Monetization: Open Letter to Investors and Stakeholders
Data1Qbit has the potential to make a LOT of money for its investors and stakeholders for one very important reason—it will provide valuable, relevant data that no one else has. This has been confirmed after an exhaustive review of our competition. (For info, see details in the Markets & Competition section of the Business Plan.)
In addition, we have myriad ways to monetize this data... but please allow me to start at the beginning.
Data1Qbit (D1qb) is an IT system designed to collect all possible data about cyber security companies and the products they make on a 24/7/356 basis. Building this system will cost a substantial sum of money—precisely because it is not a trivial system. No one else has one like it. Our data will be deeper, broader, more current and, as a result, more useful than any of the other data currently being provided. In addition (and importantly), our data will be vendor-neutral; we will not be financed by vendors, but by our customers. Big difference.
Ways we collect the data:
1) We do a vast amount of web data extraction (scraping).
2) We perform manual data collection and analysis.
3) We acquire user-input data through various techniques.
4) We acquire data from public databases.
5) We purchase it from a number of different sources (D&B, for example).
After collection, we organize, structure, analyze, mine, and prep the data for sale, utilizing a wide range of products and channels that are targeted at various markets (also described in the Markets & Competition section of the Business Plan)
In terms of products and target markets D1qb is not a one-trick pony. Our vendor assessment platform (VAaaS) helps companies and organizations determine their requirements and then presents them with choices of possible vendors that can meet their needs.
Our data-sharing component provides specialized data to specific industry niches, such as the cyber security industry, which requires vendor data in order to determine customer risk profiles. At this point in time, cyber sec insurance companies are operating somewhat in the dark, as such comprehensive data is currently unavailable. (This, from the horse’s mouth.)
Target markets include:
1) Business and IT professionals making cyber security decisions in the 23M businesses registered with D&B
2) 3.6M CTOs, CIOs, CISOs and other IT professionals
3) 72K corporate procurement officers
4) 288K IT consultants
5) 8K IT VARs
6) 400K general business and BPM consultants
7) 253K investment analysts, investors, and financiers of cyber sec companies
8) Cyber security product vendors (approx 2,500)
9) Reporting companies, such as Gartner, Forrester, IDC, 451, Verizon, etc.
10) Cyber insurance companies
These target markets will be presented with highly affordable vendor assessment options via a carefully crafted Sales and Marketing Plan supported by the following marketing budgets. Totals by year:
$277,000 (2016) | $474,000 (2017) | $775,000 (2018) | $1,210,000 (2019)
In addition, we will sell a range of data and information products. Near-term, they include:
- Various cyber security product and company newsletters and daily bulletins customized and targeted at multiple target markets, such as the insurance and financial services industries
- Customized, on-demand data sharing via SIVO (Security Industry Vendor Ontology)
- Consulting, partnership, and other identified revenue streams
A quick 4-year summary of revenue projections (2016-2019) is located below. The first thing you will see is that if the business performs anywhere close to what we are expecting, Data1Qbit will be a “big data” business with VERY high margins, earning a great deal of money.
| 2016 Units | 2016 Revenues | 2017 Units | 2017 Revenues | 2018 Units |
2018 Revenues | 2019 Units |
2019 Revenues | |
| Total VAaaS Subscriptions/Seats Sold | - | - | 46,621 | 7,403,111 | 102,960 | 19,860,392 | 131,264 | 30,807,151 |
| Newsltr-Bulletin Subs sold | - | - | 6,210 | 3,475,510 | 11,300 | 4,660,500 | 15,675 | 9,834,150 |
| Pre-launch VAaaS orders sold | 3,000 | 597,000 | 1,500 | 298,500 | 1,500 | 298,500 | 1,500 | 298,500 |
| Data report product sales | - | - | 2,223 | 59,727 | 14,824 | 413,376 | 18,950 | 1,038,550 |
| Industry data sales | - | - | 14 | 1,650,000 | 42 | 10,950,000 | 84 | 36,175,000 |
| Consulting sales | - | - | 150 | 35,000 | 1,950 | 450,000 | 3,000 | 975,000 |
| Country rights sales | - | - | ||||||
| Affiliated product sales | - | - | 761 | 19,013 | 1,992 | 49,791 | 2,460 | 61,488 |
| Data as a Service sales | - | - | ||||||
| Silo Sales | - | - | - | - | - | - | - | - |
| Total Sales | 597,000 | 12,940,860 | 36,682,559 | 79,189,839 | ||||
| Total Operational Expenses | 8,917,952 | 10,996,698 | 16,662,151 | 27,855,425 | ||||
| Cash Flow | (8,320,952 | 1,944,162 | 20,020,408 | 51,334,414 |
Actually, I believe the reality will be even better than our projections. My whole nature is to question things and look for what is wrong—it's always what you don't know that’s going to kill you. But this deal has all the elements of mega success.
