Business Plan

November, 1999
 Table of Contents

 EXECUTIVE SUMMARY                                                                                                             
 ............................................................................................................ .........
          III
    

 THE MARKET                                                                                                                    
 ................................................................................................................... ....................
                     VI
    

 THE COMPANY                                                                                                                 
 ................................................................................................................ ......................
                       X
    

 THE PRODUCTS                                                                                                                         
 ........................................................................................................................ ..........
           XII
    

  COMPETITION                                                                                                                  
 ................................................................................................................. ..................
                   XV
    

 BUSINESS MODEL                                                                                                               
 .............................................................................................................. .............
              XVII
    

 INVESTMENT OPPORTUNITY                                                                                            
 ........................................................................................... ............
             XIX
    

 APPENDIX A – PRODUCT ARCHITECTURE                                                       
 ...................................................... ..........................
                           XX
    

 APPENDIX B – FINANCIAL PROFORMA                                                                                     
 .................................................................................... .....
      21
    

Fireclick Confidential Page ii

 Executive Summary

Fireclick has developed patent pending technology to make the web experience more
rewarding for consumers thereby driving more traffic to destination sites. By increasing
the propensity to view more pages, absorb more ads, and purchase more products, “We estimate
Fireclick helps drive e-commerce revenue.
approximately $362
million in e-commerce
The World Wide Wait revenues could be at
Most Internet users are frustrated with having to spend a significant part of their online risk of being lost each
time waiting for web pages to download. Even as users hunger for more speed and and every month
greater bandwidth, most Internet sites today are increasing the richness of their content,
further exacerbating the problem. Enhancing the quality of the consumer experience is a
because of the impact
critical success factor for all e-commerce sites including e-tailers, portals, content of unacceptable
providers, and community sites. download times.”
A recent report from Zona Research estimates lost e-commerce sales due to frustrated
consumers at $4.35 Billion annually. Specifically, the study showed that shoppers with Jack Staff
slow modems could account for almost $1B by themselves. This lost revenue is Chief Economist
recognized and measured by e-commerce retailers in the conversion ratios (aka “looker Zona Research
to booker”) and in the number of abandoned shopping carts due to perceived lack of Ju l y, 1 9 9 9
response from the web site.

The Fireclick Solution

Fireclick has developed server-based software that can alleviate customer frustration
today, while improvements are made to the existing Internet infrastructure, rather than
wait for the world to upgrade to higher bandwidth (broadband) connections. This is
especially important in light of the Gartner Group estimates that even by the year 2002,
more than 63% of users accessing the web will be constrained by voice-grade modem
connections.
The Fireclick Blueflame™ server operates in front of a web host and performs real-time
analysis of site usage patterns to anticipate user clicks and prime their browser cache
with required page elements. The server uses patent pending technology to pre-deliver
upcoming pages (or elements of pages), thus enriching the consumer’s web experience.
Additionally, the server is able to regulate these deliveries within the network’s traffic
constraints.
Because the Fireclick Blueflame™ server operates as a transparent proxy, it never Fireclick
interferes with normal web server operations. If the server should fail, page requests Accelerated
continue to be processed normally but without the Fireclick acceleration. By deploying
server-side software, as opposed to a client-side application, Fireclick ensures maximum
Content Delivery
deployment flexibility and minimum deployment costs. Control of the consumer’s
experience is returned to the web “store.”
The effect for web users is that upcoming page requests are anticipated or directed by the
Fireclick server and pre-loaded into their browser cache. When they’re ready to view
the next page, it is available immediately with a perceived zero download time. In fact, Median Wait Time
the page was simply downloaded while they were viewing the previous page. In this Reduced By 90%
way, bandwidth that would normally be unused (but paid for) waiting for the next page
request is utilized to deliver an unencumbered browsing experience for the consumer. 100 % of Hits With Fireclick
90
80
70
Without Fireclick
New Selling Opportunity: Directed Merchandising 60

Fireclick’s Blueflame server is used to accelerate the performance of any Web site50
regardless of content, but it also represents an additional opportunity for online retailers40
30
20
Fireclick Confidential 10
Wait”
39% “ZeroPage iii
0
Fireclick Accelerated
1 21 41 Performance
61
Page Wait Time (seconds)
– directed merchandising. While the server typically analyzes usage patterns to prime
the user’s browser cache with required page elements, it can also be used as a directed
merchandising engine to prime the consumers browser with explicit items the retailer
selects. For example, a retailer could ensure that the “specials of the week” behind the
blinking icons are always pre-delivered to the consumer’s browser for immediate
viewing if and when selected. In this way, online retailers can take advantage of the
“impulse buy” in much the same way as traditional retailers who place high margin
items near the cash register.

The Value for eCommerce

Fireclick has developed technology to eliminate the frustration of the “world wide wait”
and make the Web experience more rewarding for consumers. E-commerce sites
increase their conversion rates, minimize abandoned shopping carts, and grab control of
directed merchandizing to produce more revenue

Competition
Several “Internet infrastructure” and “content delivery” players have emerged to address
network bottlenecks on the Internet and offer some performance relief to consumers.
New players like Akamai and Sandpiper (acquired by Digital Island), as well as
established companies like Inktomi and Network Appliances, approach the problem of
Internet performance from the network backbone. By caching frequently accessed
content at distributed points around the Internet, the vendors help save bandwidth costs
for ISPs and e-commerce sites, but end-user performance is only slightly improved.
Additionally, there is a small group of vendors providing so-called “web accelerators.”
These are generally applications designed for the end-user client and require some
action on the part of the consumer (e.g., install software). These companies have met
with limited success. Fireclick is unique in its focus on the “last mile,” the slowest part
of the connection to the consumer, and its complete transparency on the client-side
through a purely server-side software approach

Fireclick Company Background

The Fireclick team was originally formed at the graduate school at Stanford University.
The original founders: Xavier Casanova, a graduate EE student at Stanford University,
has successfully led the company through the creation of first prototype and serves as the
product manager for ongoing product and business development. Stephane Kasriel
received his MSCS with Distinction in Research from Stanford, has won several awards
for advanced research and currently functions as the product architect and lead
developer. Jean-Pascal Crametz, PhD, has been involved in two other Silicon Valley
start-ups and contributes more than 10 years of professional experience.

