This is the RAW Transcription Provided By Otter.ai – There will be typos and grammatical errors
SUMMARY KEYWORDS
partners, companies, microsoft, partnerships, channel, ecosystem, industry, customer, moments, thinking, marketing, marketplaces, influencers, podcast, attribution, people, run, technology, money, talking
SPEAKERS
Announcer, Jay McBain, Vince Menzione
Announcer 00:00
Welcome to the Ultimate Guide to partnering in this podcast Vince Menzione. a proven industry sales and partner executive brings together technology leaders to discuss transformational trends and to deconstruct successful strategies to thrive and survive in the rapid age of cloud transformation. And now, your host, Vince Menzione.
Vince Menzione 00:23
Welcome to or Welcome back to The Ultimate Guide to partnering, where technology leaders come to optimize results through successful partnering. I’m Vince Menzione, your host and my mission is to help leaders like you unlock the leadership principles and learnings of the best in the business to get partnerships right, optimize for success and deliver your greatest results. These are exciting times. We have seen seven years of transformation. Just in this last year alone, Accenture surveyed CEOs in every industry in every geography and 76% agree their business models will be unrecognizable in five years driven by ecosystems and partners. It’s why I invited this thought leader back to Ultimate Guide to partnering. My guest for this episode of the podcast is Jay McBain principal analyst for channels, partners and ecosystems at Forrester. This is an episode exclusively for those who care about partner ecosystems, the evolution of systems to drive this next phase of economic growth marketplaces and how organizations need to think and move differently. It’s always great to have Jay come visit Ultimate Guide to partnering. And I hope you enjoyed this discussion as much as I enjoyed learning from Jay McBain. So before we dive into this interview, I want to take a moment and just say thank you, I am so blessed to have so many incredible listeners like you come like, share, follow and listen to Ultimate Guide to partnering. And I’m so grateful for your support as we bring the best in the business to share leadership principles, learnings, and help leaders like you achieve your greatest results. So stay tuned. As halfway through this interview, I’m going to share a couple of shout outs to some of you. And thank you for your amazing support. Jay, welcome back to the podcast.
Jay McBain 02:22
Thank you so much for having me back.
Vince Menzione 02:24
I am so excited to welcome you back to Ultimate Guide to partnering. This is episode number three for you. And then we’re gonna make this a regular cadence. For our listeners who don’t know you. You’re the principal analyst for forester for channels, partners and ecosystems. And it’s that time of year again, right, we’re headed into the last stretch of 2021. I want to invite you back to give our listeners a little bit of a check on this technology ecosystem we all care about. And so it’s great to have you back today.
Jay McBain 02:53
Well, that’s fantastic. I always think back to those early episodes of SNL, you know, in the 80s and 90s, you get Steve Martin back, you do a big deal about coming back as host. And they’d like the five time club and things like that. So it’s a harkens back to those memories as a childhood.
Vince Menzione 03:08
We’re just gonna have to have his regular cadence. Maybe it’s every other week or something like that. You come back right like Saturday Night Live. Welcome back. So for our guests who might not know you, and there might be one or two people in the whole ecosystem who don’t know Jay McBain Can you explain your role? and whom you work with?
Jay McBain 03:25
Yeah, absolutely. I’ve been in the channel for 27 years. So I’ve got the chance to be a channel leader of companies like IBM and Lenovo, I get a chance to entrepreneurial chance to, you know, give up my salary and go and raise money and then do all the fun stuff of a startup. For seven years as I built some channel software around AI and social and mobile. For the last four years, I’ve worked for Forrester, which is one of the biggest and most powerful research and analyst firms, but studying the channel, they literally pay me, you know, to go and research the people, the processes, the programs, the technology, a lot of times I’ll list off the 143 social groups that I monitor every day that 100 podcasts that are really driving the market. And this is absolutely one of the top ones in the world that we hear from the ecosystem. I talk about the 54 magazine. So I really get a chance to you know, get paid for putting my ear to the ground, listening to what the chatter is, and try to make sense of it all.
