IPenable OEP

Page 1IPe Confidential. All Rights Reserved

IPenable: IP Design and Innovation for the Smart Grid

OEP Overview

Peer evaluations for demo deck are different from the OAP reviews. This time you will evaluate each other more equivalent to the way investors evaluate your work (Check out video on Acid Test for more information).The Quality of the Presentation Grading range: 1-4. Please give one point for every criterion present.• Is the presentation engaging? If yes, 1 point

• Does it present a compelling and interesting story about the team? If yes, 1 point• Does the team give a convincing presentation that makes you excited about what they're doing? If yes, 1 point• If you could invest or join them, would you? If yes, 1 point

• Market Grading range: 1-3 Please give one point for every criterion present.• Has the team shown in a convincing way that this is a larger and growing market that they are pursuing? If yes, 1 point• Did they analyze the market that they are selling into? If yes, 1 point• Did they also collect some of their own data? If yes, 1 point

• Quality of the Business Model Grading range: 1-4 Please give one point for every criterion present.• Did the team clearly explain how their business model works and how they would make money? If yes, 1 point• Did the team appear to have tested their business model in the real world? If yes, 1 point• Are they already making sales? If yes, 1 point• Do you believe they could make sufficient money to earn good profits and cover their costs? If yes, 1 point

• Marketing Strategy Grading range: 1-4 Please give one point for every criterion present.• Does the team appear to have the right marketing strategy? If yes, 1 point• Have they narrowed in on the appropriate target market? If yes, 1 point• Are they running marketing experiments and tracking their results? If yes, 1 point• What is the quality of the marketing page? If yes, 1 point

• Quality of the Prototype Grading range: 1-4 Please give two points for every criterion present.• Does the team already have a working prototype? If yes, 2 points• Does it already have users or customers? If yes, 2 points

OEP Overview

• Now is the time to turn your previous work in the course into an Opportunity Execution Project. • The Opportunity Execution Project gives your team the chance to think deeply about how to take your idea from a business plan on paper

and turn it into a real company. For your final team presentation you will submit:• An executive summary: no more than a paragraph A 10 minute video, or 10 slides Your video should include a description of your product

and the business model, as well as your team and how you got here. For the latter, it is always helpful to tell an appealing personal story. More specifically your video should include the following:

• Fundamental Problem. What is the fundamental problem you are solving for the end user of your product? What is the fundamental problem you're solving for your customer (if it is different from the end user)? Give a quick recap of your OAP - just a reminder of your key points and the takeaway.

• Product. What are you building or planning to build. A demo of your prototype if you have one. • Team. How did you find each other? How did you get here? Try to tell an appealing personal story. • From the following list, you should choose the ones that are applicable: Business Model. You now have had some more time to think about

your opportunity. Do you have any additional thoughts/changes about the business model? • You should touch on each of the following aspects of your business model and what tests you did on each one:

Sales and Marketing Strategy. How would you sell your product? What distribution channels would you use? How would you create demand for your product?

• Marketing • As I mentioned on the videos, marketing starts with a thorough understanding of your customers and market segment as well as the type

of market (new, growing, mature). First brainstorm several potential ways to reach your target customers. Ideally you can involve potential customers in your brainstorming. Then prioritize these marketing strategies into the cheapest and easiest ones to test out first.

• You want to carefully track these marketing campaigns so that you can later calculate your cost of user acquisition. How much did you have to spend on each marketing campaign to get a single customer to buy? Or if they can't buy yet, how much did you have to spend to get them to leave an email address? Then you can start to track which type of marketing strategies are the most cost effective? You might try a campaign on facebook, hold a raffle, buy some google adwords, etc.

• The rubric for grading will fundamentally be about how carefully you thought through your marketing experiments and quantified them. How many different types of marketing campaigns did your team try? Were these generated based on insights into what might work from your customers? Did your team calculate your cost of user acquisition? If so, did you try some new tactics to lower it?

