Here are some initial comments and information drawn from the Blipfuture Business Plan and Articles of Association which I have only had sight of in the last few hours. To see these important documents go to the https://www.blipfuture.com site and register as a potential investor. It is free and there is no commitment of any sort.
In October 2015 the current owners of the Polaroid Blipfoto social media site contacted members of the community with a view to offering to sell the company into community ownership.
Since that time and through a consultation with a ‘large number’ of Blipfoto users a small core team of four was formed to take forward negotiations with the owners of the Polaroid Blipfoto site, establish a Community Interest Company, Blipfuture CIC, and to run the company for the first year.
The Business Plan 4.4.2 states, The team was brought together by the current owners through Joe Tree (founder of Blipfoto).’ The team are Annie Andrews, Graham Colling, Bob Hamilton and Ian Stevenson.
It is proposed that the CIC will be 100% owned by its voting shareholders and that other non-voting shares will be used in part-payment for the assets of Blipfoto.
It is unclear if all current Blipfoto members will be able to hold shares given different national jurisdictions on shareholding. Currently shares will only be available to citizens of the European Union, the European Economic Area and Switzerland.
(Blipfoto has considerable membership in the USA, New Zealand, Australia and South Africa amongst other locations outside these organisations.) Donations are possible from any country but obviously this does not confer voting share ownership.
Joe Tree and Graham Maclachlan, the original founders of Blipfoto Ltd are supporting this initiative and helping the Blipfuture team during the transition.
The controversial branding link-up with Polaroid will end.
Financial sustainability will be via subscriptions.
Blipfoto is currently owned by private investors, Jeff Hecktman and Bobby Sager. The Blipfuture Business Plan 3.3 states,
‘They [the current owners] have been very flexible in offering to take payment in a combination of cash, non-voting shares in the new company and long term payments which are only made when and if the company generates a surplus’.
It may also be possible for commercial partners who have worked with Blipfoto to invest in Blipfuture so long as this does not damage either the values of Blipfoto or the concept of community ownership.
The company will be run by staff – currently the Business Plan names only a ‘co-ordinator’ - and managed by a Board of Directors. Volunteers will be encouraged to support the website operations and maintenance and develop community activities. Shareholders (one vote per shareholder not per share) will own and control the company. The broader Blipfuture community of members will be consulted on significant decisions.
It's important to emphasis that a Community Interest Company has to do what it says on the tin. It can’t just pay lip service to community members that are not also shareholders.
Indeed its an annual report a CIC has to justify to the CIC Regulator it is consuling and serving it community.
Shareholders will exercise control through resolutions at general meetings and via written resolutions and will appoint and remove directors.
Of particular interest and importance is the fact that there will be one vote per shareholder rather than one vote per voting share. That is, no matter how many voting shares an individual holds they will only have one vote. The Business Plan 4.2 states that this is so that, ‘everyone who invested in the company has an equal say.’
This is correct in as much investors are those that buy shares but it rather neglects the position of donations from members who cannot hold shares because they do not live in the EU, EEA or Switzerland.
The company aims to raise at least £180,000 through crowdfunding using the company InShare to do this.
In Year 1 of operation the company projects sales revenue of £57,000. This jumps to £110,000 in Year 2 and then grows moderately to £131,000 in Year 5. Gross Profits are projected at 79% for Year 1 rising to 89/90% in subsequent years.
As a CIC neither gross nor net profits will be distributed and will be ploughed back into the company. In exceptional circumstances a dividend could be paid on shares but this is capped by the CIC regulator at 35% of profits.
Under CIC structures Directors can be remunerated/paid (unlike Charitable organisations) but no mention is made payments to directors in the Business Plan and it must be assumed that they are giving their time voluntarily.
TheArticles of Association (25) state in what I assume is a standard clause that Directors are entitled, subject to the Articles and in particular Article 3, ‘to such remuneration as the Directors determine.’
Again, no heading is shown for Director’s remuneration in the Business Plan and it must be assumed that the Directors will not be determining remuneration for themselves.
Continued community ownership of the company is guaranteed both by the CIC structure and CIC Regulator and by the ‘objects’ of the company as set out in the Articles of Association. These include an object which, ‘which state[s that Blipfuture] is to be run on a not-for-profit basis for the benefit of the Blipfoto community.’ Theoretically the objects could be changed by a shareholder vote but this change would need to be approved by the CIC Regulator.
There is a very useful section on risks. Raising the initial £180,000 for the purchase of the Blipfoto assets is considered to be a medium risk with a low impact on investors (if the crowdfunding fails investors are not debited their committed payment) and a high impact on the Blipfoto community in that the site is likely to be closed down.
