Audio & Video
Latest News
|
Benjamin Franklin Institute
|
John Chambers, C.E.O., CISCO1
MACRO BACKGROUND: The business of providing e-education, e-training and e-jobs is high growth for as far as the eye can see. There are over 1.2 million college courses available from thousands of accredited universities worldwide.2 Over half of all Fortune 500 companies operate a corporate university and all are now engaged in training by electronic means.3 Half of all homes in Western Europe, North America and Japan will be Net connected by the end of next year.4 Lifetime learning and virtual events and virtual conferences are here to stay as evidenced by Hambrecht & Quist which continues to be optimistic about publicly traded companies in their "learning" group.5 Bandwidth is not a problem. Neither is the acquisition cost of new hardware or software, both of which continue to follow a long pattern - more for less. Neither is content, which will get cheaper - even as the demand for it increases.
Investors, correctly, do not worry about whether these macro trends will continue. In a knowledge economy, the engines of growth will come from knowledge workers who will acquire more and more of their skills by distance means. That is as sure as tomorrow.
FRIEND: This project envisions the placement of thousands of 40 foot Vans worldwide. Inside the Van is all that is needed to provide e-education,
e-training, and e-jobs. Outside is 800 square feet of advertising and promotional signage space. On the roof are both a satellite dish and a radio antenna enabling independent radio broadcasting to a radius of 20 kms and Internet reach to the rest of the planet. Vans sit on trailers where they can be affordably moved to more profitable locations if necessary. Vans are multi-purpose school houses and training centers designed for those who seek degrees from Harvard or Stanford, or training from CISCO or Microsoft, or e-games from Sega or Nintendo, or medical consultation from Mayo or Georgetown, or telework jobs from Amazon or WebCT. In essence Vans are a "knowledge factory" where the profits come by brokering education, training and jobs. First year loses for each Van are approximately $135,000. Thereafter, net before tax profits are forecasted at approximately $150,000 per Van.
OWNERSHIP, MANAGEMENT AND LOCAL OPERATION: Each Van comes with an American trained manager who stays on location for two years. Local partners work within a partnership and operating agreement where the local partner provides power, bandwidth, location and manpower until $200,000 has been collected or until the Van has been on location for two full years. After that, Vans are leased to the local partners for a percentage of gross revenues.
VANS - COST AND RECOVERY AND MANUFACTURING SITE: Vans cost $80,000 each. They are projected to net approximately $150,000 each per year after the first twelve months on location. The first ten units will be built in Chicago, thereafter in Mexicali, the capital of Baja California.
SUMMARY OF THREE STAGE PROFIT PROJECTIONS
Stage One requires funding as follows:
Stage Two requires $4.8 million which will enable placement of 50 Vans in carefully selected sites where annual profits are forecasted between $1.3 and $2.1 million, this after all 50 Vans are on location. Funding of this stage will also come with convertible bond sales, these carrying an interest rate of 7.5%. Bonds are unsecured and considered high risk.
The exit plan for Stage Two investors is to sell the operation to an e-training or e-learning provider who would use the Vans as a primary means to very substantially increase sales worldwide. Their return on invested capital should also be in the 20-40% range.
Stage Three, which should be self financed, envisions the placement of 1,500 Vans over a five year period. (Investors are encouraged to develop their own profit projections for this Stage.)
FRIEND is an outgrowth of work by the Benjamin Franklin Institute of Global Education, a private corporation organized under laws of the state of Nevada, headquartered in San Diego. The Institute was founded in 1995 by John Hibbs with the principal idea to broker knowledge products worldwide.
The main activity of the Institute has been an event called Global Learn Day, a 24 hour non-stop event held each October. The purpose of the event is to both showcase exceptional people in distance education from 24 time zones and to bring recognition to the Institute as a "distributor of knowledge". The Institute also has a program (Champions) which recruits highly motivated college graduates to work abroad for a two year period. Specific information about these undertakings can be found at:
The need to provide a multi purpose, muti-solution facility is obvious to all those who have been involved in distance education and training, particularly outside of the United States. (However, it could be that the largest market for FRIEND is in the United States and Canada.) A short discussion of the most aggravating problems is in order:
The net profit from operating these two Vans is projected to be $300,000 p.a. after the first full year both Vans are on location. The exit plan for Stage One investors forecasts 30-50% return on risk capital within two years. Investors will be offered convertible bonds carrying an interest rate of 9.5%. Bonds are unsecured and considered very high risk.
