencies of niche collector markets. To
reach this goal, e-Niche will launch a portfolio of Internet sites to serve
individual collector niches. e-Niche's sites will create value as large-scale,
efficient product exchanges and as content-specialized communities for
coLLectors.
Collector markets spanning rare music, sports memorabilia, comic books, coins,
stamps, and dozens of other collectibles categories -- are severely inefficient
as currently organized. They are served by outdated trade magazines, a
fraqmented base of retailers and trade shows, and incomplete Internet offerings.
Buyers and sellers are universally frustrated in their efforts to interact and
transact.
e-N:_che' s comprehensive product exchanges and specialized content will meet the
fuL_ transaction and information needs of collectors:
Transaction Facilitation: e-Niche will allow retailers, dealers and collectors to
create and administer commerce-enabled store-fronts. Commerce features will
inc~ude interactive inventory accounts, online auctions, and access to historic
customer, transaction, and statement information. Through e-Niche, retailers and
dea:ers will lower inventory carrying costs and customer acquisition costs.
Ind~vidual collectors will reduce product search costs and increase the sell-off
value of their collections. Content Specialization: e-Niche's sites will be
ded~cated to individual collector markets and will offer participation in an
informative, member-driven online community. e-Niche's sites will feature a
broad range of editorial, information, and industry content, much of which will
be nember-generated. Market Opportunity
Col:ector markets span dozens of product categories. The five largest
col~ectibles segments are rare music recordings, comic books, sports cards and
memorabilia, coins, and stamps. Additional collectibles markets include toys,
dolJ.s, timepieces, model trains, knives, guns, glassware, brand-specific
memorabilia (e.g. Disney products), communications equipment, entertainment
memorabilia, and military memorabilia.
The market size for the five largest collector segments is $4.2 billion annually
in the US. In these niches, 1.8 million serious US collectors spend between
$1,Li00 and $2,600 annually on their hobby and maintain collections valued between
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$23,000 to $49,000. Collectors routinely purchase product sight-unseen.
Internet access ranges across niches from 25% to 32%.
In all product categories, collector markets are highly fragmented and
inefficient. Traditionally, they have been served by advertising-driven trade
magazines, a fragmented set of unconsolidated retailers and dealers, and local
trade shows. The inefficiencies of collectibles markets impact buyers and
sellers.
Sell-side Inefficiencies: Retailers and dealers suffer from low inventory
turnover, high direct mail and advertising costs, and unpredictable sources of
local supply. Also, when selling private collections, indiv,idual collectors face
below-market prices from a small number of local dealers and retailers. Buy.side
Inefficiencies: Buyers suffer from high costs ,to initiate social interactipns (at
trade shows and in retail stores) and to locate product. Serious collectors
often spend years searching for missing items in a collection.
An opportunity exists to use Internet technology to cure the inefficiencies of
traditional collector markets. e-Niche will pursue this opportunity by
launching a portfolio of market-making and community-building sites. e-Niche's
sites will offer buyers and sellers participation in feature-rich, large-scale
product exchanges and membership in engaged, specialized communities.
Business Description
e-Niche's business model is characterized by a commission-based revenue model, a
no-inventory fulfillment system, and ongoing investments in niche marketing,
product data acquisition, and new product releases.
Revenue Model: e-Niche will earn revenue from commissions charged to sellers who
operate store-fronts. e-Niche anticipates less than 10% of revenue from
advertising and will not charge subscriptions.
Fulfillment: e-Niche's operations and fulfillment infrastructure is designed to
max~mize scaleability and to minimize user adoption costs. When items are bought
online, e-Niche will forward full contact information to buyers and sellers.
Buyers and sellers will privately handle shipping, payment, and returns.
Marketing Strategy: Collectors exist in concentrated populations and are well
suited for highly targeted, cost-effective advertising. To acquire members,
e-N:.che will advertise at trade shows, through trade magazines, on specialty Web
sites, and in Usenet groups. e-Niche's retention marketing program will
extensively track members' online activity as a basis for micro-marketing and
information-push activities.
