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Username: DotOrg Foundation
Date/Time: Thu, August 15, 2002 at 6:10 AM GMT
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Subject: DotOrg Foundation's response to Shelton Johnson's questions regarding financial viability of bidders


        Dear Mr. Johnson:

On behalf of the DotOrg Foundation, I am delighted to provide answers to your questions, below.  Please feel free to refer to our full application,, or to contact me with any further questions you may have.

a. I'd like each bidder to identify the funds that they are relying on for the transition. Do you have money in the bank set aside or are you relying on the third party partners or money from capital markets for the transition?

The DotOrg Foundation was capitalized through loans from Kintera, Inc. (Kintera) and, Inc. (  In order to fund our transition and operation plans until registration fees are available, the DotOrg Foundation does not require the $5 million VeriSign endowment.  Although the DotOrg Foundation believes that part of the endowment should be available to support a smooth transition under the language and spirit of the .org registry agreement, we have not built our plans around such reliance.  Rather the Foundation intends to get bank loans, guaranteed by and Kintera.  We understand that in the current market, banks have become more conservative.  That is why it was critical for us that these two well-financed companies, being a public company with over $200 million in cash and cash equivalents, would act as guarantors, in order to ensure that such loans would be easily available.

We recognize that the financial stability of the successful applicant is critical, particularly as the delay in the review process may make it necessary to shorten project times, potentially raising the costs of a transition.  Our plans and the ability to rely on our vendors allow us to confidently look forward to a smooth transition.

b. To what extent does your financing for the transition depend on timely receipt of all or part of the VeriSign endowment? What are your plans for alternative financing if a dispute or a delay arises in the transfer of those funds?

As we answered above, while be believe that we are eligible for the VeriSign endowment and that it should be available for the transition as well as for future registry operations, we have planned fully for the contingency that the endowment will not be available.  Please refer to our answer above for detail. 

c. Are you financially prepared to deal with unforeseen costs that might arise in the transition, particularly those related to the technical operation of the registry?

Yes.  For our transition plans, the DotOrg Foundation is able to rely fully on, whose division, Registry Advantage, is the Foundation's registry services provider.  As you can see from our application, Registry Advantage has a detailed transition plan, including preparation for contingencies that may increase the complexity, challenges, and time requirements for the transition.  Registry Advantage is prepared to shoulder the costs of the transition in the interim period before registration fees and/or the endowment are available to fund registry operations.

Registry Advantage's plans are based on its substantial experience in operating and transitioning registries.  We believe the transition plans and overall budget have accurately taken into account start-up costs, including the potential for unforeseen costs.  The plan is cautious in estimating the necessary capitalization for registry services, while ensuring a focus on benefits for the .org community. 

d. Are you financially prepared to deal with lower than expected numbers of new names being purchased/registrants renewing. What tolerances do you have in your cash projections before being forced to seek further funding?

We have taken a conservative approach to projecting demand and revenue.  In fact, as you will note from our financial model attached to our application as the "DotOrg Foundation Annual Report," we have projected a diminishing demand of roughly 20% by year six of registry operations.  Despite this decline, we are able to maintain positive cash flow and support registry operations, outreach and governance activities by:  focusing on our core mission, finding cost savings in the budget, and negotiating vendor agreements that provide the maximum cost-efficiencies for the registry.  The result is a sound business plan that ensures best-in class registry services, innovative products that differentiate the .org registry for noncommercial registrants, and an outreach and marketing plan that ensures competitiveness and noncommercial focus.

In fact, we would like to lower the registry fees, but will do so only if either the VeriSign endowment or a higher than expected demand provides for a revenue windfall that will support lower fees.  We believe in passing on cost savings, but not in jeopardizing registry operations.  As further insurance, we also understand from and Kintera that they are truly committed to supporting the DotOrg Foundation.  So, as we answered in question (a), the two companies would guarantee a bank loan for the DotOrg Foundation.  We are confident that having these two successful companies, one of which,, is a public company with over $200 million of cash and cash equivalents, as guarantors provides ICANN and the stakeholder community with a greater assurance of financial security than has any other bidder.

I'm also concerned about the stability of the .org registry if it goes to a bidder that is relying in substantial part on the VeriSign endowment for funding. How solid is the commitment from VeriSign to turn over the money? I understand that there is a signed agreement between VeriSign and ICANN with respect to the endowment, but what are the remedies if VeriSign delays or receives a waiver on the agreement?  And most important, do the bidders relying on the endowment have the resources to function in the meantime as well as to engage in a legal dispute and perhaps protracted litigation?

We understand that there may be some hypotheses regarding the potential that VeriSign would not fulfill its obligation to pay the endowment.  So, while we believe we would be fully entitled to receive the endowment for the purposes we outlined in our application, as we answered questions  (c) and (d) above, the DotOrg Foundation is prepared to operate throughout the transition phase and beyond without relying on the endowment.  We understand the .org community's concern regarding any future registry operator's financial self-sufficiency.  We agree that it is critical to the stable and successful transition and operation of .org, and that is precisely how we honed our own plans.

Thank you for the opportunity to provide these clarifications.  Please do not hesitate to contact me with any further questions.


Marshall Strauss
DotOrg Foundation



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