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Jay McBain Joins Ultimate Guide to Partnering®
In today’s episode, we revisit a conversation with a special guest, Jay McBain, Chief Analyst at Canalys. Jay McBain is an accomplished speaker, author, and innovator in the IT industry. Named Channel Influencer of the Year by Channel Partners Magazine, Top 40 Under Forty by the Business Review, Channel A-List by CRN, Top 8 Thought Leader by Channel Marketing Journal, Top 20 Visionary by ChannelPro, Top 25 Newsmaker by CDN Magazine, Top 50 Channel Influencer by Penton, Top 100 Most Respected Thought Leader by VSR Magazine, Global Power 150 by SMB Magazine, and Top 250 Managed Services Executives by MSPmentor.
Jay joins our host, Vince Menzione, for an enlightening discussion. Together, they navigate the ever-evolving landscape of the technology industry, covering diverse topics such as changing market dynamics, the transformative influence of generative AI, and the digital-first mindset adopted by millennial buyers. Join us as we uncover invaluable insights into business strategies, partnership dynamics, and marketplace trends. Whether you’re a CEO, industry professional, or tech enthusiast, this discussion promises to be intellectually stimulating and enlightening. Don’t miss this opportunity to better understand the modern tech ecosystem.
What You’ll Learn From This Episode
0:00 – Millennials as the New Buyer
2:35 – Understanding the New Buyer’s Behavior
5:08 – The Role of Ecosystems and Marketplaces
7:25 – The Death of the Cookie and the Rise of Second-Party Data
12:42 – The Future of Partnering and Marketplaces
16:47 – The Importance of Customer Obsession and Partnership Skills
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Transcript
Keywords:
partner, buyer, microsoft, marketplace, talk, year, company, customer, buy, achieve, partnering, partnership, number, ecosystem, moments, thought, inflection point, aws, money, product
Transcript (Generated by Otter A.I. – Please Excuse Any Typos)
Jay McBain 0:00
And that leads to marketplaces. Yes, they’re okay buying seven layers to solve a problem. No one wants to buy this all you can eat. You know, best in class, end to end. Platform. I’m okay building layers to my outcome.
Per Werngren 0:00
I think you shouldn’t be just in one community. It will enrich in you and will enrich the other communities. If you are engaged in multiple communities, yes, and multiple communities means that you will get more business opportunities.
Mike Gervais 0:18
Microsoft’s purpose is in service of your purpose. And again, 2024 is the year that partners come out as the leading edge of the spear on finding this buyer intent. You
Vince Menzione 0:29
show up to every meeting and demonstrate why you are relevant every
Sharon Schoenborn 0:34
day. I have to force myself to make sure that I’m taking one step ahead in terms of my own learning that
Vince Menzione 0:47
that flywheel success is where you will build momentum, and that momentum will continue, and then you feed into the other systems to say, this is what we did. This is how we did it together. The five reasons why the next generation of CEOs will be partnership leaders, warms my heart to know that as a partner leader and former chief revenue officer as well. So I thought maybe we’d start here. I wanted a deep dive, but you had some very insightful comments. I thought maybe you could maybe summarize the five steps, and then we can deep dive into them.
Jay McBain 1:09
Yeah, sure, absolutely. So, you know, for years now we’ve been making these future predictions. You know, this is what’s going to happen to marketplaces. This is what’s happening to the new buyer. This is what’s happening to the economics of partnering, and they were all a David Letterman Top 10 List of trends, somewhat interconnected, but at some point, coming to an inflection point. And 2024 happens to be the year of that inflection point where number one, the new buyer, is actually here. By the end of the year, a millennial will lead the majority of tech and telco purchasing over $5 trillion and that’s both by number of millennials, as well as by budget number two, this platform economy, not just in the hyperscalers, not just in SaaS companies, but taken hold in security, but outside of tech.
