017 - The Market Always Wins with Sunir Shah

What is up PartnerUp?

Is it better to play against the Casino, or be the Casino?

As the saying goes, "the house always wins." Same can be said for your go-to-market. Successful ecosystems are not about playing the market, but about BEING the market.

You don't want to miss this one with the legend himself...

We're joined by Sunir Shah of the Cloud Software Association (CSA), AppBind, and formerly Freshbooks and Olark. Sunir has seen well over a decade of partner transformation and as the Founder of the CSA, has probably talked "partner" as much as anyone in SaaS.

Don't forget to join in and follow the conversation at https://www.cloudsoftwareassociation.com


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Jared Fuller  00:20
So it's another Tuesday here, Mr. Bartels, you're looking clean cut? What? Wait a second. Hold on. Hold on. But before we we move to Justin screen on video here. Did you have to like you're in Massachusetts? Did you have to like go to an underground barber? Or did you have to do it yourself? because everything's so close to the mass,

Justin Bartels  00:43
I say I paid triple the market rate for this underground haircut to be to get it done. No, no things are open backup. You have to schedule the time, you have to wait outside. So to wait outside in the rain before I could go in to my scheduled slot I had to keep it on. There's a whole dance that they do where they'll take off your mask to shave around the year and come back around the other side. But I don't know on Sunday, I was like, it was just like overnight, I had way too much hair. And I was like I gotta chop it off. So I got it done last night, but feeling fresh,

Sunir Shah  01:14
desperate for a haircut. Although my hair sideburns are getting long. So I'm planning to like get long enough that I can tie them over my head and do like a sideburn over.

Jared Fuller  01:25
Oh my gosh, there's the man of the hour himself. So we don't even need to do the whole like disclaimer like, Hey, we're partnered up with the cloud software Association because we have the man the myth, the legend, Mr. Su, near Shaw here with us. What's up, sr? Welcome to partner up. Oh, well, thanks for having me. Everything's up. My wife's getting the vaccine today. So that's exciting. So she'll be able to go on vacation without us I think is what

Sunir Shah  01:54
you challenged me to drink. So I have my fresh pour beer. Yeah, from Ontario brewery, Great Lakes brewery fighting octopus.There we go. Product placement. They're not paying me anything. But maybe they should say,

Jared Fuller  02:07
yeah, they'll be they'll be knocking on our doors for partnerships just like all the partner relationship management software's. Well, one thing I wanted to get your take on because I bet senior has some hot takes that you're not known for that or anything. But is what the heck is happening with Facebook right now. And maybe we can take like an ecosystem centrally in Australia.

Sunir Shah  02:28
What's that mean? The Australia situation?

Jared Fuller  02:30
Yeah, I mean, that's pretty wild. pretty wild. I mean, there's there's legacy media, there's a whole bunch of different vectors here. And I'd love your quick take on it. Because you said you had a hot take, as we were kind of prepping for the show.

Justin Bartels  02:43
I want that I want the context. First, I'm at a loop on what's going on.

Sunir Shah  02:47
So in Australia, the government is once again regulating digital content entering the country. Some concept that maybe doesn't make any sense in America, because of the First Amendment, you wouldn't be able to do this, I don't think constitutionally, but they can in Australia have done it for video games and other media, they can definitely regulate digital content coming into Australia for foreign companies. And what they do this time. They want Facebook, to pay news media to share the content on their platform is a form of subsidizing journalism. And keep in mind that News Corp is based in Australia. So that is also when people talk abstractly. They should understand that News Corp is the primary beneficiary of this, and Facebook and Google are the payers. So it's like these companies just using the government to negotiate deals on their behalf. Perhaps, although other means not just News Corp. But it's really it's a very Australia related issue. That has to be taken into account when you're talking about this. But yeah, I mean, God help me being forced to defend Facebook and its practices. But I'm with Michael Geist, here in Canada, that when you make a law, that that makes you pay for links. It's not a good law. Because there's nothing that forces Facebook to allow any content on their system. Really. So if you charge them for sharing content and users sharing it, they're just they can say no. So Facebook blocked and defended all of Australia until yesterday, earlier this morning or whatever our time,

Jared Fuller  04:31
that you basically cannot post any links to any news media sites on Facebook, they're all of those domains are flagged, and any content is is is removed before it even hits, you know, the other side of the post.

Sunir Shah  04:45
Yeah, I think they unblocked it as of yesterday, Australia time today are time because the government agreed to some concessions that Facebook was looking for which is arbitration whatever. However, it means should be no surprise Private foreign corporation if you said you can only do something, if you pay money, they can also elect to not do that and not pay the money. And so that's what they chose the part of the conversation is it just presuming that Facebook is effectively the only access to the internet that people have, the only way of accessing news media, just taking as a given was a market condition without somehow declaring it? monopoly or anything, legally. So it's kind of like the rhetoric. So that gets more complicated, because it may be in fact, that Facebook and Google do have a duopoly in Australia. But what though

Jared Fuller  05:38
like that, see, that's weird to me advertising dollars. So advertising dollars. But correct me if I'm wrong, the only way that news media or News Corp or any of these organizations make money is by traffic to their own site. Right. So if you have the your users sharing links, and then all of a sudden those links become like, gone. It affects them more than it affects Facebook.