The detailed contract to purchase Blipfoto has not been finalized but failure to complete is considered a low risk – again with a high impact in that closure could be likely.
Low membership take-up – in terms of paying members – could be an issue. It was low membership growth (paying and non) that caused investors to cancel further investment and sink Blipfoto Ltd in March of this year. This is considered to be a low risk with a high impact.
Unfortunately, if understandably (Blipfuture may not have access yet to commercially sensitive Blipfoto data) they are no figures for current or future membership or subscription charges. To raise £400,000 from say a membership of 5,000 would require an £80 investment or donation on average.
On the other hand, the crowdfunding campaign is not aimed at investors expecting a financial return but rather at community members who want to save and sustain their community. This does require a leap of faith but there is protection, as I understand it, in as much if the crowdfunding does not reach its target no money will be taken from investors.
There is a brief survey of competitors with Project 365 at the top. And a graphic showing that Blipfoto occupiers a unique position in the photosharing world in that it is contrained (one photo a day) and based on photo saving rather than photosharing. The lack of a key or explanation does not make this graphic easy to understand and I am unclear if Project 365 is shown on it.
The potential closeness of Project 365 to Blipfoto/Blipfuture is a strategic issue that may need further consideration.
The Business Plan does not state where Blipfoto’s management and day-to-day activities will be located but I assume it will be in Edinburgh. This does have some bearing on volunteering activities but much of this will also be conducted at a virtual level.
Location could also be a consideration for General Meetings at which shareholders vote by a show of hands. It seems proxies (Articles 56 and 57) could be used but votes will be on the basis of one vote per attendee (ie a proxy could not represent say 20 votes from Finland with the right to vote 20 times (see Articles 53). Written resolutions can be voted on via a postal ballot (Articles 59).
Polls on a resolution may also be called (Articles 54) but these do not appear to be postal polls but rather ones conducted before or at a General Meeting.
Minutes (Articles 62) are to be kept but there is no stipulation to send copies of them to shareholders.
There are two types of shares – Ordinary and A Ordinary. Only Ordinary shares have a voting right. Both are priced at £10. Votes are limited to one per shareholder present (or by proxy) on a show of hands at a General Meeting.
There is an issue that will need to be dealt with concerning user representation. Within the Articles of Association the only users who have representation are those holding an Ordinary Share or shares who can either attend a meeting or arrange for a proxy to attend a meeting (a fairly complex procedure). This is different for written resolutions that can be dealt with through a postal ballot (although this clearly has major administrative costs attached to it).
The Blipfuture community (if anything like the Blipfoto one) could be scattered geographically across seven continents and 150 countries. Members residing outside the EU, EEA and Switzerland cannot hold shares. And those who do hold shares would normally be expected to represent themselves physically at General Meetings or arrange for a proxy to attend.
There is a danger here that a significant part of the community is prohibited from owning voting shares and those that can own them experience considerable difficulty in attending General Meetings.
Given these difficulties, every effort must be taken to stop Blipfuture becoming or becoming seen to be a community that by necessity needs to situated near the seat of the company which is presumably Edinburgh.
For background on the Blipfoto story see blog entry below this one and seven more posts here.
Write a comment
Mo Claydon (Friday, 04 December 2015 17:01)
Many thanks for that excellent synopsis......I'd already pledged (it was a gut-reaction;-)) but it's good to see I didn't make a decision I might have regretted!
Sarah Kirk (Friday, 04 December 2015 17:13)
Thank you for this. I have invested.
veronica (Friday, 04 December 2015 17:49)
Thanks for this Fergus. It's much more useful than the announcement from BlipCentral, which makes it sound like a total scam. Wish I'd seen this forst!
Nigel (Friday, 04 December 2015 18:28)
Many thanks for doing the legwork and posting this Fergus
Lorna (Friday, 04 December 2015 18:46)
Having already been defrauded of the cost of a lifetime membership and a book, when hindsight has made it clear that Mr. Tree must already have been fully aware that he was going to sell out when he sold this rip-off "offer" to his members, there is no way on this earth I am going to get conned by anything he is involved with again. Once bitten.
Beerdadtwy (Friday, 04 December 2015 18:59)
Very useful, Fergus. I don't know whether I want to 'invest' or not, your analysis, at least, tells me that it isn't a scam, although it is still probably money down the river? I dearly want to keep blip going, just not sure that this is the way. Can anyone tell me/us where the 'sales revenue' comes from? What are they selling??
kelvyn james (Friday, 04 December 2015 20:35)
Hi Fergus; interesting blog. I do a fair bit of consultancy & the reviewing of documents & I'd offer the following; on several occassions you've (in the absence of other info) made assumptions; being (I can tell) a nice guyyouve assumed into the positive, however really I think you've a duty to inform the reader of the potential consequences.