Jay McBain 1:40
You know, we always got confused that the biggest automotive companies and pharmaceuticals and banks wanted to become tech companies. Every company was going to become a tech company. Where we were confused is they actually want to become platform companies. And what that means, yes, and that drives a whole different set of economics with the way partnerings worked for over 40 years down here in Boca Raton with August 12, 1981 and that first IBM PC with the first IBM program with Microsoft and others. But now we’re looking at a very different thing, and this is the year that it all changes, and then generative AI and other things that come into it. So again, inflection point all into one time. Yeah, I thought
Vince Menzione 2:35
we would deep dive on these. It was really great and insightful conversation. Let’s talk about the millennials first, right? Because we’ve been talking about the tectonic shifts and this new generation of buyers, right? The different buying persona used to clicking three times on my my phone and a box shows up, right? And and maybe they don’t want to speak to as many salespeople. They want to make their own decision. They go through their own process. You’ve talked about this and how the decision making process has changed. Can you spend a minute there on that specifically? Yeah, so
Jay McBain 3:08
in a different psychology, different behaviors, different journey that they’re on, but suffice it to say they’re either digital first or digital only, right? And when you said, you know, maybe I don’t want to talk to a human, the latest research says that 75% of them would actually like to get to end of job. And this is to buy a million dollars worth of software. This is to buy a car. I’d like to get to end of job at a very important, big decision. Digital only, yeah. And so that’s 75% so this is a different way to treat those first 28 moments before they make that decision. So that’s one thing. Second is they’re subscription and consumption friendly.
Jay McBain 3:40
You know, growing up on Netflix, growing up on Spotify, yes, they’re okay to pay $1 a month for the rest of their life for a toothbrush that just gets replenished. And they understand that they’re in it for life. And this goes again across technology, but it goes into every industry, absolutely, and the way they bank, the way they buy insurance, the way they, you know, buy manufactured goods or, you know, pharmaceuticals. It’s, it’s okay to buy, be in these subscription or consumption models, and that leads to marketplaces. Yes, they’re okay buying seven layers to solve a problem.
Jay McBain 4:20
No one wants to buy this all you can eat, you know, best in class, end to end platform, I’m okay building layers to my outcome, and I’m okay building it as a team sport. So in the older generations, you and I generation, you know, we kind of look for a single throat to choke, somebody that was our trusted advisor, somebody that could really orchestrate it for us. Right? The new generation, it’s okay to build a team, and it’s not going to be a team of the seven, seven, same seven people. It’s going to be a team of different types of people that have expertise in my industry, that have expertise in my geography, expertise in the sector segment that I’m in, the compliance and governance that I’m under, all of the different. Angles. I want to build a team. And I go back to sports, I don’t need seven quarterbacks that’s or 11 quarterbacks on the field. I need, you know, 11 different players, but I need them to each do their job. Neil belichuk, well, you know, we
Vince Menzione 5:13
talked about partner to partner for years now, Microsoft parlance was around partner to partner. We’ve been talking about the decade of the ecosystem. I don’t know who coined that phrase, maybe someone we know personally, but this is, this is really about ecosystem. This is really, when I think about the I call it the marketplace moment. In fact, we’re taking, we’re digitally buying, right? There’s a lot of things that come with along with that, right, the ability to consume against these large cloud commitments, but also the opportunities, you say, to stitch together the solution that best supports your requirements. And this is where we get into multi party offers, in fact, where you can, in fact, layer several solutions together, bring it, serve it up to a customer who already has made $100 million commitment to a Microsoft, Amazon or Google, and say, This is exactly what we need, right? So it’s exactly what you’re talking about. Yeah, and
Jay McBain 6:02
that’s about. Yeah, and that’s the final piece of research on this new buyer. Is integration. First integration. First of all, the things you’d write into an RFP that’s important to you. You know, the price is important, your service, your support, things like your brand reputation. You know, all these things would have criteria around how I’m going to make my decision. Number one criteria now is how you work in my environment, this is both as a, you know, personal story as well as a professional one, where Apple got on stage last year and said 79% of people won’t buy a car unless it is Apple CarPlay. Yeah, they neglected to mention Android Auto. But the fact of the matter is, you know, here’s an industry that’s $4 trillion in size. You may be, you know, taking over a dealership from your great grandparents, and all of a sudden you’re going to lose four fifths of your buyers because there’s not a technology integration in place. It’s amazing. And so watching this, and then, you know, feeding that into all the other parts of life, I’ll buy a product that’s 80% as good as the competitor if it works better in my environment. So how do we feed an integration first buyer, a digital first or only buyer, a subscription, consumption, marketplace, friendly buyer. This is a complete reconstruction of how we do marketing, how we do selling, and how we do long term customer success.
Vince Menzione 7:15
It’s fantastic.
