© 2006 iConclude, Inc. All rights reserved. From Invention to Start-Up Case Study III – iConclude Business Plan.

© 2006 iConclude, Inc. All rights reserved.

From Invention to Start-UpCase Study III – iConclude Business Plan

© 2006 iConclude, Inc. All rights reserved.2

Agenda

• Getting Started

• Business Plan Goals

• iConclude 2005 January Plan

• iConclude 2005 June Plan

• iConclude Today

• Key Learnings

© 2006 iConclude, Inc. All rights reserved.3

Getting Started

• Entrepreneurial “DNA”• Enterprise Software with 2 previous successful startup experience

• Identifying a compelling market opportunity• Automating manual procedures in large IT shops – validation done in a project

at previous employer

• Deciding to leave a high paying job and a great career • Enterprise software company in Sunnyvale, CA

• Picking the team – needed complementary skills • Strong software development and architecture background

• Validating customer need • Customer painpoint, gaps in existing solutions, willingness to pay• 20+ customer discussions – existing relationships, heavy networking

© 2006 iConclude, Inc. All rights reserved.4

Getting Started (continued)

• Getting company off the ground

• Naming the company

• Legal

• Office Space

• Validating & Creating initial Product Concept mockups

• Did not invest too much time in writing code

• 10+ customer reviews and feedback

• Looking for initial funding

• Existing relationship with Madrona Ventures – no-brainer

• Building the initial business plan in a powerpoint

© 2006 iConclude, Inc. All rights reserved.5

Business Plan & Fund-Raising

• Team & credibility - 2

• Customer pain point

• 5+ customer validations

• Product Mockup

• Product ship timeline

• Financial Model

Angel = 500K Series A = 2.5M

• Expanded Team - 8

• Alpha Product

• 2 Early Adopter Customers

• 20+ Customer Validations

• Go-to-market model

Series B = 9M

January 20051 Week

July 20053 Months

•Completed Team •VP Marketing •VP Development•Sales Team & proven model

•Shipping Product

•4 Paying Customers

•1M+ Pipeline

•Capital EfficiencyApril 20061 Month

© 2006 iConclude, Inc. All rights reserved.6

January 2005 Business Plan

Capital Expenditure .5M to BETA, 3M to Release

Product Shipment/Fit 9 months to release; Product/market fit was unclear

Product strategy was 60% clear

Let customers drive the other 40%

Sales Model Enterprise Direct Sales Model with Tele-sales modelProduct would be plug and play – little consulting

Market Maturity New market; Uncertain how quickly customers would adopt

We perceived that it would be easy to sell

Market Opportunity Jan 2005 - VP IT Support – HELP DESK-Automate Resolution of IT Help Desk Incidents

- Unclear on which infrastructure to focus on

Customer Acquisition 20 customers within 1 year of selling

Bookings 2.3Million in Bookings; Expand 3 deals

© 2006 iConclude, Inc. All rights reserved.7

Reduces• IT support costs• Escalations• Mean time to resolution (MTTR)

Tier 3 – Experts

Tier 1 – Help Desk, xOC

Tier 2 –xOC, Specialists

Tier 4 - Developers

January 2005 - iConclude Business Plan Market Opportunity

Empower Tier 1 support in IT to Empower Tier 1 support in IT to resolve complex problems quickly by applying resolve complex problems quickly by applying

automation to manual resolution processautomation to manual resolution process

Empower Tier 1 support in IT to Empower Tier 1 support in IT to resolve complex problems quickly by applying resolve complex problems quickly by applying

automation to manual resolution processautomation to manual resolution process

© 2006 iConclude, Inc. All rights reserved.8

January 2005 - iConclude Business Plan Market Size

System Management$1,722m

Service Management$483m

Change and Configuration ManagementAsset Management

$907m

Change and Configuration ManagementAsset Management

$907m

Application Management$2,042m

Network Management$740m

ServiceResolution

ServiceResolution

*Gartner New License Revenue Forecast 2006 Total: $6,486m

Help DeskMonitoring

1B+

© 2006 iConclude, Inc. All rights reserved.9

January 2005 - iConclude Business Plan Customer Validation

“This is exactly the problem area we are trying to address right now” – Director Operations, Pemco Insurance

“If I had to chose I would buy this thing anytime over a helpdesk tool” – CTO, Drugstore.com

“This technology will help me bridge the knowledge gap with my outsourcers” – Group Manager, Microsoft IT

“Purely selfishly, I want to apply this to our networking problems”– Sr. Network Engineer, Amazon

“Managing IT is not our core business, so let’s automate process and eliminate the need for people!”

– Sr. Architect, Washington Mutual

© 2006 iConclude, Inc. All rights reserved.10

January 2005 - iConclude Business Plan Company Milestones

Seed Round

Feb Mar Apr May Jun July Aug. Sep.

Round A

CAB Design Partner #1

Design Partner #2

Paying Customer

Milestone #1

Milestone #2 BETA GA

FundingCustomers

Product

© 2006 iConclude, Inc. All rights reserved.11

June 2005Where do you apply the solution first?