As a business plan I think there are several factors missing; revenue stream is listed as subscription, fine - but knowing the current total members, the % that have previously paid (indicative of buy in) and a projected cost would make this much more readily saleable.
£180k as a but in for a tech firm is potentially very reasonable - however it also buys you a lot of new start capability and marketing; it would be good to see that the team consider a plan B should they fall short.
CIC' s are just about my favourite thing though - so I'll be pledging.
SHEILA MARSHALL (Friday, 04 December 2015 20:52)
I am sheilaM of The phoenix rises journal with over 2700 entries on blipfoto.
Initially I became a founder member when initially funds were needed. I then became a life member when the opportunity arose.
Blippers have choices as I see it
1. Do nothing = the end of blip
2. Invest as much as we can = a return to a community that we all signed up to.
We have had it good, with the vast majority of blippers being non paying. I remember being flabbergasted when I started and didn't have to pay.
I, like most blippers were devastated when the old blip disappeared and "Polaroid" took over. The conversation was gone, the community held on by the skin of their teeth and no small measure of bloody mindedness.
It is sad that some great blippers have been so badly affected that they feel so negative. I follow my niece in New Zealand, my brother's globetrotting highlights and my god daughter's family as they grow and give me much joy watching them develop in Aberdeen. How could I do that without blip? I hope they take time to consider and re evaluate their views.
I agree the initial read from Blipcentre today was not warm and open, but thank goodness for Fergus's post see here, http://www.fergusmurraysculpture.com/2015/12/04/blipfuture-cic-starting-community-ownership/
I for one am going to invest even though I understand that the business case may not be iron-clad, but I would be very upset if we loose this valuable asset and community. I can back up, but I can't gain friendship, and enjoy others art of photography from a backup drive.
Here's hoping most blippers, (who are pretty darned special folk,) think like myself.
As aye
SheilaM.
Richard Le Guilcher (Friday, 04 December 2015 20:58)
Thank you! We really want to keep blip going.
Pledged.
Kaybee (Friday, 04 December 2015 21:11)
Thank you for this - it certainly gives a lot more information than has come from BlipCentral ...... which is rather worrying.
Surely they would want to get everything laid out clearly to make it much more likely that the venture succeed.
There are still some - well, quite a few, concerns for me including the assumption aspect when it comes to payment of Directors. It looks to me that they can set their own wages - never a good situation.
I would love for Blip to continue (I have over 8 years of my life and memories tied up in it) but at the moment I think they are holding their cards too close to their chests. If they want the Community to fund and be involved they really need to be much more up front and open.
Alison Tuch (Saturday, 05 December 2015 00:33)
I blip as fairweathergirl and will register to invest without any hesitation. What I don't understand is why I never had to subscribe/pay in the first place? As a business model moving forward, would it not make sense to allow say a one month's free trial, but then ask blippers to pay a subscription/membership fee?
Paula Davies (Saturday, 05 December 2015 09:12)
Thank you for this synopsis which helped explain things in terms that I could understand. I will be investing.
Peter Harris (Saturday, 05 December 2015 09:34)
These two blog entries are really useful. I think this whole process seems to have been well handled by very capable people. I know some of them personally and believe their integrity. I am sure they will release more answers to our questions over the next few days.
I'm definitely buying in (and my wife Technophobe is too)
LooseCanon
Sue Kane (Saturday, 05 December 2015 11:59)
I'm firstly, very relieved to have had notification of what is going on here and, secondly, please to see the line-up of peoples whose journals I have interacted with during over six years of blipping. My years on here have been life-changing!
clickychick
BVFL33 (Saturday, 05 December 2015 13:04)
Am totally perplexed Have registered .. Then ad to take a quiz which it seems I failed .OK have been sent 4 pdf files which won't open so may the answers are there .. Also when I register with this new group I usedsame email but different passowrd ..Grief I am utterly at a loss with the bare basics as to how to buy a share Why ? Because the registration form is anything but user friendly .Have tried calling a UK number 4times but only answer machine and since I'm in Berlin , doubt they would wish to call me back .. In a word HELP !!!
dis...dat...d'udda (Saturday, 05 December 2015 13:19)
"Joe Tree and Graham Maclachlan, the original founders of Blipfoto Ltd are supporting this initiative and helping the Blipfuture team during the transition. "
wondering why those 2 people mentioned above didn't consider this option before they abandoned ship...I would be much happier without their "support"...a complete new start is needed!?
lovingSutton (Saturday, 05 December 2015 21:28)
Thanks for further clarification, and good to see who "the four" are... would be good if they said who they were on the blipfuture site. I'm in, trust these guys and want to keep on blipping - hoping it works...
misswinterfinch (Sunday, 06 December 2015 02:00)
Good Luck. I hope this is just another growth phase in blipping.