Vince Menzione 04:24
Well, you’re being humble here. You have a set of optics that candidly I don’t believe anybody or maybe a few other people might have having you here is a delight. So much excitement going on. First of all, the tech sector is on fire, and we’re wrapping up earnings season. I had Bob Evans on recently from Cloud wars. We talked about, you know, the amazing things going on the market capitalization of the top cloud companies. So I thought maybe we’d start there. Can you tell us where you think this industry of cloud providers this whole cloud computing industry is headed,
Jay McBain 05:01
what’s an amazing thing, you start talking about the world economy, the $86 trillion that flows, you think about the 75% of it that flows through partnerships, you know, hence why you’re running this Ultimate Guide to partnering. But then you start to double click on the 27 different industries, you know, the technology industry, which I don’t even know if it’s going to be an industry a decade from now, because every company in every industry is becoming a tech company, you know, you used to compete against the person across the street and in your industry, and, you know, do things 10% better? Well, there’s a set of startups somewhere in the world right now, that are thinking about ending your industry. So every company has had to become a technology company. And every day, you’re reading about car companies, you know, having to look more like Tesla, you’re reading about almost every industry, you’ve got these big changes underway. So you know, this technology is no longer a part of a company. In many cases, it’s becoming the entire business model, where 76% of CEOs today around the world think their current business model will be unrecognizable in five years.
Vince Menzione 06:06
I love that reference that said the Accenture article I quote you, by the way all the time on this. And what they say too, is that ecosystems will be a key driving force there, right?
Jay McBain 06:16
Yeah, absolutely. And you asked the question about cloud. And you know, who out there isn’t watching as Microsoft surpasses 2 trillion evaluation, and report 5150 5048 and 47% growth in the five quarters inside a pandemic. And now you’re starting to grow 51 on top of 50. And these are not small numbers. And this is just the entire growth of this. Google Cloud was at 46, the head of AWS got a promotion to take over all of Amazon, these numbers just off the wall, and you look at the 175,000 SAS companies grow at 30%. And this economy, this whole GDP, where technology makes up about 5% of world today, it’s doubling it’ll make up 10% in 10 years. And like I said by them, I’m not sure you’ll be able to distinguish a technology company, you know, from what would have been a traditional industry based company in the past.
Vince Menzione 07:10
So you talked about every company becoming a technology company. And we touched on ecosystems just a little bit. What trends are you seeing in these ecosystems or from these ecosystem leaders?
Jay McBain 07:21
Yeah, so we’re getting much smarter. I call it the decade of the ecosystem, we went through the decade of direct sales, we went through the decade of direct marketing. But in this early stages of the decade of the ecosystem, companies are getting much smarter about their customer. And we know at the same time, it’s a moving target, then future buyer in business, for example, looks a lot like a consumer, how you buy cloud or software is gonna look like how you buy a car today. And companies are getting better at measuring the digital or digital only journey that these customers are on. So now we know there’s 28 moments on average, that they bounce through kind of like when you buy a car. Now you’re going out and reading magazines, and you’re watching videos, and you’re going to build the car and price of the car and research the invoice price. You’re so smart when you hit that dealership, the same thing goes on and b2b now. And so they’re starting to look at those 28 moments. And look at the five partners on average that guide the customer through those moments. And guess what the answer is, we don’t have a channel there. Those people that are writing those ebooks recording podcasts like this out on clubhouse in Reddit, they’re out in association sitting on boards, they’re speaking at events, they’re on the front cover of magazine, these people we’ve never looked at as partners because they’re non transacting. And there’s a collective, oops, across our industry, of companies that have just had a blind eye to that over 20 years, and are now quickly trying to
Vince Menzione 08:47
catch up. You know, you talk about these influencers, these five seats at the table? How do you organize them? Like how do you think we always thought about resellers? And we thought about, you know, solution providers, all these different categories? How do you organize them and go to market with them so that you are represented by the five seats?
