An Exit Strategy M.B.A. Capstone Project AUGUST 5, 2016 CSU SAN MARCOS Prepared by: Michelle Svoboda P a g e | 2 Table of Contents Executive Summary ................................................................................................................................... 4 The Project & Objectives........................................................................................................................... 5 Methods .................................................................................................................................................... 6 About ItsPayd ............................................................................................................................................ 7 About TewYu ............................................................................................................................................. 9 ItsPayd’s Value Proposition ...................................................................................................................... 9 What customers are the target market? ............................................................................................ 10 What are they (businesses) dissatisfied with? What is the current alternative to your service? ..... 11 What is the product? Why is it innovative? ........................................................................................ 11 It provides a solution to what problem? What are the specific (measurable) benefits? ................... 12 Situational Analysis ................................................................................................................................. 14 Mobile Phones, M-Commerce & Internet-of-Things .............................................................................. 16 Disruptive Technologies .......................................................................................................................... 18 Competition in Payment Processing & Business Tools Space ................................................................. 19 Subscription Based Businesses ............................................................................................................... 21 Sales Channel Assessment ...................................................................................................................... 22 Direct vs. Indirect Sales Channels ....................................................................................................... 22 Sales Channel for ItsPayd .................................................................................................................... 23 Implementation of Partner Program .................................................................................................. 24 Growth Model ......................................................................................................................................... 26 Gartner Hype Curve ............................................................................................................................ 26 Disruptive Technologies & Growth ......................................................................................................... 29 SaaS ..................................................................................................................................................... 29 Salesforce & CRM Services .................................................................................................................. 31 Twilio ................................................................................................................................................... 31 MailChimp ........................................................................................................................................... 32 FinTech: Payments & Growth ................................................................................................................. 32 Square ................................................................................................................................................. 33 Stripe ................................................................................................................................................... 34 PayPal .................................................................................................................................................. 35 Apple Pay ............................................................................................................................................ 36 Google Wallet ..................................................................................................................................... 36 P a g e | 3 A Simple Formula for Sustainable Growth .............................................................................................. 38 Core Product Value ................................................................................................................................. 38 Valuation & Acquirers ............................................................................................................................. 39 Acquirers ............................................................................................................................................. 39 Venmo & TewYu ..................................................................................................................................... 41 Recommendation .................................................................................................................................... 42 Industries ............................................................................................................................................ 42 Automobile Insurance ......................................................................................................................... 43 Cell Phone Companies ........................................................................................................................ 43 Utilities ................................................................................................................................................ 44 Conclusion ........................................................................................................................................... 44 Organic Growth ....................................................................................................................................... 45 Search Engine Optimization ................................................................................................................ 45 Search Engine Marketing .................................................................................................................... 45 Social Media Presence/Marketing ...................................................................................................... 45 A/B Testing .......................................................................................................................................... 45 Affiliate Marketing & Indirect Sales Channels .................................................................................... 46 Aggressive Growth .................................................................................................................................. 46 Acquisition or Partnership .................................................................................................................. 46 Funding ............................................................................................................................................... 47 References .................................................................................................................................................. 48 Appendices .................................................................................................................................................. 56 Appendix A .............................................................................................................................................. 56 Appendix B .............................................................................................................................................. 59 Appendix C .............................................................................................................................................. 60 Appendix D .............................................................................................................................................. 62 Appendix E .............................................................................................................................................. 63 Appendix F .............................................................................................................................................. 64 P a g e | 4 Executive Summary Businesses have been forced to restructure and evolve their operations because of disruptive technologies and the growth of FinTech. Along with this there has been a growing number of successful firms that are offering subscription as a service (or SaaS) software rather than purchasing a traditional license. ItsPayd has the potential to be in a prime position to make the company a viable target for an acquisition by a bank, credit union, or financial technology firm such as PayPal. The paper examines businesses in the industries