5W Inc. is a SaaS delivery based Microsoft™ centric range of workflow management products. From day one 5W was designed as a pure business play, so let’s dispense with any techno-babble and look at the business logic of why this investment option is the place to put your funds.
To that purpose, here is a review of the factors which have been the keystones of our design and approach: Market Positioning, Cost-Effective Business Solution, Tight Overhead Management, Brilliant Product Design, Significant Partner Incentives, Massive Customer Design Involvement and Exit Strategy. Each passed 5W management’s three tiered acid test of: Is it Sellable, Will it be Profitable, and How will it Multiply?
Market Positioning: The customer cost/benefit ratios of a SaaS based delivery (web based, yearly fees paid back in weeks) are so significant that after much study we now believe it to be inevitable. Every major player in the technology market (hardware & software) is spending major funds (billions) to transition into this environment. We are at the perfect juncture, past early adopter moving towards a broad market base.
Cost Effective Business Solution: The problem has become obvious, too much data not enough information in the hands of those who need it. Result: non-revenue producing business areas with unnecessary personnel overhead and a lack of accountability.
Tight Overhead Management: Part of the brilliant design was to build into the 5W products facilities addressing; major corporate software overhead areas like client support and product training, plus creating an in place, well incentive partnership base, all to minimize the margin eaters of the software industry business.
Brilliant Product Design: The vast majority of all business work-flow management and tracking processes are very similar. So, 5W designed a range of component functions common to all which can easily be reused (like Lego blocks). Now, new products can be delivered in weeks, not years, and our partners can create new product designs (and be compensated heavily for all of their product design sales) by filling out a few forms defining the attributes of their new solution. Every solution or product can interact with all other 5W products.
Significant Partner Incentives: Basically, every time 5W makes a quarter, the applicable partner for that area or product design will also make about 12-15 cents, based upon their level of involvement (they will, so to speak, get to wet their beak with every transaction). Every facet of the sales and marketing plan is predicated on creating and delivering a very tangible vested interest on their part to work with 5W. Since SaaS by its very nature will impact these partners’ current revenue base, new sustained recurring monthly revenues will likely be appreciated.
Massive Customer Design Involvement: Its taken years and two major reiterations of the product to address the business problem from the customer’s perspective of usability and satisfaction, not a vendor’s perspective. Our appreciation goes out to the many folks who sat through demo after demo helping us hone the efficacy of this product line for the real world.
Exit Strategy: Always start with an exit strategy! In this case, the industry has for all intents and purposes pre-built a process-like approach for applicable ISVs (Independent Software Providers). They treat us like a farm system and buy (billions spent yearly) ISVs, acquiring the most desirable. We have built this product with all Microsoft tools and products, so they find the synergy viable, even if only to keep this out of competitive hands. Seeing the EBITDA numbers starting in year three, the 5W investors may choose to keep the cash cow and disperse large dividends yearly.
Is it Sellable, Will it be Profitable, and How will it Multiply? Much more expensive versions of the old delivery mechanism of products of this type (client/server based) are still growing in sales (for many over 100% a year even in this time of fiscal restraint), although profits may be shrinking due to the high support overhead issues (5W won’t have those issues). We had an SVP of capital markets at a substantial firm provide us with independent formula for 5W valuation purposes, now and in the future. The formula are based upon EBITDA, not revenue. They are in our Executive Summary, available at your request. Even if we only hit 50% of our goals under these formulaic restraints, the numbers are significant. Net-net, the product line will hit the market five months after funding to allow for applicable initial marketing and training tasks. We, the 5W management and family and friends, have already spent approximately three million in cash and uncountable sweat equity hours, and we want a home run, not a base hit.
