Last weekend, Oct 21 to 23 (Friday to Sunday), I attended Startup Weekend Manila with a few officemates and friends.

Startup Weekend is an “intense 54 hour event which focuses on building a web or mobile application which could form the basis of a credible business over the course of a weekend. The weekend brings together people with different skillsets – primarily software developers, graphics designers and business people – to build applications and develop a commercial case around them.

It’s not a normal workshop where you listen to speakers and get knowledge. The main difference here is that you and your chosen group actually do hard work to get a startup business off the ground during the weekend.

The main premise goes like this; Friday night is when all attendees and the judges/mentors hear the “pitches”. Should you have a great idea, you are given 1 minute to convince the rest, present your great idea to everyone and tell them if you need developers, money, marketers or any other help. From that, the attendees will then vote for the best ideas. The top “startups” will be then announced and if you didn’t pitch, you could then find a group that you’ll join. You’re stuck for that group for the rest of the weekend.

There were 28 approved ideas for Startup Weekend Manila. Most them were very promising and had a lot of potential. My favorites included

• Twitmusic – music marketing platform for indie bands/artists for Twitter
• Tex – the old Pinoy game. Will make it a smartphone game. This one’s cool.
• HobbyMash – Social network for hobbyists grouped by collection
• MyShoephoria – Shoe collection and management site
• Emergency Button – One touch mobile app to contact emergency services for you

I ended up joining Emergency Button which I believed had a great goal: TO SAVE LIVES. The premise is simple; If you’re having a heart-attack (or any other emergency, God forbid) all you need to do is press one button which would immediately contact the emergency services and they’ll know your exact location via GPS. Help will be on its way in an instant.

I did their marketing plan and good friend Keith Morales also helped with the technical and feasibility. We threw in some other ideas, crunched numbers, figured out start up costs, ROI and other business needs. Then, we prepared the final presentation on Sunday. And I’m glad to tell you guys that we won! Our team made it to the Top 6. I hope that my newfound friends from Emergency Button do find an investor and realize their dreams. Wishing them the best of luck!

I also did some “rounds” and helped a couple of groups. It was great meeting Ann Jacobe of MyShoephoria. I hope that she can consider some of my feedback and ideas. I’m pretty sure that her business will succeed because I saw that she definitely LOVED what she was doing. Success will come naturally if you love what you’re doing.

All in all, the Startup Weekend is a great experience. If you need to learn a few skills, get ideas, ask questions, find a mentor, land a job, or find an angel investor, then Startup Weekend is a perfect way to do all that and more.

I’m glad that I was part of this event and, in the near future, if I see a successful app or site which came from Startup Weekend Manila, I’ll be proud to tell everyone that I was part of that.

Thanks and props to the wonderful organizers and sponsors (Hi again, Minette Navarrete, it was so nice to see you) . Great work!

And congrats to all the winners. May you realize your dreams the soonest. Wishing you the best of luck in your new app, site or platform.

Cheers!

More photos…

A good friend of mine recently started here new business and asked me to post this here.

If ever you’re planning cool parties, debuts, or events for your company or group, do consider Hot Lights.

More details, after the jump…

Hot Lights Sky Lanterns

Here’s the official “PR” from Hot Lights:

The effects of our hotties(sky Lanterns) are better than fireworks because your guests have full interaction with your “gimmick”. Unlike fireworks where guest just watch the effect, sky lanterns give guests full interaction by holding, lighting, releasing then watching the lanterns go up! This makes them feel like they are really a part of the event.

Our “Hotties” works like a hot air balloons. Once the lantern is lit, the warm air will cause it to fly up into the sky. The lantern itself is made from flame retardant materials that are completely bio-degradable.

Again, here’s their Facebook Page if you want to check out more of their photos, videos and how to contact them.

Cheers!

I often get a lot of hits/visits on the original post I did almost 2 years ago. From there, I’ve responded to a lot of emails and comments (225 as of last count) and hopefully, helped would-be entrepreneurs to start out. Sana, by this time, kumikita na ang mga cafe nyo.