Nigel Smart (Sunday, 06 December 2015 06:39)
Having read the bplan, it seems to be saying that the cost of running the servers is 12k per annum at most (as this figure also includes cost of sales). So basically, this seems very low to me. Stuff always needs updating, PHP re-coding etc. Plus the disk space etc must be slow. Remember the servers creaked to death in the months before Polaroid took over. Maybe I am missing something. But I dont see the running costs accounted properly.
Also why not also use advertising to generate some revenue?
Nigel Smart (Sunday, 06 December 2015 06:41)
PS Meant "disk space etc must be expensive" not "slow" above. It was slow :-)
John M Thomson - SvQMedia (Sunday, 06 December 2015 13:12)
"For me, the most striking and dispiriting feature of these events is the apparent mismatch between the hype about global expansion and the monetary value of Blipfoto and what is seen by many - mainly its users it must be said - as a unique online community of photographers and people."
Lifted from your excellent financial history of Blipfoto Fergus. The keywords here for me are mismatch and photographers.
It's a mismatch between the business capabilities and ambitions of Joe Tree and his associates including Polaroid and the artistic hopes and dreams of the clientele the photographers.
It was always going to be so and will continue to be so because their business model was based on the artistic and narcissistic idea of photographers taking a shot of their day and posting it as a Blipfoto. I did it myself on and off but I knew I couldn't post a shot a day that held my interest never mind anyone else so I have stopped.
Of course there are quite a few people who have held on to the dream and posted thousands of shots which gives pleasure to them and others like minded photographers.
The problem is that there just aren't enough people in the world who get pleasure from this narcisstic activity to support the CIC Blipfuture.
I won't be "investing" and I have been able to download, with some difficulty, my pictures.
Excellent web site Fergus - I wish I had come across it sooner!
Ian Stevenson (cyclops) (Monday, 14 December 2015 22:50)
Hi Fergus, Ian from the Blipfuture team.
You made some observations about proxies and the importance of the location of meetings that I might be able to help with.
We have gone to considerable length (with our lawyers) to ensure that our articles allow both for electronic participation and for effective use of proxy votes. This is to ensure as many shareholders as possible can contribute to decision making. Our articles are based standard articles from the CIC regulator and I agree their interpretation is not straightforward. I cannot give legal advice on the interpretation of the Articles of Association, but this is my take on the situation (I have quoted clauses of the articles for anyone who wants to look themselves):
The key mechanism by which shareholders can control Blipfuture C.I.C. is through votes at General Meetings. The directors can call a general meeting (Articles: 44.1) or 5% of shareholders can require the directors call one (Articles: 44.2, Companies Act Section 303).
All shareholders must be notified of a general meeting 14 days in advance (Articles: 45.1) unless 90% of shareholders agree to shorter notice.
A general meeting can only proceed if 5% of shareholders attend (Articles: 49) in person or via suitable electronic means (48.3). This means we can use tools such as Skype or Webex to make it easy for shareholders to attend.
A shareholder who does not attend a general meeting can appoint a “Proxy” to vote on their behalf (Articles: 56). A proxy can be instructed in different ways:
• To vote for a motion on behalf of the absent shareholder
• To vote against a motion on behalf of the absent shareholder
• To vote as they see fit on the day on behalf of the absent shareholder
Voting at a general meeting may use a show of hands, representing one vote per shareholder (excluding shareholders with non voting shares) (Articles: 53.2). Such a vote effectively excludes proxy voters, and as such is unlikely to be used in Blpfuture C.I.C..
A director or any shareholder who holds the proxy of another person can require a Poll vote (54.2) in place of a show of hands. In a Poll vote, every shareholder present or represented by a proxy has one vote (53.2). If any proxy has been allocated, the holder of that proxy need simply call for a Poll in order for it to be represented. In practice, we anticipate that all votes at General Meetings will be Poll votes.
Matters are decided by a simple majority in either a show of hands or Poll vote.
Daniel (Thursday, 16 February 2017 08:39)
I am totally amazed by this Fergus. I think this is the best way to do some investment. Thank you for giving us this opportunity and happy to see this is not a spam.