MONETIZING THE BUSINESS MODEL

MBA LITE FEBRUARY 17, 2014

DAN QUIGG BIO

25 Years Technology Executive Founder & CEO, Public Insight Corporation President & CEO, RIS Logic acquired by Merge Healthcare Founder & CEO, OmniVista acquired by Best Software General Manager, Best Analytics (acquired by Sage) KPMG Small Systems Co-Founder

CEO - Public Insight Corporation Developers of 360-Public Goal of transforming public data into insight

Kent State University Adjunct Professor of Entrepreneurship Awards and Groups

Ernst & Young Entrepreneur of the Year Finalist Smart Magazine “Rising Star” Case Western Reserve Inaugural Leadership Award Leadership Cleveland Class of 2013

Follower of Jesus Christ

MY FAVORITE READS

BUSINESS MODEL FRAMEWORK

Source: Business Model Institute

Our F

ocus

GOAL: BUILD ENTERPRISE VALUE Value of an Organization Exit Value Functions:

Growth Rate Recur Revenue Scalability Margins Risk Mkt Potential

Entrepreneur Decisions: Capital vs. Bootstrapping Acceptable Cash “Burn” Founder Salaries

Service Co. Software Co.Base Year 100,000 100,000 Growth Rates:

Year 2 300% 500%Year 3 100% 300%Year 4 70% 200%Year 5 50% 100%

2,040,000 14,400,000 Liquidation: Revenue 1 4 Exit Value 2,040,000 57,600,000 Leverage 28.24

Company Products Sold To Capital Sale Amount Exit Timeline

OmniVista Active Planner Advanced Allocations Financial Reporter Premier Budgeting

Best Software $85k $7 Million 2 ½ years

RIS Logic RIS Logic Merge Healthcare $2.1 Million $16-24 Million 2 ½ years

BEACHHEAD MARKET ENTRY

“Paying” Customers Not “Fun With Spreadsheets” Innovative – Not “Me Too” Primary, then Secondary Go For the Beachhead!

THE CORE

Zook – Profit from the Core

Core

Adjacency

Adjacency

Adjacency

Adjacency

AdjacencyAdjacency

WHAT IS A CORE?

The Core is something that allows you to deliver the benefits your customers value with much greater effectiveness than any other competitor.* What it is Not?

IP First mover advantage Locking up suppliers

Pivoting: Typically a change in core Average successful pivots 1.8 Not a change in primary market

* Disciplined Entrepreneurship

SOURCES OF DIFFERENTIATION

Zook – Repeatabillity

Must have at least three

AVOID THESE TERMS

MINIMUM VIABLE BUSINESS PRODUCT (MVBP)

1.Customer Gets Value2.Customer Pays for Value3.Product is Sufficient to Start

the Feedback Loop4. Iterate Towards a Better

Product

ECONOMIC ECOSYSTEM

Source: Wide Lens

EXAMPLE

Segment Providers Consumers Those Who Care

K-12 School Districts Parents and Students

MediaService CentersConsultantsUnionsState

Higher Education

Colleges and Universities

ParentsStudents

K-12Trade AssociationsConsultantsLibraries

Health Care ProvidersInsurance Companies

Patients Non-ProfitsLibrariesTrade AssociationsConsultants

Government State and Local Entities

Constituents StateMediaPlanning Agencies

Business Business/Labor Mkts

General Public LibrariesEconomic Develop.

2 1Free

PRICING FRAMEWORK

Goal of Lifetime Value Costs are Irrelevant Understand Value Pay Attention to Decision Process Understand Price Alternatives Different Types Will Pay Different Prices Be Flexible for Early Adopters and