Global Learn Day
Champions
Scaleable * Reliable * Promotable * Moveable
A "conventional" location is one where the computers and the training takes place in an ordinary building, most commonly as part of some larger institution. In addition to all of the difficulties of very special networking to accommodate particular needs, conventional locations also present the problem of access to the room where the computers are themselves housed. Wiring the computers to power sources, printers, servers, telephone lines, and through walls is usually much more difficult than is originally contemplated. Very often, bandwidth sharing within the institution is another problem that needs solution.
Additionally there are problems of "keys" - those who have access to a room may, or may not, have access to a building. Or the alarms. Or the power. Or, it may be o.k. for the instructor to have access to the building but not the students. Can students have access at night? On the weekend? Holidays?
While it is true that every one of these problems may be overcome, each one detracts from resources that should be committed to prompt use of the equipment upon arrival. The honeymoon period in a project such as this is short; The first 90 days of operation should be used to excite stakeholders in ways where the upsides and the opportunities can be seized as versus getting bogged down by technical glitches and niggling aggravations.
A more severe problem is that the location of the equipment is more likely to serve the needs of the institution as versus the needs of the students and the customers. However, once the computers are installed, networked, and advertised, the chances of re-location to a better place of business are dim. (In fact, the cost of re-locating "old" equipment can be more expensive than starting from scratch.)
The third problem is scaleability. Installing computers inside any "conventional" location means that particular location is unique and may or may not be a good "sample" for replication in other parts of the city, county, state, province or nation. The really good news is that once it has been determined which courses, programs and training are most wanted, then all subsequent efforts, elsewhere, are focused to repeating the delivery of that which has already proved to be in demand. By eliminating the need to find a new building and a new room for a new operation, and by eliminating all the problems that go with wiring, networking, power, bandwidth and access, it is possible to concentrate exclusively on marketing...the hardest problem of all.
Equipping Franklin Vans with identical desktop computers, servers and the "base" software (browsers, telephony and video platforms, mailers) makes it possible to provide service excellence virtually from anywhere in the world.
The chief problem of most persons involved in education - and training - is to not devote themselves heavily enough to marketing. 40' foot Vans have a remarkable marketing impact, not just for those within eyesight of same - from cars, trains and walkways - but also for those who work inside of them.
Franklin Vans are somewhat like working on the inside of a 800 square foot billboard - one simply cannot get away from the idea of presence which presence has a continuing impact on the need for continuous marketing.
...the obvious deserves repeating
Sometimes the obvious deserves repeating. Vans are 40 feet long and ten feet high. This "translates" to 800 square feet of billboard advertising space, a tremendous marketing advantage given the location of the Van and the impact of the billboard signage - on partners; employees; students; clients; customers; passers-by.
The sides of the Van will be constructed in a way that portions of it can be easily and affordably changed. New sponsor? New course? New product offer? No problem. Inside the Van is the capability to create and print "signage" for use outside.
"Ordinary" classrooms do not have this advantage. It is a big one that cannot be "lost" on Van employees since it "stares them in the face" every single time they go to work.
...a crucial undertaking
This is a crucial element the importance of which cannot be overstated.
Exhaustive studies confirm that the number one reason that telecenters offering education and training overseas fail is because the operators have underestitmated the need to concentrate heavily on marketing their services. These same studies also confirm that when telecenter owners recognize the importance of "marketing", and keep those activities uppermost, that telecenter failures are rare.6
The hard lessons of "marketing" begin with the oldest adage in real estate success: Location. Location. Location. We mean it when we say that our goal is to "park a Franklin Van on the front lawn of every City Hall in the world." Van partners are selected as much because of their ability to secure high visibility locations as they are for any other single reason. Those contracted to supervise Van activities are continuously reminded of both the importance of location, location, location. They are also very much aware of the old pilot adage - "good approach, good landing." How and where the customer views the Van is crucial to how receptive the customer will be to purchase the services inside.
