How Software Startups Go-To-Market in the Cloud Era

The Transcript

John Jahnke (JJ):

Thanks everybody for jumping on and thank you, John and Ben for joining us today and we’re excited to talk about how software startups can go to market in the cloud era. And my name is John Jahnke and I am CEO of Tackle. And Tackle exists to help software companies sell through the clouds. And I’ve spent my entire career in emerging tech sales, presale services and getting the chance to change the way that software is sold is really exciting for us. And I’m excited to welcome John and Ben. John and Ben, do you guys want to quick introduce yourselves so then we dive in a bit deeper?

John Leon:

John Jahnke (JJ):

Thanks everybody for jumping on and thank you, John and Ben for joining us today and we’re excited to talk about how software startups can go to market in the cloud era. And my name is John Jahnke and I am CEO of Tackle. And Tackle exists to help software companies sell through the clouds. And I’ve spent my entire career in emerging tech sales, presale services and getting the chance to change the way that software is sold is really exciting for us. And I’m excited to welcome John and Ben. John and Ben, do you guys want to quick introduce yourselves so then we dive in a bit deeper?

John Leon:

Good. Yeah, absolutely. Happy to. Great to meet everyone today. John Leon, I head up a business development and partnerships at a company called Apiiro, which is in the cybersecurity world. We are focused on application risk management. We won the RSA Innovation Sandbox award this year for the approach we’re taking with our technology. I’ve been in DevOps, DevSecOps for about 10 years. Geez, going back to all been partnerships, business development. Prior to that, I was in product management companies like Puppet Labs, now called Puppet, ExtraHop. I was at a company called Twistlock, which was in the container security world and where I first started working with Tackle, getting into cloud marketplaces. GitHub most recently and now back in the startup world at a company called Apiiro. That’s myself. Portland, Oregon is where I live. Three kids, a wonderful wife and a dog. That’s a bit me in a nutshell.

John Jahnke (JJ):

Thanks, John. What about you, Ben?

Ben Rice:

Hi. My name’s Ben Rice. Thank you all for joining us today. It’s a pleasure to speak with you. I handle business development at a company called Styra. We just took our series B financing so we’re pretty early stage, but we’re focused on bringing authorization everywhere. If you think about Okta as the company that brought authentication to a lot of new places, we’re trying to do the same thing with authorization. It’s a lot about security but it’s also about certain operational things. Styra is the company behind OPA, which is the open policy agent. It’s a cloud native computing foundation graduated project. We’re super excited to have the community behind us. It’s been downloaded over a 100 million times. And so what we’re looking to do as a company is use cloud marketplaces to get to those open source users that have downloaded our product and give them a SaaS management tool called Styra DAS that we sell commercially.

Ben Rice:

Excited to talk more about how that works and how we’ve worked with Tackle, this is my third company working with Tackle and why that’s important and why cloud marketplaces are something that you absolutely have to solve for whether you’re a startup or whether you’re in a bigger company.

John Jahnke (JJ):

Yeah. Awesome. And I got to say, I’m really thankful for you guys to be here and both of you have so much experience with marketplace over the years and having gone through this journey to build cloud go markets in different ways, at different points in time. I think there’s a lot everyone on the call can learn from you both.

John Jahnke (JJ):

And I wanted to start and just set the stage and talk a little bit about what we’re seeing at a macro level, from a marketplace movement standpoint and this evolution of cloud go to market. There is a significant transformation underway in the way that software companies sell. And we’re at this dawn of a new go to market age and we are calling that the cloud go to market age and we believe deeply that in the future, sellers will help buyers buy digitally. And cloud marketplaces are the initiation point of this transformation. And as buyers make larger and larger commits to the cloud, marketplaces offer a hedge against those commitments by allowing you to not only purchase native first party services but purchase third party services and put them on your cloud build.

John Jahnke (JJ):

And almost everything that’s built for the cloud these days is a combination of first and third party services. It’s really rare to think about anything you’re building on the cloud that doesn’t have some combination of a first and third party in it. And as the budgets, the cloud budget’s growing and marketplace becomes more of a movement and especially as cloud enterprise agreements move out of departments and into more finance and procurement, it’s causing the lines between the cloud budget and the enterprise software budget to get really fuzzy. And these are both $500 billion plus budgets that we’re starting to see converge.

John Jahnke (JJ):

Before we dive in deeper, I did want to like clarify a couple of terms that we’ll use throughout this talk and the first one is cloud marketplaces and what cloud marketplaces are, that’s the platform provided by the cloud. AWS Azure, GCP, Red Hat and there’s a bunch of others out there that allow sellers to sell and tap into budgets and allow buyers to buy and get access to the technology that they need when they need it.

John Jahnke (JJ):

The second is this term cloud go to market. And what cloud to market is it’s the program that a software company builds around using marketplaces because this is not a magic button. Marketplace is not a list it and amazingly revenue starts flowing in. You have to think deliberately about how you build a program and that program will be cross-functional in your company. There’ll be an owner. A lot of times that owners sits in a partnership or alliances role. Sometimes it’s a CEO. Sometimes it’s a CRO. Sometimes it’s the head of the product. But for people to really succeed and succeed at scale, they have to think cross-functionally about how they build cloud go to market into their system over time.

John Jahnke (JJ):

I just wanted to set that landscape around a couple terms. And one of the reasons, I get to talk to a lot of different software companies of all stages but I love hearing from startups. And we’re seeing the shift in the way startups are building their go to market to think about building them marketplace native and everyone in the early days when you’re selling, you sell direct because you don’t know exactly how to price your product. You don’t fully maybe understand the value. You’re trying to learn that from your early users and help them get value and make them successful and inform the program for how you’re going to scale. But the fact that you can now tap into the cloud budget and the cloud contract to do those direct deals via private offers fast and then grow into other forms may be more bottoms up and tops down oriented motions over time is becoming this movement where we’re seeing startups say, “I want to build my company marketplace native.”

