For any startup, tapping into a deep pool of customers can mean the difference between success or struggle. Startups may wrestle with gauging modern software buying trends, or even understanding what those buyers actually want, but one thing is abundantly clear: If a startup isn’t connecting with buyers in the manner they prefer, then the road from Series A funding to Series B and beyond is going to be very rough indeed.
That’s why it’s critical to reach those customers where they like to buy – and the data indicates that B2B software customers prefer to buy in the Marketplace, primarily for three main reasons, according to Tackle’s 2021 State of Cloud Marketplaces Report:
- Take advantage of committed spend with Cloud Providers
- Accelerate time to value
- Simplify procurement
In fact, the trend toward Marketplace purchases is accelerating. The 2021 State of Cloud Marketplaces Report also shows that 61% of buyers had purchased through one of the Cloud Marketplaces in the last year, with 83% saying they are likely or extremely likely to purchase through the Marketplace in the future.
As Microsoft continues to invest in and expand its Marketplace, more buyers (and sellers) are expected to flock to the Microsoft commercial marketplace. “Our main goal is to help generate business opportunities for startups, and having a transactable offer in the Microsoft Commercial Marketplace is key to setting up opportunities with Microsoft sellers, partners, and customers” said Jared Prins, Business Program Manager for Microsoft for Startups.
But what is it like for a startup to partner with Microsoft and launch its products on the Microsoft commercial marketplace? How can a startup take advantage of the programs available and build real momentum?
To help answer these questions, we talked to two startups with extensive experience working with Microsoft and selling on the Microsoft commercial marketplace. Here, Darren Yetzer, Vice President of Cloud Partnerships for Algolia; Paul Horn, head of Global Microsoft Alliance at Nasuni; and Microsoft’s Jared Prins offer some of their tips and advice for startups looking to optimize Microsoft commercial marketplace.
What has your Cloud Marketplace journey looked like, and what compelled you to begin listing?
Paul Horn: We’ve been active in Microsoft commercial marketplace for just over two years. We started hitting our stride about six to eight months in and saw some customers really looking at the ease of transaction. Now we’re at the point where we’ve transacted millions of dollars of business over the past two-and-a-half years. I’ve seen an incredible focus on Marketplace and it’s hitting critical mass right now. It’s a very significant part of Microsoft’s business going forward because buyers are now asking to transact there because they’re getting a lot of benefit through commitments that they’ve made with Microsoft. The Microsoft field sellers are also looking at that as a path to accelerate business versus potentially having to jump through some procurement hoops.
Read more: Partnering With Microsoft to Shape the Future of How Software is Bought and Sold
“Now we’re at the point where we’ve transacted millions of dollars of business over the past two-and-a-half years.” – Paul Horn
Darren Yetzer: Several of our customers who understand the benefits of the Marketplace transaction came to us and said, “It would be helpful and beneficial to us if Algolia could get into the Marketplaces as quickly as possible.” And that’s when Microsoft actually reached out and connected us to Tackle. Tackle helped us get our Marketplace up and running in a matter of weeks. Over the last year, we’ve had the company’s largest transaction go through the Microsoft Azure Marketplace, and we’re continuing to just add more and more transactions on a regular basis.
Key takeaway: One of the most common misconceptions about Marketplace is that it’s only for small, non-enterprise deals. It stands out here that both Algolia and Nasuni have enterprise buyers asking to transact this way, but that their Marketplace deals have resulted in millions of dollars of revenue.
Would you say that Marketplace is a good channel for a smaller ISV?
Darren: Absolutely. I would say you must have it, but you don’t have to dedicate a tremendous amount of resources to it. That’s where Tackle helps, because Tackle can offset some of those internal investments that you might have to make on your own if you’re running a small company.
“For our business and our partnership with Microsoft, it is 100% critical that we have Microsoft commercial marketplace transactability.” – Paul Horn
Paul: For our business and our partnership with Microsoft, it is 100% critical that we have Microsoft commercial marketplace transactability. If you look at the list of where Microsoft plans to allocate their time and their resources, you’ll see that the Microsoft commercial marketplace is on that list. So you’ve got to be on it.
Jared: Marketplace adoption is accelerating. There’s still time for a startup to build its Marketplace presence, to build a strategy, and to execute well. As the Marketplace becomes more mainstream, you’ll be ready to take advantage of opportunities and be better positioned for success going forward.
Key takeaway: Establishing partnerships with the Cloud Providers is necessary for all companies, in particular startups looking to grow in a strategic way and reach a wealth of new buyers. To get there, it’s best to start early.