Jay McBain 09:06
Well, it’s interesting. So you look at their business model, you need to know how they make money. And there’s all kinds of new, almost consumer like business models there. You’ve got advocates and affiliates, you’ve got ambassadors, you’ve got, you know, different kinds of alliances. So you’ve got different kinds of folks there. But in the decade of direct marketing, we always thought of influencers kind of like we think of Kim Kardashian, we’re going to run a campaign, we’re going to pay her a million dollars to run Instagram, and we’re going to try to attribute whatever the results are to that campaign. And, you know, and hope you know, that everything lands in green. Well, today, you know, we’re still thinking of partners at that level, in almost marketing terms, like there’s some sort of email list with our influencers. What’s much more important than that, and those of us in partnerships know that there’s over 100 elements to the average program. It’s not about just having these people on an email list and maybe turning on a camera. Paying here or there, because we’re not running Instagram ads to sell our products, we’re, you know, going through much deeper, more complex, longer sales cycles and marketing cycles. So this idea that these people need to be brought in, in a way that is repeatable and scalable, highly organized, and operationalized. So the recruitment into onboarding, education, training certification, building out competencies of where these people influence building out the incentive, and motivation and loyalty, because guess what, if they’re not going to stick around for the sale, there’s no way to fund it. And that’s the eye opener for partnership professionals that have always played in gross to net or in revenue reduction. Yeah, let’s kick out a percent of MDF, let’s kick out a percent of volume rebates. And, okay, these influencers, let’s kick them over a percent, or let’s Well, no, there’s no money there. So you’ve got to go and ask for money. And these are capital dollars you’re asking for, and you’re in front of the CFO or the board. And you know, next to you is the head of sales, the CRM, or the VP of sales, who now for 20 years has built the operational the scientific approach to you know, I want to hire a new salesperson, and here’s your exact ROI, to the decimal point. And now you’re sitting beside the head of marketing, who now has had 10 years to go build out this scientific approach and say, let’s not hire a salesperson, let’s use that 150 grand, and I’ve got the levers and dials, we’ll run, you know, some SEO campaigns. And here, let’s run a billboard up and down the turnpike. And, you know, it’s a different approach. But I think I can return higher to the company. And here’s to the decimal point, what that will do. You know, for 40 years now, partnership leaders look at conversations like that, and, and they know and research tells us that that 150,000 spent in the channel will have higher revenue return, more profitability, and higher customer set, we just don’t have the science to show we don’t have the decimal point, we have a bunch of anecdotes, and we have a bunch of stories. And it’s hard to compete at that level. And that’s where partnership leaders in this Ultimate Guide to partnering needs to get to is to make it that scientific to show organizations that $1 spent in ecosystems or dollar spent in partnerships is the best dollar that companies can spend.
Vince Menzione 12:17
You know, I just had a guest on talking about attribution, having the systems and tools I was going to ask you about what the best tool do. But I think some of that is really around having the ability to do attribution back to the deals right. And partners need to be able to do that and get incentive to
Jay McBain 12:32
do that. Yeah, well, the whole world of attribution just blew up 60 days ago, when Google and Apple phone privacy religion, world of attribution used to be you know, following around cookies and tracing and retargeting and all the tools that we had the little pixels that we sent out with every email and the following we could do on the internet. Well, that all just collapsed. And so between Apple and Google, they own 99% Mobile Share in the world. And together, they own 86% browsing share on desktops and laptops. So you, your customer, basically the whole world gets to the internet through two companies. So when they find privacy, religion, and there are no more cookies, and there is no more following you hoovering up your personal information as you surf the web. And as you go through those 28 moments, the only way a company is going to be able to see, get visibility to these early moments. See what’s happening in those early moments. And then most importantly, be able to influence the influencers in those early moments is partnerships. And this is the whole point I go back to is once your onboarding and what’s your incentive. And once your co marketing stuff, the whole point of data sharing becomes really important. So attribution is not about going to find these mountains or data lakes and, and try to find some interesting correlations. It’s really about, you know, there’s companies today like a crossbeam, for example, that has a data sharing mechanism that two entities that may not be true partners in the sense of the term, but would both feel comfortable putting information into a secure escrow service in the cloud. And having AI and automated tools go and find areas where they could create value together, where they could co innovate together and leverage each other’s network effects. That’s the kind of a modern ecosystem tool that didn’t even exist in our lexicon. You know, two years ago, the attribution tools like impact, like partner eyes, and a when these are tools that grew up in the consumer space, you spend a million on Kim Kardashian, you kind of want to know at the end, to keep your job as a CMO. You kind of want to show the board that something good came up that in today’s world, those companies are raising hundreds of millions of dollars through private equity, and quickly building out their tech stack to work in the $13 trillion b2b space because that’s the next battleground and under Standing these moments understanding those