After that original post, I augmented it with a follow-up post; Internet Cafe Business where I helped a reader on her question of whether to buy brand new PCs or buy an already furbished shop.

In this installment, I’ll tackle some of the most-often asked questions; Capital: How much do you need to start out? and Return on Investment (ROI)

Start An Internet Cafe Business in the Philippines (Part 2)

Click here for part 1

A) CAPITAL? How much is “enough”?

The bulk of your capital will go to 2 things; first are the computers. Syempre, an Internet Cafe is useless without them, diba? The second would be deposits and advances for rent or lease. The first thing to do is decide on the SCALE of your operations. Based on feedback, reports, my own feasibility studies, and experience, it’s best to start with at least 20 or more PC units. Starting with less will mean less income and you won’t be able to recoup or head to that sweet spot – the R.O.I or Return on Investment. Why? Because the number of seats will be finite. Meaning, you will never be able to cope up with demand whenever you have a lot of “waiting” customers.

So, how much capital is “enough”? Let’s just base it on the current market price of a PC. According to this online PC store, a gaming rig will cost you around PHP 37,000. This already includes the LCD monitor (it’s a complete set). This means that for 20, you will need to invest P740,000 for the units alone.

A lot of readers and would-be business owners ask me online if cutting back on costs on PCs is a good idea… meaning, that they try to look for the cheapest PC set and buy that. My advise: No, no, no!!! Why? Because your primary investment are the computers. Cutting down on costs will only be more expensive in the long run. Take note that games and applications will be more powerful in mere months, this means that you have to constantly upgrade your PC to stay competitive (because you don’t want your competitors to have the better machines). This translates to more costs rather than investing it at the start.

Now, back to the example…

Let’s do a simple computation on capital based on the following assumptions

• Number of PCs: 20
• Monthly Rental or lease for shop: P20,000.00
• Operation Hours” 9am to 12 midnight (15 hours daily)
• Number of employees: 2
• Connection: DSL 3-4 MBPS (costs roughly P4,000 per month)
• Rental Rate: P20 / hour

As you can see, the capital needed is nearly a million bucks. That’s ok. I’ll help you plan your work and work your plan on how to get back that investment.

Let’s go to the next topic, shall we?

B) RETURN ON INVESTMENT

In order to figure out how to get your ROI (the period it takes na bawi na puhunan mo), you have to think in terms of occupancy. This is the single, measurable metric you have in the I-Cafe business. Occupancy will come in a percentage. Simply put, how much will your cafe gross in a day if the computers were rented 100% during your day’s operation hours.

Using that thought, here’s the answer;

20 PCs X 20 Pesos per hour x 15 hours in a day = P6,000

Now we know that you will gross 6K a day assuming na walang tatayo and occupied ka whole day. This translates to around P180,000 in a month gross income.

Now that we know this value, let’s set some goals. Let’s target around 40% occupancy on the first half of the year and then increase that to around 50% to 60% before the end of the first year. Btw, 50% occupancy rate for a cafe is actually good enough.

Once we have a goal, we have to know what tabs to pick up on a regular basis to know our Net Revenue (Gross income less Expenses). Let’s make a list with some projections. This will also allow us to see the B.E.V (or Break Even Value – how much we need to earn daily/monthly to pay for the expenses.) In short, ito ung “bawi-bawi lang” mode.

The electric bill is no joke. Trust me.

At any rate, let’s go back to the tutorial…

We already know that we will spend around 75k a month. With this value, let’s compute the BEV first.

P74,500 / 30 days = P2,483.33 per day or around 124 hours of rental time. This is roughly 6.21 hours rental (124 divided by P20 per hour) per PC, an occupancy rate of 41%. Hey! That’s almost exactly what we projected on the first 6 months.

Now, we know that we have to gross around P2.5k a day to stay afloat. Anything in excess of that is profit.

That’s a good start. Let’s now go into computing HOW SOON we can recoup the initial investment of almost P1M.

