1. Page 1 LearnLinc Corporation The ILinc-LearnLinc Story Dr. Jack M. Wilson | Chairman, LearnLinc Corp.

2. Page 2 © Jack M. Wilson 1999 The Internet Tsunami u Do you think the pace of change is accelerating? Incl. Int’l Tech Companies 1980s 1990s 2000 1970s 1980 1970 1990 Source: Securities Data Company Microprocessor PCs Client/Server Software Data Communications Internet $ Trillions Initial Development… 1967 University Networks… 1981 Regional Networks (NYSERNET)… 1988 Early ISP,s… 1992 World Wide Web… 1995

3. Page 3 © Jack M. Wilson 1999 Introduction u The founding, growth and eventual acquisition of the ILINC Corporation is a typical small example of technological entrepreneurship. u ILINC was founded in 1993 by a professor (the author) and two students at Rensselaer Polytechnic Institute. u Later the name was changed to LearnLinc to match the name of its popular product and eventually u LearnLinc entered a triple merger in early 2000 with Gilat Communications and Allen Communications to form the Mentergy Corporation (NASDAQ).

4. Page 4 © Jack M. Wilson 1999 The Idea. The Research u Managing learning on networks u Consulting with IBM, AT&T, GTE, Boeing, NeXT, Microsoft, Intel, etc u Joint Venture between AT&T Bell Labs and RPI o WorldWorx product released u New technology releases allow a better idea.

5. Page 5 © Jack M. Wilson 1999 The Opportunity u Propose a significantly enhanced and advanced version to AT&T o AT&T declines o But Bell Labs excited! u Research continues in Wilson’s Lab u Design and Manufacturing Learning Environment u Degerhan Usluel, MBA student, BSEE, former entrepreneur u Degerhan recruits Mark Bernstein, former CA “TopGun.” u They want to start company and want Wilson to lead it. u Distributed learning environment with multicast video, application sharing, agents to control bandwidth. o None of these had been done reliably and internet was not ready.

6. Page 6 © Jack M. Wilson 1999 The Team: ILinc LearnLinc Founders u Degerhan Usluel, Mark Bernstein, Jack Wilson Chief Technology Officer Vice President Marketing Chairman and CEO

7. Page 7 © Jack M. Wilson 1999 Exit Strategy u Need to decide ahead of time how we wanted this to end. o Private Company o Public Company IPO or acquisition o Life Style Company u We all wanted to create a public company and either IPO or Sell.

8. Page 8 © Jack M. Wilson 1999 Creating a Prototype u Need a prototype to raise money. u Need a prototype to acquire early customers. u Need a polished pitch

9. Page 9 © Jack M. Wilson 1999 LearnLinc

10. Page 10 © Jack M. Wilson 1999 LearnLinc Instructor

11. Page 11 © Jack M. Wilson 1999 Funding the Enterprise u Met with many successful entrepreneurs o Bugle Boy, Wellfleet, Interlan, Bay Networks, Nortel, MapInfo, etc u Went against advice u Decided to sell vaporware. u Success magazine called it the “Wimpy method” o Wimpy: “I’ll gladly pay you Tuesday for a hamburger today!” o ILinc: “I’ll gladly give you software next year for $300,000 today.” u Against all odds (and reason): It worked! u First Customers: IBM, AT&T, GTE, Sprint, Office Depot, and News Corp.

12. Page 12 © Jack M. Wilson 1999 Building the Product u Degerhan actually conquered the reliable multicasting challenge and made the product work! u Bernstein sold lots of vaporware. u Every customer, except for one, was very satisfied.

13. Page 13 © Jack M. Wilson 1999 Venture Capital u Once company was up and running, we were short of working capital and tired of co-signing bridge loans! u First Round: Exponential Investors and New York state development fund. u Board asks Wilson to leave RPI permanently. u Instead Wilson hires a new CEO who would bring advanced start-up experience. u Second and Third Rounds: GeoCapital Investors, Intel, and original investors. u Total outside investment was less than 50% of the company. o Very rare, but left the company short of cash compared to new arrivals. o We were using the old model. They used the TechBoom model.

