Mineserver Update: We’re not dead yet!
Readers have been clamoring - nay demanding - a Mineserver update, so here it is. The gist of customer complaints is that they feel cheated and under-informed and we're sorry for that, but please read-on.
This is our 25th update on the Mineserver project. That's a lot of updates for people who don't do enough updates. We've detailed so far every step and misstep in the project except one, which is coming in the next paragraph. Nothing about those earlier updates has changed or is incorrect. We've learned a lot and we've done what we had to do to get to this point.
The major change that has been, to this point, unannounced, is that we ran out of money. Yes, we raised $34,000 on KickStarter which netted us $30,000 and has many people pissed-off, but we've spent just under $90,000 in all, which is as much as my poor old retirement account could stand purely for the vocational education of my children. Not a penny of this went for salaries, by the way. If it seems like too much money then you haven't started a company lately in California.
Those who criticize this project for being run unlike a Silicon Valley startup should understand that if it was such a startup we would have long ago declared bankruptcy, leaving customers with nothing. But I'm not going to do that to my children, just as I don't allow them to read your comments.
Facing a financial crisis (you can't ship products if you can't afford to pay for shipping) we were forced to fish or cut bait: did we intend to pursue this business long-term or not? If we did intend to pursue it then we'd need to raise more money. And that money wasn't going to come from a horde of KickStarter backers who were already carrying torches and pitchforks.
We had a company meeting and decided to go for broke, which means changing into a true startup. That began with hiring a real business lawyer, Herb Fockler from Wilson Sonsini Goodrich & Rosati in Palo Alto. Herb has become our guru, though if you want to sue us please go through our litigator, Claude Stern of Quinn Emanuel Urquhart & Sullivan in Redwood City. Our entertainment deals are handled by Chuck Hurewitz of Isaacman Kauffman & Painter in Los Angeles. Yes, we've lawyered-up. That's how it's done.
Herb told us to turn Mineserver LLC into Mineserver Corporation, a Delaware C-Corp like all the other Sand Hill Road darlings. That took time and money we didn't have. Then we set about raising seed money. This is where we had to be quiet, because publishing the details I am sharing here could have imperiled negotiations. You can't very easily tell 100,000 people about your screw-ups while trying to find an investor at the same time.
But that wasn't the only reason for keeping quiet. We were held up waiting for suppliers who were giving us 90 percent discounts: you can't blame them in public and expect them to take it well. How would you have handled that?
Deciding to grow the company complicates things a lot. We had to come up with a plan for mass production. One of our hardware suppliers simply wasn't capable of growing with us so we had to replace that supplier, which wasn't easy especially since it involved numbers that were increasing by 100X.
Based on what we learned from the $99 Mineserver and $199 Mineserver Pro, we had to come up with a single follow-on product to replace both that was cheaper to make yet more powerful. This will be the $99 Mineserver 2, designed primarily by Fallon, who just turned 11. The $99 Mineserver 2, which has nearly the performance of a Mineserver Pro, will be a four-core 64-bit machine running at 2.2 GHz with two gigs of DDR3 RAM and a 16-gig eMMC card. This machine, prototypes of which will soon be in testing, will be assembled overseas, not in the Man Cave.
All this is nice but what's the investor pitch and which kid gets to be CEO? I guess they are all CEO at this point because no one is better at that job than his brothers. But we've brought on a few advisors who've done the job before, notably Doug Carlston, co-founder and longtime CEO of Broderbund Software.
The investor pitch is simple: 1) we have a great product that's unique in the industry; 2) it's unique because we've accomplished something heretofore thought impossible, which is true zero-configuration networking with any home router in America or the world; 3) we accomplished this because we were too ignorant to know it was impossible; 4) we have a brilliant marketing program (two of them, actually) that will lead to rapid direct sales growth; 5) with 125 million licensed Minecraft players in the world we see a market in the next two years for approximately one percent of that installed based or 1.25 million Mineservers worth more than $100 million, and (finally); 6) Mineserver Corporation is literally the ONLY way to invest in the Minecraft ecosystem other than by buying Microsoft shares.
Which company, between those two, has the greater market cap growth potential?
And the pitch must have worked because we've found just enough investors to move on to the next level, which is first shipping our current orders (with 16-gig SD cards instead of 8-gig) then ramping-up Mineserver 2 production overseas.
Eventually the plan is to sell the company, probably to Microsoft. After all, we've accomplished what Redmond could not.
So that's the update. If you are among our KickStarter backers we're sorry for being so late, but we'll also remind you that the average price you have paid for a $99 Mineserver is $63 and our average cost to deliver them will be almost exactly $99. You get a deal but in return you, as backers, assumed some of the risk.
Finally, if Herb says we can legally do so, we're going to attach some Mineserver Corporation warrants to every late KickStarter order (twice as many for the Mineserver Pros) so you can share in our success, which we are sure is about to be realized.
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