Imprinting on those involved in Van activities the importance of "knowledge customers" and "knowledge workers" is a daily grind and very hard work. It is a message which we will frequently send to our operators abroad, all of which will be trained to spearhead marketing activities in very close coordination with the local partner
Radio will play a key role in all marketing plans and be the basic spearhead for ensuring that the benefits of Van activities are well known throughout the community. Each Van will have the capability of radio broadcasting within a radius of 30 kms, which in many cases means we can reach over a million people very affordably.7 In some cases this will be possible because we can come in "under the radar" of government airwave restrictions. In other cases we will have to rely on conventional radio operators, many of whom will be attracted to the Van training programs which offer instruction on how to integrate the power of the Internet with the reach and affordabiity of radio.
Partners who understand the power of location, location, location, are also likely to understand the need for marketing - especially affordable marketing. They will be called upon to give presentations to various civic groups, to the business community and to department heads within the city government. Our drumbeat will be a consistent message that communities which develop knowledge workers are the ones most likely to create new sources of wealth.
...and public relations with the print media
Just as ESL instruction is a key part of the training capabilities of the Franklin Van, so too is close contact with the leadership of the local English language newspapers.
Additionally, international public relations courses are expected to be attractive to Van customers; parts of these courses involve training to ensure that stories actually get printed in local newspapers.
Trading training for "friendly" (print) articles about Van activities is part of the marketing effort.
...particularly with respect to keynote deliveries
Broadcasting and webcasting keynote speeches given during prime conferences in the city is a capability that Van owners will offer to convention organizers. This is both an income source and one more method to create awareness of Van capability.
It's not for nothing that our prime logo is the same as the portrait which appears on all American one hundred dollar bills. It's not for nothing that that portrait belongs to Ben Franklin who remains the best example of a quintessential knowledge worker who acquired great wealth because of the intelligence gathered in his print shops.
The 21st century print shop is a Franklin Van - also known as a Knowledge Factory. It is also a Jobs Factory, and must be perceived as such. Job seekers in Lagos can now find work in Los Angeles - that is IF they have the proper skills.
The Van is a place where there is a direct relationship between the skills acquired and a resulting increase in individual income. Telework is the key to this element, as discussed next.
* Web Site Tending * Search Engines/Marketing
* Service Help Desks
The advent of the web opens brand new opportunities for jobs held remotely. Nowhere are these opportunities greater than areas which assist the millions and millions who now own and operate a web site. Three areas deserve special attention.
Web Site Tending: Creating a web site is now as easy as tapping a few key strokes.8 The hard part is affordably taking care of the site created. This means constant attention to posting new updates, watching for broken links, adding elements helpful to the site owner. There is no reason whatsoever that these jobs cannot be done as well in India as in Indiana - at a fraction of the price.
Web Site Marketing: Hand in glove with web site tending is web site marketing, particularly with respect to keeping the web site "current" with the major search engines. This is hard only in the sense that it is very labor intensive, and therefore only affordable to either very large companies, or smaller companies who find that employing smart Mexicans is cheaper than employing smart Canadians. We will offer several courses which combine the elements of web site tending and web site gardening. The synergies are inextricably linked.
Virtual Help Desks: More and more, providers will come to grips with the idea that if they don't service customers 365/24/7 they will be at a great disadvantage. More and more will follow the path Amazon.com has taken. That company employs a New Delhi work force which answers questions from customers residing from Peoria to Perth, from Alaska to Chile - at a fraction of the cost if these services were to be provided from its American base. Most of this help comes by way of text messages in English where the bulk of the responses are intelligent application of Frequently Asked Questions. The list of potential 'help desk" clients is a long one - car rentals and hotel reservations; software providers, catalogue sellers; insurance representatives; airlines. The synergies of teaching web-marketing, web-gardening and finding telework from overseas clients are substantial and will be exploited continously.