OEP Overview

• Sales • If you have a consumer web product or if you have a physical product or are selling to other businesses your sales process may look very

different. Nonetheless, there will be some type of sales funnel or process. If you're selling to a business, who are the key decision makers? What does their process look like for approving a sale? How long does it take? Can you brainstorm several possible sales strategies and order them from cheapest and easiest to the most expensive. Start with the cheap or free ones (contacting your network). Can you try to make a few initial sales? Which strategies or tactics seem to work best? Where to potential customers get stuck and why?

• Here you will be graded based on how well you experimented with the sales process (if applicable to your startup). Did you outline a few sales strategies and track how well each of them worked, starting with the lowest cost ones? Did you actually make any sales? How clear was it what your team learned from these experiments? Did it cause you to rethink any part of the business model? If you couldn't make a sale, what did you learn that you need to change? How long is the sales process for your startup from start to finish?

• Partnerships • Does your business model require partners? If you need a supplier or a distributor, can you reach out and talk to a few of them? What

information do they need? Are they potentially interested in partnering with you? If so, under what terms and conditions? What types of firms seem to be most interested in partnering with you? Do you have bi-directional relevance that Alex Rampell speaks about?

• You will be graded here on how well you reached out to potential partners and how much you learned about whether they'd be willing to work with your startup. How many partners did you meet with? DId you learn anything about which types of partners are interested in working with you? Did you learn something about which partners you need to target first to be able to get to others?

• Distribution • How will you distribute your product? Are there distribution partners you need to contact? Is your distribution through the web? How

much will setting up distribution channels cost you? Should you sell the product directly or through a third party or retailer? What is the best way to reach your customers? Who can you talk with to learn the best way to set up distribution for your company?

• Here you will be graded on how well you reached out to potential distribution partners or experimented with a couple of different distribution channels for your product. For a web product the distribution channel is the website along with how you deliver the service, experience or how you get the product to the end consumer. How well did the team track what worked and what didn't in their experiments and meetings here?

• Costs • What are your costs and how can you get them to be as low as possible? See if you can estimate the cost of goods if you're producing a

physical product. If you have a service or a website, then how much will personnel cost you in the first year or two? How much will server space and hosting cost you? Do you need customer support? I don't want you to spend a ton of time on financial models that will never come true. However, to check whether your business model is viable, you need to get sense for whether the dollars coming in through revenue will be greater than the dollars flowing out in costs

• Did your team make clear whether the per unit costs are lower than the per unit revenues? Is your business model currently viable? If not, what needs to change to make the revenues higher than the costs? I don't necessarily want to see a huge formal financial model out to the 6th year. That would be overkill and these are never correct. But you should be tracking and calculating your costs in terms of materials, hosting, people's salaries, etc. to know whether your business model is viable

OEP Overview

• Revenue Model • How will customers pay you and how much are they willing to pay? Is a subscription model better than a one time payment? Is it better to

rent to them or sell? Does a freemium model make sense and if so, what features will people pay to upgrade for? Run some tests with customers to see what the best revenue model would be. Are you planning to make money through advertising? If so, contact a few potential advertisers and see if they are interested and how much they would pay you. How many users do you need for them to be interested in advertising on your site. Try to think outside of the box and not just rely on advertising-based business models. It's great if you can have a few different potential revenue streams to test out. Are there other ways you might charge for the product or service? Which might yield the most revenue? How do you know?

• You will be graded here on how well your team tested alternative possible revenue models. How will the team make money? Did you walk through the entire process of how exactly a dollar moves from the customer's hands to the startup? Did the team brainstorm alternative possibilities? If the team thought advertising was the right model did they actually talk to potential advertisers? If it was a monthly subscription, could they get a few paying subscribers? Are the users and the paying customers different (like for Google)? If so, were both sides tested? If the revenue model is lead generation, did the company actually try to get paid for generating a few leads?

• Risk. • Regarding financial, technical, people, and market risks; which one is of most concern? Which would you choose to address first and why?

How would you manage or minimize each of the high- priority risks going forward? • Partners and Allies. • Who will be your major partners? How will your product be made? Will your company produce all of the parts, or will it use external

suppliers? How would you go about attracting these partners and allies to work with your company? • Funding. • How would you fund your venture? Would you bootstrap, take money from venture capitalists, take funding from a corporate investor, etc?