Management Team
This founding team has added senior management talent to bring Fireclick to the next
stage. Ram Srinivasan, President & CEO, adds 20 years of management experience in
engineering and marketing functions at technology companies including Sun
Microsystems, H-P, Informix, and Red Brick Systems. Ram was most recently VP
Marketing for RightPoint Software (acquired by E.piphany). Dennis Tabuena, VP
Development, brings over 18 years of experience in all aspects of development at
software companies such as Metaphor, General Magic, & Digital Fabrics, and was most
recently VP Product Development for Austin-Hayne. Steve O’Brien, VP Marketing and
Business Development brings 15 years of experience in product marketing, branding,
and business development from Sun Microsystems, Digital Equipment, & Red Brick,
and was most recently VP Marketing for Personic Software.

Fireclick Confidential Page iv

Fireclick Confidential Page v
 The Market

The Problem: “WWWait”

The Internet has already changed the way we live and work, and the opportunity for e-
commerce is virtually unlimited. But the success of e-commerce is jeopardized by
consumer frustration with Web performance.
Despite ongoing infrastructure improvements frustration with Internet interaction
remains a key inhibitor to business. The problem has become so pervasive as to have its 1998 Holiday Shopping
own nickname – the “worldwide wait.”
Fireclick develops Internet server software that speeds Web access for consumers, thus
driving the success of e-commerce.

The Opportunity Cost for eCommerce

The access problem on the Web not only frustrates potential consumers but causes Placed an online order
serious revenue loss for e-commerce companies. Any company that relies on the
Did not purchase item
Internet for revenue, whether from subscriptions, advertising, or actual product sales, is
at risk. During the 1998 holiday shopping season, for example, only 20% of Internet Purchased off-line
shoppers actually placed an order online at the site where they sought a purchase. 27% Purchased from alternate site
of shoppers became so frustrated they did not purchase the item at all, while the
remainder purchased the item through alternate channels, including competing Web
sites. [Source: Zona Research]
In June 1999 Jupiter Communications found that if response times at a particular Web
site did not meet Internet users' expectations, 37% of those users visited a substitute Web
site to meet their needs. For 24% of users, the decision to use an alternative Web site
was permanent.
The potential loss of e-commerce sales due to frustrated consumers is estimated at $4.35
Billion annually. This lost revenue is recognized and measured by e-commerce retailers
in the “look-to-buy” ratio and in the number of abandoned shopping carts due to
perceived lack of response from the Web server. Recent research indicates that at least 2
out of every 3 shopping carts on the Web are abandoned.

Many Possible Fixes, No Real Solution

To address the access frustration, tremendous and continuous infrastructure efforts to
increase the capacity of the network are being made. NSP (Network Service Provider)
and ISP (Internet Service Provider) companies are increasing the backbone capacity;
Webmasters are buying additional servers or leasing more and more bandwidth to deal
with increased traffic. At the same time, solutions like network caching (vendors include
Inktomi, Cisco, Network Appliance, Cacheflow) and content distribution (e.g., Akamai,
Sandpiper) have been deployed to decrease the overall consumption of bandwidth, and
offer partial relief to consumers.
However, today no substantive solution exists for the e-commerce site manager to
effectively reduce the unacceptable download times observed on the Web.
One theory holds that this problem will go away when higher bandwidth connections
(broadband) become ubiquitous. However, consumer confusion over which broadband
standard to embrace (cable, DSL, ISDN, satellite, etc.), along with the prohibitive costs
associated with each, have caused adoption to be slow. Both Gartner Group and IDC
research indicates that even by the year 2002, more than 67% of users accessing the Web
will be constrained by modem connections.
But even with broadband connections, performance will never be good enough. Web
developers constantly push the envelope on the content they provide to consumers.
Today’s simple JPEG and GIF images are already giving way to richer, more bandwidth-
intensive content such as streaming media video, audio, applets, and JavaScript.

Fireclick Confidential Page vi

Rather than wait for the world to upgrade to higher bandwidth connections, Fireclick
has developed server-based software that can alleviate this problem today, in spite of
current infrastructure constraints.

