1/11/2001C o n f i d e n t i a l 1 Active Ingredient Business Models or “Who Do You Want to Be in 2001?” Tracy Weatherby

1/11/2001C o n f i d e n t i a l 2 Active Ingredient What Business Models are Getting Funded? Businesses that can project profitability from a proven business model within a couple of years “Monetizing” your idea

1/11/2001C o n f i d e n t i a l 3 Active Ingredient What’s Not Getting Funded? Everything else

1/11/2001C o n f i d e n t i a l 4 Active Ingredient Models Depend on Your Business & Your Market Software Hardware Content & Community Marketplaces Services Support

1/11/2001C o n f i d e n t i a l 5 Active Ingredient Software Models – Sell or license it By the package (i.e., shrinkwrap) Per processor Per seat Per organization Utility or transaction model – pay as you go OEM

1/11/2001C o n f i d e n t i a l 6 Active Ingredient Software Models - Rent it Subscription (Anti-virus software) Pure ASP / MSP / BSP (USi, Corio, Applicast/Agilera, Portera)  Monthly service fees  With or without upfront costs Monthly rental of enterprise software by the company who makes it

1/11/2001C o n f i d e n t i a l 7 Active Ingredient Software Models - Give it away Open Source / Shareware / Freeware  Sell the servers (Netscape Navigator, Adobe Acrobat)  Advertising (Driveway.com, Homestead.com)  Voluntary payments (McAfee)  Sell support services (Red Hat)

1/11/2001C o n f i d e n t i a l 8 Active Ingredient Hardware Sell it  Retail  B2B  Wholesale  OEM Rent it or lease it Give it away  Sell services or “razor blades” (Pitney Bowes)  Sell subscriptions (WebTV)  Sell advertising (Free PC)

1/11/2001C o n f i d e n t i a l 9 Active Ingredient Content & Community Sell it  Individual articles or items  One-time fee for total access Rent it  Subscription (NYT.com) Give it Away  Advertising (Yahoo – portals or infomediaries)  Direct marketing leads

1/11/2001C o n f i d e n t i a l 10 Active Ingredient Marketplaces / E- commerce Entities buy products directly from you (Amazon, Dell) Seller pays (eBay, Classifieds) Seller & buyers pay for access (Match.com) Buyer pays (Buying Clubs) Affiliate programs – others link to you (Amazon) Build your own marketplace for the savings (auto companies) Sell the software & services to build marketplaces (Ariba, CommerceOne)

1/11/2001C o n f i d e n t i a l 11 Active Ingredient Services Sell it  Per transaction (brokerage, on- line photos, etc.) Rent it  Subscription (AOL) Give it away  Lead generation (but for what?)

1/11/2001C o n f i d e n t i a l 12 Active Ingredient Support Per incident Package of calls Yearly maintenance contract as % of purchase price Flat fee for yearly contract Different prices for different tiers of support

1/11/2001C o n f i d e n t i a l 13 Active Ingredient How do you transition models? Carefully Thoughtfully Just once, if you can

1/11/2001C o n f i d e n t i a l 14 Active Ingredient An Example Great technology in a competitive market First: Decided to become a software marketplace After market crash: Became a services supplier to one end of the marketplace After the 12/00: Went back to being a software service or product for which companies will pay