John Jahnke (JJ):

We’re also seeing this come from investors and board members where it’s a pretty common question in the boardroom that, hey, how are we aligning our products and our go to market to the clouds. We have to think about that. And there’s a lot of incentives around that. That’s the broader context of why we’re here and excited to dive in deeper. Maybe John, why don’t you kick us off and just can you give us an overview of how you’re going to market today and just some details on your buyers and sellers and how maybe cloud go to market fits in.

John Leon:

Yeah John, it’s funny. I was listening to the last part of your talk there and it just, it’s my world right now. Just to give some context to the audience. We came out of stealth fall of last year with a series A round of $30 million so quite a big haul. I joined the company in the summer of this year, so July timeframe, and obviously now the task I have is to figure out the ecosystem vision and strategy and how we’re going to go to market and scale and leverage are the two words time and again. For every startup, how are you going to scale? What kind of leverage can you create as the BD ecosystem leader? And so the beauty is every time you start a new company working with a new founder team, you get a blank sheet of paper and you get to start to think about, all right, what would I have done differently? What should I do differently versus what I’ve learned in the past, et cetera?

John Leon:

And so cloud marketplace, the minute I walked in the door was front and center for us to figure out to participate in, to make sure that we resourced appropriately. And frankly, before I joined the company, to make sure we were all on the same page. How does sales think about this, the CRO? How do the product leaders think about it and our head of R and D? Certainly our founders and our board. And the consensus was at the time before I even joined was this is an important part of our strategy was to make sure that we led out the gate with a cloud marketplace strategy. That’s different than in years past. In companies I’ve been in past, direct motion, traditional resellers, systems integrator consultants. And of course we’re doing that right and I’ll talk about that in a second. But cloud marketplace was usually fifth or sixth on the list and it’s amazing in about three years short time, it’s at the top of the list, at least for companies that I’ve talked to most recently, B to B, SaaS providers, et cetera.

John Leon:

We’re on that path right now. We’re looking at it through a lens. I’m looking at it through a lens. We’re talking about internally as a focal point of our strategy but at the same time, we’re also ensuring that we’ve got bets placed on other routes to market. Certainly the consulting firms that are out there that talk DevSecOps are very important for our referral business. Certain value added resellers are very important for us as well. Certainly the technology partnerships that we’re engaged with. The interesting thing though and many of you know this in the audience is a lot of them are already affiliated with the big cloud providers. There’s an ecosystem around the marketplace and around the cloud provider that feeds upon itself, that sort of cranks the wheel. And at the highest level, that’s a big part of what we’re doing, where we’re engaged and John’s organization was one of the first ones we called when I walked in the door to get this process rolling. It’s a bit of our story.

John Jahnke (JJ):

Yeah. Awesome. Thanks for that. It’s been great to get to partner with you over a few of your chapters and we look forward to continuing to do that in the future. And Ben, what about you? What’s the state of the state at Styra?

Ben Rice:

I would say, ditto what John said. Interesting perspective he offered on getting to a new company without an ecosystem, getting to build it. And I always endeavor not to sound like or act like I’m doing something I’ve already done. Partnerships tend to be an interesting part of the company for a lot of people. I’m not the partnership person who’s perceived as a martini drinking, lunch having, sports attending guy that doesn’t do much. But the actual partnerships is always interesting. And I always like to try to take people at my company on a field trip and different people in the company work with a partner. I try to make it exciting and as if we’re building something new and we are. And in the case of Styra, I was fortunate to have been consulting the company prior. And I put a bug in their ear about using Tackle and getting up on the marketplace so that when I landed, there would be some things already out of the way and activity to start engaging in.

Ben Rice:

But of course, as John pointed out, both Johns, you can’t just put your stuff in the marketplace and then all of a sudden orders start coming in. And not that that’s the expectation at Styra but there wasn’t a person like me here to manage it and drive it. That’s kind of largely what I’m doing to start with is engaging with AWS, where we have our marketplace offering and then also examining what it will take and when we might get onto the other marketplaces. And then having done this before, I also now have the bumps and bruises and scars on how to get a sales organization and a company to buy into this and to actually engage and do the right things.

Ben Rice:

Fortunately at this company with a clean sheet, starting off really well, we’ve got some business that’s gone through the marketplace already and we’re starting to get our sellers to ask their prospects about it during the sales cycle. This is not something that you want to bring up at the end. The best practice is the person you’re talking to that’s interested in your technology, probably isn’t the person that controls the AWS budget. They may not even know their company has an AWS budget but you need to ask about that earlier in the sales cycle and find out, do they buy through marketplace? Are they a company that’s pre-purchased as I call them, Bezos bucks. And as John pointed out, there’s a strong incentive for a company to retire that pre-buy and when the person you’re talking to finds out they can get a fairly significant cash discount off of what they’re buying because half of it can be AWS credits, that oftentimes can speed the sales cycle.

Ben Rice:

And as we’ll probably talk about more, the process of fulfilling something and obtaining it through a marketplace is a lot easier than the sort of paper back and forth, legal documents, PDFs, invoice stuff that we’ve traditionally done. One of the carrots for companies and sellers in the marketplace model is pre-approved contract terms and a procurement process that is digital. And so everything can move that much faster and accelerate your sales cycles and your ultimately how much money you make and how quickly you get it.

John Jahnke (JJ):

Cool. Yeah, that’s interesting. And I know Ben, when we were doing the kind of pre-call for this, you talked about the couple different go to market motions that you have and I think they mimic a lot of what early stage startups are looking to do. You have a direct motion, you have some sort of free motion that you’re looking to connect to marketplace. Can you maybe expand on those couple motions and how you see them evolving?