Directed Merchandising: A New Opportunity for eCommerce

Fireclick’s Blueflame server is used to accelerate the performance of any Web site
regardless of content, but it also represents an additional opportunity for online retailers
– directed merchandising. While the Blueflame server typically analyzes usage patterns
to prime the user’s browser cache with required page elements, it can also be used as a
directed merchandising engine to prime the consumer’s browser with items the retailer
selects. For example, a retailer could ensure that the “specials of the week” behind the
blinking icons are always pre-delivered to the consumer’s browser for immediate
viewing if and when selected. In this way, online retailers can take advantage of the Fireclick Benefits:
“impulse buy” in much the same way as traditional retailers who place high margin •Improved “look-to-buy”
items near the cash register. conversions
• Fewer abandoned shopping
carts
Market Size: Macro Level
• More revenue per visitor
Fireclick provides Internet server software to drive eCommerce success. Because there • Longer user sessions
are no other vendors providing similar products to those Fireclick has developed, there
is no third-party published data on the exact size of the market. However, there are • Increased site traffic
several established markets of which Fireclick is part, and their size can be used to • Improved page views
validate the Fireclick opportunity.
The Internet caching market consists of those companies providing hardware and
software to cache frequently accessed pages at various points-of-presence (POPs) on the
Web. Typically sold to ISPs and web hosting companies with the goal of saving
bandwidth costs, these devices come from vendors like Inktomi, Cisco, Network
Appliance, Novell, and Cacheflow. This market has attracted both new and established
vendors due to the forecasted market size and growth. Gartner Group has estimated this
market size at $92 million in 1999, growing to over $1Billion in 2003, in excess of 80%
CAGR.
Industry analysts also track the market for e-commerce software and Fireclick is
certainly a part of that well-defined market. In November 1999 Business Week
estimated the e-commerce software market at $580 million for 1999, growing to $3.7
Billion in 2002, putting the CAGR at more than 85%.
IDC surveys a broader market for what they call Internet commerce applications.
According to IDC (4/99) this market will grow by 280% in 1999 to $1.7B. They further
forecast growth to $13.1B by 2003, a CAGR of more than 66%.
Clearly, broad market forecasts are sensitive to assumptions and differing definitions.
The only real conclusion here is that the market for Fireclick’s products is already large
“…the e-commerce
and growing extremely fast. software market is
finally exploding. It’s
Market Sizing: Fireclick Focus & Target Customers expected to top $580
Fireclick’s initial target is the market of business-to-consumer (B2C) eCommerce sites million this year and hit
that depend on revenue-generating traffic to survive. Included in this target are
shopping sites that generate revenue through product sales and content-oriented sites $3.7 billion in 2002.”
that derive revenue through advertising or memberships. As of mid-1999 there were
almost 3,000 non-adult-oriented Web sites with more than 40,000 unique visitors per
month. (For the record, over 1,000 of the high-traffic sites tracked by PC Data were Business Week
adult-oriented.) Of the non-adult sites, 1,700 had more than 100,000 unique visitors per November 1, 1999
month. There are at least another 3,000 sites in the world with less than 100,000 unique
visitors per month, some of which are not tracked at all, and dozens of new sites come
online every day.
Even if we consider only the high-traffic, name brand, eCommerce sites tracked by PC
Data Online in mid-1999, this is a large and fast-growing market. Because Fireclick is
priced according to the value it provides to the customer as a monthly fee rather than
traditional one-time software licensing fee [see Section VI: Business Model], these sites
alone represent a revenue opportunity of $227 million per year, starting immediately.
Even assuming conservative growth rates for new sites (40% CAGR) and new Web users

Fireclick Confidential Page vii

 For every

coming online (25% CAGR) [Source: NUA Internet Surveys, 9/99], the total available
market for Fireclick in just the largest, high-traffic sites is significant.
$1
in worldwide e-commerce
revenue generated last year,

Year

1999
Available Market

$227 M
$.93
was invested in e-commerce
2000 $425 M infrastructure.
2001 $750 M
2002 $1.3 B
Source: IDC, The Industry Standard

Fireclick’s focus and market size is established by determining the largest market
segment with the most to gain from using Fireclick products:

Internet Player Example How they make money?

ISP/NSP/RSP AOL, Earthlink, Mindspring, MCI Sell bandwidth
Web Hosting Exodus, Digex, AboveNet Real-estate, rent space for
hardware, admin services,
value-added services
Infrastructure Sun, HP, Dell, Inktomi, Interwoven, Sell hardware, software product
(Hardware, Software DoubleClick, Agency.com, Vivid, license, CPM, Service revenue
tools, Web design, US Web, Digital Deli
Advertising)
Destination sites TheStreet.com, Sportsline, Ads, subscriptions, product sales
• Content Amazon, Yahoo, GoNetwork,
AltaVista, TheGlobe.com,
• e-tailers Women.com
• Portals
• Community

Internet Player Fireclick’s Value Fireclick’s Cost “If response times

ISP/NSP/RSP Questionable Network Bandwidthat a particular Web
Web Hosting Differentiator, Better QoS More hits, increased site did not meet
bandwidth, admin/real-estate
Internet users'
Infrastructure More hardware,
complement/leverage Fireclick,
expectations,
Displace & compete for dollars;
Phantom impressions
(Hardware, Software
tools, Web design, increased traffic, more “real” 37% of those users
Advertising) impressions/click-through visited a substitute
Destination sites Conversion rates Web site to meet
Reliability, Uptime guarantee
• Content Minimize abandoned shopping
their needs.
• e-tailers carts
More pages/visit
• Portals Longer stays
• Community More Ads
For 24%, the
Increased Revenue decision to use an
alternative Web site
Return on Investment
was permanent.”
The Jupiter findings at right and the Zona Research findings cited earlier (53% of online
shoppers during the 1998 holiday season became so frustrated with their initial site that Jupiter
Fireclick Confidential
Communications
Page viii
June, 1999
they purchased the product elsewhere) demonstrate exactly the Fireclick value
proposition and help quantify the ROI. Fireclick speeds web access for consumers, thus
enabling e-commerce sites to generate more revenue.
The Jupiter and Zona findings are amazingly consistent and imply that Fireclick could
help e-commerce sites generate 40-50% more revenue without increasing site traffic at
all. Simply by capturing the revenue opportunity of the shoppers already visiting the
site, Fireclick would demonstrate an immediate and consistent return on the investment.
Obviously, satisfied customers are more likely to return, so Fireclick also contributes to
customer loyalty, return visits, and increased site traffic.
Unlike shopping sites, content sites generate revenue through advertising, memberships,
or both. In this case the Fireclick ROI is even easier to calculate. Sites relying on
advertising generate more revenue every time an ad is displayed. That means that more
pages and more visitors contribute directly to the bottom line. A Fireclick-enabled Web
site will display 40 – 90% more pages in the same amount of time. Additionally, site
visitors are likely to stay online longer due to lack of frustration and the enhanced
browsing experience
According to Jakob Nielsen, Ph.D., a Web usability guru, “slow download times are the
bane of the Web. Human factors research has long held that response times need to be
under one second for optimal usability and under ten seconds for keeping the user’s
attention. Many web sites even violate the ten-second rule, impelling users to give up
and leave.”
Fireclick’s ROI is realized when Web site visitors stay longer, view more pages, and
purchase more products.

“If the real life benefits are up

to the demo, you appear to have
a winning technology.”

Robert A. Gunst
Former CEO
the good guys!