Vince Menzione 7:22
The we’re excited to announce ultimate partner, live executive summit october 22 and 23rd in Las Colinas, Texas. We’re bringing back the event that we hosted last year, but in a new facility with state of the art capabilities and live streaming. This is your opportunity to engage with other technology leaders, to learn the what, why and how to achieve your greatest results, partnering with Microsoft and other tech giants, featuring leadership tracks, fireside chats and workshops designed to help you achieve more. So the next thing you talked about was the death of the cookie. You brought this up before as a big factor, right? And really why partnering is so important right now and again, with my experience in partnering and as a CRO formally, what would you say about the old acquisition models and new models? Yeah. So
Jay McBain 8:20
we talk about 2024, as an inflection. Point, and this end of the cookie, if you happen to be in marketing, has been coming for years. It’s actually three years ago that on the iPhone, you could say, I don’t want to be followed. I’d no longer want to be the product on the internet. And back then, you know, Facebook was publicly saying, this could put us out of business. We rely on this. You think of Google, who’s half their company, relies on this business model of selling our personal data in those first 28 moments. And obviously there’s active buyers. So this is the third party data system where a couple of weeks ago, to start off 2024 Google updates Chrome and Android to actually stop limiting cookies. They also made a declaration, by the end of 2024 the cookie will be dead. Yeah, so in a world that moves from third party data, you remember the Cambridge Analytica scandal, and, yes, you remember, you know, the billions of dollars which has created trillion dollar valuations for these companies in third party data, selling our private data is now moving to second party. The channel partners, ecosystem alliances are who own these first 28 moments, the ebooks, the podcasts like this one, all the things that happen in these 28 moments now becomes a second party data problem and CMOS need to shift from third party to second party. And again, 2024 is the year that partners come out as the leading edge of the spear on finding this buyer intent. And this is just a remarkable thing happening along with everything else,
Vince Menzione 9:53
but it’s what we’ve been saying for so many years now, right? I mean, many years ago, I went through a course by Miller High. In strategic selling. And the whole idea was to find out as much situational analysis or awareness of your client, and the best way to do that is other people that are talking to your client, who else talks to your client than you the seven or eight seats at the table, they might be competitors, they might be potential partners, they might just be friendlies, and be able to have those conversations. And now what you’re saying around this is, that’s why it’s so important that we have this new data intelligence and we find new ways to approach the customer, because we don’t have cookies,
Jay McBain 10:29
yeah, and so, you know a story around Microsoft, for example, you know they did a better job of surrounding the buyer. Yes, they didn’t have a better price than than AWS. They didn’t have better product. They didn’t have better Super Bowl ads. What they did is had better coverage of the seven people that surrounded every buyer. They had more Microsoft endorsements sitting at the table, and that sat in the ebooks at the events. It sat in the podcast. It sat in all the different moments that the customer was friendlier to that solution versus that one. And that’s one example, but that’s the future of selling. Is a surround strategy of these seven trusted people, and how you get them to influence that buyer in those first 28 moments, it
Vince Menzione 11:17
feels like the rest of the world is going to start speaking our language,
Jay McBain 11:21
this was part of the why the next CEO should have partnerships in their resume or be a partnership leader. Yeah,
Vince Menzione 11:29
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Vince Menzione 12:25
discussed the 45 billion that you had predicted by the end of 2026 I think it was originally 2025 Yeah, 2520 25 and now you said that that’s under called and potentially this year, what are we saying? Yeah.