Data Acquisition. e-Niche will accumulate online inventory both from users who
interactively post items for sale and create auctions and from uploading
arrangements with select retailers and dealers. e-Niche will call directly on
leading retailers and dealers, many of whom currently maintain digitized
inventory information to support their mail-order operations or amateur Web
sites.
Product Release Schedule: e-Niche will launch MusicFile.com, ComicFile.com and
SportFile.com in the first quarter after funding. e-Niche plans to launch
StampFile.com and CoinFile.com in the fifth quarter. From there, as funding and
revenue growth permits, e-Niche will launch or acquire successive sites in
additional niches.
Sustainability
e-Niche's strategy for organizing and rationalizing collector markets is
sustainable and defensible for three reasons. First of all, by creating
comprehensive, large-scale product exchanges (through investments in marketing,
data acquisition, and specialized content), e-Niche will benefit from the
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critical mass effects associated traditionally with airline reservation systems
or stock exchanges. Once at critical mass, e-Niche's sites will see increasing
referral rates and decreasing member acquisition costs.
Secondly, e-Niche members will incur switching costs when leaving for substitute
services. e-Niche users cannot easily export to other sites their online
inventory or the historical customer and transaction information accumulated in
customized store-fronts. Similarly, members cannot transport to other sites the
relationships they form with like-minded hobbyists, retailers, and dealers.
Finally, the activity profiles that e-Niche will gather on its members and use
for value-creating retention marketing activities will take time for members to
replicate on other sites.
Thirdly, by operating multiple sites on shared investments in infrastructu~e and
organizational knowledge, e-Niche will have a, cost advantage over smaller .. and
single-niche sites. e-Niche's investments in capital and functional skills
(including niche marketing, data acquisition, and product design) will be
amortized across multiple sites.
Competitors
e-Niche's online competitors are manageable. To date, Internet offerings for
collectors have been variously incomplete, under-funded, and under-managed. All
competitors are vulnerable to e-Niche's strategy of investing jointly in
large-scale, feature-rich product exchanges and in content-specialized
communities.
Direct Competitors: Three companies are currently experimenting with strategies
similar to that of e-Niche. These competitors all manage several sites for
collector markets. e-Niche believes it can out-compete these players. They
are variously under-managed, under-capitalized, and non-scaleable.
Indirect Competitors: e-Niche faces indirect competition from three categories of
companies: trade magazines, general consumer auction sites, and single-niche
aggregators. All of these competitors are manageable.
Trade magazines are constrained because of the Internet's cannibalization threat
to their traditional advertising and subscription revenue.
General consumer auction sites do not have a vertical focus on specific collector
markets and do not have a critical mass of buyers and sellers in any particular
col:ector market. They intend to extend their auction-only sites horizontally
across additional consumer categories.
Sites that aggregate transactions and content in single niches do not benefit
from the advantages of operating multiple sites. They are also uniformly
under-funded, under-managed, and non-scaleable.
Management
e-Niche was founded by Stig Leschly (President) and Sridhar Rao (Director of
Engineering) . Stig holds a JD from Harvard Law School and an MBA from Harvard
Business School. Stig has worked as a business analyst with McKinsey & Co. and
as an acquisition associate at Primedia Inc. Sridhar Rao was formerly Lead
Engineer at Firefly Network where he led the design and development of Firefly's
client-side profile management products. Sridhar holds a BS in Electrical
Engineering from the University of Maryland.
Current Activities and Outlook
e-Niche is currently developing the key database and commerce applications that
will support its product exchanges. These features will allow users to manage
commerce-enabled store-fronts that feature interactive inventory accounts, online
auctions, and historic transaction, customer, and transaction information.
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e-Niche expects to test release MusicFile.com, its product for the collectible
music segment, on July 15, 1998. A prototype is available for demonstration.
