# Business Model Options

## Overview

This document evaluates all business model options considered for the industrial IoT venture, with analysis of viability, capital requirements, and strategic fit.

---

## Option 1: Integration Consulting ✅ RECOMMENDED (Phase 1)

### Description
Provide OT/IT integration consulting services to manufacturers on a project or hourly basis.

### Services Offered
- PLC programming for data export
- Edge gateway setup (on customer hardware)
- MQTT/OPC UA configuration
- Grafana dashboard deployment
- Cloud integration (AWS, Azure, GCP)
- Training for customer teams

### Revenue Model
- **Hourly**: $150-200/hour
- **Project-based**: $15k-40k per project (100-200 hours)
- **Small retainer**: $2k-5k/month ongoing support

### Economics
**Capital Required**: $500
- LLC filing: $100-300
- Basic website: $0-200
- Business cards/marketing: $50-100

**Time to First Revenue**: 30-60 days

**Year 1 Potential**: $100k-200k (5-10 projects)

### Advantages
✅ Fast to revenue (30 days possible)  
✅ Minimal capital required  
✅ Validates market demand  
✅ Builds network and case studies  
✅ Customer-funded (use their hardware)  
✅ No infrastructure costs  
✅ Flexible schedule (works around full-time job)

### Disadvantages
❌ Time-for-money (limited scaling)  
❌ No recurring revenue  
❌ Project-based lumpy cash flow  
❌ Requires constant sales

### Strategic Fit
**Perfect for Phase 1**: Generates cash, validates demand, builds relationships for future platform customers.

---

## Option 2: Edge Monitoring Platform ✅ RECOMMENDED (Phase 2)

### Description
Multi-tenant edge monitoring platform hosted on GTHost dedicated servers using LXC containers.

### Services Offered
- MQTT broker per customer
- InfluxDB time-series database
- Grafana dashboards
- Alert management
- Remote monitoring and support
- Data backup and retention

### Revenue Model
**Service Tiers:**
| Tier | Price/Month | Features |
|------|-------------|----------|
| Basic | $1,500 | 10 sensors, 30 days retention |
| Pro | $2,000 | 50 sensors, 90 days retention, mobile app |
| Enterprise | $3,000+ | Unlimited sensors, 1 year retention, custom |

**Setup Fee**: $5k-10k one-time

### Economics
**Infrastructure Costs:**
- GTHost server (8 cores, 32GB, 1TB): $100-150/month
- Capacity: 8-10 customers per server
- Revenue per server: $12k-30k/month
- **Gross margin**: 85-90%

**Capital Required**: $1,000
- First 2 months GTHost funded from consulting revenue
- Development time: nights/weekends

**Break-even**: 2-3 customers

### Advantages
✅ Recurring revenue (sticky)  
✅ Highly scalable (multi-tenant)  
✅ High margins (90%+)  
✅ Leverages LXC expertise from ZLH  
✅ Edge-first (no AWS conflict)  
✅ Can add customers to existing infrastructure

### Disadvantages
❌ Requires infrastructure investment  
❌ Technical complexity (multi-tenant)  
❌ Support overhead  
❌ Longer sales cycle than consulting

### Strategic Fit
**Perfect for Phase 2**: Transitions consulting customers to recurring revenue, builds platform moat.

---

## Option 3: Virtual PLC Management ⚠️ PHASE 2-3

### Description
Deploy and manage soft PLCs (CODESYS) on customer hardware or GTHost servers.

### Services Offered
- Soft PLC runtime deployment
- Remote management and monitoring
- PLC programming services
- Backup and disaster recovery
- Redundancy and failover

### Revenue Model
- **Setup**: $10k-30k one-time
- **Monthly management**: $3k-8k/month per site
- **Programming**: $150-200/hour as needed

### Economics
**Infrastructure:**
- Runs on customer hardware OR
- GTHost dedicated server: $150-300/month
- 1-3 customers per server (if hosted)

**Capital Required**: $2,000-5,000
- Development and testing
- Pilot deployment costs

### Advantages
✅ Higher revenue per customer  
✅ Sticky (critical infrastructure)  
✅ Differentiated offering  
✅ Leverages controls expertise

### Disadvantages
❌ Higher liability (control systems)  
❌ Longer sales cycle (6-12 months)  
❌ Safety certification concerns  
❌ More technical risk

### Strategic Fit
**Good for Phase 2-3**: Once platform proven, add premium control tier for select customers.

---

## Option 4: GPU-Powered AI/ML Services ✅ RECOMMENDED (Phase 3)

### Description
Add AI-powered features using NVIDIA GPUs for predictive maintenance and computer vision.

### Services Offered
- Predictive maintenance models
- Anomaly detection
- Computer vision quality inspection
- Advanced analytics dashboards
- Custom ML model development

### Revenue Model
**Premium Tiers:**
| Tier | Price/Month | Features |
|------|-------------|----------|
| AI Basic | $4,000 | Predictive maintenance, 20 assets |
| AI Pro | $6,000 | + Computer vision, 50 assets |
| AI Enterprise | $8,000+ | Custom models, unlimited assets |

**Setup Fee**: $10k-20k one-time (model development)

### Economics
**Infrastructure:**
- GTHost server with Tesla P4: $350-450/month
- Capacity: 3-5 premium customers
- Revenue per server: $12k-40k/month
- **Gross margin**: 85%+

**Capital Required**: $5,000
- GPU server + development time
- Funded from Phase 2 profits

### Advantages
✅ Premium pricing (high margins)  
✅ Differentiated (competitors can't match)  
✅ Defensible moat  
✅ High customer value  
✅ Multiple upsell paths

### Disadvantages
❌ Requires GPU infrastructure  
❌ More complex to build  
❌ Longer sales cycle  
❌ Need ML expertise (or partner)

### Strategic Fit
**Perfect for Phase 3**: Once monitoring platform established, add AI tier for differentiation and margin expansion.