I’ve made a simple study based on an average of 60% occupancy rate (monthly) for the entire year;

You will get back your investment in around 2 years and 3 months. Not bad for a 1M investment, right?

The key here is to increase your occupancy rate. You could do this via several things

• Marketing
• Value Added Services – LU top up cards selling, food, etc
• Better service than your competitors – faster PC and connection, kind and knowledgeable staff, etc
• Expansion (if you can loan money from a bank, this is a good idea)

…but that’s another article.

I hope you guys learned a thing or two with this topic. Don’t hesitate to comment below or contact me should you have any questions.

I’d also appreciate it if you can share this to your friends or relatives who would like to invest in an Internet Cafe by emailing them the link or posting it in your Facebook, Friendster, Twitter etc.

All the knowledge here is free! All I ask is for you to be my fan on Facebook or follow me on Plurk, Twitter

Lastly, if this post helped you, show some love by subscribing to my RSS by clicking the link below so you’ll be instantly updated when a similar post comes.

Thanks and best of luck in your Internet Cafe Business!

Mon Macutay aka GM Tristan (http://gmtristan.com)

(c) October 2009

In my post, How To Start Your Own Internet Cafe Business, I get a lot of questions. I’m happy to help and answer whenever I can. Consider it as a free consultancy =)

Anyways, I recently got a tough question from Aileen Suerte. She asks if it’s better to buy an already-built cafe rather than starting on her own.

Although I already sent her some notes (c/o the comments section), I’m gonna republish her question here and have more detailed analysis. Hopefully, Aileen (and many others like her) can make a sound decision.

On May 2, 2009 Aileen wrote:

halu… we’re planning to start an internet cafe business. we already made a budget plan of establishing a new one, but starting only with 10 computers. now, we learned that there’s this existing internet cafe business for sale. the business is in a very good location. it existed for more than 4 years already. we observed that the business is doing good. the reason for the sale is the owner is leaving. it had 23 computers in good condition. which do you think is practical? establishing a new one or buying an existing one? they cost almost the same – 300-350K. thank you in advance for the advice.

GM Tristan’s Answer

Yup. A tough one alright. Here are some notes to help you, Aileen.

1. Location – this is a very important Key Factor for Success (of in the marketing world, KFS). Location can make or break your business. If the existing cafe’s location is sound, you’ve got one less problem to worry about. Things to consider; is it near a school? Is foot traffic heavy? Do an ocular yourself. Since I can’t see where it is, you’ll be the best judge of that. I guess you have to ask yourself; which location is better? Yours or the existing cafe?
2. Computers - Now, since the cafe is already 4 years, chances are, the PCs there will be old. Would you prefer old PCs over the new ones that you’ll buy? Will the units be adequate enough to run the latest games and applications. What about the cost of acquisition? Factor in the depreciation cost too. You should know what the FMV (Fair Market Value) of the units should you, in turn, want to resell them. Now, if you’re going to buy 10 brand new ones, that’s good. But this is a perfect segue into the next topic.
3. Operating Cost – Aileen, let’s do some basic “number crunching” to see if it will be feasible. Okay… say you operate 12 hours a day. 10am to 10pm. And let’s target 50% occupancy rate… that means that your PCs are rented by customers half of the time. Let’s also assume that you charge P20/hour. With those info, let’s go compute
   • YOUR 10 PCs: P20 x 5 hours per day = P100 per PC per day. P100 x 10 PCs = P1,000 per day (or P30,000 monthly)
   • THE EXISTING CAFE of 23 PCs: P20 x 5 hours per day = P100 per PC/day/ P100 x 23 PCs = P2,300/day (or P69,000 monthly). That’s more than 100% increase over the 10 computers!
   • Once you have the gross, subtract the following regular expenses
     • Rental
     • Electricity (more for the 23 PCs)
     • DSL fee
     • Taxes
     • Salary (if you have a “bantay”)
     • Others
   • You should then be able to see which set-up is more profitable
4. Customers - buying the existing cafe will also mean buying the user-base. If the cafe already has a load of “suki” customers, then it’s akin to discovering a gold vein. Ask the owner or observe for a few days.

