This spreadsheet supports STUDENT analysis of the case,

"ServerVault: 'Reliable, Secure, and Wicked Fast'" (Case 11).

This spreadsheet presents selected exhibits from the case.

Revised: March 7, 2006.

Copyright 2000 by the Trustees of the University of Virginia Darden School Foundation.

Exhibit 2

Revenue (Billions of $)

$14.00
$12.00
$10.00

$6.00
$4.00
$2.00
$-

Managed
Co-location
Shared
Total

Managed
Co-locatio
Shared

$8.00

2000
2000
$0.98
$0.47
$0.44
$1.89

2001
2001
$1.88
$0.73
$0.55
$3.16

2002
2002
$3.74
$0.84
$0.66
$5.24

2003
2003
$6.65
$0.95
$0.77
$8.37

20

Managed
Co-location
Shared

2003
2004
$10.97
$1.03
$0.89
$12.89

2004

ServerVault
Statement of Cash Flows
(Direct Method)

Exhibit 4
Statement of Cash Flows
Jan-00

Feb-00

Mar-00

Apr-00

May-00

Jun-00

1,000
2,420
445
3,865

2,500
6,440
350
9,290

3,000
10,480
600
14,080

5,000
18,540
1,150
24,690

6,000
26,200
1,900
34,100

7,500
35,480
2,325
45,305

(3,790)
(3,500)
(28,250)
(9,584)
(45,124)

(3,790)
(22,250)
(45,100)
(15,484)
(86,624)

(6,115)
(51,750)
(54,570)
(16,884)
(129,319)

(5,591)
(57,250)
(56,600)
(22,530)
(141,971)

(5,591)
(51,750)
(61,520)
(30,160)
(149,021)

(11,678)
(79,800)
(62,200)
(39,910)
(193,588)

(41,259)

(77,334)

(115,239)

(117,281)

(114,921)

(148,283)

(9,800)
(10,180)

(14,265)
(81,100)

(17,770)
(29,540)

(31,220)
(27,590)

(36,150)
-

(44,890)
-

(19,980)

(95,365)

(47,310)

(58,810)

(36,150)

(44,890)

47,500

50,000

10,000

Net Cash Produced (Used) by Financing Activities

47,500

50,000

10,000

NET MONTHLY CASH INFLOW (OUTFLOW)

(13,739)

(122,699)

(152,549)

(176,091)

1,848,929

(193,173)

575,000
561,261

561,261
438,562

438,562
286,013

286,013
109,922

109,922
1,958,851

1,958,851
1,765,678

Cash Flows from Operating Activities

Operating Revenues
Setup
Hosting
Services
Total Sources
Operating Expenses
Bandwidth
Marketing
Salaries
G&A (including corp.)
Total Uses
Net Cash Produced (Used) by Operating Activities
Cash Flows from Investing Activities:
Capital Expenditures
Computer Hardware
Facilities
Net Cash Produced (Used) by Investing Activities
Cash Flows from Financing Activities:
External funding