“Lighthouse Customers” It is Always Easier to Drop the Price

Than Raise it

UNDERSTAND COSTS OF CUSTOMER ACQUISITION

Source: Disciplined Entrepreneur

Time Horizons Year 1 Years 2 and 3

Years 4 and 5

PIPELINE CONVERSION

SCENARIO PLANNING

METRIC DRIVEN REVENUE FORECASTING

Gross User Licenses 5 10 15 25 Cumulative User Licenses 5 15 30 55 Average Annual Subscription Price 400 400 400 400 New Cash Subscriptions 2,000 4,000 6,000 10,000 Renew al Percentage 85% 85% 85% 85%Renew al Subscribers - - - - Renewal Cash Subscription - - - - Cumulative Subscriptions 2,000 6,000 12,000 22,000 New Subscription Revenue 167 500 1,000 1,833 Previous Years Revenue RecognitionMonthly Revenue 167 500 1,000 1,833 Consulting Estimate 0% 0% 0% 0%Consulting Revenues - - - - Subscriber Cancellations - - - - Cumulative Subscriber Cancellations - - - - Active Subscribers 5 15 30 55

CASH FLOW PLANNING

Cash Flow Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12

Beginning Cash (77,294) (108,711) (143,715) (195,422) (250,552) (279,676) (307,216) (329,041) (339,156) (344,379) (344,567) (340,341)

Inflows:Existing Member Fees 860 8,565 2,423 - 7,285 3,703 - - - - - - New Member Fees 25,000 25,000 25,000 25,000 25,000 25,000 37,500 37,500 37,500 37,500 37,500 37,500 Renewal Fees - - - - - - - 9,375 9,375 9,375 9,375 9,375 Referral Fees 300 850 1,600 2,450 3,450 4,800 6,400 8,150 10,000 12,000 14,050 16,625 Direct Service Fees - Contingency 9,600 12,000 14,400 16,800 19,200 21,600 24,000 24,000 26,400 28,800 31,200 33,600 Direct Service Fees - Project 900 2,100 3,300 4,200 5,100 6,600 8,100 9,300 10,200 11,100 11,700 13,575

36,660 48,515 46,723 48,450 60,035 61,703 76,000 88,325 93,475 98,775 103,825 110,675

Outflows:Salaries and Wages (Burdened) 52,321 52,914 52,825 57,975 58,554 58,638 67,219 67,835 68,093 68,358 68,610 68,953 Operating Expenses 13,755 28,605 28,605 28,605 28,605 28,605 28,605 28,605 28,605 28,605 28,605 28,605 Sourcing Office Advances/Earned 2,000 2,365 2,278 2,362 2,927 3,008 3,705 4,306 4,557 4,815 5,061 5,395

68,076 83,884 83,707 88,942 90,086 90,251 99,529 100,746 101,255 101,778 102,277 102,953

Net Operating Cash Generated (Used) (31,417) (35,370) (36,984) (40,492) (30,051) (28,548) (23,529) (12,421) (7,780) (3,003) 1,548 7,722

Capital CostsOther Capital EquipmentPrepaid SO Marketing FeeOrganization CostsAccounts Payable ReductionCommunity Web Site 15,000 15,000 Sourcing Office Advance Reduction (365) (278) (362) (927) (1,008) (1,705) (2,306) (2,557) (2,815) (2,678) New Hire Capital Costs - - - - - - - - - - - -

- (365) 14,722 14,638 (927) (1,008) (1,705) (2,306) (2,557) (2,815) (2,678) - Financing

Loans From Related PartiesCapital Contributions

- - - - - - - - - - - - Net Cash Generated (Used) (31,417) (35,005) (51,707) (55,130) (29,124) (27,540) (21,824) (10,115) (5,223) (188) 4,226 7,722 Ending Cash before Distributions (108,711) (143,715) (195,422) (250,552) (279,676) (307,216) (329,041) (339,156) (344,379) (344,567) (340,341) (332,619)

Distributions:Cash Distributions

- - - - - - - - - - - - ENDING CASH (108,711) (143,715) (195,422) (250,552) (279,676) (307,216) (329,041) (339,156) (344,379) (344,567) (340,341) (332,619)

QUESTIONS

CONTACT INFORMATION:Dan Quigg, CEODan.Quigg@publicinsightcorp.comCell: 440-317-0117561 Boston Mills Rd., Suite 500Hudson, OH 44236www.publicinsightcorp.com