14. Page 14 © Jack M. Wilson 1999 Fortune on ILinc: u “Interactive Learning International Corp. (ILINC), a two- year-old company in Troy, New York, has shown what's possible in today's world of limited telecommunications bandwidth. ILINC's interactive training programs can be transmitted to users' PCs over local- and wide-area networks, as well as high-speed communications links such as ISDN (integrated services digital networks). A live instructor can appear in a window on the screen and address students in dozens of locations. He can launch video and audio clips for all the "class" to see and hear. And at discussion time, a student can click on a "raise hand" icon to get the floor. “ o REPORTER ASSOCIATE Alicia Hills Moore o Copyright © 1996, Time Inc., all rights reserved.

15. Page 15 © Jack M. Wilson 1999 Wall Street Journal on ILinc -1998 u "It's great -- by using it, we've cut our travel expenses substantially," says Gary Schweikhart, a spokesman for Office Depot, an office-supply company in Delray Beach, Fla. u Office Depot first took its corporate training sessions on-line in May 1996. It was one of the first customers of Interactive Learning International Inc., or ILINC, a Troy, N.Y., maker of distance-learning software. Since then, about 1,500 Office Depot employees have completed on-line training, on everything from how to write a business letter to how to use the company's proprietary order-taking system. u "We were in a situation where we were doing a lot of training of trainers" in order to have enough qualified instructors to teach employees at 629 stores and 68 sales offices across the country, says Doug Kendig, the company's manager of training technology. "We had to deputize a lot of people [to train employees], and you don't always get the best results that way." u But now Office Depot uses the ILINC software for about 20% of its training, with classes in Florida, California and Texas using just six instructors. "I think it's fantastic," says Jeannette Perez, who works in Office Depot's commercial credit-card department. "It just holds my attention more, because you're interacting with the computer."

16. Page 16 © Jack M. Wilson 1999 WSJ

17. Page 17 © Jack M. Wilson 1999 Going Public u Rapid Growth meant much more capital needed. u Arrival of several “fast-followers” meant that we had competitors nipping at our heels. u Potential IPO was about $100 million. u Acquisition was only about $50 but could create some beneficial alliances. u Investment Banker hired.

18. Page 18 © Jack M. Wilson 1999 Mentergy formed u With help of Investment Banker and VC advisors: u A triple reverse merger. u Sold control of LearnLinc to GILAT Communication of Israel and at the same time used LearnLinc to acquire Allen Communications, John Bryce Training, and GILAT itself. u Closed deal on February 29, 2000 for $52 million. u Combination called Mentergy o Value was $500 million in March o New York, Salt Lake City, Europe, and Israel. o Created headquarters in Atlanta o As tech bust came they entered bankruptcy in 2002.

19. Page 19 © Jack M. Wilson 1999 Questions for the Student: u Where would you place LearnLinc on the spectrum of types of innovations? Product or process; radical or incremental; architectural or component, competence enhancing or destroying? u How would you place LearnLinc on the S curve of technology? What does this imply for its adoption? u LearnLinc offered a low cost universal way to bring learning to learners in a corporate training environment. Were they operating in segment zero? If so, what was the market they were disrupting? u If you were advising ILINC as to how to manage its LearnLinc product just prior to its acquisition, what would you identify as major challenges they would need to face quickly?

20. Page 20 © Jack M. Wilson 1999 A New Paradigm u View at the height of the tech boom –ca. mid 90’s u OLD Paradigm: Physical Capital / Resources u NEW Paradigm: Knowledge / Intellectual Capital Frank P. Quattrone Managing Director Head of CSFB Technology Group Credit Suisse/First Boston

21. Page 21 © Jack M. Wilson 1999 Why we are running so hard u The Internet’s pace of adoption eclipses all other technologies that preceded it. o Radio was in existence 38 years before 50 million people tuned in; o TV took 13 years to reach that benchmark. o The Internet crossed that line in 4 years, once it was opened to the general public. o Email, Yahoo, Google, YouTube, Facebook, Twitter,

22. Page 22 © Jack M. Wilson 1999 Wilson’s Favorite Laws! u Moore’s Law: CPU performance doubles every 18 months u Bandwidth law: Bandwidth is doubling even faster! u Metcalf’s Law: the value of a network scales as n 2 where n is the number of persons connected.