five partners or should be partners wrapped around this virtual table is table stakes for the next decade, and the companies that get it wrong will probably not be in business. You know, we could really dive in on the 20 moments I’d love to articulate Do you have a list of them anywhere that we could pull reference to? We do, but it’s highly specific. So what I would tell your listeners is just think back to when you bought a car. And when you walked into that dealership, you were smarter than the salesperson, they sat you down for eight hours to get you to that, you know, air quotes deal, you already knew the invoice price you already knew within $100 what you’re walking out with, and most of us after that long, tedious physical experience, you would tell ourselves, I would have paid $100 more I hack on Pay $1,000 more, just deliver the car on my driveway and hand me the keys. And so the reason How did we get so smart? How did we go? Do you know there’s 365 kinds of cars? There’s one for every day of the year? I did not know that. By the way. I didn’t go for 365 down to your shortlist of three, well, you start breaking it down, you know, do I want an SUV? Do I want a sports car me? You have these top level breakdowns? And as you start narrowing and narrowing and narrowing the scope? How are you doing that? What are the places on the internet? Who are the neighbors you’re talking to were on social media? What are all these places that inform you to your final decision and give you that confidence to go make a vendor selection or go choose a car. And that’s the point of moving that out to other industries now. And it’s how considered the product is I mean, when you buy a car, they say it’s your, you know, second biggest spending area. So you consider it more than you would consider buying a mattress even more than you consider buying a toothbrush. But in the business space, the same thing exists, you know, as you’re going into buy a functional tool like, you know, a data backup software versus a more complex, you know, cloud infrastructure layer tool like security, or you know, even deeper into your earpiece systems and everything else that, you know, can’t be ripped out if you make a mistake. So the consideration basically informs you know, how long and how deep you go into those 28 moments and how many moments there really are. And the people that own those moments. And too many of the partnership experts I talked to every day, you know, they get a bit glassy eyed at this point because this is not something that’s been part of their job description for 40 years now.
Vince Menzione 17:20
Hey, Ultimate Guide to partnering listeners. This week shout out goes to Isa que, from New Zealand kiora. thence, just a quick note to say, I’m really enjoying your podcast well done. I’m also so privileged to be able to say that my mentor is Brent Khan best, Brent recently introduced me to a good to learn from as I’ll be managing the largest telco in New Zealand this fiscal year, when I saw you an interview to go, I was excited to listen in, as requested on your podcast, I wanted you to know that I really enjoyed listening to a ghost story. I’m also a massive fan of Michael Gervais. So I was able to find several podcasts I can continue to listen to, I will share this with my partners and colleagues across Australia and New Zealand kekaha strengthen unity. So well that he said thank you so much. So excited to have you listening down in New Zealand. And thank you for your amazing support. You know, you mentioned some systems and tools out there across beam being one and some others that are raised quite a bit of capital. What do you see some of those organizations doing now differently? How are they organizing around this, these buying trends?
Jay McBain 18:36
Well, the good news is that you know, that 76% number, a lot of this is top down now, it’s not your partnership experts having to go to your board have to go to your CEO and convince them how important partnerships and ecosystems are. A lot of times now it’s the other way around, you know, an IBM will go out and say that they’re going to spend a billion dollars on the ecosystem. And now it’s back on the shoulders of these vice presidents to say, I’m not even sure where to spend the money. You know, I’m not sure what kind of program I need, not only for these early influencers. But you know, we’re converting over to a subscription consumption business. If you’re the likes of Dell, or Cisco, or HP or IBM, all these companies Nutanix. Everybody’s on this mission now to become full 100% subscription based or consumption based. So now all the fun starts after the point of initial transaction, because the transaction is only the first 30 days with the customer. And now who’s going to drive adoption so we get renewed, who’s going to drive integrations and stickiness so we drive our retention rate, who’s going to drive upsell and cross sell not only for our portfolio of products we have today, but any innovation in the future who is out enriching our contract, you know, every 30 days. So these are hard questions. And just like the influencer conversation, you get glassy eyed because first of all, we’ve never really looked at it that way. We’ve never asked the question Who are the five partners at the virtual table with our customer every 30 days now Ever because the journey never ends. And that’s a different channel that sits out on the right. It’s this big retention channel. And the partners that show up early, or the partners that show up at the point of transaction may not be the partners that show up after. And so this is where you’re getting these wild numbers. Now, I posted last week, Microsoft has 470,000 partners, but they’re picking up three to 400 new partners every single day. Now, that’s over 10,000 a month, that’s over 100,000 a year, partners coming into that ecosystem. And 80% of them don’t fit in that traditional Microsoft program. csps lsps, you know, that sit in the middle. They’re influencing Microsoft, and they’re retaining Microsoft, and Microsoft is now recognizing these partners at scale, building programs for them. And you know, figuring out the economics of a non transacting partner channel that leads into this broader ecosystem conversation.