In the end, it all boils down to making a sound business decision. You’re the one that’s going to do it, Aileen. Whatever you choose, it should be able to cover the costs and I hope that you have an expansion plan.

It seems that going after the existing one looks more promising since it has more PCs. The simple logic here being, more PCs = more customers. If you can get a loan and upgrade the PCs (even if it’s just a couple every month), then that will be a great goal.

Maybe the other readers will have some ideas to help you too. Best of luck in your business, Aileen!

Glad to be of service.

Often, we just play it. Sometimes, we pay for it. But do we really understand the business of Massively Multi-player Role Playing Games (or MMORPGS)?

The following feature article from MMOSITE.COM will show you the types of business models and how online games make money. Sadly, the market is so competitive these days that most online games even fail to make their Open Betas.

Read on…

To start, the most popular genre of MMORPGs is fantasy. “Fantasy is typically the first successful genre to be commercialised because it tends to attract early-adopter gamers first. Subsequent genres such as sports, children, family, adventure, action genres find their place in the market as new entrants carve out niches and segment the market for second and third tier adopters.” says the mmosite article.

There are several business models for MMOs: retail, subscription, virtual goods sale (or Item Mall), and hybrid. Let’s examine each below:

1. Retail

This model was developed in the time between the cross-over from dial-up to broadband. It made sense to distribute on CD or DVD because there was no other way to distribute the required large amounts of data files to enough users. Early generation MMOs such as Everquest and Ultima Online had to be concerned over the download speeds that most users had and tailor their technology accordingly. Those restrictions still exist today (World of Warcraft updates come on multiple DVDs and most users still don’t have the means to download so many gigabytes of data in one sitting) but are for most practical concerns considered irrelevant in the modern market.

Here, in our country, we still cannot afford to go on a “purely download” model for updates, launches or even patches. We have to do CDs or DVDs. For businesses here, that adds up to the cost.

The best example of a retail MMO game that still exists today is Guild Wars.

2. Subscription

Subscription games are more popular in the West than here in the East. Perhaps this is due to cultural choice or even economic differences. Let’s face it, there are more credit card owners in the US and Europe than in such countries as ours.

Subscription based games typically let users try the game for a few days, weeks or even a month. After that, you are charged a monthly service fee (MSF) which ranges from $5 to $20 a month.

Hands down, the most popular (and profitable) subscription-based game is World of Warcraft. If you recall, during the pioneer days of the online game industry here in the Philippines, Ragnarok, the first MMORPG here, was also on a pure subscription basis.

3. Virtual Goods Selling

Also called “Microtransactions” or “F2P” or “Item Mall-based” games. The carrot at the end of the stick for these types of games is that they’re FREE.

This mechanism was popularised in the East (i.e. China and Korea). In a virtual-goods based game, users are typically allowed to play the game as long as they want, but have the option of buying some form of property within the game. A virtual good might be something of tangible benefit to a player’s character or a visual customisation. Virtual good items are typical of small monetary (01p – 5.00) value but enhance the player’s experience, accessibility or individuality within the game significantly.

A lot of the games here in the Philippines (and in the company that I work for) are F2P games. FlyFF was the first F2P game to be launched here.

4. Hybrid

In the Philippines, Ragnarok and RF Online are hybrid business models. What started out as subscription-based games eventually open their own Item Malls.

Some MMOs use a hybrid approach of subscription and virtual goods, either offering different versions of a game for subscribers or virtual goods buyers, or combining the two. This trend toward sophistication throughout the methods available to monetise customers of MMOs is ongoing, but the hazard of a hybrid approach is that it can over-complicate the value proposition for the customer. 

===

Whatever the business model, the product has to be superior. With the growing number of games (and game companies) being offered to the public, a lot of games tend to be rushed when it comes to development. Sadly, almost every “new” game that comes out is just another wolf-in-sheep’s-clothing, a clone or copy of some popular and/or succesful game.

The industy players have to rethink their strategies to survive not just the tough marketplace but also the global crisis.

