IronPort The Beginning

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IronPort The Beginning

• INDUSTRY LEADING ANTI-SPAM ANTI-VIRUS TECHNOLOGY

Scott Weiss Former CEO IronPort Systems, Inc.
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Agenda

• Email great market dynamics
• How big is this market?
• Which market segment to hit first?
• How to go to market? No mans land of
• Getting financed A core piece of the
  infrastructure
• A tale of two companies Ciphertrust vs. IronPort

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The email explosion
Email volume growth at 66 Email account growth
at 75 Avg. message size growth 192
Email usage (eMarketing Adoption)
Penetration (Wireless, International)
Avg. Email Size (HTML, Attachments)

• Terabytes per day

per year IDCFerris research
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The IronPort Email Vision
1) Throughput is Exploding
Email volume growth at 66 Email account growth
at 75 Avg. message size growth 192
Email usage (eMarketing Adoption)
Penetration (Wireless, International)
Avg. Email Size (HTML, Attachments)
Terabytes per day
2) Processing is intensifying - Anti Virus, Anti
Spam, Content scanning, Advanced routing,
Identity/reputation, Encryption
3) Mission Criticality is here to stay - Email
is todays factory floor
A new email platform is required
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Messaging primer
Enterprise
Yahoo Mail
Outlook Clients
Browser Client
Exchange MS
Custom MS
Outlook Clients
Browser Client
Internet
Marketing (CRM)
Commercial
Primary Needs Capacity  Manageability
Value-Added Features
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Corporate mail architecture
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How to attack the market?
Hire all-star tech team
Talk to potential customers

• Sam Rushing eGroups mailer (largest) Medusa
  Stackless python
• Eric Huss Listbot paypal infrastructure qmail
• Scott Dorr Hotmails DNS (largest)

• Interviewed 100 potential customers over 9
  months
• Feedback on pain points, competition, addressable
  market
• Beta/pre-release agreements

• Patentable, breakthrough technology
• Accelerated time-to-market

• Product roadmap
• Feature set (PRD)

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Gateway Market Summary

• 2.5B Market - 2002 Worldwide CAPX Spend

Market sizes do not include value of future added
functionality
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CM Market Methodology

• Email marketing and ISP email infrastructure
• Methodology
• Calculate average and peak volumes for each of
  8458 companies with significant volume in inbound
  ISP logs
• Apply addressable email volumes ? 4655
  addressable customers
• Segment market into 3 tiers based on
  infrastructure need
• Apply industry averages by tier for
• CAPX operational costs,
• email marketing message volume growth rates and
• 36 month hardware replacement cycle
• Generate annual spend for each customer tier
• Comparison
• 3.3 B 2002 total email marketing spend (not
  including ISP, 20)
• CAPX is therefore 4 of email marketing spend
  checks against customer data

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CM Market Size
Market Size
(s in 000s)
Market Segments
ACPA Average CAPX Per Account
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Sample Opportunities
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Enterprise Methodology

• Enterprise messaging gateways
• Methodology
• Determine populated portion of 4.3 B Internet IP
  address space (20)
• Ping sample of populated IP space for Internet
  mail (SMTP) support
• .mil and .gov not included
• Determine distribution of mail gateways per
  company
• Apply industry averages by tier for
• CAPX costs,
• email message volume growth rates and
• 36 month hardware replacement cycle
• Generate annual spend for each customer tier
• Results
• 5.6MM entities have a single mail gateway
  assume non-addressable
• 230,000 customers have multiple mail gateways
  addressable market
• 573,000 total addressable gateways
• Comparison
• Daniel Bernstein (qmail inventor) estimates 4 MM
  gateways (vs. 6.2MM)
• His sample includes empty IP space, skewing
  results