Storyboard

1. Who we are: Team 2. Overview of market opportunity: OAP/Problem statement3. Business canvas4. Our business model & product offer5. Detailed schematic/offer6. Sales & marketing7. Partnership & distribution8. Costs & Revenues9. Risks & Funding

Our Team

• Engineers and technologists with over 100 years of combined experience: Deploying Utility communications : architecture, design & business case IP Communications Building complex communication devices

• Global presence in North America, Europe & Asia• Deep experience working with both startup companies and industry leaders• Partnership with key industry leaders

August 1, 2013 Page 7IPe Confidential. All Rights Reserved

Overview – Problem Statement

The utility sector includes a broad umbrella of companies who provide natural gas, electricity, water, steam, sewage removal, and related services to a variety of end customers.

In the last 25 years, these companies have made sweeping changes to their delivery models because of fluctuating energy demands, governmental regulation, volatile pricing, integration of renewable energy sources, and extreme competition. With ever-increasing pressures to further modernize delivery, utilities are turning to solutions such as Advanced metering infrastructure (AMI), automatic meter reading (AMR) technology, smart grid, end-user consumption control, and demand based pricing to save money and gain more insight into the utility usage across the grid.

IPenable is focused on electric power utilities. Electric power companies handle power generation, transmission and distribution to the end customer. IPenable designs communications solutions around existing technologies for device vendors & electric power utilities who are focused on Advanced Metering Infrastructure (AMI), Distribution Automation (DA), and SMART Infrastructure solutions.


Key Resources

Key Activities

Cost Structure Revenue Streams

Customer SegmentsValue Proposition

Channels

Customer Relationships

Key Partners

• Cisco: Enable integration of Cisco products & services with OEM solutions.

• Verizon: Enable integration of Verizon services with OEM solutions.

• Other partners/suppliers include companies that provide specific solution components of our offering.

• Build & maintain strong partner relationships.

• Product development & implementation

• Partnering/biz dev• Technical

architecture/ integration

• Sales engineers

• IoT engineering solutions (devices/ applications/ services/XaaS) that enable IP integration & management by leveraging key partner offerings.

• Customer problems solved include providing them with a lower cost, fast time to market comms offering.

• Product/service bundles:?

• Key inherent costs• Most expensive resources• Most expensive activities

• Become source of IP networking information for our customers

• Value customers are willing to pay for• What do they currently pay• Revenue model• Pricing tactics

• AMI, DA & smart infrastructure (lighting, parking meters, etc) vendors requiring FAN connectivity.

• Most important customer requirements:• Outdoor deployment• Predictable density• Low power• Unreliable PHY layer• Low data rates (<100

Kbps/day)• No real-time control

requirements.• Forward looking, IP

friendly, need for deterministic communications.

• Focus on US initially

• web site• Conference/Trade

shows/white papers/books

• Customer education• Joint partner

marketing/biz dev• Sales engineers

NewCo Business Canvas

IPenable Offers Engineered Solutions For AMI, DA & Public Infrastructure Device Manufacturers

Vision Offering

Services & Solutions For Smart Infrastructure Companies & Utilities

Focused on the AMI, DA and smart infrastructure service verticals (utility/energy, lighting)

Support plan, build & operate for end to end AMI communications solutions with partners like Verizon & Cisco

Integrate IP solutions into devices to improve communications and allow for new services

Embed low-cost, highly reliable IP-based communications modules

Provide IP Communications for Smartgrid devices

Support development of the Internet of Things (IoT--50 billion+ devices/$14T in revenues by 2020)

Create next generation of energy and utility management solutions

Enable the massive shift towards Smart Utility solutions

IPe combines best-of-breed solutions with custom engineering services to provide hardware, software and services that enables manufacturers to quickly & inexpensively integrate low cost communications into their devices


DeviceWide Area Network

Comms.Head End

Appn HEUtilityData Center

IPe

Partner

Field Area Router

13 2

Requirements:High functionality, low cost connectivity

Leverage industry-leading & ubiquitous solutions that are reliable & scalable

Fast & easy access to required data & device controls

Solutions:IPembed

Firmware + Engineering services to embed low-cost, highly reliable

communications modules

IPmanage

Devices and applications that improve communications and data

management.