Vince Menzione 20:57
As you know, I do a lot of work within the Microsoft ecosystem. They’re really encouraging this whole partner to partner play, which infers and says, you know, all these different types of partners need to learn how to work together more effectively across the aisles, I call it and come to the table to support the customer and the buying, influencing.
Jay McBain 21:16
And there’s another really cool part of that story is, when I said that every company in the world is becoming a tech company, big surge of these new partners every day are Microsoft customers. There’s a bank, there’s an insurance company, there’s a pharmaceutical company, there’s government’s, there’s all kinds of manufacturers that, you know, just added an IoT device, or they’ve, you know, just added some blockchain technology, whatever it is, their customers are walking over in the afternoon in the morning, their customers in the afternoon. They’re the latest partners at Microsoft, as they innovate together and go to market together as entities and its partner to partner the customer. And, you know, in this world of where we’re at now, it could be 510 20 partners collaborating at scale, you know, to solve very specific problems in the market.
Vince Menzione 22:04
I’m going to shift gears here. So you know, marketplaces, we’ve been talking about marketplaces, you and I were on a blog post not too many months ago talking about marketplaces. And we recently just had tackle i O. Sanjay Mehta joined this podcast. And we’ve talked about, you know, some of the announcements, Microsoft made some recent announcements about marketplaces. What do you see happening? Is this a disruption? Or is it complimentary to what we’ve already seen?
Jay McBain 22:31
Well, to the channel, the legacy channel is an absolute disruption. You know, we’re telling companies now, especially in the cloud, that, you know, 64% of the tech industry, you know, as of last year, when indirectly, it was resold in some way or another, we think that’s going to drop to probably 30%, by the end of the and another 30%. Or another third is going to run through marketplaces. Again, there’s no reason after a digital or digital only journey, that you’re ever going to want to turn physical, that digital transaction just makes sense, it makes sense for the way you buy a car as well, by the way, and so maybe at the end of the decade, we’re going to turn to digital money, like crypto, but that’s for another conversation. The point is, that then triggers a subscription or consumption model that is also digital, till the end of time in in the world that’s truly digital, there is no physical transaction. And that’s fine, where all these companies now are putting out these multipliers, which, you know, for every dollar of Google Cloud, there’s $5.32, for the ecosystem. for Microsoft, they’re in the press talking about trillions of dollars a partner opportunity, there’s this big rush now like Salesforce, talking to they were the first to do this, is take your eye off that first 30 days with the customer at 20% margin, and start thinking about asking the customer for 200% of the deal, or $2 for every dollar at 75% margin. If you get every, you know, thing, you know, companies like Accenture and Deloitte and stuff, they’re looking at this even more aggressive. How could we ask for $3 or $4, for every dollar of Salesforce or Microsoft or a cloud vendor at 75% Mark, highly sticky. And those projects never end, there’s closest thing to managed services because they just repeat over and over and over again. And they just never rent. And so this is the kind of business now that is the most lucrative out there for broader channel. And there’s some companies that are winning in this space. And there’s some companies yet to see this opportunity and get obsessed over these multipliers. And that all relates back to marketplaces. So I had a little five minute video a couple months back where I predicted Salesforce would become the next trillion dollar company, joining Apple and Google and Microsoft and Amazon and Facebook as the next trillion dollar company. And it was for three reasons. One is building out the 250,000 new partners non transacting partners, moving all the money to the marketplace, app exchange in their in their case, and then number three taxation. And that’s what changed a few weeks ago when Microsoft announced the lowering of a 20 percent taxation down to three.
Vince Menzione 25:01
Yeah, was a big moment.