Fireclick Confidential Page ix

 The Company

Overview
Fireclick was founded in February, 1999 by three graduate students at Stanford
University who saw that the Web was not living up to its potential. Xavier Casanova,
Stephane Kasriel, and J.P. Crametz formed Fireclick (known then as eRacer) while
doing research and studying full-time for advanced degrees at the Engineering school at
Stanford. Working in their spare time they were able to produce a working prototype
and raise the first round of funding from a group of angel investors and Atlas Ventures.
In May they brought in Ram Srinivasan, a Silicon Valley veteran, as CEO to run the
company. Ram quickly recruited the other members of the management team. In June
1999 the company became Fireclick and moved into its current headquarters at 289 S.
San Antonio Rd., Los Altos, CA 94022.
All original founders still hold key roles in the company.

Background & Founders

Xavier Casanova, 24, led Fireclick through the first round of financing. Currently a
graduate student in Electrical Engineering at Stanford, Xavier also holds a B.S. in “Any wait
Computer Science and Electrical Engineering from the prestigious Ecole Polytechnique,
France, where he received the Carnot Fellowship for entrepreneurship to continue his
longer than
studies in the US. Prior to attending Stanford, he was a research assistant with Prof.
Khuri-Yakub in the Electrical Engineering department at Stanford University. Xavier
8 seconds for a
currently serves as the product manager for Fireclick where he is responsible for overall page download
product direction.
frustrates users
Stephane Kasriel, 24, earned his Master of Science in Computer Science at Stanford
University, where he received the Distinction in Research. His research at Stanford and seriously
focused on analysis and monitoring of distributed systems. Before moving to California,
he graduated from the prestigious Ecole Polytechnique in France where he was awarded jeopardizes the
two fellowships: the Fondation de l'X fellowship, which attributes its grants based on
outstanding research and the Carnot fellowship which recognizes entrepreneurship. At chance of a
Polytechnique, Stephane also received an award for research he conducted at Stanford
during the spring and summer of 1997. He currently functions as the product architect
transaction.”
and lead developer at Fireclick.
Dr. Jean-Pascal Crametz, 31, earned his Ph.D. in Operations Research at Stanford
University. His research over the past five years has focused on the pricing of bandwidth
services for telecommunications and network applications. While at Stanford J.P. was Zona Research
involved as a seed investor and algorithms expert in Izami, Inc., a DSP company. In
1998, in parallel with his research, J.P. was involved in Tomoni, Inc., a consulting 7/99
business providing professional services to major telecomm players. Before moving to
California, J.P. attended the prestigious Ecole Polytechnique, France, and the Ecole
Desmines where he ranked first in a class of 200.

Management Team
Ram Srinivasan, 43, President & CEO, adds 20 years of management experience in
engineering and marketing functions at technology companies including Sun
Microsystems, H-P, Informix, and Red Brick Systems. Ram was most recently VP
Marketing for RightPoint Software (acquired by E.piphany). Prior to RightPoint, Ram
led Red Brick Systems through the company launch, several product launches and an
IPO as the Director of Product Marketing. His sales and engineering positions at
Informix, Sun, and HP provide a broad set of experiences from which to draw upon.
Ram holds a BS in Chemical Engineering, a postgraduate Diploma in Management and
an M.S in Chemical Engineering & Real-Time Computing from the University of
California at Santa Barbara.
Dennis Tabuena, 41, VP Development, brings over 18 years of experience in all aspects
of development at software companies such as Metaphor, General Magic, & Digital

Fireclick Confidential Page x

Fabrics, and was most recently VP Product Development for Austin-Hayne. Dennis
holds a B.S. in Mathematics from the University of California Berkeley.
Steve O’Brien, 36, VP Marketing and Business Development was most recently VP
Marketing for Personic Software where he re-branded and launched the company and its
core products. Prior to Personic Steve was VP Marketing at Continuus Software and
Director of Product Marketing at Red Brick Systems. Steve spent the first ten years of
his career in various product management and market development roles at Sun “E-commerce
Microsystems and Digital Equipment Corp. He holds a B.S. in Operations Research &
Industrial Engineering from Cornell University and an MBA from the Johnson Graduate companies, while
School of Management at Cornell. constantly adjusting to
operating at lightning
Board of Directors and Advisors
Xavier Casanova, Founder, Fireclick, Chairman.
speeds to keep pace
Stephane Kasriel, Founder, Fireclick, Director.
with Internet
Ram Srinivasan, President & CEO, Fireclick, Director. technologies, must
Eric Archambeau, General Partner, Atlas Ventures, Director. Eric Archambeau reconcile themselves to
represents Atlas Venture in the Silicon Valley. Previously, Eric was the President and
CEO of RightPoint, a leading Enterprise Marketing Software company and Atlas
the fact that their
Venture portfolio company. Eric is a graduate of Ecole Centrale in Lyon, France. He
holds a Master of Science in electrical engineering from the University of California,
customers are living in
Berkeley, an electrical engineering degree from Stanford University, a PhD in Computer what amounts to slow
Science from Grenoble University and an MBA from Santa Clara University. Eric is a
founding director of eGroups, Trading Dynamics (acquired by Ariba), and motion on the other end
SkillsVillage.com. He also serves on the boards of T.sqware, Impresse and Frequency
Technology. of the line.
Steve Harari, Harari & Assoc., Director. Mr. Harari previously served as President of As a result, these
EIT and has worked with other Internet-related companies including CommerceNet,
Internet Profiles (I/PRO), Intuit InsureMarket, and ValiCert. He also serves on the
businesses have to make
board of directors of Searchbutton.com. difficult decisions about
Steven Aldrich, Board Advisor, is a co-founder and President of Intuit Insurance
Services (IIS), the Alexandria, Virginia, based subsidiary of Intuit, Inc.
how to attract and keep
QuickenInsurance (www.quickeninsurance.com), part of the leading Quicken.com customers within the
financial Website, is the market leader in on-line insurance, providing educational
information, decision tools, and transaction capability to millions of visitors since its limited bandwidth
launch in the summer of 1996. Steven has extensive experience in the financial services
and technology sector. He was placed on Institutional Investor’s 1997 list of the top 20 available.”
most influential people in financial services on the Internet today. He has worked in the
investment banking division of Alex. Brown & Sons and for McKinsey & Company. He
was recognized as an Arjay Miller Scholar while completing his MBA at the Stanford The eCommerce Report
Graduate School of Business, and he is a Phi Beta Kappa graduate of the University of
North Carolina. June, 1999
Mark Goldstein, Internet Executive, Softbank, Inc., Board Advisor. Mark is currently
an Entrepreneur in Residence (EIR) with both SOFTBANK Venture Capital and
SOFTBANK Capital Partners. Until recently, he was a vice president at Inktomi
Corporation, which acquired the Impulse! Buy Network in April 1999. The Impulse!
Buy Network specialized in e-commerce and was considered one of the leaders in online
merchandising systems for Internet portals. Mark was also founder and CEO of Reality
Online, a leading provider of financial and technology services for individual investors,
which was sold to Reuters in 1994. In addition, he founded NetAngels, an early
developer of Internet profiling and targeting tools, which merged with Firefly Networks
and was later acquired by Microsoft in 1998. Mark serves on the Board of Directors or
Advisors of FreeShop.com, salesforce.com, Rentals.com and NetGift Registry. He is
former Chairman of the Interactive Services Association, the Internet Industry Trade
Association, and the trade group Merch.net, both now a part of The Direct Marketing
Association. Mark was the initial recipient of the Information Industry Association's
Entrepreneur of the Year award in 1992. He began his career at Apple Computer, as
product manager in charge of online banking and online services. He graduated from the
University of Pennsylvania where he attended the Wharton School of Business.

