E245 agora week7

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E245 agora week7

  1. Agora<br />2/15/2011<br />
  2. Agora – V5<br />· For enterprise segment, higher touch model with direct sales force<br />· API support for buyers’ developers / IT admin staff· Live 24/7 customer support <br />· Online support forum<br />Buy-side· Reduced cloud compute infrastructure cost through capacity planning· Better, easier way of finding the right compute to match their needs<br />Sell-side: <br /><ul><li>Channel with low acquisition cost
  3. Better planning for demand variability ·
  4. Develop a working prediction algorithm & build product
  5. Develop matching algorithm for compute & build portal
  6. Sign up keystone customers to test product
  7. Develop relationships with cloud compute vendors</li></ul>· Technology partners – cloud vendors, management tools· Payment processor· Law Firm· PR / Marketing Firm· VC/Investor<br />Buy-side (most important):·High compute needs with high variability in usage <br /><ul><li>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)·</li></ul>Sell-side (secondary- will follow if we are able to attract buyers): · Cloud infrastructure service providers<br />· Direct field sales force to enterprise customers<br /><ul><li>Inside sales for entry level</li></ul>· Integrators / consultants (e.g. Accenture)<br />· 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.<br /><ul><li> Subscription charge to buyers
  8. Pricing table scales based on # of servers and # of seats, with tiers
  9. % fee to sellers from channel activities
  10. Derivative products
  11. Customer acquisition costs – Demand creation + Field sales for enterprise, demand creation + inside sales for entry-level
  12. 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</li></li></ul><li>Who we are today<br />Tool set for managing cloud compute usage<br />Service matching<br />Capacity planning <br />Usage monitoring & control<br />Targeting ~30% savings for customer<br />“I believe that with the right optimization tool, you could save us $100k/ month on our AWS usage.” –Oren Teich, Heroku<br />
  13. Key Risks<br />Ability to prove value proposition<br />Priority of problem for customer & ongoing need<br />Test cases to show value creation<br />Metrics for tracking success<br />ROI calculation will be critical to sales process<br />Highly dependant on hosting cost trends<br />Perceived alignment with customer objectives<br />Driven largely by pricing structure<br />Competitive defensibility<br />vs. AWS, RightScale, new entrants<br />Technology viability<br />How much improvement are we able to make?<br />Risks associated with taking control of planning<br />
  14. Competitors’ Revenue Model<br />Looked at:<br />Traditional IT capacity planning (e.g. up.time, TeamQuest) <br />Cloud monitoring tools (e.g. RightScale, CloudKick)<br />Pricing Models varied:<br />Some priced on server type, # of servers, device counts, sockets, chips, cores etc.<br />Some licensed on meter usage and users count<br />Most have bulk/volume discount (up to 40%)<br />One charges additional 20% support fees on top of base price<br />
  15. Pricing Matrix<br />
  16. Entry Level Customer<br />Sales Model<br />Estimated Customer LTV<br />$1,000 / mo<br />5% attrition rate month-to-month<br />20 month average lifetime<br />$20,000 LTV <br /><ul><li>Annual Sales Cost (inside sales): $1.3M
  17. Leads cost: $8.3K
  18. MarComm: $240k
  19. Advertising: $37k
  20. 5 Inside sales reps: $1M
  21. 2 Tradeshows: $200K
  22. Annual New Revenues: $4.8M</li></li></ul><li>Enterprise Level Customer<br />Sales Model<br />Estimated LTV<br />$20,000 / mo<br />2% attrition rate month-to-month<br />50 month average lifetime<br />$1M LTV <br /><ul><li>Annual Sales Cost (Field Sales):
  23. 3 Field Sales Reps: $1.5M Cost
  24. Annual New Revenues: $3M</li></li></ul><li>Income Statement: 1 year after launch<br />

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