Motive closed 5 early customers, called Lighthouse Customers, to validate their business model and product approach before their public launch in April 1998, which helped them achieve $60M in bookings over the next 18 months. Motive used a Lighthouse Customer program to learn about problems, validate features and benefits, and establish reference customers prior to launch. The document discusses Motive's goals, categories and targets for the Lighthouse Customer program and provides a status update on progress with round two customers.

1. Customer Development in the
High Tech Enterprise
Customer Validation
Part 1
Steve Blank
sblank@kandsranch.com
3/2/10 1

2. Agenda
! Logistics/Questions
! Review
! Case: Motive
! Guest: Max Ventilla from Aardvark
! Customer Validation

3. Today: Customer Validation
Customer Customer Customer Scale
Discovery Validation Creation Company
• Develop a repeatable and scalable sales process
• Validate your business model
• Only earlyvangelists are crazy enough to buy

4. Customer Validation:
Phase 3 Phase 4
Customer
Positioning Business
Validation
Model
Verified
From Discovery
To Creation
Phase 1
Phase 2
Get
Sell to
Ready
EarlyVangelists
to Sell

5. Customer Validation
Get Ready to Sell!
Articulate Prelim Sales Prelim Prelim Sales Hire a Align Your
a Value & Collateral Distribution Roadmap “Sales Closer” Executives
Proposition Materials Channel Plan
Formalize
Sell to “EarlyVangelists”! Advisory
Board
Contact Sell to Sell to Refine
Refine Sales
Visionary Early Channel Channel
Roadmap
Customers Customers Partners Roadmap
Develop Positioning!
Product Company Present to
Positioning Positioning Analysts &
Verify! Influencers
Verify the Verify the Verify the Verify the Iterate or
Product Sales Channel Business Exit
Roadmap Roadmap Model

6. Customer Validation
Get Ready to Sell!
Articulate
a Value
Proposition
Inside the Building!
Prelim Sales
& Collateral
Materials
Prelim
Distribution
Channel Plan
Prelim Sales
Roadmap
Hire a
“Sales Closer”
Align Your
Executives
Formalize
Sell to “EarlyVangelists”! Advisory
Board
Contact Sell to Sell to Refine
Refine Sales
Visionary Early Channel Channel
Roadmap
Customers Customers Partners Roadmap
Outside the Building!
Develop Positioning!
Product Company Present to
Positioning Positioning Analysts &
Verify! Influencers
Verify the Verify the Verify the Verify the Iterate or
Product Sales Channel Business Exit
Roadmap Roadmap Model

7. Phase 1:
Get Ready to Sell
Phase 3 Phase 4 ! Serious preparation
Positioning Business before 1st sales
Model
Verified " Another writing exercise
" Aligning Executives
Phase 1
Phase 2 Get
Sell to Ready
EarlyVangelists to Sell

8. Get Ready to Sell
! Value Proposition
! Sales Collateral
! Distribution Plan
! Sales Roadmap
! Sales Closer
! Synchronize Execs
! Advisory Board
Articulate Prelim Sales Prelim Prelim Sales Hire a Align Your
a Value & Collateral Distribution Roadmap “Sales Closer” Executives
Proposition Materials Channel Plan
Formalize
Advisory
Board

9. Get Ready to Sell:
Articulate a Value Proposition
! Create Value Proposition
" Is it emotionally compelling?
" Does it make or reinforce an economic case?
" Does the it pass the reality test?
! Varies by Market Type

10. Get Ready to Sell:
Preliminary Sales Collateral
! Create collateral roadmap
" What you need and when you need it
" Supports the sales roadmap
" Ensure the collateral matches the internal audiences
! Create all selling materials
" Presentations
" Data sheets
" White Papers
! How would collateral differ by Market Type?

11. Get Ready to Sell:
Preliminary Channel Road Map
! Channel Food Chain and responsibility
! Channel discount and financials
! Channel Management
! How would channel plan differ by Market Type?