Ben Rice:

Yeah. Having done marketplace a number of times, I’m fortunate in this company where there’s a very strong push, even from the board level behind product led growth, what does that mean? Is making your product so available and so easy to use and so easy to adopt that the product itself can actually cause somebody to self qualify and say, “Hey, I want this, I’m going to buy it.” And the idea behind that is creating a whole set of revenue generating activity that doesn’t require human intervention. The human intervention is the creation of the product that allows itself to be sold by usage from a customer or prospect. In our case, we have a free version of our product. Doesn’t have quite all the features but it’s very full featured and able to solve problems. And the difference in this company is we’re actually targeting developers.

Ben Rice:

We want developers to include authorization into their cloud landscape, into their application. We want them to not do authorization and sort of outsource it to us using code, using our policy language Rego. And so the idea behind having someone use the free product and then talk to a salesperson, doesn’t make a lot of sense. What we’re doing is we’re wiring our free product to the marketplace and more and more, you’ll see stuff within the free product that points you to, hey, if you want more of this, go to the marketplace. And then as John mentioned on the bottom left, the other John, we also have the other go to markets we’re working on, which is system integrators, channel partners, technology partners, consultant recommenders and then a group of people, sales and SEs at our company that work with those partners.

Ben Rice:

What’s interesting though and we can probably talk more about it is as much as that sounds like a separate world now, the partners and the system integrators and everybody are aware that there are these marketplaces and there are times now where the customer actually force is the issue and says, “Hey, I want to work with this partner, but I actually want to buy it through AWS.” And so we actually have ways to accommodate that partner now. And so the partner can actually fulfill through AWS Marketplace, stay a part of the transaction, stay a trusted advisor to that customer and in fact, stay a reseller and a happy partner of Styra. Whereas a lot of people would imagine that if the customer said, “I want to fill through marketplace,” that would mean disintermediating the partner. And I’m sure that’s happened.

John Jahnke (JJ):

Yeah. Partner’s probably a hot topic we could spend a lot of time on and I’m sure at some point during this call, my dogs will bark. I’ll proactively apologize. And you can call me JJ so we don’t have to be confused and about the two Johns, like J squared.

John Leon:

There we go. That’s a good technique.

John Jahnke (JJ):

Yeah. And John, what about you from Apiiro? You talked a little bit about the go to market model but maybe double click into it and even how you see it evolving.

John Leon:

Yeah. Ben’s roadmap that he just laid out there is exactly the path that we’re on as well. We’re a bit earlier on this marketplace journey in that our listing is going to go up this quarter. We’re just getting started at this company, at Apiiro. The way I’ve educated the sales team to this point and our CRO and the conversation we’re having is exactly what you said earlier, JJ, which is there’s a private offer element to this that allows us to transact through a marketplace to take advantage of committed cloud spend. The customers we’re trying to access have already signed on for multi years of cloud spend. To Ben’s point, the initial engagement you’re talking, the person you’re talking with initially may not even know yet that that budget exists that’s in place. And so we’ve gone through the path of educating our SDRs, many who are quite young, who are learning what cloud is, Who are learning the terms DevSecOps and the players in this space.

John Leon:

We’ve got a very young SDR team. They’re 25, fresh out of college, maybe their second job and this is very important for them to understand kind of in the talk track, when do you bring this up? How do you educate your buyer that this exists? Part of this is that education of the SDR team but we’re going to start with a private offer element. And then in terms of our go to market strategy, product strategy that initial land in the bottoms up sort of product availability is so key. And so right now we’ve got what I’d call an enterprise product but we will be having a self serve option if you will that will be well suited for the marketplace.

John Leon:

We’re going to get the wheel going from a fulfillment standpoint for all the reasons that Ben talked about, which is ease of consumption, procurement ease, contracts in place, committed cloud spend. That’s going to get the initial few deals in the door but the fast follow for us is to have that sort of self serve product as well, specifically designed for the marketplace. That’ll be our two step sort of function if you will. The other piece of this, I don’t want the audience to lose is that the marketplace is an activity but there has to be overall cloud strategy that you have for that particular cloud partner, whether it’s Google, Microsoft or AWS. And we try to also attack this, if you will, through the product team engagements that are relevant to us, the AWS services, for example, that are relevant to us. Ensuring that we’re building relationships there. We’re taking part in all the events, in the activities around it for awareness building and of course the marketplace itself. There’s a multi sort of faceted approach you have to take to make this successful over time.

John Jahnke (JJ):

That’s great. And we actually had a couple questions in there that you kind of went through. And the one Ben had asked a question, how do you recommend a phased approach to marketplace, first private offers and later self service? And that was almost exactly the way you laid it out. And in your mind, can you just say a couple more words about why you prioritized it that way?

John Leon:

Oh, is that to me, John?

John Jahnke (JJ):

Yeah, yeah.

John Leon:

I’m sorry. I thought you said, Ben, my ears are.

John Jahnke (JJ):

I’m sorry. The question was from Ben. That was a total mistake.

John Leon:

Okay. Why do we prioritize it that way? I think for us, we’re a closed source software company to start. We’re not born from an open source project. We’re a closed source to start. Our approach initially has been a direct sales force. We’ve hired SDRs. We’ve got very much a inbound outbound marketing approach. And we’ve been able to address initial logo acquisition through the direct sales team. But we know going back to scale and leverage that for us to have a force multiplier from a go to market standpoint, the marketplace is super important. For us as a closed source software company, we’re getting asked from our clients, “Hey right, is there a way I can transact through the marketplace?” And that’s going to be through private offers initially. That allows us to sort of keep control on the pricing model, the construct we have today, which frankly is still, it’s in development. It’s a series A company, we’re still sort of sorting out the right tiering structure and the right sort of feature sets and how we’re packaging.

John Leon:

But we know that the marketplace is going to offer us an ability to address the SMB, if you will, that the user out there that wants to get the initial taste of what it is we offer. And we’re all about securing the SDLC and the shift left format. DevSecOps really is about individual users who like to go out and try whether they’re an ops or developers. They want to try the product. They want to get a taste for it. And it’s amazing how we can gain traction. I’ve seen that happen before and it’s what we want to replicate here.

