Varsity CEO Summit Scaling Strategies CEO Case Study

The Pivot

Kip Quackenbush, CEO, Sendio

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Corporate Overview Year Founded 2003 – 10 Years on Feb 3rd Company Overview Our products protect email environments from attacks and abuse, and dramatically increase employee productivity by reducing the amount of time required to manage an email inbox. Using self-managing communities similar to those found in social networking applications, Sendio users receive all of the email sent by customers, suppliers, partners, friends, associates and other members of their “community” while being completely shielded from both nonsense messages sent by casual abusers and devious messages from malicious criminal concerns. Product(s) & Delivery Email Security & Productivity Service via Hosted, Appliance, Virtual Appliance Business Model Annual Subscription, Focused on SMB, SLED Capitalization Venture. $14M. Two rounds. Key Milestones Achieved 2012 Cash Flow Positive/Profitable 450 Intensely Loyal Customers – 90%+ renewal rate Patent suit settled after two year “dormant” period

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Company: Sendio Sector: Messaging Security & Productivity Primary Value Prop: A Clean Inbox Company Stage: Restart

Key Competition: Barracuda, Symantec, Trend Micro, McAfee, Cisco, Google (Postini)

The Challenge

•  Messaging Security market highly saturated

•  Commodity business creates downward pressure on margins

•  Takeaway business requires significant spend to steal market-share

•  Market maturity w/ sizeable competitors creates significant R&D spending hurdle to stay competitive/relevant with ‘security’ features

•  Do we go Enterprise? •  What about going 100% channel? •  Do we add more products to create a

Smorgasborg? •  What’s the corresponding $XXM in

investment required? •  Where is our value?

•  How do we change the conversation? •  Are there other markets where we fit?

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Transcend Messaging Security Market

•  Employees send and receive an estimated 110 emails a day, according to the Radicati Group. That's expected to increase by 15% by 2015.

•  In 2012 more than 50% of all email was accessed and read on mobile devices •  A McKinsey Global Institute report calculated that employees spend about 28

percent of their time managing email, among the least productive and time-consuming parts of their day

•  In the US, surveys show that lost productivity due to email was costing industry between US$17 billion to US$21 billion annually

•  In a 2010 survey of 1700 knowledge workers by legal publishing house, LexisNexis, half of the respondents claimed that only about 50% of their emails – on average – were relevant to getting their jobs done

•  There is another market out there…. •  The continued increase in time spent “on email” and the corresponding loss of productivity

is encouraging more innovative product approaches and attracting VC dollars and M&A: •  Some recent M&A activity in this sector:

•  Rapportive purchased by LinkedIn for $15m in Feb. 2012 •  Raised $1m….NICE return

•  OtherInbox purchased by Return Path in Jan, 2012 •  PowerInbox acquired by ActivePath in late Nov, 2012 after raising $10m

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Transcend Messaging Security Market

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Anti-Spam/Security Market Inbox/Task Mgmt. Market

Email Productivity Market

Sendio Security Services Sendio Productivity Services

Commodity Value

Strategic Approach Step 1: Market Pivot •  Migration to ‘Email Productivity’ (aka, inbox management) •  Combine security value proposition with productivity value proposition •  Focus on the “positive” security model - predicated on building trusted communities

Step 2: Messaging Makeover •  Migration from Plain Jane to Fun & Edgy •  From technical messaging to emotional messaging •  “Join me” – the time is right thanks to the social platforms

Step 3: Go 100% Digital •  Implement an aggressive product marketing strategy to generate awareness & interest •  Strive for a strong and growing viral co-efficient, FAST/FAIL methodology •  Leverage our unique touch points (invitation and the thank you emails)

Step 4: Get Aggressive •  Generate velocity & critical mass in market adoption in order to put Sendio on the desired

trajectory

Step 5: Double Down on Productivity •  Create Upsell Opportunities with Sendio Productivity Suite for Business and enter the Consumer

market

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Issues & Mitigation

Dealing w/ turbulence

Issues •  Stand the existing business back up before any new investment is made •  Adhere to a capital efficient model to drive growth •  Existing business will fund the next product targeted at business •  New money is required to enter the consumer market •  Change in culture of the company – this is new stuff!

Mitigation •  Engaged Accelerate-IT with BOD •  Answered the question “what’s different this time around” and the folks are

energized •  Most likely will raise a new round

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Results & Learning

•  Re-launched the business on Feb 1 (in a public way)

•  Changed our thinking and planning processes to include “Sendio 2.0” in everything we do

•  2013 off to a great start – all initial milestones have been met

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Current Sendio.com

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It’s the BEST Deodorant

•  Don’t let your ego/domain expertise get in the way of finding new ideas and paths to take

•  A well rounded and eclectic group of thinkers will always come up with something new

•  Make sure the BOD is involved in some of the process

•  And finally….

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