• Did Customer Incident/Alert Surveys• Found resolution needed to address broad server, exchange, storage, network stack

• Classic marketing theory told us that we should focus on 1 infrastructure• Target specific infrastructure (i.e. Exchange), go sell & market to that vertical • Hard for startups to build a Horizontal play• We decided to go deep on Microsoft Exchange

• Customers did not resonate with Microsoft Exchange• Needed solution that could address problems across Networking, Servers, Storage etc.• They would not buy if the solution was Exchange ONLY

© 2006 iConclude, Inc. All rights reserved.12

June 2005Go-to-Market Strategy

Fortune 1000 focus Sales model• Tele-sales & direct sales model - initial 100 deployments

• SI’s, ISV’s, Systems Mgt. vendors

• Viral Marketing via Online Repair Packs

Licensing/Packaging• In-house deployment or pre-configured hardware option

• Subscription & Perpetual Licensing

Community Strategy for creating content• Customer Proprietary Content

• iConclude Content

• Community Content

Still part of 1 year roadmap & Strategy

Not part of 1 year strategy

© 2006 iConclude, Inc. All rights reserved.13

iConclude TodayAlert/Incident Management & Much More

SystemsMonitoring

Event Consoles

INCIDENT DETECTIONINCIDENT DETECTION

Service Desk

KnowledgeManagement

INCIDENT TRACKINGINCIDENT TRACKING

INCIDENT RESOLUTIONINCIDENT RESOLUTION

Tribal KnowledgeScripts

Static Run BooksPost-Its

Tribal KnowledgeScripts

Static Run BooksPost-Its

Ad-HocAd-Hoc

SystemsMonitoring

Event Consoles

INCIDENT DETECTIONINCIDENT DETECTION

Service Desk

KnowledgeManagement

INCIDENT TRACKINGINCIDENT TRACKING

AutomateTriage

DiagnosisRepair

Flexible Automation Platform for:Problem

ManagementChange/ConfigManagement

Tools & processintegration

SA MaintenanceTasks

IncidentManagement

Fortune 50 Investment Banking/Financial ServicesAnalyzed 70% of Alert Volume on Infrastructure AloneWindows, Linux, Unix, Networking, Databases, AutoSys etc.

DSG Minutes/Dollars Actual Occur.5 months

(Est.) Occur. Annual

Avg. Savings/ Incident (minutes)

Potential Annual Savings

MS Exchange Queue analysis and service restarts 8974 21538 13 $279,988.80

MS Exchange Exchange server process stop, restart verify 7247 17393 4 $69,571.20

Win Services Verify, Restart, Re-verify 13224 31738 2 $63,475.20

Win Threshold Babysit some and escalate if consistent, for disk space - find usual suspects and clean 16216 38918 6 $233,510.40

Win Pinger Verify, System type lookup, verify recent reboot, escalate if necessary 7846 18830 1 $18,830.40

Unix Pinger Verify, System type lookup, verify recent reboot, escalate if necessary 31969 76726 1 $76,725.60

Unix reboot Verify, correlate, close 14679 35230 2 $70,459.20

Unix Threshold babysit and potentially escalate, if disk or page file, then free space or adjust 6445 15468 6 $92,808.00

Net App Just verify and throw away some, remediate others 28465 68316 5 $341,580.00

Unix/syslog/pci Verify, count and watchdog escalate and/or open SRS ticket 71246 170990 3 $512,971.20

Unix/syslog/sbus Verify, count and watchdog escalate and/or open SRS ticket 29620 71088 3 $213,264.00

Est. Annual DSG Savings $1,973,184.00

NSO Minutes/Dollars

Network IP Ping, lookup SMS, login to gateway, login to switch, run Cisco command, open/close ticket or escalate 40753 97807 5 $489,036.00

Network router similar procedure to above 37498 89995 5 $449,976.00

Network switch similar procedure to above 17171 41210 5 $206,052.00

Network Vitalnet 10957 26297 4 $105,187.20

Network SNMP 9990 23976 3 $71,928.00

Network BGP 9529 22870 3 $68,608.80

Est. Annual NSO Savings $1,390,788.00

PCO Minutes/Dollars

DB Iwatch Very simple verification/remediation procedure 9362 22469 2 $44,937.60

DB Liveback check

Remotely log onto DB servers, look in logs, run scripts, potentially kill/start processes

7192 17261 5 $86,304.00

DB Logmon check Logon to machine, check running process(es), restart server process 3156 7574 4 $30,297.60

DB Repserver issues

Verify which of several issues this could be, typically run one or two commands to fix

22724 54538 3 $163,612.80

Autosys MAXRUN Watchdog to see if job completes within acceptable threshold 164521 394850 1 $394,850.40Est. Annual PCO Savings $720,002.40

$4,083,974.40

High Repeatability – 65% alerts are being automated (> .5Million alerts daily). Savings of $5Million - Labor cost $60 – Actual cost > $100.

© 2006 iConclude, Inc. All rights reserved.15

Business Plan Changes

Capital Expenditure Burnt 500K less than original plan

Product Shipment/Fit V1 was 2 months late; Great product/market fit

Sales Model Enterprise Direct Sales Model – expensive & hardRequires consulting to make customers successfulTele-sales model is about 2 years away

Market Maturity Created new market category – “Runbook Automation”

Early adopter market transitioning to early majority

Great momentum – customers have the pain

Market Opportunity Now – VP IT Operations – Data Center

-Automate Alerts Resolution -Automating manual procedures -Automate Change/config. process

Customer Acquisition Exceeded plan by 5 customers

Bookings Exceeded plan by .5M

© 2006 iConclude, Inc. All rights reserved.16

Big Learnings

• It’s all about the team• Validate & experiment - don’t repeat

mistakes again• Listen to Customers• Make changes quickly• Start selling early - you learn only when

you sell• Be capital efficient