---

## Option 5: Digital Twin / Virtual Commissioning ❌ NOT RECOMMENDED

### Description
Build comprehensive digital twins and virtual commissioning environments for manufacturers.

### Why NOT Recommended
❌ Extremely compute-intensive (high infrastructure costs)  
❌ Long sales cycles ($50k-150k projects, 6-18 months)  
❌ Competes with AWS Digital Twin services (non-compete risk)  
❌ Requires team (can't do solo)  
❌ Large enterprises only (SMB can't afford)  
❌ Complex 3D/physics simulation (outside core expertise)

### Alternative Approach
**IF pursued (far future):**
- Partner with simulation vendors
- Focus on PLC testing environments (simpler)
- Offer as premium add-on, not core service
- Wait until Phase 3+ with team in place

---

## Option 6: Brownfield Retrofit Projects ✅ HYBRID OPPORTUNITY

### Description
Add sensors and connectivity to existing equipment through project-based work.

### Services Offered
- Wireless sensor installation (LoRaWAN, cellular)
- Edge gateway setup
- Data pipeline configuration
- Integration with monitoring platform

### Revenue Model
- **Project-based**: $20k-50k per site
- **Maintenance**: $500-2k/month per site

### Economics
**Capital Required**: ~$0 (use customer hardware)  
**Project Duration**: 2-4 weeks  
**Projects per Year**: 6-12 possible

### Advantages
✅ Complements both consulting and platform  
✅ Natural upsell to monitoring service  
✅ Uses customer hardware (no capex)  
✅ Project-based cash injection

### Disadvantages
❌ Still time-for-money  
❌ Requires travel to site  
❌ Project-based (lumpy revenue)

### Strategic Fit
**Hybrid with Phases 1-2**: Use as project revenue to fund platform development, convert to monitoring customers.

---

## Rejected Options

### MSP for General IT
**Why NOT**: Already saturated market, no OT differentiation, commoditized pricing

### Cloud Platform Builder
**Why NOT**: Competes with AWS (non-compete violation), requires massive capital, too competitive

### Hardware Sales
**Why NOT**: Low margins, logistics complexity, not our expertise

### Traditional System Integrator
**Why NOT**: Project-only, doesn't leverage cloud expertise, mature competitive market

---

## Recommended Business Model (Hybrid 3-Phase)

### Phase 1 (Months 1-3): Consulting First
**Revenue Model**: Project + hourly  
**Target**: $20k-45k in 90 days  
**Purpose**: Cash flow, validation, network

### Phase 2 (Months 4-9): Add Monitoring Platform
**Revenue Model**: Setup fees + recurring subscriptions  
**Target**: $10k-15k MRR  
**Purpose**: Recurring revenue, platform moat

### Phase 3 (Months 10-18): Premium AI Features
**Revenue Model**: Premium subscriptions + consulting hybrid  
**Target**: $35k+ MRR  
**Purpose**: Differentiation, margin expansion

---

## Revenue Mix Evolution

### Month 3 (Phase 1)
- Consulting projects: 100%
- Recurring: 0%
- **Total**: $20k-45k/month

### Month 9 (Phase 2)
- Consulting projects: 50%
- Recurring monitoring: 50%
- **Total**: $20k-30k/month

### Month 18 (Phase 3)
- Consulting projects: 20%
- Recurring basic: 40%
- Recurring premium: 40%
- **Total**: $35k-50k/month

---

## Critical Success Factors

### What Makes This Work

1. **Start with Cash Flow**: Consulting first = no runway stress
2. **Customer-Funded Platform**: Their projects pay for infrastructure
3. **Recurring Revenue Focus**: Transition to subscriptions ASAP
4. **Edge-First Always**: Avoids AWS conflict, addresses data sovereignty
5. **Multi-Tenant Architecture**: Scale efficiently with LXC expertise
6. **Premium Tier Later**: Add GPU/AI only after base platform proven

### What Would Make This Fail

1. **Starting with platform**: No revenue, burning through capital
2. **Competing with AWS directly**: Non-compete violation
3. **Trying to do everything**: Scope creep, delayed launch
4. **Ignoring consulting revenue**: Long path to profitability
5. **Building before validating**: Wrong product-market fit

---

## Financial Model Comparison

| Model | Year 1 Revenue | Gross Margin | Scalability | Capital Needed | Risk Level |
|-------|----------------|--------------|-------------|----------------|------------|
| **Consulting Only** | $100k-200k | 95% | Low | $500 | Low |
| **Platform Only** | $50k-120k | 90% | High | $10k+ | High |
| **Hybrid (Recommended)** | $150k-300k | 90% | High | $1,500 | Medium |
| **Digital Twins** | $0-50k | 40% | Medium | $50k+ | Very High |
| **General MSP** | $50k-150k | 60% | Medium | $5k | High |

---

## Next Steps

See `recommended-approach.md` for detailed 3-phase execution plan.

---

*Last Updated: December 2025*