Jay McBain 25:03
Yeah, I was wondering out loud at that point all, you know, many companies and this is the hub spots of the world and others are thinking there to evaluation. Part of it is this taxation that those trillion dollar companies are in anti trust court right now for. And so if the industry rate dropped from 15, let’s say average today in the cloud, down to three, that would be a major change. And again, it further cements why Microsoft is being very aggressive against their competitors on every front. And so no one has followed in the last few weeks. And there may not be a follow, as companies understand if they can not only tax the follow on software and follow on hardware, but if they can tax the follow on services, and a company like Salesforce can tax, you know, $5.80, for every dollar they sell, and they collect the money for Accenture and they collect the money for the managed service provider, they collect the money from the ISVs, they end up paying it out like a distributor one. But if they could do that, they end up doubling the size of their company overnight. 15% of $5.80, you know, adds almost half the company. And when they reach 50 billion in five years, which they will hook or by crook that raises them to 93 and then a 10 time valuation on the stock market. There you have your six, technology based trillion dollar
Vince Menzione 26:18
firm. And I don’t doubt that Benioff will get there, that’s for sure.
Jay McBain 26:22
Yeah, by hook or by crook, by m&a by organic by all of the above.
Vince Menzione 26:26
So it’s an exciting time and an exciting set of topics. You know, I’m speaking, I’m filing, I’m hoping that I’m gonna still be able to do this in person versus virtually, but are speaking at a couple of cloud conferences in the fall. And so I don’t know, I’m wondering what the reception is going to be like, like, what are the eyes staring back at me in the room gonna have? Are they going to be toe eyed? Are they going to? I’m trying to understand what they’re how they’re going to be thinking through this? How do organizations in these ecosystems that are operating today in these channels? How did they behave, organize and optimize for success?
Jay McBain 27:03
Yeah, when I’m speaking in front of the audiences like this, you know, the first thing I’m talking about is, we’ve got to take away the word channel. Because for most people in business that’s synonymous with where the money changes hands, you know, when you make the first McDonald’s restaurant, and then you franchise it on every street corner, like that was a channels of distribution. Same for coffee, same for donuts, we’re not asking these companies to franchise, even though you know, we think a third of their sales will go that way. But not until you get product fit, not till you get your sales and marketing engine, you know, working seamlessly, would you ever think about putting you know, a restaurant on every street corner, you know, half the McDonald’s movie, the founder was, you know, talking about the kitchen and the inches of the fryer later and things like that. So that’s where companies got to be focused. But now there’s a new equation here, which is, you need to start from day one, almost building alliances, you need to build the technology alliances and strategic alliances, but you have to start thinking about these early influencers, you have to think about these late retention sell partners, because again, it’s not a channel or a transactional model you’re thinking about, it’s a non transactional model. But partnerships are absolutely critical to not only your success, but obviously getting valuation getting any kind of funding, I don’t see any decks being successful today in front of VCs or private equity, that don’t have at least one or two slides on the partnership strategy. So it used to be that out of 175,000, SAS companies 10% of them had hired a channel leader put in a channel program, bought a piece of channel software from the channel software tech stack, where today the other 90 have to be thinking about channels not as a distribution route or acceleration of sales, but they have to be thinking about it in the lens of the entire business model, the entire company’s strategy,
Vince Menzione 28:54
it’s really good answer. You know, I’m also thinking about how markets are organizing, right customers and markets. We talked a lot about customers and the buying influence says, you know, Microsoft has put a lot of organizations that are partnering with Microsoft need to double down on verticalization or industry as they’re referring to it as what are you seeing what things are you seeing shaping this flow of goods and services towards more of an industry lens? What like, what buying behaviors do you see there?
