Saturday, July 24, 2004

Keeping Tibanna and Pocketpass Alive

In the summer of 1999, I got the idea for an Internet payment system that would be:
  • Anonymous,
  • Funded with cash for people without credit cards or who didn't want to use their credit cards for privacy and/or security reasons, and
  • Cost-effective for micropayments (music, content and other "digital deliverables."
I joined forces with entrepreneur Douglas Denoff and highly successful technology executive Dr. Inder Singh who also provided the initial seed investment. By August 1999, the idea became a company called Pocketpass.

We were blessed to be joined in this adventure by gifted programmer and developer Eric Harold and by an immensely intelligent seed investor and board member, Dr. Yaqub Mirza.

Then, in 2001, with Napster and P2P file-sharing on the rise, I had another idea for a product that would set premium digital content free in the world and still allow the content's creator to make some money.

This idea became a DRM product called Tibanna. Tibanna was free software that any individual could download and use. It took the content, the "digital wrapper" and the Pocketpass payment system and combined them into a single file that could be copied, shared and set free on the Internet without all the hassles still associated with premium content.

In the spring of 2003, we had signed up our first customers, one a large global software company, Olive Software, which was integrating Pocketpass into their Active Paper product. We also had another customer, a small, high-priced wine industry newsletter, Wine Market Report.

I'll talk more about these customers in future posts.

By the end of March 2003, we had gone live with Wine Market Report (WMR). We structured a search engine for WMR that searched all of the newsletter's .pdf (Adobe Acrobat) files then returned a Google-like set of search results. When the user clicked on one of the links, they received a Tibanna-wrapped file that allowed for quick, easy payment of a small dollar amount to unwrap the file.

Significantly, if the user wanted to send that file to other people, they could do so, but only the wrapped version, thus assuring that Rich Cartiere, the one-man-operation behind WMR got some compensation.

Even more importantly, I envisioned -- and the technical team incorporated -- an affiliate-like system into Tibanna. This allowed a person to "sign" the Tibanna-wrapped file before forwarding it or linking to it from a web site. If another person opened and paid for that file, the person they got it from would receive an Amazon-scale affiliate fee.

This unique and patentable feature of Tibanna produced three important results within a file-sharing environment:
  • Continued income for the content creator
  • Affiliate income for intermediaries, thus a financial incentive to push the content (good for the creator and the affiliate)
  • A financial incentive NOT to make pirated content available.
In April 2003, we were in final beta testing of the integration of Pocketpass and the Active Paper software (which did not use Tibanna at the time). The beta test site was the Arizona Republic.

Indeed, as May 2003 rolled around, the only issues left were mostly cosmetic web site layout issues with a couple of simple-to-fix requests from the client on how the dynamically generated pages would appear. The system worked and our first customer was very happy.

Then an investment group, which we had mistakenly trusted, pulled the plug on funding -- an investment they had promised, in writing, to provide months earlier.

Indeed, my wife and I had borrowed money to help bridge the company financially on their false assurances that funds would be arriving imminently. That bridge was also funded by Drs. Singh and Mirza along with an outside investor.

Unfortunately, the promised investment never happened and on the eve of actually starting to get revenues from a major customer, the investment group pulled the plug, foisted their own choice of a CEO on the company, and forced me out of the company I had founded.


I am unsure of the details, but has something to do with the investors' plans for a "reverse merger," the process of taking an empty but publicly traded corporation and folding the company into it.

While a reverse merger with a public shell can be accomplished in a completely honest and aboveboard manner, most savvy investors consider them shaky and shady.

The investment group stacked the board with their own people, did their reverse merger with a company called Secure Sign, then renamed Pocketpass, SVC Financial which trades on the Pink Sheets as SVCX.

And while the group had promised to finish financial audits and get current with SEC reports, a year has passed now without ANY solid data other than back-patting news releases filled with self-congratulatory phrases, unsubstantiated superlatives and other hype.

They fired a top-flight and straight-arrow auditing firm, Perry-Smith (and stuck them with unpaid bills), hired another auditor, Lichter, Weil & Associates, then fired THEM on June 22, 2004!

I'll talk more about all these issues - naming names, dates and specifics based on emails and documents - in future blog postings. Through this, I will chronicle the rise and fall of a company and a cool product the market still needs.


Post a Comment

Subscribe to Post Comments [Atom]

<< Home