John Jahnke (JJ):

Great. Yeah. And I think that very much is a best practice. We see people start with that private offer motion and grow into a self service motion over time as one, you build the muscle to marketplace. Two, you have a better understanding of how you want to price and package your product to deliver value. There also was a question around getting marketing involved and to understand and articulate the value of using cloud marketplaces and Ben, I’d love to hear your take on this. How have you put partnered with marketing in the past? Has there been resistance to integrating kind of marketplace into your marketing messages? Or what kind of tips and tricks do you have?

Ben Rice:

Yeah. I’ll start with the end state. The end state is kind of some things we’ve hinted at already, which is everybody from the board down should be bought into this. It shouldn’t ever be that it’s the BizDev department that owns the marketplace. It should be the whole company. If you think about a restaurant, there’s a cash register. Who owns the cash register? Well, the cashier does but if the cashier doesn’t show up, do you stop doing business? No, everybody in the business is focused on getting people into the restaurant so that they’ll pay the cashier and then everyone will get paid. And similarly, everyone in the company, especially marketing has to help own this. Now this is the product of experience I’m speaking with. And maybe in the first time I tried this, it was a Ben Rice special and I’m trying to do everything on my own. And I ask marketing, write the initial marketing or the marketplace listing and then I’m off and running.

Ben Rice:

Bad idea. Because what you want is you want your marketing department to look at the marketplace certainly as an endpoint for everything they’re doing. Marketing is successful if leads come in and those leads turn into revenue. And one way to measure that is looking at what’s going through the marketplace. That’s a very tangible result that marketing can focus on. And then of course, you also want them to be educating in general that this product is available in the marketplace. There are options of where you can procure it. We are a cloud company. Look, we’re on a cloud marketplace. The more times it can be mentioned, the more times it can be highlighted on webpages, the more times you can have a buy now button on a particular webpage as a call to action.

Ben Rice:

Imagine you’re doing a marketing campaign, you’re nurturing somebody, hey, try this, hey, try this. One of the messages could be, by the way, did you know there’s a super easy way to procure this where you don’t have to talk to sales? Now, not saying that’s the value prop, not talk to sales but for some people that is a value proposition. And until they know that that’s available, they may not ever even try to do such a thing. I would seek to get marketing, product management and sales on an early buy in and the executive team and that way, all of the bumps and bruises you could take down the road, you can kind of get them out of the road up front. Some of these will come out in the questions I’ve seen asked, what do you do about sales? We’ll talk about that but these are things you should kind of iron out at the beginning and making sure that everybody knows that it’s not the BizDev person’s project.

Ben Rice:

Because as an example, if you’re trying to do the self serve thing, your product has to be orchestrated for that. It can’t be, hey, here’s this long instruction set. You’ve got to download it. You’ve got to do all these different things. That’s not going to work for a marketplace buy. It has to be, hey, I’m in the AWS console as an example. And I see I don’t have everything I need to build this landscape and I’m going to click over here on this nice big button on the left. Here’s a bunch of things I can get from the marketplace and start using right now. That’s what I’m looking for. I’m looking for, I’m building this right now. It needs to be done by the end of the week how do I get it now? That already has to have been built into the product. Bottom line, get as many people to buy in across the company as you can and get them to share the opportunity with you.

John Jahnke (JJ):

Yeah, it’s a great list. I think sales, marketing, executive, typically there’s like some element of legal because there’s contract elements but I think that’s a good short list. And lots of questions, keep them coming. We’ll definitely try to answer as many as we go. I did want to circle back to John, something you talked about and maybe hear both of your takes on this. That intersection of product and go to market and how you think about aligning your product to the cloud and aligning your product to go to market. And maybe Ben, we’ll start with you, and you’ve touched on some of these elements, like free product trial, popups in product. Share some thoughts around product and go to market alignment.

Ben Rice:

Yeah. So on the product side, it’s making sure that as people find value in your free product that you show them a pathway to features that they’re not getting in the free product that they might need. Valuable things that they’d be willing to pay for. Measuring what their adoption and usage level is of the free product to be able to prompt them at a point where probably they’ve consumed enough that they’re ready for a message of, hey, this is only $36 a month or whatever it is. And then, the other thing you can do is just look at companies that are really, really good at this and see what they do. Atlassian is an example I would give of a company who’s architected around a free product and not have having people to manipulate the customer or user of the product as much as the product itself.

Ben Rice:

And what kind of tricks do they do? How do they make support and help available? How do they instrument the product on the backend so they can actually get data about the usage? Most software companies come from the days of on premise software where we built some software, someone downloaded it, installed it but it wasn’t in communication with the vendor because it’s solely running on premise. And so we really had no idea how they use it, if they use it. And in fact, there was a time we didn’t even care. We’re just like, hey, salesperson just sold a load of $4 million of software. We don’t care about that account for four years. And if they haven’t adopted it, we’ll go back and sell them four million more in four years.

Ben Rice:

Now with SaaS subscriptions, as we all know, the key is obtaining the renewal. And so we have this whole function built up within companies called customer success, which is about making sure that people are adopting and using the product. Of course you want to have customer success but if you build into your product metrics that people in the company can go over, salespeople, product people, who’s clicking on what? How many times is the free trial being used? How far are people getting on quick starts? Are there blockers? Are people coming to the community a lot with a lot of questions? And so this falls into all of the modern trends of fast iteration, agile software development. And if you really are tuning your product for product led growth, you’re doing these kinds of things where you’re really looking on a weekly basis or daily basis about usage and then making improvements and then measuring those improvements.

John Jahnke (JJ):

And thanks for that. That’s a great answer. And John, there’s a question specifically for you in the chat just around, you mentioned your company’s moving from enterprise to SaaS strategy and how’s is your go to market strategy going to change in that shift?