To support the full launch of MusicFile, ComicFile, and SportFile in the first
quarter of operations, e-Niche is currently recruiting sales, marketing, general
management, and engineering candidates.
DFunding Requirement and Projections.
To date, e-Niche has been funded by a $100,000 capital contribution from its
co-founder, Stig Leschly. Over half of the seed capital has been spent on
development of MusicFile and infrastructure building. '
To expand, e-Niche is seeking $2 million in equity financing. Investment••
proceeds will fund the full development and launch of MusicFile, ComicFile, and
SportFile. Capital will be invested primarily in product development, marketing,
and data acquisition. e-Niche anticipates raising additional capital in year two
to fund the launch and support of CoinFile.com, StampFile.com, and additional
sites.
The following revenue and profit projections are conservative. They include only
the results from e-Niche's first five sites: MusicFile, ComicFile, SportFile,
CoinFile, and StampFile. All of these sites will be launched by the end of SQ.
The revenue and profit potential of the dozens of additional sites that e-Niche
will launch or acquire is not reflected in these projections.
Page 4 of89
D1YlJ2YD3YD4YD5YDDRevenueD$543,328D$3,509,747D$10,658,509D$23,248,385D$43,104,062DDExpensesD$2,55
of total marketD0.1%D0.8%D2.5%05.2%D9.4%DDShare of online
market04%D12%D22%D32%042%DD# of registered
membersD51,8470162,5830293,238D422,036D549,745DD# of facilitated
transactionsD286,476D1,756,982D5,141,878D10,871,198D19,494,796DD# of items in
databaseD1,794,422D5,234,419D9,148,575D14,080,543D18,996,175DD* These results
pertain only to e-Niche's first 5 sites: MusicFile, ComicFile, SportFile,
CoinFile, and StampFile
The capital efficiency of e-Niche's commission-based revenue model and scaleable
ful=illment mechanism create an attractive investment opportunity. e-Niche
incurs no marginal costs of facilitating transactions among buyers and sellers,
other than infrastructure wear and incidental customer service costs. e-Niche
also benefits from shared investments in infrastructure and functional skills.
Investments in engineering staff and site-related staff (marketing, data
acquisition, editorial, and general management) will flatten substantially after
the second year of operations. e-Niche expects to reach cash-flow break-even on
its first five sites in the Q8, with a total funding requirement for the five
sites of less than $4 million.
[]Conclusion
Collector markets are ideal candidates for rationalization on the Internet.
Collectible products are fully describable online and routinely bought and sold
in remote transactions. Collector markets are inefficiently structured around
outdated retailers, dealers, trade shows, and trade magazines. Finally,
collectors themselves are fanatical, rich in disposable income, and hungry for an
Internet solution to their full community and transaction needs. e-Niche will
take advantage of this opportunity by operating a portfolio of sophisticated
transaction-facilitating and community-building sites.
To: kehoa [at] aol.com
From: Roger Raffee
Subject: Re: letter of credit
Cc:
file://C:\Documents and Settings\oneill_rm\Local Settings\Temporary Internet Files\OLK133TPL_LOCAL_TEXTutboundR... 1/13/2006
This is the next message Roger got after the requested documentation above had been sent to Maria and the New Yorker fact checker:
Maria Bustillos [maria [at] popula.com]
You replied on 11/20/2013 5:15 PM.
Sent: Wednesday, November 06, 2013 7:42 AM
To: Roger
Attachments:
Hello Roger,
We should know something about the New Yorker piece next week, I think. (Who knew this was going to turn into such a thing!?)
Hope everything is good your way!
All best
Maria.
And then this was the last correspondence from Maria in response to a follow-up by Roger:
From: Maria Bustillos [maria [at] popula.com]
Sent: Wednesday, December 04, 2013 11:13 AM
To: Roger
Subject: Re: just checking in
I did the same thing yesterday! It's still alive: that's all I know.