23. Page 23 © Jack M. Wilson 1999 It ain’t over till it’s over u Moore’s law, the Bandwidth Law, and Metcalf’s law remain true and are expected to continue to be true for another 40 years at least! u These will drive faster and faster need for change. o Companies will have to respond. o Training is the only way! u It ain’t over till the fat lady sings -and she isn’t even in the hall yet! Jack M. Wilson: http://lallyschool.rpi.edu/Wilson/ITE.html

24. Page 24 © Jack M. Wilson 1999 My Three Messages: u It’s about intellectual capital stupid! u Intellectual capital demands continuous development. o (fish, relatives and intellectual capital spoil after three days.) u Computing, Communication, and Cognition will change the process tremendously.

25. Page 25 © Jack M. Wilson 1999 LearnLinc

26. Page 26 © Jack M. Wilson 1999 LearnLinc Instructor

27. Page 27 © Jack M. Wilson 1999 LearnLinc Instructor Video Window Instructor or Student

28. Page 28 © Jack M. Wilson 1999 LearnLinc Instructor Audio Controls

29. Page 29 © Jack M. Wilson 1999 LearnLinc Instructor Students HandRaise&Response

30. Page 30 © Jack M. Wilson 1999 LearnLinc Instructor Response Summaries

31. Page 31 © Jack M. Wilson 1999 LearnLinc Instructor Text Chat Area

32. Page 32 © Jack M. Wilson 1999 LearnLinc Instructor Shared Work Area

33. Page 33 © Jack M. Wilson 1999 TestLinc

34. Page 34 © Jack M. Wilson 1999 Tutorial

35. Page 35 © Jack M. Wilson 1999 Student Results

36. Page 36 © Jack M. Wilson 1999 Record book

37. Page 37 © Jack M. Wilson 1999 NTU-Rensselaer Course Hands-On World Wide Web u Feb 10 & 17, 1998 u 8000 participants u 500 sites u Most successful NTU course ever u “The future of satellite based education.” o Lionel Baldwin, President, NTU

38. Page 38 © Jack M. Wilson 1999 Aetna: A Success Story u trained more than 3,000 employees this way 1997-2000 u Employees taught via LearnLinc scored four percentage points higher on training achievement tests than those taught the old fashioned way. u it's more cost-effective to bring the class to the employee, than to get the employee to the class. u After software costs, Aetna says it has saved $3 million dollars. u Efficient and Effective!

39. Page 39 © Jack M. Wilson 1999 MCI: A Success Story  Goals  To reduce the need for expensive training rooms.  To train all of the company's network operations personnel on new products at the same time.  To educate employees as needed, without requiring them to travel for training.  Results o faster deployment of products and services o estimated savings of about $1,500 per person per class, o $2.8 million dollars in savings. o a 237-percent return on investment in less than a year.

40. Page 40 © Jack M. Wilson 1999 Office Depot: A Success Story u Michelle Sonder, technical training developer for Office Depot : o “Office Depot was spending about $150 per person daily to send employees off-site for an eight hour course. o The cost was cut to $14 per person with LearnLinc. o The centers were teaching them too much. We customize our training now, so that once they are trained, that training instantly applies to their job, and we have shortened the amount of time contracted experts are on site by having them address several locations at once. o In one case, this saved us $40,000 in one week.”

41. Page 41 © Jack M. Wilson 1999 Computer Associates: A great start! u CA plans to offer online instructor-led certification courses on its products to employees. u Make life easier for CA and its IT professionals. u Currently, all field engineers are flown to CA's headquarters in New York for certification training which is both time consuming and costly. u With LearnLinc, IT staffers will be able to go online and become certified in CA technology without leaving their desks. u CA also plans to offer the classes to customers for a fee.

42. Page 42 www.learnlinc.com 518-286-7000 Thank You Jack M. Wilson www.JackMWilson.com