John Leon:

Let me clarify that. We have a platform that we put into the market that has a lot of great features. Fantastic features set across different parts of the security, of the SDLC. But there’s always, when you’re starting off with a new product as a series A and you’re finding your fit in the market, there’s always that one or two hooks. The one to two hooks that why people write a check, why people pay money to consume your product. And our thinking is we want to make sure that as we make this self service offering, we make it such that it’s the hook that an individual user can and access, gain benefit from quickly. And frankly pay us money very quickly as well. The rest of it, the vision that we have to the old land expand strategy where you land on an initial hook and then you start to expand within the organization is really about them getting aware of all the features and the richness of the product, what else they can do, what else can it replace? What else can it do as and automate within my organization?

John Leon:

When we think about our product strategy, it’s always the land and expand. It’s what is the one to two hooks that people are going to pay money for? And then what is the expansion strategy within? And we’ve built a fantastic platform, as I mentioned, the RSA Innovation Sandbox award but we’re building a new market as well. The application risk management sector is very new. It’s very vertical and this is how we’re thinking about it. But in terms of just expansion and enterprise, that’s how we’re going to package.

John Jahnke (JJ):

Cool. We’re about midway and we have a bunch of lessons learned just from past experience. I think it’s rare to get three or four time market placers on a call at the same time. Maybe John starting with you, just some lessons learned from your previous experiences.

John Leon:

Yeah. I’ve got the gray hair to show I’ve been around for a bit. And two tier two three distribution models to cloud marketplace, it’s amazing how fast innovation is occurring now in our industry, how easy now it is to procure software, how much automation exists and even three years ago, when we kind of did the postmortem on the Twistlock exit and I sat down with CRO for a beer and we just talked about out how it went and what we thought we would’ve done differently. There’s real humans involved in these decisions that we’re making as a startup and the reluctance that he had towards cloud marketplace at the time. Because he had grown up in an era when it was traditional VAR, VAD, direct sales model and the admission that let’s do this faster next time.

John Leon:

And so it’s these lessons that you learn as you go go through, the world of startups and you work together with various teams. It’s a muscle building exercise within an organization is the other thing I’ve learned too. And Ben called this out early on, which is make sure everybody’s on board of the outset. This is not a project. It’s not a one off. It is a strategic enabler for the entire go to market engine in the company and that requires everybody’s buy in from top down to include the investors. I think the easy part now in 2021 is more B to B companies get that. I think the acknowledgement is there. I think the continuation of that education now is make sure you set the tone and you set the expectation properly about the pace that this is going to take.

John Leon:

To Ben’s point, it’s not going to happen overnight that you list and then the leads start to fill in. It’s going to take a few quarters worth of time and effort to get the engine turning, to do the lead share, to do the things that you need to do to make sure that you’re getting the attention from AWS, Google, Microsoft, whomever it is you’re working with. That muscle building takes time across the organization with as I mentioned, the SDR teams that I referenced earlier. Marketing should be joined at the hip with you on this activity. You should be talking to CRO weekly, if not biweekly in your regular calls about the performance and making the adjustments as needed over time. That’s kind of the initial heavy lift that goes into it to get the engine turned on. And then thereafter, I think you’re going to find that it becomes a key part of your go to market.

John Jahnke (JJ):

Yeah. And there was a question earlier around KPIs that I think aligns really well to your answer. In the early days and you think about setting goals or KPIs for marketplace, are there ones specifically that you start with? Or any advice around KPIs?

John Leon:

I think early on for us, what I’m tracking right now is we start off the gate is how much fulfillment can we drive through the more marketplace? For us right now, it’s going to be private offer based, which is we’ve got an existing pipeline of activity. Some of that, a lot of that, is going to be on a specific cloud provider. We keep picking on AWS in this call. I think because they’re the largest but 60% of that is on AWS. Working with the CRO and the sales team, let’s funnel some of that through the marketplace. That’s a KPI we’re taking, how many deals are we going to funnel through in the initial quarter of the first setup of our listing?

John Leon:

And why are we doing that? Because we know that we’ve got to show traction through the cloud provider to ensure that our partners at AWS, for example, see activity through the listing that we have and that’s going to build the momentum to get where we want to be, which is lead activity. Lead sharing and making sure we’re starting to see inputs coming in from AWS, for example. I’ve set it up in the past where we would start with private offers. We track the amount of leads we’re exchanging through ACE, which is an AWS tool around customer exchange of information. And then thereafter, we start looking at purely generated cloud lead activity from the provider itself.

John Jahnke (JJ):

Awesome. And Stephen, who asked that question, I just put a blog that we wrote around marketplace KPIs that might be useful. Ben, what about you? Some lessons learned from previous experiences?

Ben Rice:

Well, I’m a positive person so most of what I’ve been saying has been very positive but what I would like to share now is a little bit of the negative side because you’re going to have people in your organization that are going to doubt you. A couple things to consider is what would happen if you didn’t do this? What if you didn’t put your product in the marketplace, what would happen? I’ll give you an example. Highly contested RFP type deal. My company wins. The technical bakeoff is heading towards a nice big sale until we get to the procurement aspect. And the prospect says, “This must be fulfilled through marketplace X.” We’re not in the marketplace. What do we do? Oh, our competitor is.

Ben Rice:

And so think about that at this point, this particular customer made the choice because of cost because of ease of purchase. We’re going to buy the company that had the technical loss but they’re in the marketplace and so they fit the budget that we have and we know they run on this platform well and everything looks good. And so literally the marketplaces are like parties you’re not invited to. If you’re not into the party, you don’t get to have the beer. I would use that as a message to your company that participating in these marketplaces is a necessity. There’s a sector of the market that is going to be cut off to you and you’re not going to be able to touch those dollars unless you’re in these marketplaces.