IPoptimize

Services to support the planning, building & operating of IoT device

communications.

123

WAN

2

Services and Solutions Based On Best-of-Breed Platforms

Page 11IPe Confidential. All Rights ReservedAugust 1, 2013

Sales and Marketing

Key decision makers include the Business Decision Maker (BDM) and Technical Decision Maker (TDM). At the utility level IPenable works with the power distribution project manager and IT infrastructure network operator of the AMI/DA platform. Decision makers at the vendor level are typically the CTO or the project engineering team responsible for the device communications solution.

• Prospecting is always the first approach to a sale and the least expensive. Making calls is an integral part of success for a business model of any kind.

• Resources of social media such as Linkedin, Google+, Facebook, and Twitter are immediate and direct ways to• connect with KDM’s.• Introductions through suppliers and vendors in an adjacent space work well to get the vision of our solution in

the hands of those who will make a direct impact with it.• Conferences & Industry trade shows such as: DistribuTECH, CES, and formal partner events will grow our

business model• Electrical & Utility Associations are key to driving our brand, image, and solutions.• Online advertising, trade magazine, and direct mail are other sources of sales strategies

Part of the sales cycle for customers in the utility and vendor space includes providing an architectural roadmap & business justification for the IPenable solution as well as actual design & schematics. IPenable will act as an extension of the vendor or internal utilities engineering team. Vendors will often start with a small consulting arrangement to address critical roadblocks and establish rapport prior to establishing a large, long term partnership. Smaller engagements could be one-off consulting contracts, while larger engagements would likely utilize a more formal RFI/RFP approach.


Sales and Marketing


WAN

APPLICATION H/E & NETWORK MANAGEMENT

SECURITY & AUTHENTICATION

DEVICE MESH NETWORK

FIELD AREA ROUTER

Utility Requirements:• Multi-service Field Area Network that can support AMI & DA• Highly secure & reliable communications • Simplify handling of multiple proprietary protocols• IPv6 addressing• Select the optimal communication solution that can evolve to support future requirements Device Manufacturer Requirements:• Augment existing engineering teams with IP Communications expertise• Meet current & future communication requirements• Meet the Total Cost of Ownership (TCO) targets• Combine best-of-breed components• Utilize the optimal design• Follow a lean engineering process IPenable Solution Specifications:• 802.15.4-based IPv6 mesh with QOS and mesh algorithms to optimize reach & reliability• 6loWPAN and RPL based

IPembedFirmware + Engineering

services to embed low-cost, highly reliable

communications modules

IPoptimizeServices to support the planning,

building & operating of IoT device communications

IPmanageDevices and applications that improve communications and

data management

MARKETING: Lean IP Engineered Utility Solutions

IPembed Firmware + Engineering Services

• Combine best-of-breed communications modules and firmware to enable smart devices.• Offer board-based, chip-based and software-based solutions to meet customer requirements.• Offer custom design and engineering services to provide IP communications for devices.


DA, AMI, Infra-

structure Device

ProtocolConversion

D/A

Data Encoding

IPv6 Encapsulation

& Management

802.15.4 Physical & Mac Layer

Mgmt

RF Tx/Rx (FSK, DSSS,

OFDM, etc)

uP Resources (memory, etc)

uProcessorI/O

System ClockClock

Management

Legacy/ Proprietary Protocols

Analog Data

Digital Data

Services & Solutions For Smart Infrastructure

IPenable is focused on the energy and smart infrastructure service verticals. Today’s utility & municipal customers are demanding equipment with the latest in communication technology & device connectivity.