CASH POSITION
Beginning balance
Ending Cash Balance

2,000,000
-

2,000,000

ServerVault
Three-year Growth Forecast for Servers

Exhibit 5
Three-Year Forecast of Server Growth

New Facilities
Total Facilities
New Servers
Total Servers

Jan-00
0
1
3
3

Feb-00
0
1
5
8

Mar-00
0
1
6
14

Apr-00
0
1
10
24

May-00
0
1
12
36

Jun-00
0
1
15
51

Jul-00
0
1
25
76

Aug-00
0
1
35
111

Sep-00
1
2
65
176

Oct-00
0
2
90
266

Nov-00
0
2
115
381

Dec-00
0
2
135
516

New Facilities
Total Facilities
New Servers
Total Servers

Jan-01
1
3
206
722

Feb-01
0
3
221
943

Mar-01
0
3
236
1179

Apr-01
1
4
271
1450

May-01
0
4
291
1741

Jun-01
0
4
311
2053

Jul-01
1
5
351
2404

Aug-01
0
5
376
2780

Sep-01
0
5
401
3182

Oct-01
1
6
447
3628

Nov-01
0
6
477
4105

Dec-01
0
6
502
4607

New Facilities
Total Facilities
New Servers
Total Servers

Jan-02
1
7
547
5153

Feb-02
0
7
547
5700

Mar-02
0
7
582
6282

Apr-02
1
8
647
6929

May-02
0
8
692
7621

Jun-02
0
8
737
8358

Jul-02
1
9
807
9165

Aug-02
0
9
862
10027

Sep-02
0
9
917
10945

Oct-02
1
10
997
11942

Nov-02
0
10
1062
13004

Dec-02
0
10
1132
14137

ServerVault
Three-year Growth Forecast for Servers

New Facilities
Total Facilities
New Servers
Total Servers
Cash Flows from Operating Activities
Operating Revenues
Setup
Hosting
Services
Total Sources
Cumulative Revenue
Operating Expenses
Bandwidth
Marketing
Salaries
G&A (including corp.)
Operating Expenses
Net Cash produced/(used) - Operation
Cash Flows from Investing Activities:
Capital Expenditures
Computer Hardware
Facilities
Net Cash Produced/(Used) - Investing

Sep-00
0
1
132
278

Oct-00
0
1
273
551

Nov-00
0
1
565
1116

Dec-00
0
1
1169
2285

Jan-01
0
1
1243
3528

Feb-01
1
2
1322
4850

Mar-01
0
2
1406
6256

Apr-01
0
2
1495
7751

May-01
1
3
1590
9341

Jun-01
0
3
1691
11032

Jul-01
0
3
1799
12831

Aug-01
1
4
1914
14745

Sep-01
0
4
2036
16781

66,000
208,500
13,900
288,400
649,630

136,500
413,250
27,550
577,300
1,226,930

282,500
837,000
55,800
1,175,300
2,402,230

584,500
1,713,750
114,250
2,412,500
4,814,730

621,500
2,646,000
176,400
3,443,900
3,443,900

661,000
3,637,500
242,500
4,541,000
7,984,900

703,000
4,692,000
312,800
5,707,800
13,692,700

747,500
5,813,250
387,550
6,948,300
20,641,000

795,000
7,005,750
467,050
8,267,800
28,908,800

845,500
8,274,000
551,600
9,671,100
38,579,900

899,500
9,623,250
641,550
11,164,300
49,744,200

957,000
11,058,750
737,250
12,753,000
62,497,200

1,018,000
12,585,750
839,050
14,442,800
76,940,000

(25,000)
(100,000)
(210,000)
(50,000)
(385,000)

(25,000)
(100,000)
(210,000)
(50,000)
(385,000)

(25,000)
(100,000)
(210,000)
(50,000)
(385,000)

(25,000)
(100,000)
(210,000)
(50,000)
(385,000)

(25,000)
(100,000)
(210,000)
(50,000)
(385,000)

(50,000)
(100,000)
(420,000)
(50,000)
(620,000)

(50,000)
(100,000)
(420,000)
(50,000)
(620,000)

(50,000)
(100,000)
(420,000)
(50,000)
(620,000)

(75,000)
(100,000)
(630,000)
(50,000)
(855,000)

(75,000)
(100,000)
(630,000)
(50,000)
(855,000)

(75,000)
(100,000)
(630,000)
(50,000)
(855,000)

(100,000)
(100,000)
(840,000)
(50,000)
(1,090,000)

(100,000)
(100,000)
(840,000)
(50,000)
(1,090,000)

(96,600)

192,300

790,300

2,027,500

3,058,900

3,921,000

5,087,800

6,328,300

7,412,800

8,816,100

10,309,300

11,663,000

13,352,800

(396,000)
0

(819,000)
0

(1,695,000)
0

(3,507,000)
0

(3,729,000)
(6,000,000)

(3,966,000)
0

(4,218,000)
0

(4,485,000)
(6,000,000)

(4,770,000)
0

(5,073,000)
0

(5,397,000)
(6,000,000)

(5,742,000)
0

(6,108,000)
(6,000,000)

(396,000)

(819,000)

(1,695,000)

(3,507,000)

(9,729,000)

(3,966,000)

(4,218,000) (10,485,000)

(4,770,000)

(5,073,000) (11,397,000)