Ben Rice:

I think it’s reasonable to think about it the way John has mentioned where you start off with private offers, which are essentially your ability to customize and offer however you want. You can change the legal documents, you can change the price. It’s as if you’re transacting the way you used to, where there’s paper going back and forth and you’re negotiating. It is streamlined and made easier but if you think about marketplace, most of you are probably thinking about this listing with these five or six SKUs with a fixed price. And that’s limiting and customers come to that and they say, “That’s too much and I don’t want it.” But that’s not the end of it. The private offer really is for direct selling, partner selling, whatever but you’re at the fulfillment point and you say, “Okay Hey, let’s take it this way.” And so you can orient the customer or that way or they can be oriented that way but you can fully customize it.

Ben Rice:

It’s not really for these somebody who comes through the web and comes right to your listing and buys something. Understanding that you have this ability to customize it, I think is also a key message to get to your company that, oh my gosh, if we put this up there with this price, everybody’s going to know our price, everyone’s going to negotiate against us. Our competitors are going to know about our pricing. This is going to upset the whole selling model. It really doesn’t. If anything, the marketplace listing becomes a source of a budgetary quote or an idea for a prospect to look at and see, this is what it potentially could cost. And then there’s great news when actually talk to the salesperson or the partner that no, that is not the fixed price. Depending on what you want, we can customize this just for you. It could actually be cheaper.

John Jahnke (JJ):

Cool. A bunch of questions around channel and disti and working with channel and cost of channel. And I figured we could just maybe riff on some channel topics. I’ll try to rattle. There’s one question around traditional distribution and fit in the new marketplace purchasing path. And with marketplaces lowering their fees or more marketplaces moving to lower their fees, is that enabling a new, faster path versus traditional distribution? Curious on how you guys see distribution fitting into your business today or even thinking about how distribution has changed over time.

John Leon:

Yeah. I can start with that, John. I’m learning as well, how things are changing, evolving so quickly? I will say that as we think about our geographic partnership structure and model, there are certain regions you still need to work with value added distributors. AMEA for example. There’s so much contractual, legal requirements country by country that having a value added distributor in the region is a part of our strategy. We will have a VAD that will help us in key countries in the UK and the Nordics, Germany, et cetera. I am hearing that cloud marketplaces are starting to take off in Europe and I’m hearing this from other colleagues that in other startups that are out there that are a few years ahead of us, couple rounds ahead of us and I’m kind of keen to hear what’s happening from their perspective around how’s the AWS Marketplace working in Germany, for example or the UK?

John Leon:

I’ve got my eyes on that keenly. I will say that VADs in Europe are key part of what we’re doing. In the US less so. That being said, I do have some very key value added resellers that are super important to us. I don’t have a ton but I have a handful that are very focused on AppSec, DevSecOps that have relationships and we’re going to nurture those just as we are trying to nurture the cloud marketplace. I guess my short answer is we’re not banking on any one route to market. We’re making sure that we’ve got our bets laid out appropriately and then we’ll fine tune as we can go, which is the advantage of being a small company is we can fine tune.

John Leon:

The last thing I’ll say and then I’ll let Ben talk and I’ll stop talking is that I’m also finding that a lot of the cloud providers like the GCPs, the AWSs have their own partner ecosystem that’s already working with and very closely to the cloud provider. Consulting firms, referral firms, et cetera, that can take advantage and retire their requirements as a partner with AWS and Google by working with us. Fantastic three way win so that everyone’s getting something out of that and we’re all building entire relationships.

John Jahnke (JJ):

I think that’s a really great point. Evaluating the partners who are. There’s a transformation happening in the channel and distribution and some partners are racing to the clouds and others are resisting or operating as is. And I think the word value and value added reseller is more apparent than ever before. They’re all becoming managed service providers and managed service providers are in a SaaS world. They’re no longer installing software or delivering hardware. They’re wrapping value around SaaS. And that’s a pretty significant transformation.

John Leon:

One of the easiest things to do, JJ is when you get first started is go look at the AWS partner network, do a search. Who’s out there in the consulting area? Who’s there that’s in your field? There’s your target list of smaller sort of VARs and consulting firms to go work with.

John Jahnke (JJ):

Yeah, definitely. And I think with the clouds having contract with so many buyers now, it is changing the nature of when partners and distribution gets engaged. At least that’s what we’re seeing because everybody has a contract with Microsoft or Amazon or Google, I should say. Ben, thoughts on channel.

Ben Rice:

Yeah, I will amplify what John said there. At some point there was a record store that decided CDs were not going to be the thing and that was not the record store you wanted to go to after you bought a CD player. Similarly, when you’re looking about the partners you’re signing up, if you’re selling a cloud native thing, if you’re selling something that ultimately always will live on AWS or GCP, do you want to go with partners that aren’t already in tune with that? You don’t. This hint that John just gave to go look at the APN and see what partners are already transacting there, A, you don’t have to go sell to these partners on why AWS is important or why you won’t disintermediate them because they’ve already done stuff on there and they know what’s what. And then secondly, this is a pool of people that are already going to be talking your language and interested possibly in your technology so it’s a great spot to fish from.

Ben Rice:

And I would just say, of course there’s a continuum of people that are going to continue doing things the way they’ve done but there’s people way out here that have adopted this super fast and I’ll share the name of this company because I don’t want all of you to go try to knock down their door because I’m trying to knock down their door, but they’re a traditional security VAR. And so you think, oh they’re selling appliances, they’re selling the old way. There’s a part of this nationwide VAR that has adopted AWS Marketplace in a way that’s way beyond anyone else. And what they’ve actually done is they are the payer for this customer, the customer pre-buys AWS credits and then they land them with this reseller and then the reseller actually provides a huge value, which is what should you buy? What should you go get in this cloud marketplace?