• Low Cost: Utilize open-standards based solutions that allow for a choice of products that leverage scale economies

• Future Proof: Non-proprietary interfaces that ensure continued availability of low cost communications equipment

• Secure: Native IP reduces use of field interfaces that can be compromised• Faster Time to Market: Team that can work with your engineers to quickly understand

communications requirements & design the most effective solution


Requirements: Partnerships & Distribution—Due Aug 4

Type Of Partner Companies Contacted Level of Interest/ Required Information/Notes

Communications Solutions Providers (for comms solutions)

• Cisco: www.cisco.com• Paradox: www.pdxeng.ch• Sensinode:

www.sensinode.com

• All were interested due to bi-directional relevance (we would be a value-added reseller/OEM)

• Level of interest varied based on strength of our existing offering & customers. Start ups like Paradox & Sensinode were more interested in partnering with other startups; Cisco wanted to see strong list of prospective customers.

• Information that they wanted was NDA, list of customers, company credentials, signing up for developer network.

• Plan on targeting Cisco first due to their market presence and solution synergy.

Component Manufacturers(for board & chip-based components)

• Texas Instruments: www.ti.com

• TI is interested in a vendor-customer relationship where they sell us the components at list price. Since this offers a limited competitive advantage we will seek smaller suppliers/TI partners that will be willing to support required customization/better price discounts.

Service Contractors(for contract labor & specialized subject-matter experts)

• Practical Telematics: www.practicaltelematics.com

• Interested in partnership & joint Go To Market. They hav ethe technical skils required by IPenable & we offer them an expanded market presence.

• They are willing to move forward quickly since they are of a similar size & have a complementary offering.

http://www.cisco.com/

http://www.pdxeng.ch/

http://www.sensinode.com/

http://www.ti.com/

http://www.practicaltelematics.com/

http://www.practicaltelematics.com/

Requirements: Partnerships & Distribution—Due Aug 4

Type Of Distribution Channels

Activities/Companies Level of Interest/ Required Information/Notes

Direct Sales • Develop contact lost using Linked-In, Conference participation, web search

• Cold call to set up initial call

• Sell through direct sales/ business development team

• This will be our primary channel due to the challenges of establishing trust with the customer & working through a complex sales cycle that includes lots of joint planning & consulting.

• We have two individuals on the team that are primarily focused on signing up customers. We have had good success & requests for follow up conversations from all 3 customers contacted so far.

• We need to qualify customers better so we only spend time with customers that are willing to buy. Given the long sales cycle & the required resource investment, we need to be more effective with respect to how we manage the direct sales effort.

• Cost

Channel Partners • Uptown Services www.uptownservices.com

• This is a strong complementary channel due to our opportunity to leverage existing customer relationships to position our services. This will require the direct sales team to work with the channel partners to position the IPenable offer.

• Uptown has proved to be a good fit due to the fact that they currently consult with utilities and are able to introduce IPenable to their customers.

• We have struggled to find companies that offer the right fit in terms of existing relationships, services offerings & a synergistic culture. We expect that we will only have a few (2-3) partners of this type due to the depth of relationship required.

• Developing the right revenue-sharing and joint-delivery model is key for these engagements.

Prospecting Channels

• Website www.ipenable.com

• Conference participation (www.distributech.com; www.utc.org etc)

• We have launched our website and have also signed up for participation at some of the industry conferences.

• Since our presence with these channels is still nascent, we have yet to see much leads/success from these channels. We wil need to spend a lot more time & effort building up these channels since they will help identify leads and build our credibility with our potential customers.

http://www.uptownservices.com/

http://www.uptownservices.com/

http://www.ipenable.com/

http://www.distributech.com/

http://www.utc.org/


IPenable operates a lean business model: as a design and strategy firm we have work to keep relatively low overhead costs so that we can evolve our offering based on customer feedback. Our primary cost is time spent developing customer leads and developing our proprietary services: IPembed, IPmange, and IPoptimize.Costs:

1. Time - Network Consulting and Design2. Chip or Board based Hardware Development3. Website - Maintenance4. Travel - Customer Meetings

Time - Network Consulting and Design (Salaries)• As a IP design and consulting firm, our biggest cost is the time involved in research and development of communications solutions that

can support our partner’s technology. Since we don’t have a compensation model in place, it is hard to quantify the cost of the time we are spending on these strategic and technical business development activities.