A game, in order for it to appeal to a now-sophisticated online-game user base, has to be unique, has to prioritize community building and (for me) make user-generated content available to the community.

I think we’re heading there…

>>>

With excerpts from MMOSITE

Am currently reading a book, Top Performance by one of my favorite authors, Zig Ziglar.

In it, he gives good advice on how to manage your people. He says that you have to find the good in others. This is one crucial thing managers seldom do. When you make an effort to find the best in others, it inspires them to work harder. True leadership is actually making them want to do their job since they believe in you, as their leader AND they believe that they can do better. If you don’t have a shared vision, it will be difficult to end up on the same “finish line”, so to speak.

Do you manage people? Or are you part of ANY team? Here’s my own take on how to find the best in others.

1. Convert the naysayers – If you think that one of your team-mates feels that he doesn’t like his job or his role, take him aside. Talk to him and ask him to list at least 5 things he likes about his job. I’m sure he (and you) will be surprised to find out that this list can go on and on. Hey, if it’s the salary or the money, that’s one. You can build this list together and try to convert him from a non-believer to a believer.
2. There’s always something that he does better – So true. Even if this guy is the last to understand your business plan, and he can’t do reports on time or is a little bit “slow”. There’s ALWAYS something that he does better than the rest. Perhaps, he’s good in predicting trends or knows the best restaurants in town. If you have a VIP guest, he’ll soon be a value to your team — he can impress your guests with his knowledge and recommendations. Finding something that a person does better is always a start. Look for this everyday.
3. Compliment them in public, scold in private – A simple business rule that I live by. Never ever, ever, shame them in front of their peers. This lowers their self-esteem. But a little pat on the back for a job well done, works miracles. I always remind myself to at least do this once a day. Trust me, it will mean a lot to your team.
4. Friends first, boss second – Another personal motto. I try to build relationships with my people by being friends with them first. Why? Simply because they’ll be more comfortable and honest with you when you ask for feedback or opinions. As an added bonus – you’ll have MORE friends! Respect will still be there. I don’t try to build respect via fear… some people do, but it simply isn’t my style. If your team sees this, chances are they will treat their own people the same way.

The same simple rules can also be applied to gaming or your guilds. Becoming a leader is no simple chore. Perhaps one of the most vivid scenes etched in my memory is the scene in a movie when Sean Connery, captain of a Russian U-boat, delivered a speech in front of his men before casting ashore. He said

“Without me, you are nothing”

“But without you, I am nothing”

Now that’s teamwork!

Strength and Honor,

GM T

With the growth of the online gaming industry and the influence of the internet in our daily lives, a lot of people are in need to be “connected”. Unfortunately, not everyone here in the Philippines has access to good hardware and a decent connection. But all of that is changing now, especially with the frenetic rise of Internet Cafes in our country.

For the local MMORPG industry, roughly 80% of our business comes from the cafes. So it’s important to have a good relationship with our “partners”.

Meanwhile, I’m certain that a lot of individuals or friends (mostly thru gaming) are considering opening up their own shop. Mind you, it’s no joke. A business is always serious.

I thought I’d share with you some practical tips on how to start (and maintain) your own Internet Cafe.

