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2/15/2011

Buy-side (most important):


High compute needs with high
variability in usage
Primarily large enterprise
Companies engaged in image
and video processing, conversion
and rendering (e.g. digital media
companies)
Scientific data processing (e.g.
biotech research companies)
Financial modeling and analysis
(e.g. hedge funds)


Sell-side (secondary- will follow if
we are able to attract buyers):
Cloud infrastructure service
providers

Direct field sales force to
enterprise customers
Inside sales for entry level
Integrators / consultants (e.g.
Accenture)




Customer acquisition costs Demand creation + Field sales for enterprise, demand
creation + inside sales for entry-level
Revenue share with channel
Development Costs
Infrastructure costs will scale with # transactions (a function of # customers and
frequency of transactions per customer per day), and staff level
Support costs will scale with # transactions
Legal costs filing patents, incorporations, etc
Subscription charge to buyers
Pricing table scales based on # of servers and # of seats, with tiers
% fee to sellers from channel activities
Derivative products


For enterprise segment, higher
touch model with direct sales force
API support for buyers
developers / IT admin staff
Live 24/7 customer support
Online support forum
Buy-side
Reduced cloud compute
infrastructure cost through capacity
planning
Better, easier way of finding the
right compute to match their needs

Sell-side:
Channel with low acquisition cost
Better planning for demand
variability


Develop a working prediction
algorithm & build product
Develop matching algorithm for
compute & build portal
Sign up keystone customers to
test product
Develop relationships with cloud
compute vendors



Technology partners cloud
vendors, management tools
Payment processor
Law Firm
PR / Marketing Firm
VC/Investor
Physical AWS
Brand efficiency in the cloud
Intellectual property prediction
algorithm
Development resources UX and
scalable distributed backend
Inside & field sales force
Biz dev (channel partners and
technology partners)
Support
Financial angels and VCs. Amount
TBD.
Agora V5
Who we are today
Tool set for managing cloud compute
usage
Service matching
Capacity planning
Usage monitoring & control
Targeting ~30% savings for customer
I believe that with the right optimization tool, you
could save us $100k/ month on our AWS usage.
Oren Teich, Heroku
Key Risks
Ability to prove value proposition
Priority of problem for customer & ongoing need
Test cases to show value creation
Metrics for tracking success
ROI calculation will be critical to sales process
Highly dependant on hosting cost trends

Perceived alignment with customer objectives
Driven largely by pricing structure

Competitive defensibility
vs. AWS, RightScale, new entrants

Technology viability
How much improvement are we able to make?
Risks associated with taking control of planning
Competitors Revenue Model
Looked at:
Traditional IT capacity planning (e.g. up.time,
TeamQuest)
Cloud monitoring tools (e.g. RightScale,
CloudKick)
Pricing Models varied:
Some priced on server type, # of servers, device
counts, sockets, chips, cores etc.
Some licensed on meter usage and users count
Most have bulk/volume discount (up to 40%)
One charges additional 20% support fees on top
of base price
Pricing Matrix
Enterprise Gold Silver Bronze Free
Servers 1000+ 500 100 50 1
Users 10+ 5 2 1 1
Data
Retention
Unlimited 5 years 1 year 6 months 1 month
Support 24/7/365, 15
minute response
time
Internal
support
contact
2 hour
response
time
Phone Email,
standard
business
hours
Price/mo Upon Inquiry $2995 $995 $595 FREE
Entry Level Customer
$1,000 / mo
5% attrition rate month-
to-month
20 month average
lifetime
$20,000 LTV

Annual Sales Cost
(inside sales): $1.3M
Leads cost: $8.3K
MarComm: $240k
Advertising: $37k
5 Inside sales reps:
$1M
2 Tradeshows: $200K

Annual New
Revenues: $4.8M


Sales Model Estimated Customer LTV
Enterprise Level Customer
$20,000 / mo
2% attrition rate month-
to-month
50 month average
lifetime
$1M LTV

Annual Sales Cost
(Field Sales):
3 Field Sales Reps:
$1.5M Cost

Annual New Revenues:
$3M


Sales Model Estimated LTV
Income Statement: 1 year after
launch
Revenue Unit Cost Qty
Entry 400 $4,800,000
Enterprise 12 $2,880,000
Total $7,680,000
Expenses
COGS $120,000
R&D
Developers $150,000 5
Lead $250,000 1
Tools $7,500
$1,007,500
SG&A
Sales & Marketing $2,784,750
Rev share with Channel $768,000
CEO, BizDev $250,000 2
Office $48 2000
Utilities $12,000
$4,160,750
Total $5,288,250
Income before tax $2,391,750
Tax expense $717,525
Income after tax $1,674,225