Jay McBain 29:22
Yeah, so I think you know, the industry verticalization is short sighted, I think that companies are doing it or not actually looking and playing 3d chess at the moment. Interesting. You know, example, the head of marketing in many companies spends more money on technology than the head of technology. That’s not an industry that’s a buyer. So you need to build channels that surround the buyer that you are trying to influence and obviously sell to, you need to build channels, not at an industry level, but a sub industry level. You know, if I take you through a midsize clinic with 50 doctors versus a dentist office versus a small hospital, three completely different kinds of channels. So there’s no health care vertical partners anymore. I want to Ask that next question on the 297 sub verticals that they’re in geographic that channels always been a geographic entity where you got 197 countries, you got the states, the provinces, the 50 mile range. But well, the 175,000 software companies today are agnostic to geography. They’re all global companies right out of the gate. So you can’t just draw a map like you used to in the past and say, hey, we’ve covered Wichita, Kansas, let’s move on, you got to look at it differently from a geographic perspective and ask those questions. Number four is the sector size and segment, you know, completely running different and different regulation and legislation and governance and other things that are going on and changing, which brings in different partners. And now, you know, it’s not hardware, software and services, we have 26 categories at the top with 250 subcategories, you can’t have a security conversation without the seven layers below it in the 17 layers below that. So here’s the level of questions. And if you do the math on those five vectors, which are different than verticals, there’s 35 million potentials. And that’s exactly how many conversations are going on in the market today. No company, including Microsoft are included in those 35 million conversations. So you have to do this heat map and figure out those places where your dark red, figure out those places where the channel can expand those dark red circles across those 35 million opportunities, and have a very focused partnership strategy. That’s not a shotgun, you know, spraying it at all those 35 million things, but you’re growing outwards from the success you’re having. And that’s the same conversation with Microsoft, as I have with startups. It’s just a different level of scale. But it’s the exact same strategy, and community approach and all the things you would do to have that kind of partnership strategy from day one.
Vince Menzione 31:51
So I get what you had to say here, especially around healthcare at the different permutations, I guess, if you will, right, different types of customers buying behaviors, different use case scenarios. But getting to the level of verticalization, to say healthcare first, doesn’t at least allow you to finally get to that level of permutation later on down,
Jay McBain 32:10
what allows you to step in, and the good part about the first layer of each of these vectors that I talked about, is that, you know, the channel wants to see you step in. So if Microsoft, for example, wrote an E book on health care, the partners, those five virtual partners that wrap around that midsize clinic in upstate New York in front of that marketing buyer can take that and run it the last month, it’s very hard to take Microsoft at the top level. And then take that the last month, they’ve got to lean in and talk about HIPAA and high tech and you know, some industry aware language, and then let the channel run at home. And the same thing goes for every one of those 35 million examples. But you’re not going to create 35 million ebooks. So you could choose to build 27, industry based, you know, kind of marketing step ins or technical or sales enablement, step ins, you could choose by buyer, like the marketing buyer at that midsize clinic has different if you’re trying to predict who the five people have wrapped around them, there’s a high likelihood it’s going to be a digital agency. So one part of Microsoft in this example, or a SAS startup has to be out there thinking about the 200,000 Digital agencies because they’ve got a seat at the table in front of our prospects. And they’re going to, you know, for them to be able to step in again, you have to help them by recognizing them. And, you know, at least leaning in to their specialty, and letting them run the last month, I’m just telling you, it’s not just a vertical strategy, there’s five strategies that make up vectors. If I’m Microsoft again, or if I’m a startup, I might not want to lean into that marketing buyer, I might want to lean into healthcare, I want to lean into the geography upstate New York, but I might want to lean into the United States. And in this example, I want to lean into the sector, you know, 50 doctors is a midsize clinic, that should be recognized, I shouldn’t be just talking about large hospitals in my and then by product. You know, as you’re talking to that buyer, if you’re talking about teams, or security or office 365, or dynamics or Azure, I mean, it’s going to be a completely different conversation. So that is the nuance here of going forward. And I’ve spent 40 years I spent 17 of those with IBM as it was a highly industry based company. And it wasn’t enough to find the partners you need, you know, make a home for them where they feel comfortable. And they’ll align to you and be loyal to you and take you the last mile. And that’s the battle for the next
Vince Menzione 34:31
decade. You know, it seems to me as you’re discussing this, that the system and tools to support that does not exist today, right? It’s going to be it’s almost going to be like my Amazon. I read this book last. Therefore these are the other books. I’m one of these 35 million permutations, who are the partners who are the right organizations that need to come together to solve for my needs. Correct?