Ben Rice:

We manage the budget for you. We tell you what to buy. They’re essentially fulfilling the same role they used to always fulfill except they’ve actually got their hands on the budget now and they’ve grown this business massively. This is a $100 million a year business for this reseller and they’ve got 30, 40 captive customers for whom they’re suggesting what to buy in the marketplace. For me, I want to be inside the bank vault and looking at the money and saying, “Okay, how should we spend this?” Whereas most selling is how do I get into the bank fault to get them to buy something? It’s kind of turning things around and saying, “Find the procurement first. Find the person with AWS budget or GCP budget,” or whatever and then tell them about what your offer is. But you’ve already kind of got captive somebody that’s got budget and is willing to go forward. Look for those partners that are already into this and don’t be the one that has to convince them to do this.

John Jahnke (JJ):

I know there’s a couple more foundational questions around channel plus marketplace and maybe there’s a consulting partner, private offer program with AWS that allows a MSP VAR to execute on a private offer. That’s the primary, there’s a CSP program with Microsoft that allows you to do the same. Those are the primary mechanisms but you can still use marketplace and the cloud budget for fulfillment as a software company and have a third party in the mix. There is some nuances and complexity to this. We have a bunch of content to tackle that IO around these concepts as well as resources. Ask your Tackle, whoever you’re partnering with on our side and we can help you work through.

John Leon:

Can I just give you the plug there, JJ? The content you all produce, that the report that you came out with, State of the Cloud Marketplace, I think it was very recent. That was a report that I shared with our board and with our founders and some of the outtakes there about how cloud spend is now strategic. It used to be just departmental. It used to be in certain areas. Now the CFO’s looking at cloud spend as a strategic aggregate number for the entire company. And the old adage is skate to where the puck’s going. That’s how procurement is happening with a lot of our customers today in the enterprise mid market, et cetera. Great, great findings and it’s they’re great resources to help tell the story internally.

John Jahnke (JJ):

Thank you for that. And if Erika was on video, she’d be smiling ear to ear as our director of content and brand. She’s amazing. Shout out to Erika and she I know is super passionate about helping all of our sellers learn from each other on how they can sell more. And shout out to you guys for joining and just sharing. Anyone who’s on this call, who has ideas on things they want to share with us or content that they want us to create, please give us feedback. We’re always looking to create more so.

John Jahnke (JJ):

Awesome. Let’s see, where are we at? We have, let me scroll through the questions really quick. We got about 12 minutes left. I see there’s a question around private offer. Interest in private offers and marketplace, which best strategy to go to market. I think maybe I’ll try and hit that one quick. If you’re new, selling a new product, new company private offer, you have to one, become a cloud partner. Two, find your way to marketplace. Three, a private offers the ability to pass custom pricing and terms through the fulfillment vehicle of marketplace.

John Jahnke (JJ):

And there’s nuances around how you can price and package in a marketplace. And I think a lot of times when you engage with us, we start with how you sell. And sometimes you may not know and that’s okay. We have ways to help you figure out how to, you will have public pricing when you’re in the cloud. And you have to acknowledge that. That’s part of the marketplace movement and private offer gives you flexibility to do deals the way you want, even though your public pricing may not be exactly in that bottoms up motion. Probably a much deeper dive, more specific to you, Anthony, who asked that question but definitely let us know. And regarding learning more, you definitely, if you’re not engaged with Tackle, just follow up with sales@tackle.io.

John Jahnke (JJ):

Couple things, like top things to do when you think about becoming a modern digital selling organization. We’ve talked a lot about marketplace being a foundation of that. Are there other areas that you guys think about on this broader, longer term vision of sellers will help buyers buy digitally in the future? I’d be curious.

John Leon:

I’m going to let Ben go.

Ben Rice:

Well, I think one of the many sales trainings I’ve gone through in my career at sales kickoffs was the challenger model. And so in this selling construct, one of the things that we’re supposed to do as sellers is bring insight to our buyers. What is insight? It’s some valuable piece of information that helps them understand something. It doesn’t even have to be about our product or service. It has to be that me as a person, I’m delivering value to the person I’m talking to and earning their trust and earning the ability to keep talking to them more. As an example, some of the content that Tackle puts together, if you’re talking to someone that’s not familiar with buying through the marketplace, just that State of the Cloud Marketplace report that John mentioned will be a great thing to share. Provide them with of insight into, wow, I didn’t realize this was going on, that everybody is now buying this way. Everybody’s doing this.

Ben Rice:

There’s a ton of content out there, not just from Tackle, about how cloud marketplaces are growing, about how cloud is growing in general. And these sort of seem like obvious things to say but you yourself should be educating yourself about what’s out there and when you find something useful, I think it’s a best practice to think about sharing it and helping someone understand what value they could get from consuming or reading it, watching a video, seeing a webinar, educating customers before you drive them right in the face with, Hey, here’s where you got to go buy this, I think is a great idea. I don’t know if that is as good an answer to the question but I would also point out that your marketing department should also be thinking about how to generate leads digitally. Does this just mean Google Ads?

Ben Rice:

It doesn’t. There’s lots of stuff. I’m not a marketing expert but the idea that you want people to go buy something off the web but then you’re going to give them a billboard to go do that doesn’t necessarily make sense. In other words, there should be a connection digitally between the advertising, the message, the entreaty to go do something and where that action will live. It’s not clicking on a billboard, it’s clicking on something that takes you into the marketplace. It’s clicking on something that takes you into content. I think your digital marketing strategy should at some point indicate some part of your marketplace strategy as well.

John Jahnke (JJ):

Yeah. I think this is a complicated emerging topic. I think one, be marketplace enabled. We’ve obviously talked about that a lot. Sellers want to sell where buyers want to buy, listen to your buyers, ask them questions, understand what strategic to them. I think that informs a lot. With the concept of social proof, we’re huge advocates around social proof. And that’s a combination of reviews, whether those are G2 reviews and how do you link reviews? And as well as building content, I think most buyers still discover via content. They’re going to engage with content you create that describes the problem that you solve and tells stories about how people like them solve similar problems and that’s going to lead them to engage with you and less people want to engage with a person now than ever.