Chip and Board-Based Networking Solutions (Materials)• IPenable’s IPembed solution includes a chipset with software and circuit layout. Our customers will most likely integrate that solution

into their circuitry and do the final manufacturing themselves. We are still working with partners to determine some of the specifics for integration between IPembed and existing solutions. IPenable has developed three use cases based on hypothetical partner capabilities.

**Embedded price = chips only.

Module price = solution we will provide to other customers.1st solution: 900MHz Network CardEmbedded price: ~4 USDTarget Unit price: ~5 USD2nd solution: 2.4GHz Network CardEmbedded price: ~7 USDUnit price: ~10 USD3rd solution: It's a mix of 900MHz and 2.4GHz ISM bandEmbedded price: ~8 USDTarget Unit price: ~10 USD

Costs


Customers will pay IPenable to design end-to-end networking solutions that supplant their existing utilities infrastructure. IPenable is in the early stages of working with a few customers on developing a IPv6 integration strategy; these initial projects will smaller consulting projects that could range from $100K - $500K* and could expand to larger-scale technology build-outs with proprietary communications embedding ($500K - $5M*.)

Is a subscription model better than a one time payment?At IPenable, we have a fee-for-service cost model which is project based and dependent on the size and scope of the network communication buildout.

**These are hypothetical estimates based on existing customers - The size and scope of each project could affect and change these estimates substantially.

Costs Cont’d


Is it better to rent to customers or to sell?Sell - for now: IPenable sells IP communication expertise as well as proprietary solutions to build out intelligence in a utility network. As part of our consulting services, we integrate proprietary solutions which include hardware (e.g. a chipset that adds intelligence to a field area router.)Future - managed services: IPenable also is developing a solution called Ipmanage which will include software and data analytics as a managed service. This offering is a differentiation point that will also create a recurring revenue stream.Run some tests with customers to see what the best revenue model would be.Our customers have been interested in engaging IPenable to help with specific projects relating to IPv6 communication with opportunity for additional communication-related projects that would add value to their products.Are you planning to make money through advertising?Right now, IPenable is not trying to make money through advertising. We have begin marketing ourselves at relevant channels including trade shows, business associations, and industry affiliated groups. IPenable also has a social media presence through well-known channels like Facebook, Twitter, LinkedIn, and Google+.Try to think outside of the box and not just rely on advertising-based business models.IPenable provides boutique consulting design services to a niche in the utilities market. We are developing a service for this industry but with a lean business model, our plan are to expand the offering to other verticals that could benefit from improved connectivity and Internet of Things intelligence.IPenable Revenue Streams:IPenable has three core offerings that provide the potential for multiple revenue streams and business expansion. Currently, customers that we have met with are most interested in our IPembed solution because utilities are increasing their investments in AMI and DA infrastructure and they are interested in migrating communications to IPv6.

Revenues


1. IPembed: consulting, hardware, partner technology integration - chip or board (hardware) based to support partner communication solution2. IPmanage: consulting and partner technology integration3. IPoptimize - consulting, SaaS, managed serviceCash Flow: From Customer to Start-Up- Customer meets with IPenable team to discuss project.- IPenable provides design solutions and engages a preferred partner.- IPenable drafts design specifications and scope of project with associated costs.- Customer gets budgetary approval to move forward with the project.- Customer pays IPenable upon completion of consulting and design or in predetermined increments for managed service.Conclusion: Based on IPenable’s current and future costs of doing business and the revenue we can generate from our IP design solutions (as tested through customer engagements),we are confident that we have a profitable business model. We understand that while our overhead is almost negligible right now, our model still works when welook at the project opportunities that our target customers will be taking on in the next 2- 5 years.

Revenues Cont’d


RISK: We have engaged multiple vendors who are interested in the design expertise IPenable can offer. Because our team includes experts in the IP communications space, our business value will extend beyond utilities and support the Internet of Things technology adaptations.

FUNDING: IPenable is currently bootstrapping and interested in sharing our business roadmap with venture capitalists to further identify growth opportunities.

Page 24IPe Confidential. All Rights ReservedAugust 1, 2013

IPenable OEP

Business

point quality

point market grading

marketing strategies

marketing page

marketing experiments

business model grading

final team presentation

right marketing strategy