Fireclick Confidential Page xi

 The Products

Fireclick has developed server-based software to accelerate web access for end users.
From the user’s point of view, connections to the Internet are not optimized and are in
fact fairly inefficient. While the end user is reading a web page, the modem connection
sits idle. When a link is clicked, the browser takes anywhere from 4 to 45 seconds to
display a page, while the user sits waiting idly for the page elements to download. (See
figure below)

B A N D W ID T H BU SY ID L E BU SY ID L E

END USER ID L E R EAD ID L E R EAD

On the server side, web servers are sized to accommodate the projected peaks of traffic.
However, since peaks typically occur only 5-10% of the time, the full capacity of the
network is not used most of the time.
If there were a way to leverage unused network resources that have already been paid for
to alleviate frustration of the end user, e-commerce companies would clearly benefit.
Fireclick’s Blueflame does just that – reduces latency by leveraging existing resources.

Fireclick Blueflame™
Blueflame is a server-based solution installed as a proxy server in front of the origin web
host. The Blueflame server is the only element that needs to be installed to enable
acceleration by Fireclick.
The Blueflame server transparently sends a small software component (JavaScript/Java
Applet) to the end user’s browser cache after their first request from the web host is
served. Blueflame then communicates with the Java Applet by sending information
about page elements needed for upcoming requests. The end user does not need to know
about Java, and does not need to install or configure anything to enable acceleration.
B lu e fla m e B lu e fla m e
T ra n s p a re n t s o ftw a re c o m p o n e n t

IN T E R N E T

END USER W EB SERVER

Once installed near the web server, Blueflame performs real-time analysis of site usage
patterns. By analyzing the page traversal patterns, Blueflame is able to prime the end
user component with information about likely pages or elements that will be requested
later. For example, it is very likely that a user reading e-mail will browse their first
email, then the second on the list, and the third, etc… While the user reads the first
message, Blueflame is priming the second, and so on. A consumer shopping for a book
may call up a list of the top ten bestsellers, and then want more detailed information on
the top 3 authors. Blueflame primes the user’s browser cache with page elements that
will be required to service these upcoming requests, thereby delivering a much faster
response to the actual request. On a shopping site, the GIF image of an item can be
pre-downloaded into the consumer’s browser while she is reading the item description,
thus eliminating the painful wait time typically associated with large images.
Blueflame sends a “hint list” to the end user component whenever a web user browses a
web page. The hints are actually a list of elements (HTML, GIF, JPG, etc…) that are

Fireclick Confidential Page xii

likely to be requested by the user when she has finished reading the current page. The
server prioritizes hints in order of “most likely” elements to be requested. The end-user
component then requests those elements from the server and stores the elements in the
browser cache.

Blueflame Architecture
Blueflame is an end-to-end content delivery system. Blueflame exploits site-specific
traffic patterns and the inherent user-view time of each Web page to deliver content of
future pages to the browser cache, thus substantially reducing subsequent wait times.
As with all end-to-end systems, Blueflame consists of both server and client software. Consumer Benefits:
The client component is a small Java applet that is completely transparent to the end- •Enhanced QoS experience
user. Server software continuously analyzes traffic patterns and maintains a database of • Efficient use of time
per-page “hints.” The hints of a page represent the most frequently requested content
after that page. The server software then transmits these hints along with each page for • Minimized frustration
use by client software in the user’s browser. Client software serves as a “pump” that
receives hints and primes the browser’s cache with future content.
Server. Blueflame’s server-side software consists of full-time TCP/IP services hosted at
the origin site including:
• a prediction engine that continuously analyzes the traffic patterns and maintains a
prediction database based on popularity metrics of most likely paths
• a data collection component that continuously observes and records traffic patterns
• a content transformation engine that dynamically injects hints into a site’s pages
• a layer-7 flow switch, implemented in software, supporting the HTTP 1.1 and 1.0
protocols, forwarding user requests to the data collection and transformation
engines and well as the origin server(s)
The last three services are packaged as a multithreaded reverse proxy that handles all
public HTTP traffic for the origin site. Logging, installation and other administrative
services are also provided. The prediction engine is factored away from the proxy for
maximum scalability. The Blueflame system has been tested under load to deliver 300
transactions per second at negligible latency on off-the-shelf hardware costing less than
$4000. When used in conjunction with a load balancer, a cluster of Blueflame servers
will provide linear scalability of the service for up to 2400 transactions per second. eCommerce Benefits:
Newer designs of Blueflame are expected to deliver 2000+tps on a single rack- •More pages per visit
mountable network processor.
•More frequent visits
End-user Component. Blueflame’s client software consists of intelligent content in the •Increased conversion rates
form of JavaScript and a Java Applet that the server automatically injects into each page. •Decreased abandoned carts
This software receives and interprets hints, coordinates the transmission and
downloading of advanced content loading it into the browser’s cache. Client software is •Directed merchandizing
automatically “piggybacked” onto each page. To a web site’s users, acceleration is 100%
transparent—no explicit downloads or configuration is required.
Packaging. The entire system is currently packaged as a standard, user-installable,
software package for Sun Solaris and Microsoft Windows/NT. Technical feasibility for
Linux has been proven, providing the potential opportunity for Blueflame to be
packaged as a network appliance.