John Jahnke (JJ):

Gartner says 80% of people will make a buying decision before ever talking to a person at a software company, which means your content strategy, your digital engagement strategy need to be really well thought out. And I think if you think about our consumer lives, the first thing everyone does is read reviews on any product they’re going to buy. We’re evolving to that era in B to B and B to B is very nuanced and it’s going to take us a little a while to figure that out. But I do think social proof becomes a big part of that. And just enabling those pathways. Ben, you talked about having to buy buttons wherever you can. Hey, just making it clear. Marketplace is an option, it’s available and teaching people to ask questions.

John Jahnke (JJ):

There was a question around, we got six minutes a left. There was a question around sales compensation and curious on, and maybe John, do you want to through your chapters, how have you thought about sales compensation with marketplace? And have you thought about it differently versus other routes of market?

John Leon:

The short answer is we try to keep it agnostic in terms of how our reps are getting paid because we didn’t want to create preferential sort of speed landing any deal any certain way or incentivizing them any specific way. It should be that the customer, how they would like to purchase or procure, they get to choose. And so, it’s a part of our talk track early on is, do you have a partner you’re working with? Which cloud marketplace are you working with? How do you choose to fulfill, would like to fulfill? Short answer is no, we’re not trying to incent any certain way. That being said, I mentioned earlier on the KPI with the CRO about trying to drive some business through early on. Those are things that we’re trying to be proactive about but we’re not trying to incent with a compensation model.

John Jahnke (JJ):

Ben, what about you? Thoughts on sales comp?

Ben Rice:

There’s a couple fine points, I’ll jump right into the controversy here. On the one hand, anytime you start off with a direct selling organization and you move into partner selling, there’s this rub of wait, so if I’m a seller and I work with a partner and they get 20% of the deal, then my quota attainment goes down 20%. My cut goes down 20%. The answer to that sometimes is, yes, deal with it. And they brought you the deal, this is how we’re doing business, we’re a 100% channel company. We’re not direct selling. Now there’s another answer, which is we’re so partner friendly that we don’t even take that amount away from the salesperson. We want to incentivize them to do business with any partner, whether it’s a marketplace or whether it’s a traditional partner. And for that, we’re not going to even hit their compensation at all.

Ben Rice:

There’s somewhere happy medium in between which could be on these types of deals it’s this percent, on those types of deals it’s that percent. But this is something that absolutely should be talked about, decided and put in stone before you start running at your salespeople and telling them to go do stuff. Because I have done that at a company where it wasn’t figured out and nothing happened. And when I went back and looked and talked with individual salespeople about it, it was, I don’t want to lose 20% of my sale or 10% or whatever the amount was and therefore I’m not going to do this. And then you go talk to them and say, “Hey look, you’re not going to get this business from this customer, unless you do this. They’re only buying through marketplace. This is December. They’re about to run out. Their pre-bought budget’s about to disappear so they want to buy from you now and they have to buy it here. If you want to keep forcing them to this other path, you’re not going to get the deal.”

Ben Rice:

I think sales compensation and the messaging internally about that is super important and something you should think out incentivizing perhaps early and maybe modifying over time and say, “Hey, in the first year we’re going to do it this way and the next year, once we have this going, you guys will see the value. We should be getting business back from AWS by then and it will be obvious why we’ve given up this money. But for the first year, we’re going to not do that.” I would look at the different and options, talk to people that have been successful with it that you know in your network and then you can ask the people on this call, if you don’t have those options filled.

John Jahnke (JJ):

Yeah. I’d say our most successful sellers, it is not a penalty. That it is neutral and in some instances there’s incentives to really get the flywheel moving. And the last thing you want to do is build a new channel and discourage people from using it because what will happen? They won’t use it.

Ben Rice:

Nothing will happen.

John Jahnke (JJ):

All right, we got two minutes left and any final questions? John, Ben, I just want to say thank you for sharing lessons learned a over the years, insights. I think like super interesting topic. Erika’s amazing and will turn some of this into a blog post so everyone who’s on can read some of the insights and we can package them up to make them a little more easily consumable. And thanks everyone who jumped on the call. And if there’s anything Tackle can do to help you go on your journey, please don’t hesitate to reach out to us.

Ben Rice:

Yeah. Quick unsolicited commercial for me, there’s one way to do it yourself and you have your developers wiring things and you have a lot of problems. I did one marketplace that took a year and a half and then the next company I said, “Is there another way?” And I hired a little company called Tackle and they did it in a week. Hate to end this with a commercial but one of the things that you want to do is not struggle with getting into the marketplace. Don’t get your company all excited about it and then take a year and a half to get it done. Get it done quickly, start off on the right foot and the process through which you would procure that will let you understand what a private offer is. That worked for me at a company, I brought this Tackle in and they said, “What’s your private offer? CFO, give me all kinds of questions.” He got an email. He clicked on the link and he was subscribed. Ben Rice, this was out of his hair and we were off and running and in the marketplace within a week.

Ben Rice:

I urge you to go talk to these people, even if you don’t buy from them, they know so much about these marketplaces. They are trusted within each of the clouds as super great participants in the ecosystem. And just mentioning the name of anyone that works there or the company itself will get you an audience.

John Leon:

I would echo what Ben just said and it’s not just for startups like where he and I are right now. I was at GitHub in my last role, Microsoft company and we used Tackle. If there’s folks on this call from large enterprise ISV organizations, companies, tech companies, big and small, value add big time. Don’t it yourself. Get help. And these folks have figured it out.

John Jahnke (JJ):

Guys, thank you. Thank you so much. Thank you for the partnership. And we really appreciate the shout outs and we live to help sellers sell. We look forward to continuing to do that. All right, guys, have a great day. Thanks everyone. Talk to you soon.

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