The XC business model seeks to build trust between technology developers, end-users, and the business trades in between. Trust is built by working in public, by sharing information, encouraging free collaboration, and foregoing the binds and leverage of intellectual property ownership. This trust is symbolized in a brand name, which is the joint currency of XC and its affiliated business trades (affiliates and franchises).
The only thing XC sells is service. These services are primarily sold to the business trades, who are in turn encouraged to invest in XC. XC can be viewed as a cooperative of the business trades, and much of what XC does is to perform R&D, service methods, business plans, and marketing, which can be done more efficiently and consistently by a single central organization than by the many small, local businesses which make up the business trades.
This equilibrium between XC and its franchises forms a community, which seeks to pool its resources to achieve the most cost-effective, most broadly accessible, quality solutions. This and the openness and trust that our solutions are based on provides end-users with exceptional value. Appreciation of this value in turn leads end-users to join into our community, which further adds to our strength and value.
The residential networking and automation industries are in a strange state today: while the potential value is readily apparent, actual implementations are mired in immature, incompatible technologies and greedy business plans.
Residential networking and automation can be extraordinarily confusing to end-users. Systems are expensive, inflexible, and intimidating. Finding a vendor one can trust is difficult, and researching the facts needed to make a sound decision is arduous (if indeed even possible).
XC promises to cut through all of this, and deliver to end-users the authoritative information and education that they need. XC will test and integrate systems, and publish full, candid, independent reports (like Consumer Reports, but on a public web site). XC will collect and publish consumer reports (praise as well as bugs) from the field.
XC provides builders with one-stop shopping for adding networking and automation systems. XC provides builders with access to XC-certified subcontractors, and (directly or through affiliates) important services, including systems design, estimating, price comparison, kid building, extended service plans, and warranty.
Moreover, by educating and marketing to end-users and realtors, XC provides builders with better informed customers (which for many builders would be miracle enough). Networking and automation are potentially strong selling points, especially for new houses. XC helps translate this potential into actuality, at the least cost possible.
XC provides affiliated installers with expert information, training, and certification. XC routes business to the installers, and helps them build and promote their business. XC makes it easier for independent installers to offer warranty on their work.
XC provides realtors with timely education on residential networking and automation, including tips on how to explain and sell technology to home buyers.
XC provides technology developers a gateway to the market. Small business, in particular, can benefit immensely from favorable reviews and the credibility that XC can lend new products. XC will in turn work with technology developers to articulate customer demand and to focus efforts on real needs.
XC's reliance on open source software is also a boon to most technology providers (excepting, of course, a handful of proprietary software goliaths).
We plan to put a Linux-powered server and network into every home. While initially we expect this to have little effect on the end-user's computer choices, it will represent a significant market gain for Linux, and in the long run will attract more and more end-users to Linux. We expect this to be a huge strategic advance.
The industry profile and business model suggests that XC will be a high growth, low margin, stable, low risk enterprise. Low margins are of little interest to most venture capital firms, and IPO prospects are currently depressed, so we doubt that capital will be forthcoming from venture capital sources. The most likely source of capital will be from private (and possibly corporate) investors who have other interests that are synergetic with XC: franchises, affiliates, and possibly some technology vendors.
It should be possible to bootstrap a viable XC with very little capital investment. The advantage of raising capital is that it allows us to move faster, on more fronts. Since the industry is growing (or at least threatening to grow) very quickly, this may prove to be significant. How much capital is needed on what schedule is to be determined.
We expect that the initial working capital for XC should come from the CEO and management team and private investors associated with them. There should in any case be a substantial employee stake in XC, possibly including grants or options to open source collaborators. Subsequent capital investment should primarily come from franchises and affiliates.
At some future point we expect to offer an IPO. This is not an urgent requirement of the business plan.