Product Roadmap
Blueflame Service. The development team has proven architectural feasibility of
deploying the Blueflame functionality as a subscription service. Once launched this
service will allow customers to take advantage of Blueflame acceleration without the
need to provision and maintain dedicated hardware and software systems. Fireclick
will have the ability to turn the service on an off remotely with no software or hardware
installation required.
Longer Term Futures. There are many opportunities for expanding and enhancing
Fireclick products and services.

Fireclick Confidential Page xiii

 •Data acquisition can take place anywhere along the path of content,
providing a possible solution for ISPs and web hosting companies to
take advantage of Blueflame capabilities.
•Popularity metrics can be gathered and utilized with varying levels of
granularity for more personalized acceleration services (e.g., providing
an “express lane” for the best customers or most profitable products).
•Content transformation can be used for a variety of purposes, i.e.,
detecting network speed, comparisons based on content, geographic
distribution, etc.

Development
Fireclick employs “best practices” in the development of its software. Product
requirements are determined through a rigorous MRD (market requirements document)
process driven by real-world customer/prospect demands. Engineers and product
marketing jointly explore the design space for each candidate feature. A list of
alternative implementations is developed, and an approach is selected and documented.
The release team closely tracks implementation progress for each feature to mitigate
technical risks.
To date, nearly all of the implementation is done in the Java and other high-level or
special purpose scripting languages. We chose to implement the core of the product in
100% Java since that provides us with the greatest flexibility in platform selection.
However, our design has isolated the performance-sensitive areas of the code allowing
us to reimplement those functions in a faster, more conventional language, such as C or
C++.

Quality Assurance
Fireclick maintains a state-of-the-art lab, equipped with high-performance network
processors for testing its products under heavy client loads. Our partnerships (Cisco, According to
Sun, Alteon, Foundry) provide us with access to the latest equipment from the most
popular platform and network processor vendors. This allows us to test Blueflame in NetSmart, 85%
near “real world” deployments.
of Internet users
The software underlying each release of the Blueflame server system undergoes
thousands of hours of testing under all supported platforms. Fireclick also tests against are frustrated
up-to-date and legacy versions of the most popular browsers and their derivatives
including Internet Explorer, AOL, Compuserve, and Netscape. by slow web site
download times.

Fireclick Confidential Page xiv

 Competition

Although no companies today currently offer similar functionality to the Fireclick

Blueflame™ accelerated content distribution system, the general problem of “speeding
up the Web” is being attacked by dozens of companies through widely disparate
approaches. Fireclick most closely aligns with the companies doing Internet caching
and content distribution. Though we consider all of these players to be excellent
potential partners, we acknowledge that in some cases we will be selling to the same
prospective customers and may compete for the same budget dollars. This section will “These high-
be used to explain where Fireclick fits relative to the established players in these
markets. activity, high-
content sites are
Content Distribution
On October 29th Akamai Technologies, Inc. completed an initial public offering of 9
finding it harder
million shares of common stock at $26/share. By the end of the day AKAM closed at
over $145 giving Akamai a market cap of more than $13 Billion. Just days before
and harder to
Sandpiper Networks was acquired by Digital Island for more than $600M in an all-stock
transaction. By the end of that day, Digital Island’s stock had appreciated almost 40%,
deliver their
valuing the Sandpiper transaction at more than $1 Billion. content with high
Akamai and Sandpiper are the leading players in the Content Distribution marketplace.
Content distribution service providers have built worldwide networks of servers quality and
(thousands of servers) on which they replicate content for e-commerce sites. When a
consumer tries to access this content they are automatically routed to the server that can acceptable
serve the request fastest, often simply the closest server. So if a user in Singapore types
www.yahoo.com into their browser they will likely get the dynamic content directly from performance to
the Yahoo! server in Santa Clara, but the Yahoo! logo and other large static content will
come from an Akamai server located locally in Singapore. In this way, Yahoo! Is able to users around the
accommodate more users without significant increases in the traffic or bandwidth
required at the Santa Clara Web server farm and the user in Singapore receives world.”
somewhat better response times.
Content distribution providers sell to e-commerce sites, much as Fireclick, but their
value proposition focuses much more heavily on the cost savings for the Web host than
on the benefit for users. While commodity bandwidth is available to an e-commerce site
Caching.com
for as little as $500 per MB/s, content distributors typically charge $2,000 or more. E-
commerce sites are willing to pay this premium in order to achieve the protection from
November, 1999
flash traffic, and decrease in total bandwidth required at the host site.
Fireclick competes with content distributors insofar as we are all caching Web content
closer to the end -user, we are all selling to e-commerce sites, and we all provide
benefits to the consumer. But while Fireclick’s entire focus is on improving the
consumer experience, and the improvement in eliminating the delay over the “last mile”
is significant (up to 90% reduction in end-user wait times), content distributors deliver
only a slightly enhanced end-user benefit almost as a side-effect of their solution. Their
focus is really on improving the network infrastructure for the host sites and saving
resources. Fireclick’s focus is on making more money through a better consumer
experience, more page views, more traffic, and more revenue.