300,000

900,000

1,500,000

6,600,000

3,400,000

300,000

900,000

1,500,000

6,600,000

3,400,000

(492,600)

(326,700)

(4,700)

20,500

(70,100)

(45,000)

869,800

(756,700)

2,642,800

3,743,100

(1,087,700)

5,921,000

1,244,800

940,578
447,978

447,978
121,278

121,278
116,578

116,578
137,078

137,078
66,978

66,978
21,978

21,978
891,778

891,778
135,078

135,078
2,777,878

2,777,878
6,520,978

6,520,978
5,433,278

5,433,278
11,354,278

11,354,278
12,599,078

Cash Flows from Financing Activities:

External funding
Net Cash Produced (Used)- Financing Activities
NET MONTHLY CASH INFLOW (OUTFLOW)
CASH POSITION
Beginning balance
Ending Cash Balance

Projected

(5,742,000) (12,108,000)

ServerVault
Three-year Growth Forecast for Servers

Projected
Oct-01
1
5
2166
18947

New Facilities
Total Facilities
New Servers
Total Servers

Nov-01
0
5
2304
21251

Dec-01
1
6
2451
23702

Jan-02
0
6
2500
26202

Feb-02
1
7
2550
28752

Mar-02
0
7
2601
31353

Apr-02
1
8
2653
34006

May-02
0
8
2706
36712

Jun-02
1
9
2760
39472

Jul-02
1
10
2815
42287

Aug-02
0
10
2871
45158

Sep-02
1
11
2928
48086

Oct-02
0
11
2986
51072

Nov-02
1
12
3045
54117

Dec-02
0
12
3105
57222

Cash Flows from Operating Activities

Operating Revenues
Setup
1,083,000
1,152,000
1,225,500
1,250,000
1,275,000
1,300,500
1,326,500
1,353,000
1,380,000
1,407,500
1,435,500
1,464,000
1,493,000
1,522,500
1,552,500
Hosting
14,210,250
15,938,250
17,776,500
19,651,500
21,564,000
23,514,750
25,504,500
27,534,000
29,604,000
31,715,250
33,868,500
36,064,500
38,304,000
40,587,750
42,916,500
Services
947,350
1,062,550
1,185,100
1,310,100
1,437,600
1,567,650
1,700,300
1,835,600
1,973,600
2,114,350
2,257,900
2,404,300
2,553,600
2,705,850
2,861,100
16,240,600
18,152,800
20,187,100
22,211,600
24,276,600
26,382,900
28,531,300
30,722,600
32,957,600
35,237,100
37,561,900
39,932,800
42,350,600
44,816,100
47,330,100
Cumulative Revenue
93,180,600 111,333,400 131,520,500 153,732,100 178,008,700 204,391,600 232,922,900 263,645,500 296,603,100 331,840,200 369,402,100 409,334,900 451,685,500 496,501,600 543,831,700
Operating Expenses
Bandwidth
(125,000)
(125,000)
(150,000)
(150,000)
(175,000)
(175,000)
(200,000)
(200,000)
(225,000)
(250,000)
(250,000)
(275,000)
(275,000)
(300,000)
(300,000)
Marketing
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
(100,000)
Salaries
(1,050,000)
(1,050,000)
(1,260,000)
(1,260,000)
(1,470,000)
(1,470,000)
(1,680,000)
(1,680,000)
(1,890,000)
(2,100,000)
(2,100,000)
(2,310,000)
(2,310,000)
(2,520,000)
(2,520,000)
G&A (including corp.)
(50,000)
(50,000)
(50,000)
(50,000)
(50,000)
(50,000)
(50,000)
(50,000)
(50,000)
(50,000)
(50,000)
(50,000)
(50,000)
(50,000)
(50,000)
(1,325,000)
(1,325,000)
(1,560,000)
(1,560,000)
(1,795,000)
(1,795,000)
(2,030,000)
(2,030,000)
(2,265,000)
(2,500,000)
(2,500,000)
(2,735,000)
(2,735,000)
(2,970,000)
(2,970,000)
Net Cash produced/(used) - Operation
14,915,600