One more click, faps…

HOW TO START YOUR OWN INTERNET CAFE BUSINESS

• Budget – An internet cafe with around 20 seats will push you back P700 to P1M in capital. Of course, the more seats, the more money you will need. If you don’t have the cash, you can find partners to pool in money. I believe that the optimum number of partners for this project will be 4. Expect an ROI (Return of Investment) of 1 to 2 years. Also, I would suggest against forming a business with your close friends. The chances of ruining your friendship is high. Just note that.
• Location – Aside from the moolah, location is one of the KEY FACTORS FOR SUCCESS. Keywords to look for when scouting; near a school, heavy foot traffic, not too many competitors in the area. You should try to look for a place that’s easy to spot (from the customers perspective, ok?). A good monthly rental is P15,000 to P25,000 a month, more than that and you’ll have to work double time for the return.
• Hardware – Try to budget P25,000 to P35,000 per PC. Remember, I always tell potential entrepreneurs to “invest for the future”. Do not scrimp out on memory, processing power or video cards. The logic here is that a) okay, so you save a few bucks but your computers will be trash in less than a year and b) you should have a faster PC than your competitors – it’s your “edge”. And hey, if you can get LCD monitors for all computers, do so! The cost savings on electricity will more than pay for itself.
• Connection – again, a faster and decent connection in your cafe will be a key selling point. Don’t worry too much about marketing, if you have the best computers and the fastest connection in your area, sheer WORD-OF-MOUTH will drive customers through YOUR door. It’s a fact. So try to get the best kbps package that you can afford. Also, if you have the money, you can always get another as back-up in case your primary connection goes down.
• Set-Up – if you’re a techie, you can probably do the wiring and the setup of the routers and switches yourself. But if you can’t, there are professionals who can do it for you. If you can’t find one in your province or city, grab a copy of Buy&Sell or discreetly ask the tech guy at the PC shop where you bought your hardware if he can do a little moonlighting for your new shop.
• Software – if you plan to start small, you don’t have to pay to install MMORPGs. The installers are free. Just tell me if you need it delivered to your new shop and I’ll get the Sales boys on it right away. For office applications, openoffice is free and mimics Micro$oft. For a good, free billing solution, try handycafe
• Other services – Food is always a good extra source of income. Check out my post on Gamer Food 101 and you’ll see what gamers need and want. Printing, Fax and Xerox (photocopying) are other good sources of supplementary revenue.
• Staff – If you’ve formed a partnership, take turns with your partners manning the shop. Just make a schedule. If you’re going to hire someone, hire someone you can trust. You have to set “check and balance” systems (such as an advance billing system) to avoid fraud and theft. It may be tempting to hire an avid gamer to staff your shop but if he has friends and he let’s them play for free… you know what that will bring you. Speaking of free play, tell your all your friends that you can’t allow them to play for free. It IS a business after all. But tell them you can give them a discount. If they really are your friends, they’ll understand.

So there you have it…

Best of luck in your business. Questions? Type ‘em below.

Strength and Honor,

GM T

MY OTHER ARTICLES ON INTERNET CAFE BUSINESS

• Buying old PCS vs new ones (if you’re starting out)
• How Much Capital Do I Need? And Computing Break Even

Want more similar articles? You can be my fan on Facebook or subscribe to my RSS. Thanks!

Now that I think about it. I may be too old for this industry. And that’s not just me, so will be everyone else working for online game companies.

Here’s what’s real. A 12-year old kid has founded a Silicon Valley based company called playspan. Playspan is the “game industry’s first publisher-sponsored™ in-game commerce™ network. PlaySpan’s patent-pending in-game search, commerce and micropayment technologies enable game publishers and developers to generate new revenues, acquire new users and extend the loyalty of existing users.”

According to their official website;

“PlaySpan is founded by Arjun Mehta, a 5th grader, passionate about gaming and software programming that can make game playing experience exciting and more importantly rewarding!

PlaySpan started in Arjun’s garage in Silicon Valley in 2006 and was incorporated with Arjun’s earnings from selling online game items won from quests he fought while attending 5th grade at Challenger School in San Jose. “

Playspan has reportedly received a total of $6.5M worth of funding from partners and has recently signed up with 7 MMOG publishers with a combined userbase of 10Million users. They have not revealed their partners or the games that they are supporting as of this writing.

Wow! Talk about big business and big bucks.

Karl Mehta, Playspan co-founder and CEO said in an interview at Gamasutra; “[This investment] will help create a new class of revenue opportunities for publishers and will allow gamers to enjoy their game experience with commerce.We are extremely fortunate to have a complimentary group of global investors that bring solid experience in the gaming, internet and financial service industries.”

And now, time for me to go out and try to spot another 12-year old to make the MMORPG industry in the Philippines soar.

Any recommendations?

Cheers,

GM T