Jay McBain 12:39
So, I mean, at Wall Street now we’ve got, not only the Big Three hyperscalers, but we’ve got now with the bigger marketplace, SaaS companies and others starting to show what their future commits are. And it’s one of these, again, to get these high valuations, investors love to know how much money you’ve got committed to you, and just the top three have over $340 billion committed pounding, and then somebody at some point has to figure out how to put that into product SKUs and put that together into seven layer stacks. But that 45 billion, which was a hockey stick, it’s an 86% compounded annual growth. We think it might be doubling every single year, and we don’t see it stopping after 2025 this is just a trend that continues feeding this new buyer. Well, in fact, the number went from 300 billion to three 40 billion in one quarter, correct? So we’ll see what the what it’s expanding. And we’ve also got, in the last 30 or 60 days, we’ve got four press releases now, I’ll use AWS Marketplace as an example. CrowdStrike, snowflake, Palo, alto and Splunk have all issued press releases that they’re running a billion dollar business on one marketplace. And one of the predictions we made alongside the 45 billion, which we also undercalled, is that AWS as a leading marketplace would join the likes of TD cynics and Ingram as a top 10 distributor by 2025 again, under called it, they’re already there. They’re there. Now you have to get to about 5 billion to overtake dnh, or an exclusive networks, and they’re already there. Yeah. So this is an area where they may have achieved, you know, $5 billion as one marketplace. But their sites are on the 60 billion at TD, cynics and 50 billion at Ingram. The numbers are astounding, and when you’re doubling every single year, it doesn’t take you long to get there. So what does this do to the channel and to distribution? Well, the blow up was, this is the channel from decades ago was at the point of sale. All the economics worked at the point of sale, and partners were only measured at that point of sale. Yeah. How much do you sell? Well, the fact of the matter is, money is changing hands in a very different way. And one thing that happened, and Microsoft led this, and everybody soon followed, is Microsoft declared that a marketplace fee shouldn’t be 20% or shouldn’t be 35% which has apple in court with epic and 45% of what they’re trying to. Was in New York Times, but Microsoft’s like, we’re not going to make money off our ecosystem. It costs us about 3% of the fee to run a marketplace, so much like a MasterCard or Visa swipe and consumer it’s about 3% of the deal to architect the movement of money, which is complicated. It’s, you know, we’ve got to move the money. We’ve got to take on the risk that the customer doesn’t pay. We’ve got to wait for the time value of money, net 30, net 60, net 90. And in the end of all that, we have to hire Biff to break knees when that customer doesn’t pay. But for forever, we thought in the 1980s that that was worth 40% margin. Then it was 30, then it was 20. And you know, we’re all kind of deciding what that’s worth, but it’s now been declared, and Google followed Microsoft, and just a few months ago, AWS is finally there on board, yes, but everybody’s at the point now, and all the end users know that the whole value add of taking my money on behalf of a vendor is worth three so let’s talk about where the other 17% of The gross tenets are. And a partner would tell you, Well, I guess I do free consulting, I do free design and architecture, I do free implementations, and it’s great. I’ve always got paid at one point, and a lot of the other stuff that maybe other partners, like a system integrator, would charge for, I’ve ended up giving for free. And then now in a marketplace model, I could still go get the other 17% on a private offer or some sort of multi partner offer, and I might be willing to give up the 3% because that’s a part of the business I’m not all that interested in.
Vince Menzione 16:31
Exactly, exactly, yeah, it’s changing the entire value chain equation, is what I would say there. So I loved having you here today, and next time, we’re going to have a longer session. We’re going to have we’re going to host you here and maybe even have some partners in the room. But we’re on a tight timeline today, so for our viewers, listeners, what do they need to be thinking about and doing differently now that we’re in 2024 in a big way.
Jay McBain 16:59
I mean, the first thing, and this is not a surprise to anyone, is continue to be obsessed about your customer. Get obsessed about the people they trust. Get obsessed about what they read, where they go, who they follow. Get obsessed about a journey that isn’t about the point of sale. It’s about the 28 moments before that. It’s at the point of sale, regardless of how money changes hands, so getting the customer to the dance, getting them on the dance floor, and now with every company keeping them dancing all night long, every 30 days, forever. You know, one company a couple of weeks ago became the most valuable company in the world by telling Wall Street, we’d be the most sticky, predictable, reliable, repeatable and scalable revenue, not reliant on a September launch of a product every year. Yes, and the market responded. So, you know, we can talk about a $3 trillion company, or we can talk about a startup. The same thing is, if you get obsessed about your customer, when you move outwards from your customer, you’re going to find that there’s partnerships everywhere, in the integrations, in the go to market, in the routes to market, in all the influence, all the things you need to do around your customer are really partner driven at this point, and that’s why I think your leadership should have much better skills in partnerships.
Vince Menzione 18:16
I love what you have to say. Thanks for listening to this episode of ultimate guide to partnering. Hopefully, this episode and all the episodes we’ve recorded are helping you better align your partner strategy to achieve your greatest results. So I want to ask you something, have you implemented everything you’ve been learning, and are you now achieving the growth and revenue objectives that you hope to achieve? If not, it’s time to take action now join ultimate partner experience. We’re building the community I’ve always dreamed about with UPX. You get access to exclusive Industry Insights, unparalleled networking opportunities, tons of educational resources and support from a community that shares your goals. Join us now, visit our website, the ultimate partner.com and sign up today. You.