12. Channel Alternatives
Pick One
OEMs
System
Integrators
Direct
Sales Force
Value-Added Your
Your
Resellers (VARs) Customers
Company
Dealers
Distributors
Retail/Mass
Merchants/Online

13. Channel Diagram
Book Publishing Company
National
Publisher Wholesaler Distributor Retailer
Determine Merchandise
Deliver Books Allocations Titles
(from printer) Stock Books
Deliver Orders Sell Books
-Establish Identity Ship Books
-Create Demand
Dispose of Acknowledge
Returns Returns

14. Channel Margins
Book Publishing Company
Publisher National Customer
Distributor Retailer
Wholesaler
% of 35% 15% 10% 40%
Retail
$s $7.00 $3.00 $2.00 $8.00 $20.00

15. Get Ready to Sell:
Preliminary Sales Road Map
! Built around key insights about the selling process
! Answers
" Who decides the sale?
" Influencers, recommender, decision makers Where is the
budget? How many sales call to the sale? To who? What is
the script for each?
! Consists of:
" Organization Map
" Influence Map
" Customer Access Map
" Sales Strategy
" Implementation Plan

16. Early Sales

17. Get Ready to Sell:
Hire a “Sales Closer”
! Identify need for a “Sales Closer
" Founders have experience “closing” business?
" Do they have a “world-class” set of contacts?
" Bet the company on their ability to close sales?
! If not, hire a “Sales Closer”
" Do NOT hire a VP of Sales
" Typical background would be a regional manager
! How does Market Type effect this hire?

18. Get Ready to Sell:
Synchronize Your Execs
! Product Development
" Schedule
" Deliverables
" “Good-enough” Philosophy
! Engineering’s role in sales, installation, post-sales support
! Sales Collateral review

19. Get Ready to Sell:
Formalize Advisory Boards
! Advisory boards are critical in nascent stages of a startup
! To sell to industry specific customers requires an industry
advisory board
! Multiple Advisory Boards
" Use at different times
" Different purposes

20. Phase 2: Sell
Phase 3 Phase 4 ! First sales
Business
Positioning
Model ! First channel sales
Verified
! Scalable and Repeatable
Phase 1
Phase 2 Get
Sell to Ready
EarlyVangelists to Sell

21. Sell to EarlyVangelists
! Contact Visionaries
! Sell
! Refine Sales Roadmap
! Sell to Channel Partners
! Refine Channel Roadmap
Contact Sell to Sell to Refine
Refine Sales
Visionary Early Channel Channel
Roadmap
Customers Customers Partners Roadmap

22. Sell:
Contact Visionaries
! Looking for people with problems
! They are few are far between
! They need to become your
cheerleaders…
while paying you to do so

23. Sell: Turn Visionaries into
EarlyVangelists
! Very few are early customers
! Visionaries will emerge to buy an unfinished
product if it truly solves a painful problem
! A lack of these early purchasers is a red-flag
! Market Type effects ease of execution

24. Build the Organization Map
Dave Jones
CEO
Karen Rogers
VP Marketing
Neil Garrett Suzanne Kellogg
VP Database VP Merchandizing
Marketing
Our Potential
Customer
= in house competition
= issues to be addressed before a sale

25. One Step at A Time
Dave Jones
CEO
Ben White Karen Rogers
VP Sales VP Marketing
Joe Black Neil Garrett Suzanne Kellogg
Dir. Sales Operations VP Database VP Merchandizing
Marketing
Leslie Elders
Financial Modeling
Our Potential
Customer
= in house competition
= issues to be addressed before a sale

26. Organization Map
Dave Jones
CEO
Ben White Karen Rogers Roger Smith
VP Sales VP Marketing CIO
Joe Black Neil Garrett Suzanne Kellogg Phil Whitry
Dir. Sales Operations VP Database VP Merchandizing Director IT
Marketing
Leslie Elders Geoff Smith
Financial Modeling Financial Tools
Development
Our Potential
Customer
= in house competition
= issues to be addressed before a sale