Caching Players
The Internet caching market has been expanding rapidly in the past few years. As stated
earlier, Gartner Group has estimated this market size at $92 million in 1999, growing to
over $1Billion in 2003 (80+% CAGR). The size and growth of this market has attracted
a number of players, including Inktomi, Network Appliance, Cisco, Novell, and
Cacheflow.
Internet caches are devices installed at various points-of-presence (POPs), such as ISPs
and web hosting sites, that store frequently accessed web pages. For example, if an ISP
in Boston deployed an Internet caching device and thousands of users attempt to access
the ESPN site on Sunday evening to get the details of the Patriots game, not all those
requests need to be routed to ESPN’s servers in Seattle. Rather, one request can be

Fireclick Confidential Page xv

served from Seattle and the page cached in Boston. All other users requesting the same
page are served from the cache device in Boston, thus saving tremendous amounts of
bandwidth for the ISP, who would otherwise need to process all those cross-country
requests separately, paying for the bandwidth utilized each time.
Like Fireclick and like content distribution schemes, cache devices bring content closer
to the end users. But like content distributors, the primary reason for deploying a cache
is the bandwidth savings for the ISP. The end-user benefit is miniscule because 90+% of
the time spent waiting for the requested page occurs in the “last mile,” the connection
from the ISP to the user’s desktop. Caches do nothing to address the “last mile”
problem, which is Fireclick’s focus. Fireclick caches Web content as close to the
consumer as possible, in the browser cache.
Caching vendors typically sell a system (hardware and specialized software, sometimes
packaged as an appliance) for a one-time licensing fee and charge a moderate
percentage of that license for ongoing maintenance, much like traditional enterprise
software.
Fireclick’ first products will not compete directly with caching vendors because we are
selling to a different audience with a different value proposition. Fireclick sells to e-
commerce sites while caching vendors typically sell to ISPs or even enterprises. But
because we are all caching content from the Web, we can be considered part of the same
overall market space.

Akamai, Cisco,
Fireclick Digital Island Net Appliance Cacheflow

Target Market B-to-C sites B-to-C sites ISPs Enterprises

- Speed Web access for - Speed Web access for - Save bandwidth - Save bandwidth
Value Proposition consumers consumers - Quality of service - Quality of service
- Incremental page - Conserve host
views, traffic, revenue resources (bw/server)
for e-commerce - Flash traffic
protection

Focus – what part “Last mile” Network infrastructure Network infrastructure Enterprise
of the problem? Inside firewall

Basic Technology Click stream analysis; Distribute static Cache frequently Cache frequently
Cache at consumer’s content; cache at accessed pages at the accessed pages for
browser numerous POPs; not POP/ISP the enterprise
including ‘last mile’

Uniquely well-suited Dynamic pages; Large, static content; Frequently accessed Enterprise or
for Interactive sites; Streaming media; static content campus-wide usage
Shopping, content Content sites

Intellectual property
Online Prediction; Network optimizations; Caching software; Content refresh
Transparent client; Private server network; refresh algorithms; algorithms
Server-client Content distribution Appliances
communications algorithms

Fireclick Confidential Page xvi

 Business Model

Value Proposition
Fireclick drives e-commerce success by providing Internet server software that speeds
web access for consumers. What does this really mean?
E-commerce success: Fireclick’s software products make the user experience more
rewarding and therefore drive more traffic to destination sites. By increasing the
propensity to view more pages, absorb more ads, and purchase more products, Fireclick “Slow download times are
drives e-commerce revenue. the bane of the Web.
Internet server software: Server based, no end-user action required. Fireclick’s Many Web sites even
Blueflame™ server software is installed near the web host server and automatically
downloads a tiny 100% Java applet with no user intervention required. Users need not violate the ten-second rule,
even be aware that the site they are viewing is Fireclick enabled, except that the impelling users to give up
browsing experience is greatly enriched.
and leave.”
Speeds web access for consumers: Because user page requests are pre-loaded into the
browser cache, the user perceives download times of near zero. Pages requested are
immediately viewable. By eliminating the frustration of the “world wide wait,” more -Jakob Nielsen, Ph.D.
productive user sessions result and e-commerce sites enjoy longer sessions, more traffic,
and increased customer loyalty. Useit.com

Pricing Model
Fireclick’s proposed pricing model meets four main goals:
1. appeal to e-commerce sites on their own terms and thus be easy to do business with,
2. generate fees proportional to the value delivered and share in customer success,
3. become part of an operating budget, rather than a capital expense, and
4. generate an ongoing revenue & profit annuity for Fireclick.

In order to accommodate these goals simultaneously, Fireclick Blueflame will be priced

as a service instead of a traditional enterprise software product. Rather than a
prohibitive one-time licensing fee with a difficult-to-justify ROI, Fireclick products are
priced in terms the e-commerce site operators can easily relate to, namely Web
advertising.
Fireclick’s pricing will be a monthly fee based on site traffic. Fireclick’s price will fall
into five different bands based on the number of unique visitors per month. The bands,
and example sites that fall into this category, are as follows:

# Sites Average Annual

Unique Visitors/Month This Size Examples Fireclick Fee
automallusa, godiva, movieweb,
Fewer than 100K 3,000+ sjmercury, stockmaster, jobtrak $13,800
autobytel, movies.com, thestandard,
101 to 200K 1,500 eddiebauer, nfl.com, jobbankusa $34,200
borders, jcrew, cooking.com,
201 to 500K 950 hotjobs, newsweek, foxsports $63,000
eToys, garden.com, walmart, wired,
501K to 1 million 350 moviefone, etrade, headhunter.net $90,000
Amazon, drugstore.com, onsale,
Over 1million 250 disney, mtv, msnbc, drkoop, monster $168,000