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Market Size
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Sample Opportunities
Undercounting in methodology - multiple
gateways represented as a single mail gateway
(load balancer)
Undercounting single gateway companies that
are addressable
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Customer interviews-overview
Marketers eBay Egghead Palm PayPal Travelocity
Services eCircles eCount eDialog eGroups Excite
eVite FreeLotto Topica Skylist
eMarketing Adv.com AvenueA Digital
Impact eCentives MyPoints Matchlogic NetCreations
Revinio
CRM _at_Once e2 Escalate Kana MarketSoft Personify
Responsys Talisma Vignette
Publishers c/Net Iconocast On24 WSJIE Ziff-Davis
45 contacted, 24 interviews, 11 scheduled in 4
weeks - 77 close rate Rejected for too early
(4), too busy (2), wrong person (3), competitive
(1)
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Customer feedback/analysis

• Commercial
• Need solution today
• Performance is critical
• Manageability for troubleshooting/scheduling
• Growth is dramatic, unpredictable
• Open to beta products/early adopters

• Enterprise
• Centralized control and manageability
• Security for intranet/WAN
• Messaging bandwidth costs
• Commercial apps cause capacity problems
• Adopts proven technology

• Interviewed 50 potential customers by phone
  and in person

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Product development path Bowling alley
Customer Messaging
TBD
Protocol upgrades
Bandwidth mgt.
V 2.0
Security
OEM
Reporting/control
Enterprise messaging
Value-added reseller
Administration
V 1.0
Mail engine (core)
Commercial Email
Direct Sales
Product
Customer
Channel
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IronPort Product Strategy

• Policy enforcement
• Scalability

• IronPort A-Series

• Scalability
• Delivery Monitoring

IronPort A-Series
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IronPort Product Strategy

• Security
• Inbound monitoring

IronPort A-Series

• Policy enforcement
• Scalability

• IronPort A-Series

• Bounce handling
• Response processing

IronPort A-Series

• Scalability
• Delivery Monitoring

IronPort A-Series
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IronPort Product Strategy

• Access/content control
• Security
• Inbound monitoring

IronPort C-Series

• Policy enforcement
• Scalability

• IronPort C-Series

• Bounce handling
• Response processing

IronPort A-Series

• Scalability
• Delivery Monitoring

IronPort A-Series
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Sales Plan

• Hire 2 sales Managers/Directors by 1 Jan 02
• Profile
• Experience with box selling
• Independent, creative, aggressive
• Proposed Ramp
• Q301 Q401 Q102 Q202
• 1 rep 2 reps 5 reps 8 reps
• - 50K 1M 2.3M
• Assumes
• Revenue per rep of 1.4M / year (comps at
  1.0-1.4)
• 6 Month ramp to full productivity
• Trajectory 10M year 1, 30M year 2

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Product line broadens over time
Direct
Average Revenue per Account (ARPA)
250K
Inside
50K
VAR
OEM
0.8
1.0
2.0
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Product Features
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F1500 Breakout
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Channel Update US Channel Market Segmentation
Total US Companies over 50 Employees 175,000
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International Sales Development
Phase III
Phase I
Phase II
Starting in Q4
Complete
Underway
Not Started
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Overview
Problem Broken, homegrown gateway
infrastructure cannot serve increasing
demands Opportunity A large, growing market
(2.4 billion) at a mission-critical corporate
chokepoint Solution Unique technology platform
in an easy-to-manage appliance
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Evolution of the network infrastructure
OBSERVATIONS
Performance, security, and manageability were
paramount.
Custom O/S or tight O/S integration.
Buyers want appliances.
Commerciali-zation spurred innovation.
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Evolution of the network infrastructure
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Financing Schedule
Sept. Oct. Nov. Dec. Jan. Feb. March
Administrative
Meetings
Due Diligence
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A tale of two companies circa 2000

• IronPort
• Thinly capitalized
• Started in Customer Messaging
• Built scalable MTA, proved in high volume
  environment
• International early
• 2003 F500 market share 1

• Ciphertrust
• Well capitalized
• Started in Enterprise Messaging
• Built on top of Postfix got to market faster
• Tried to stay profitable lacked intl
  investment
• 2003 F500 market share 20