27. The Influence Map
Functional Technical
High Executive 1
Low

28. The Influence Map
Functional Technical
High Executive 1 2 CIO or Division IT executive
Low

29. The Influence Map
Functional Technical
High Executive 1 2 CIO or Division IT executive
Low End Users 3

30. The Influence Map
Functional Technical
High Executive 1 2 CIO or Division IT executive
Low End Users 3 4 Corp. IT staff or Division IT

31. The Sales Roadmap:
Starts with Influence Map
Educate & Present
Solution
Operational Technical
High Execs CIO
End IT
Users
Low Staff

32. The Sales RoadMap:
Adds Access, Assessment & Strategy
Access Assess Strategy Educate & Present
Needs Solution
Finance
Product Operational Technical
Mgmt
High Execs CIO
Sales
Intro Account
Meetings Strategy
Corp. End IT
Mktg Users
Low Staff
Support
IT

33. The Sales RoadMap
Access Assess Strategy Educate & Present Sell, Sell, Sell, Sell
Needs Solution
Finance
Product Operational Technical
Mgmt
High Execs CIO
Sales Implement
Intro Account Proposal
Meetings Strategy Plan
Corp. End IT
Mktg Users
Low Staff
Support
IT

34. RoadMap becomes The Sales Pipeline
4. Understand
1. Prepare 2. Initial Meeting Existing Situation
• Hoovers, One • Ask tough questions a) Technology
Source, Web • Do Buy- In Demo
3. Qualify?
b) Organization
c) Competition
T
h
e
i
m
5. Custom Pitch
• Prepare! 6. Win Over IT 7. Define Problem 8. ROI Pitch
• Get NDA signed • Tech deep dive • Develop Action Plan • Prove the Value!
9. Exec Session
• Set expectations for
this meeting early on.
10. Solution 11. Formal Pricing 12. Negotiate
Session Proposal • Sales
• Detailed Tech discovery
• 13. Close!
• No surprises! • Finance
• Support

35. Sell: Sell/Refine Channel Roadmap
! Early channel partners need to be “Visionaries”
! Indirect channels/integrators have $ minimum
! Indirect channels/integrators just fulfill
! Market Type affects channel adoption

36. Motive Case
36

37. What happened?
March 2, 2010 www.motive.com 37

38. o Closed 5 Lighthouse Customers (April 1998)
# Netscape
# Disney
# CompuCom
# JD Edwards
# Microsoft*
o Public launch April 1998
# All 5 customers participated,
# Remedy, Vantive, Scpous, Tivoli, Software Artistry announced
partnerships with Motive
o Shipped Motive System 1.0 in June 1998
o $60M in sales bookings over next 18 months
March 2, 2010 www.motive.com 38

39. Lighthouse Customer
Program
March 2, 2010 www.motive.com 39

40. Lighthouse Customer Program
26+ Customers 8-10 Customers 3-4 Customers
Learning Validation (Today) Partnership
• 75% of time on data gathering • Validate Motive approach • Joint product development
• Process slow & inaccurate • Fine tune value proposition • Impact final product specs
• Data captured is imprecise • Understand whole product needs • Early product use
• Inaccurate historical capture • Reference customer
• Ad-hoc knowledge base tools • Identify Lighthouse customers
• No live diagnostic tools
March 2, 2010 www.motive.com 40

41. Goals
o Learn about the target market
# problems, tools, methods, etc.
o Identify the core value proposition
# business drivers, metrics, payback
o Validate the Motive product
# feature, function, benefit & targets
o Establish 3-4 reference customers
# real product use prior to launch
o Generate early revenue
# just because we should ...
March 2, 2010 www.motive.com 41

42. Categories & Targets
Bus. To Bus. Corp. Support Outsource/SI
Borland Outsourcers
Compaq Citicorp CompuCom
Computer Moms Disney EDS
Dell Fannie Mae IBM ISSC
HP Printers IBM MCI/SHL
Intuit Intel SAIC
I2 Merrill Lynch
JD Edwards Motorola SIs
Microsoft Netscape BSG
Netscape Northern Telecom PSW
Oracle Power Computing Perot
PeopleSoft Swiss Bank
Redbrick TI ISPs
Star-tek Traveler’s NetCentric
Trilogy US Postal AOL
24 out of 39 completed
March 2, 2010 www.motive.com 42