As you review the projected revenues, please note that in 2017, we project $7.4M in sales for 46.6K VAaaS seats sold. That comes to an average of $159/seat. We make the assumption that most of the sales will not be annual sales, but will be shorter-term subscriptions. Also, note that in 2019, we project the sale of only 131K seats, averaging $234 each out of the short-term and very-targetable markets previously described.
We firmly believe that with THIS product at THIS time… and with the marketing plan we have built, these are very achievable numbers.
With respect to the various newsletters, bulletins, and other report products... these are projected to have sales prices of between $97 and $297 per year. And please note the low subscription numbers there, considering we are selling unique information addressing a national emergency. I predict we'll do MUCH better than our projections, but I prefer to err on the conservative side.
If you will, think about the unique way we collect and mine data... a methodology that allows us to deliver cyber security vendor and product knowledge in ways that NONE of our competitors can match. They cannot do it unless they build an IT system like ours. This will be extremely valuable data, and I already know that we are not charging enough—I have been told that countless times. That's OK... we will charge more as soon as we are comfortable that we can do so.
We need to address the line item titled “Industry Data Sales.” It represents another important way we intend to monetize our data. As you can see, this is a big line item. But before we dig into it, something else needs to be brought up again, and that’s SIVO (Security Industry Vendor Ontology). D1qb intends to be the builder, maintainer, and steward of this ontology—and this is hugely important.
SIVO is important because it gets everyone on the same page, so to speak, by facilitating the ability of diverse IT systems to communicate with each other. (See National Security Value of Data1Qbit for more information).
Our approach is to acquire government acceptance of this very specific SIVO (cyber security products and companies), and then present it to the cyber insurance industry for across-the-board acceptance, as I understand from consulting with them, they are eager to do. The insurance industry intends to roll it out over the rest of the commercial sector because it is critical for sharing data with their millions of clients.
After the SIVO is well underway, D1qb will be positioned for interoperability with other industry IT systems—and also for machine learning. We will then be able to take data requirements directly from any other IT system and immediately respond with the custom data requested.
Now, to return to my mention of “Industry Data Sales” a few paragraphs ago. As you can see by reviewing the financial projections, the numbers are quite substantial—as is the size of the insurance industry itself. This industry as a whole is comprised of several distinct groups:
- 55 cyber insurance companies (20 mega-sized companies, plus another 35 large companies)
- 50 large metropolitan cities that self-insure with re-insurance as a back-up
- 500 large corporations that self-insure with re-insurance as a back-up
There are various details regarding how we plan to charge insurance companies and self-insuring entities for our data streams, but please note that in 2017, we project 14 such customers and $1.65M in revenues... averaging $117K per customer. By 2019, we project that we'll be selling our data to (only) 84 insurance companies, large enterprises, and governments… with $36M in revenues and at an average $430K per customer. That's not much money for a custom data-stream/service for a large enterprise customer. (I am happy to discuss the assumptions around this in greater detail.)
And lastly, you'll notice that there are various potential revenue line items that show no revenue at all. Frankly, the other numbers are already so good that to pile on additional sales may be a disservice to D1qb’s financing efforts, so I have not factored in any revenues there. But a couple of those could be very significant.
Also, please note that as a "platform company," D1qb is positioned to support VCs and other partners as they leverage off D1qb's intelligence-gathering capabilities to further monetize the data in ways that benefit them specifically.
And finally, our long-term ability to clone the system and move into other technology verticals using OPM is not to be overlooked—this is a huge thing.
Clearly, there are multiple avenues to pursue in monetizing Data1Qbit. But basically, it is an issue of supply and demand. If this system is built immediately, we will control the supply of some very critical and important information, and the demand for it will be voracious because we’re already in a hair’s-on-fire situation with regard to how to protect ourselves. Product and vendor data is needed more now than ever before—and by a widely expanding number of companies and organizations worldwide. I really don’t think this is hyperbole. (Additional info about investment returns can be found in the Business Plan’s Financial Data section.)
My hope is that this has presented a clear picture of what D1qb is all about—and what an amazing investment it is. Please contact me directly if I can answer any questions, and if you would like to take a look at the Confidential Documents, I will be happy to give you login credentials.
Best regards,
Ray Hutchins
Founder, Data1Qbit