Hope everything is going well with you!
all best
M.
SUMMARY ANALYSIS QUESTIONS:
Why did the New Yorker drop publication of the story, without comment or explanation, despite the documentation supplied by Roger?
Was there ever any real intention by the New Yorker to publish the story?
Was the actual intention of the New Yorker to find out if Roger had documentation to verify the interview he posted back in 2009? If so, why would the New Yorker want to do that, and for whom? Could it somehow be related to Jeff Bezos's purchase of the Washington Post at the same time as the first contact Roger received from Maria Bustillos?
Why was Musicfile.com touted without question in some
contemporary media articles that it was the "premier destination" for music-related buyers and sellers when virtually no one was actually using the site?
Why was GEMM.com ignored by publications at that time when it was, in fact, the actual premier destination on the internet for buying and selling music related items?
John Doerr met with Roger in December, 1998, pressuring Roger to sell to Stig. Jeff Bezos called Roger in January, 1999, not only asking Roger if he'd like to sell to Amazon but also inquiring about GEMM's payments system where GEMM would collect payments, by credit card and other means available at the time from customers and forward those payments to sellers (Paypal did not exist as a person to person internet transfer funds transfer service at that time). This was a key feature that it turned out marketplaces require in order to be successful. Stig's site couldn't compete with GEMM without this feature. Amazon began developing their marketplace and payments transfer service after purchase of Stig's company. Why then did Amazon inflate the importance of, and exaggerate the story of success of a company that they had no need for to their investors and the general public?
Why did they pay approximately $200 million dollars for a book site worth a fraction of that amount and a music site that generated close to zero revenue and had close to zero traffic?
Where did that $200 million dollars go? Who actually benefitted directly from the transaction?
What was the real reason John Doerr and Jeff Bezos wished to purchase Stig's company, or transfer $200 million of Amazon investor wealth to Stig's company, and was this already decided by the time they had contact with Roger in December, 1998, and January, 1999?
How did Amazon benefit indirectly from the transaction? How did this transaction affect the over-valuation of Amazon and the internet in general which in turn led to a huge loss to so many investors in the Spring of the year 2000 when the over-inflated valuation of the internet as a whole came crashing down?
Who benefitted most by taking advantage of the low valuated stock after the internet bubble crash in the year 2000?
Was this an aberration or was this typical of internet company purchases by public companies? Are, or were valuations of companies to be purchased being purposely over-valuated? If so, was this done to transfer investor funds to friends and associates?
Why is it that GEMM.com has had no success in getting exposure in Google and Bing's organic search results? Despite having had the largest data-base of music related items on the internet and being, still, the oldest marketplace on the internet?
Can John Doerr suppress GEMM in search results? Does he? Does he have friends over at Bing and able to also influence how GEMM appears in their search results?
Why do GEMM's direct competitors come up on top of relevant search results when GEMM is no where to be found, or very hard to find?
Can Google and Bing suppress or drive traffic for their own business interests without regards to fairness in search results? Should search engines be required to drive traffic fairly and not allowed to protect monopolies and the shared interests of their top tiered venture capital investor class?
How was Stig Leschly qualified to be a professor at Harvard?
What role did Stig's father play in his success? John Doerr told Roger that it was at the request of Stig's dad that he met with Roger. How else did Stig's success with his business and sale to Amazon benefit from his father's help? Did Stig's dad benefit directly from the sale of Stig's company to Amazon. Did Stig's father's friends and business associates benefit directly from Stig's sale to Amazon. Was it ethical for John Doerr to pressure Roger to sell to Stig then have a deciding vote as a member of Amazon's board of directors in deciding that Amazon should purchase Stig's company?
Can the idea be dismissed that John Doerr has influenced GEMM's position in Google's search results? If not, then how many other investments by John Doerr, his friends and business associates have been and are being benefitted by Google search positioning?
Is this something that should be considered with regards to Anti-Trust laws?
For more information:
http://www.gemm.com
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