43. Time and Motion Study
known
70% problems problems
config. related Ask the Expert...
????? Type a few lines...
“name - rank - “open this file… “re-boot or
serial number” run this command…” re-install” trouble
ticket
25% 50% 25%
ID & data gathering & solution
entitlement investigation
relevant
activity
problem
occurs
March 2, 2010 www.motive.com 43

44. LHC Status: “Round Two”
Microsoft: Approach on Zero Admin & Backoffice initiatives.
Bus. 2 Bus. Strategy mtg with Maples sr. Schedule 2nd mtg.
Netscape: Lost ground due to re-org. Restarting with VP of
NA Sales/Services. 2nd mtg in mid Sept.
Actuate: 1st mtg 8/6. Expressed interest. Need to revisit
and close. Schedule 2nd mtg.
Disney: 2nd mtg 8/27. Wants to be LHC. Willing to take
Corp. IT
Alpha code in Jan. Asked for a proposal.
Travelers: 1st mtg 8/14. Wants to be LHC. Next step is
tech. Demo and pilot project definition.
Power Comp.: Need to schedule 2nd mtg.
AOL: 1st mtg 8/27. Wants to be LHC. Sees unique
Outsource
uses of product. Asked for a proposal.
Perot: Schedule 2nd mtg.
CompuCom: Schedule 2nd mtg.
March 2, 2010 www.motive.com 44

45. Milestones
Milestone Location Date
Proof-of-Concept Demo Customer 10/1/97
Pilot project selection Customer 11/1/97
Technology Demo MOTIVE 12/1/97
Alpha code drop Customer 1/1/98
Pre-Beta status mtg MOTIVE 2/15/98
Beta code drop Customer 3/30/98
Pre-FCS status mtg Customer 4/15/98
FCS Customer 6/30/98
March 2, 2010 www.motive.com 45

46. Company building
March 2, 2010 www.motive.com 46

47. Timeline
o May 1997 Company founded
o July 1998 Motive 1.0; 5 lighthouse customers
o 1999 $60M in sales bookings against $12M target
o June 2000 European operations established
o September 2000 Software deployed on 10 million endpoints
o November 2000First of eight technology patents received
o October 2001 Asia-Pacific operations established
o November 2001Software deployed on 15 million endpoints
o January 2003 BroadJump, Inc. acquired
o September 2003 Software deployed in 30M+ products/services
o June 2004 Initial Public Offering (NASDAQ:MOTV)
o 2004 $100M in revenues
March 2, 2010 www.motive.com 47

48. Support as a “Feature”
March 2, 2010 www.motive.com 48

49. End User Perspective
For end users, service needs
to feel more like ATM's and
pay at the pump -- less like a
web search
March 2, 2010 www.motive.com 49

50. Service Provider Perspective
For service providers, automation
must reduce costs and improve
customer retention
March 2, 2010 www.motive.com 50

51. Product Traction
Motive
Market Market
Entry Entry
1998 2001
Self-Management Self-Management
for for
Consumer Data Center
Technologies Technologies
• 10M PCs • 10K Servers, Storage
• 20M Broadband Connections • 10K Enterprise Software
Applications
to date
March 2, 2010 www.motive.com 51

52. And then…
March 2, 2010 www.motive.com 52

53. March 2, 2010 www.motive.com 53

54. After the IPO…
Q2 2004: Awesome results; biggest bookings quarter
ever (>$35M)
Q3 2004: Awesome quarter; beating estimates
Q1 2005: Awesome quarter: Raised guidance
Q2 2005: Missed the number
Q3 2005: Missed the number again; need to restate Q1
Q1 2006: Replaced Scott Harmon as CEO; Scott Abel and
Brian Vetter leave
Q2: New CEO decides to delay filing; Motive de-listed
March 2, 2010 www.motive.com 54