We will concentrate heavily on "jobs out placement". Every web site owner in the world is a potential employer.
There are over 1,200,000 courses now offered from accredited universities worldwide. That number is expected to triple in the next 36 months.
There are tens of thousands of e-training courses from a whole alphabet soup of corporations - from Apple to Zerox, from Shell to Sony.
Every single one is interested in more students and more customers; and most of them are keenly interested in extending their reach outside of the countries from which the courses are provided.
In that regard, we expect to find a warm reception to our requests for substantial tuition discounts - even free, at least during the first year or so every Van is put on location.
It is impossible to accurately guess which courses will be desirable where. The job of the Van operator is to offer the whole smorgasbord with the intent to quickly narrow the focus. Ultimately about a dozen courses are expected to provide the great bulk of the revenues.
and the Partnership Framework
Our calculations do not include any grant money; nor do they include cash that might be expected from partner contributions. Click here for full details.
They do include non-cash investments from the local partners. The prime non-cash investments from the local partners are these:
- bandwidth for 24 months
- "security" personnel - (non training functionaries)
- location expenses
at start up
The Local Partnership Agreement will incorporate the above requirements (bandwith, personnel, location expenses). The purpose of those investments is to "equalize" the cost of the Van and placing the Van on location as well as paying for the Franklin Manager for 24 months.
...after 24 months
Mostly, we will follow the model of major hotel ownership and foreign management agreements whereby ownership of the Van and its equipment can be transferred in a purchase and management agreement. It is premature to settle in concrete exactly the ultimate formula - except that ownership of all the equipment will be retained by the "Original" Van owners until a transfer of title agreement has been reached.
Our thinking, now, is that the Vans can be profitably sold, outright, for approximately $200,000 each once they are on location; an option that we can only explore (and prove) after pilot operations.
A Strong Warning to Investors
Investors are strongly encouraged to accept that the pilot operations are highly risky and that there is a good possibility that their entire cash investment may be lost.
While altruism is the glue that makes a lot of this possible, the financial upsides are very large. Here are some of them.
First, it could be that the American market will prove to be the most lucrative and the easiest from which "normal" buy/sell profits will accrue. We may well be able to produce these Vans for less than $50,000. each and find a market for them in the $80,000 to $100,000 range. In time, if the American "buy/sell" market develops, the competition will force prices downward, but our costs our production costs will also decrease, especially if the Vans are produced in quantity in Mexicali, Mexico. The American market for a well equipped Van, with a well organized central Help Desk, could be in the many, many millions of dollars.
Second, if we find the American market receptive to these Vans - on a (simple) "buy/sell" proposition basis - such finding will also make it profitable to market in Europe, East Asia and in some parts of Latin America.
Third, we are reasonably confident that one or more providers with deep pockets will see that these Vans can be profit makers in their own right as well as valuable marketing instruments to sell more of their own products. This is particularly true in the English as a Second Language arena; but it also applies to many, many, many computer software makers.
Investors interested in this will make their own calculations. What we offer is a management team and the skills to make this happen.
Each Van comes fully loaded with all the equipment needed for almost any education course from any provider; or any training course from any corporation; or for those interested in finding tele-work jobs. For a complete list of the equipment inside, please click here.
_____
1 CEO, CISCO
2 COO, WebCT, March 2002
3 Fortune Magazine, December 2001
4 ISTF Report, February 2002
5 H&Q Report, January 2002
6 Commonwealth of Learning, July 2001
7 Dr. Arun Metha Report, March 2002
8 www.nomatterwhere.com
Copyright © 2003 Benjamin Franklin Institute
| Ben Franklin Institute Home Page |
| Global Learn Day VII
| Socrates Academy |
| Champions Program
| Cybervan |
| Webcasting Consulting Services |
| Latest News
| About Us
| Contact Us |
of Global Education and individual authors. All rights reserved.