Jay McBain 34:55
Yeah. As you know, it’s going to be highly AI and automation driven. Self Service. You know, I don’t think that there’s 400 partners coming into Microsoft every day with a cam assigned to them on day one. It’s obviously going through the onboarding and the competencies and everything is going to be self service. There is 193 companies on my channel software tech stack, I see them investing in AI and automation. I see them investing, there’s 34 companies that just do ecosystems now, serving these non transactional influencers and retention stuff partners. So there’s a ton of innovation. I’ll remind you that, you know, 10 years ago, through the first year of the decade of direct marketing, no one had ever heard of Eloqua, Marketo, HubSpot par dot act on tech companies like that, until companies like Oracle and Salesforce and Adobe acquired the first three, the company that came in fourth place, at the end of the decade to HubSpot is worth $25 billion in the stock market today. And they also just shut down their resale program. But in this decade of the ecosystem, there are, you know, most of the companies on this tech stack, you know, the average listener will have never heard of, but I’ll tell you, that person that comes in fourth, you know, could be a HubSpot like valuation. At the end of the decade, Wall Street gets this no private equity gets this money is flowing in, they’re starting to pick some of the winners, you mentioned, you know, tackle, not only did they raise a lot of money, but they raised it from Andreessen and Bessemer. You know, the two companies that have been on every winner for the last 20 years, you know, these are really serious companies that are starting to see this take shape. And they want to be obviously, on the right side of history at the end of this decade. And when you do see the next HubSpot, you know, come out that they want to obviously be sitting on their yacht in New York Harbor, you know, lamenting the early days of this decade.
Vince Menzione 36:48
Really great set of points here, Jay, I really I so enjoy having you here as a guest and Ultimate Guide to partnering. So as we entered this last stretch of 2021, what advice do you have for our listeners about how to optimize for success,
Jay McBain 37:03
I tend to get really tactical at the end, we talked a lot about a lot of big things. And I don’t want to use you know, keep using Microsoft or AWS or Google as examples here. Because this is an enterprise class conversation, and you have 10,000 people that can go and work on projects and things. We want to be talking to every business. And as every business becomes a technology business, and this ecosystem kind of fills up, you got to get back to your customer. When I talked about those five vectors, those are customer obsessed. If you understand your last 100 customers and plot them against the 35 million, you’ve already built your heat map, if I can go find out what those customers and those partners read where they go and who they follow. I could go and help you up in Buffalo or Albany or Syracuse, Rochester, we could look at midsize clinics, we can look at marketing buyers, we could pretty quickly build, you know, the 50 to 100 partners that would be most likely to be in that room and the 100 influencers that are driving the conversation across those 28 moments. That’s a tactical approach, names, faces, places that you could assign a person and technology to go and build a winning play against. And these are the types of things it’s all grassroots. And it’s all like very tactical focused, as it surrounds your buyer as to your potential market and building out a playbook that’s repeatable. And we can lift up that strategy from upstate New York, walk it into Scotland and look at pharmaceuticals, we could walk it into Singapore, and look at small manufacturers. And we could walk that into other places and rinse and repeat and win in the decade of the ecosystem.
Vince Menzione 38:49
Sounds like a great opportunity for some of our system builders out there. And some of these technology organizations that you follow.
Jay McBain 38:56
Absolutely. The ones that see it are growing by triple digits. And they’re getting the attention by the way of private equity and venture capitalists as we speak.
Vince Menzione 39:04
I love this discussion. Jay, always great to have you as a guest, you’re an Ultimate Guide to partnering. I want to thank you for your time. Thank you for your support. And we will see you again i’m sure at the end of this year, we’re going to run a report on what happened. So thank you,
Jay McBain 39:17
that’s exciting to kind of look ahead and look back and always have a kind of a fascinating tension based conversation.
Vince Menzione 39:25
I love it. Thanks again for joining. As with each of my episodes, I appreciate your support. Please subscribe on your favorite platform, like comment, tell your friends about Ultimate Guide to partnering and where they can find us and i’d love your feedback. Please like the podcast and provide comments or reach out to me at Vince Menzione on LinkedIn, Twitter, Facebook and Instagram. You can also like and follow Ultimate Guide to partnering on our Facebook page or drop me a line at Vince m at ultimate dash partnerships.com this episode of the podcast is sponsored by ultimate partnerships. Ultimate partnerships helps you get the most results from your partnerships, get partnerships, right, optimize for success, deliver results. For more information, go to ultimate dash partnerships.com
Announcer 40:20 thanks so much for listening to this episode of The Ultimate Guide to partnering with your host Vince Menzione online at Ultimate Guide to partnering calm and facebook.com slash Ultimate Guide to partnering. We’ll catch you next time on The Ultimate Guide to Partnering