Fireclick Confidential Page xvii

By pricing on a CPM (cost per thousand) metric based on site traffic, Fireclick shares in
customer success and generates more revenue as the site realizes the Fireclick benefits
and generates more traffic. By pricing as a monthly fee rather than one-time charge,
Fireclick generates an ongoing revenue stream while eliminating large start-up costs as “The only
a potential objection. And by pricing relative to site traffic, Fireclick is able to offer its
product/service to sites of all sizes while maintaining a fair and consistent pricing meaningful way to
model.
differentiate a site,
and reliably bring
Channels Strategy users back to it, is
Fireclick’s initial distribution channel will be through a direct sales force. By targeting
e-commerce sites with more than 200K unique visitors per month (see table above), to build a great
Fireclick marketing efforts will be able to generate high-quality leads that convert
predictably to sizable sales. [See Appendix B: Operating Plan for the sales force customer
staffing plan.]
experience.”
Beyond the first year of direct sales activity, there are multiple opportunities for alternate
channels of distribution for Fireclick products. Below are some examples of the types of
partnerships Fireclick will pursue in order to expand our distribution channels beyond ZD Internet, Inc.
the direct sales force.
White Paper One
Web Hosting: Companies like Exodus and Verio compete head-to-head every day for 1999
new e-commerce accounts. Fireclick will approach these companies with an opportunity
to differentiate themselves by offering Fireclick acceleration to their customers. By
placing multiple Fireclick Blueflame servers on-site at a web hosting facility, dozens or
hundreds of web sites could be accelerated. Hosting companies can charge a premium
for “accelerated hosting” and Fireclick can share the monthly fee, thus turning a
competitive differentiator into a revenue opportunity as well.
Web Design & Services: Many e-commerce enterprises outsource the development and
maintenance of their Web sites to service provides like Scient, eForce, or USWeb/CKS.
These Web service providers are an ideal distribution channel for Fireclick. By
‘designing-in’ the Fireclick acceleration these service providers can create a competitive
advantage for their customers and for themselves as well.
Caching: Internet caching players are continually looking for features to add to their
products, or partnership integrations to give them a competitive advantage. Companies
like Inktomi, Network Appliance, and Cacheflow make excellent potential distribution
partners (or OEMs) for Fireclick technology.
“The hallmarks of any
Content Delivery: Though a fairly new space, content delivery is gaining popularity
among e-commerce sites. Many rely on vendors like Akamai and Digital Island successful e-commerce
(Sandpiper) to replicate and distribute their static content around the world and optimize Web site are crisp
access for users. Fireclick’s technology is highly complementary and actually extends
the distribution of content from multiple POPs around the world directly to the end- response times, reliable
user’s browser. A distribution or technology-sharing partnership with an established service and consistency
content distribution company is another potential channel for Fireclick.
for the user
Networking: “Companies like Alteon WebSystems, Foundry Networks, ArrowPoint
Communications, Cisco, and others have paved the way in the market to make the Web experience.”
run smoother with new hardware and software technology,” said CNET News in
November, 1999. There is opportunity for Fireclick to approach these companies with a
proposal for integrating Fireclick technology at a very high level in the network protocol Network World
(e.g., Level 7 switch) to provide their switching and load balancing products with new November, 1999
features and competitive advantages.

Fireclick Confidential Page xviii

 Investment Opportunity

Accomplishments to Date
Fireclick has used financing proceeds to invest in three main areas:
Market Validation: Both a top-down and bottom-up evaluation show a significant
market opportunity for Fireclick products [see Section I: Market Opportunity]. We
have segmented the market and targeted the most profitable prospective customers.
Product Validation: Early customer enthusiasm shows that the product works in real-
world environments and provides the expected benefits. We have taken the product
from concept/prototype to Beta-level release. “Frustrated online
Intellectual Capital Accrual: To the original team we have added world-class
engineering and management talent. We have filed a patent for our core technology. shoppers cost e-
We have added features and functionality to the original product concept to cope with
real-world challenges and new opportunities. We have achieved the benefits of field- commerce $4.35
testing and customer/prospect feedback.
Billion annually.”
At this point we have achieved enough significant milestones to be convinced that the
technology works and is valuable, the market for it is large and growing, and we have
significant advantages in terms of time-to-market and barriers to entry.
Zona Research
Financing Required July, 1999
Fireclick requires financing at this point to reach the next stage of growth. The next
round of financing will be used for:
Development: We will finish development of the core product and prepare for general
availability of a commercially viable software release in Q1 CY00. We will continue to
evolve the product architecture and release a second-generation offering before the end
of CY00. We will build an infrastructure capable of providing world-class service &
support for all customers. And we will continue to build a high quality development
team in order to produce more intellectual capital and build higher barriers to entry for
potential competitors.
Marketing: We will formally launch the company and our core product in Q1 FY00.
Beyond the initial launch we will invest in awareness marketing programs designed to
keep Fireclick at the forefront of a fast-moving market. In addition, we will invest in
lead-generating marketing programs to support the direct sales force in achieving
corporate revenue goals.
Sales: We will build a direct sales team capable of capturing a large number of
customers and producing rapid revenue growth ($0 to $600k in the first three quarters)
while upholding our company value of “service to the customer.” In addition to meeting
revenue objectives, the sales team’s goal will be to produce predictable results,
generating many new accounts rather than a few large deals. The goal for CY00 will be
to have many happy, referenceable customers to help us win even more new business in
the future.
Detailed budgets and headcount plans are available in each of these key areas.

Fireclick Confidential Page xix

 Appendix A – Product Architecture

HTTP
HTTP
Requests
Requests

Data NON-
Internet Flow Switch HTML
Acquisition Traffic

HTTP
Responses Proxy HTTP
HTML Traffic
Responses
Origin
Service
HTTP Site
Requests
Traffic
Statistics Content HTML
Transformer Traffic

HTTP
Responses

Prediction Service Hints

Prediction Hint
Engine Database
Origin
Graph
Edits Server

Fireclick Confidential Page xx

 Appendix B – Financial Proforma

Financial Highlights (Fiscal year ends Dec 31)

FY’00E

Revenue $633,150

Operating Expenses $5,322,651

Operating Profit/Loss $(4,702,164)

Headcount at End of Year 35

Operating Plan FY 2000

Attached.

Confidential Page 21