What do you think is one of the biggest mistakes a startup might make, whether on their journey to Marketplace or their journey with Microsoft?
Darren: First and foremost, not being on the Marketplaces is a mistake. Get into the Marketplaces as quickly as possible. We just look at it as an additional storefront or channel.
What other things should startups be aware of when beginning this journey?
“Get into Marketplace as quickly as possible.” – Darren Yetzer
Darren: Executive buy-in is extremely important because you need to have somebody thinking about Marketplaces at a very senior level. Encourage each of your executives to understand the Marketplace and its potential – and look at some of the data that Tackle and Microsoft and other Marketplace research firms are providing. Part of being a good business executive is understanding the bigger picture especially since Marketplaces cuts across most of the functional areas in the company.
Read more: Ask the Experts: Getting Your C-Suite On Board for Marketplace
Paul: Marketplace is not an “If you build it, they will come” type of model, so you also need to ensure that you are driving a strong co-sell motion with Microsoft and, thankfully, that’s part of Microsoft’s DNA.
Darren: Microsoft is not going to go in and close a deal for you. Microsoft is not going to connect you to a purchaser or a senior decision maker. You have to do most of the selling work, and you need to rely on Microsoft to be your partner and to help educate the customer on why choosing a Microsoft vendor or a Microsoft partner makes sense, and why purchasing through the Marketplace makes sense.
Read more: Co-selling with Microsoft: A Guide
Key takeaway: Leveraging Marketplace is about more than just getting listed (although that’s certainly an important piece of the puzzle.) Marketplace is part of a larger Cloud go-to-market strategy that depends upon the involvement and support of everyone within the ISV to help drive growth.
What activities are you doing or contemplating to drive Marketplace visibility and transactions?
Darren: For us, it’s creating case studies and sales tools, and creating heroes out of people who have won a Marketplace transaction – spreading the word in a thoughtful and connected way.
Paul: We’re looking at some things like being able to provide a one-month free trial for customers, because if they hear that there’s an option for that to transact in Marketplace, they may jump on that faster.
Darren: One other thing that we’re contemplating now is having multiple Marketplace listings. I think that’s one of the nice things about the Marketplace and with Tackle too. It’s easy to pick up and drop and rename and create a brand new Marketplace listing. You can even A/B test them and see which is more effective.
Is there anything that startups should keep in mind when working with Microsoft?
Darren: Keep in mind that there’s a Marketplace, but then there’s also being a good partner of Microsoft. For us, making sure that we’re continuing to build and evolve our solution with Azure and other integrations with Microsoft is important. The more you can tell that connected story between your solution and Microsoft, the more attention you’ll get from the Microsoft sellers.
Paul: As you deploy in the Microsoft commercial marketplace, you get access to different things: blog posts, collateral content creation opportunities, and greater visibility opportunities. Look into what’s available through Microsoft to help you out. It could potentially change your selling and buying behavior.
Jared: I would recommend all startups to apply to Microsoft for Startups Founders Hub, which is a platform designed to democratize access to business and technical guidance, software tools, and expert mentorship to guide your journey with Microsoft. I believe this is a great first step that will assist in your startup navigating the Microsoft ecosystem and gain mindshare as you partner with Microsoft.
Read more: Tackle’s Microsoft Commercial Marketplace Seller Guide
Do you have any suggestions for scaling your business on Microsoft?
Darren: Figure out what motion works for your company based on whether you use a product-led or a sales-led motion. Think about how you scale based on what you do well, and just continue to add fuel to that fire.
Paul: If you’re looking to leverage Microsoft’s Cloud Solution Provider (CSP) program, it’s important to understand what markets or segments you’re going to be focusing on. Microsoft does a great job of building out their CSP partner network, and if you can leverage that, by all means do it – but start small, and I think you’ll be surprised at how quickly you can scale.
Jared: I think Marketplace provides that opportunity for immense scale. You can open up to the 90,000 CSP partners that we have, but I think it’s important to operate in a “crawl, walk, run” approach. Begin with those first few partners, working out the kinks, figure out where the successes and pitfalls are, and then from there, expand your approach.
Once on the Marketplace, startups need to figure out how to optimize and build momentum. A big part of that hinges on cultivating partnerships with Cloud Providers, as well as investing time and effort into co-selling and Cloud go-to-market strategies. Programs aimed specifically at startups are key to fully benefiting from Cloud Marketplace. Both Algolia and Nasuni demonstrate that startups can scale their Marketplace business and create a successful path forward.
To help accelerate your growth in the Cloud Marketplaces, apply now for our Startup Acceleration Program.