16,827,800

18,627,100

20,651,600

22,481,600

24,587,900

26,501,300

28,692,600

30,692,600

32,737,100

35,061,900

37,197,800

39,615,600

41,846,100

44,360,100

Cash Flows from Investing Activities:

Capital Expenditures
Computer Hardware
(6,498,000)
Facilities
0

(6,912,000)
(6,000,000)

(7,353,000)
0

(7,500,000)
(6,000,000)

(7,650,000)
0

(7,803,000)
(6,000,000)

(7,959,000)
0

(8,118,000)
(6,000,000)

(8,280,000)
(6,000,000)

(8,445,000)
0

(8,613,000)
(6,000,000)

(8,784,000)
0

(8,958,000)
(6,000,000)

(9,135,000)
0

(9,315,000)
0

Net Cash Produced/(Used) - Investing

(6,498,000)

(12,912,000)

(7,353,000)

(13,500,000)

(7,650,000)

(13,803,000)

(7,959,000)

(14,118,000)

(14,280,000)

(8,445,000)

(14,613,000)

(8,784,000)

(14,958,000)

(9,135,000)

(9,315,000)

3,915,800

11,274,100

7,151,600

14,831,600

10,784,900

18,542,300

14,574,600

16,412,600

24,292,100

20,448,900

28,413,800

24,657,600

32,711,100

35,045,100

21,016,678
24,932,478

24,932,478
36,206,578

36,206,578
43,358,178

43,358,178
58,189,778

58,189,778
68,974,678

68,974,678
87,516,978

87,516,978
102,091,578

102,091,578
118,504,178

118,504,178
142,796,278

142,796,278
163,245,178

163,245,178
191,658,978

191,658,978
216,316,578

216,316,578
249,027,678

249,027,678
284,072,778

Cash Flows from Financing Activities:

External funding
Net Cash Produced (Used)- Financing Activities
0
NET MONTHLY CASH INFLOW (OUTFLOW)
8,417,600
CASH POSITION
Beginning balance
Ending Cash Balance

12,599,078
21,016,678

Revenue sources
Description
One time set up fee
Monthly hosting fee
Additional value added fee

Fee
$500.00
$750.00 per month
$50.00 per month

Inputs and figures

Employees

20

Capital Expenditure

30
Min

New Facility
Number of Servers

Max

$5,000,000

$6,000,000

5,000

Server Costs

$3,000

Operating Expenses

2000
$7,000
$25,000
$100,000
$50,000

2001
$7,000
$25,000
$150,000
$50,000

Server growth

2000
2001
2002

107%
6%
2%

Employee per server

166.67

Employee Cost
Redundant Bandwidth
Marketing
SGA

2002
$7,000 per month
$25,000 per month
$200,000 per month
$50,000 per month

0.0001

IBM
Digex
Data return
total
Gap
25,983,000.0

980,000,000
47000000
59800000
7100000
113,900,000
866,100,000

5%
6%
1%
12%
88%

Total Market
2000
$0.98
$1.40
$0.47
$0.44
$1.89
$1.20

Managed
Co-location
Shared
Total

2001
$1.88
$0.73
$0.55
$3.16

2002
$3.74
$0.84
$0.66
$5.24

2003
$6.65
$0.95
$0.77
$8.37

IBM
$0.05
$0.34
$0.66
$1.31

Data Return
$0.07
$0.20
$0.38
$0.75

Serverault
$$0.0049
$0.1316
$0.5610

Gain in Market Share Yearly$1.00

IBM
35%
Digex
30%
$0.80
Data Return
20%
Servervault 2000
0.50%
$0.60
Servervault 2001
7%
Servervault 2002
15%
$0.40

1999
2000
2001
2002

Digex
$0.06
$0.20
$0.29
$0.56
$1.12
$2000

1999
2001

2002

2000

00

2004
$10.97
$1.03
$0.89
$12.89

Digex
IBM
Data Return
Serverault
Unsatisfied Demand

Unsatisfied
Demand
$0.80
$0.14
$0.15
$-

2001

Total
$0.98
$0.98
$1.88
$3.74

2002

Market Potential - Managed Hosting Service

$12.00
$10.00
$8.00
$6.00
Managed

$4.00
$2.00
$2000

2001

2002

2003

2004