Sunir Shah  06:05
Yeah, but I should be careful what I say maybe, in fact, they have a duopoly not in the legal sense, but in a market numeracy since 30. They have 80% market share between the two.

Jared Fuller  06:13
Yeah, effectively they do. Right. not legally, of course.

Sunir Shah  06:16
Yeah. And so that's what I mean, like there's no job or account Facebook. Yeah. And that's kind of part of the complexity of this issue. Personally, I am the view that there's, it's, it's kind of wild, we got to the point that journalists are demanding the government get on their side. That's the whole point of the 50. State is the government's on the other side right. Now, the government want the government to pick and choose and which media companies survive. I watched the CBC, which is a Canadian public broadcaster, interview with Facebook, Canada, and there's journalists wasn't To be honest, my opinion, because I have worked on that on the news media. I would not say that was the best journalist CBC had. But he kept asking why Facebook? You know, why would they not bend to the will of a democratic government? He just that was his only question, which is a very, like, haranguing kind of McCarthy s kind of question to ask the journalist to ask another company, why the government is not regulating more of the media as if it was a very strange, especially from a public broadcaster. It was a very strange conversation that kind of gives you the idea of the amount of stress the news industry is under because, fundamentally, and this is my actual controversial opinion, the news is not that useful. And that is the problem they've had. If you look at the economics of journalism, historically, sections A and B, which is world in local news, were just a wrapping paper for the sections of the newspaper that were generating revenue. So whether it be classifieds.

Jared Fuller  07:55
It all got unbundled. Right. That means bundling and unbundling the newspaper got in bumbled unbundled all of their revenue streams, right?

Sunir Shah  08:02
Yeah, every one of those little pieces that people wanted, that drove the sale, the subscription to put into more better platforms, whether it's Yelp for classifieds, or online games, or mobile apps, or whatever Craigslist Facebook marketplace now actually took I mean, they they are the new, you know, classified ad marketplace is huge in the States, personal like Tinder, obviously, other dating apps. I mean, so all those little services that people actually want, that we're paying the one central news, because think about who owns the printing presses, right? Because they're expensive things. So they became newspaper. So I mean, journalism was always subsidized by these other things. But as it turns out, I think I believe it's credible. Facebook says only 4% of the shares are news in Australia, of all their content, I think that's probably right. But if you actually, you know, then look at the user behavior around news, most people don't even read the articles, what all they're doing is using the headlines is kind of sports, mostly, I mean, there is real news, people share, I'm not gonna say that doesn't happen. But I don't want to have a, like a categorical argument. Let's look at actual user behavior, because that's economics, you know, percentage basis is, you know, statistically, because we're product people, we will want to analyzes the actual behavior. And so most people, you know, are just only read the headline, so they don't need the body of the article. So what's the journalist really doing? And then why are they What are they doing with the headline, they're just mostly in the political sphere, that kind of reacting, you know, in a sports team level, it's not even that useful and most of the news in order to generate, you know, not just now but before before World War Two, because wasn't similar. It was in a similar situation. You know, they had to sell a lot of negative emotions to get people interested in the news. So you know, if it bleeds, it leads, yellow journalism, that kind of stuff, to start, you know, say tell both sides with the conduct conflict theory of reporting, and then they got into new journalism and Gonzo journalism to like personalize the story. But is that like all this lot like all this Talk about the value of journalism and democracy. While true. It's not clear the news and media as an industry is a good, like a good example, the ideal they're proposing and they never built a business model that was sustainable. So then like, then you're basically begging Facebook and Google as the only sources of capital to pay them out. It's it's I don't think it's an I don't think it's a clear cut when that that that legislation, I don't think it's, I think it's

Jared Fuller  10:31
it's a horrible situation to be in for I think, for all parties. I think it's bad for Facebook, and it's bad for the media companies. And it's, it seems silly for the users, like the users are just like, both of you are stupid, right? Like, as a user, and you're caught in the middle of this, you're like, I don't understand either of you. Like, yes, I will read your content. And I respect to some degree, like whenever you actually do journalism, which I think we might agree is the exception and not the role. But

Sunir Shah  10:57
then, the people who want real journalism are paying for it like Wall Street, The Washington Post Wall Street Journal, the economist or Maclean's wall, there's people who actually want to read long form articles will pay for it. But there isn't that big market. And the thing is, the problem with the argument is that people you can you can put the best journalism out there in the world, but you can't make anyone read it. You know, you can, you know, you can make the most delicious water, but you can't make the horses drink it right. And so even if you put all this great journalism out in the world, it's not going to make an any impact on anyone's decision making process as it very clearly is the case. I mean, we all know, saw what happened over the last few years. I mean, it's pretty clear that news is not what people think it is. No, it's

Jared Fuller  11:43
it's definitely entertainment. But I think, to me, this is a partnership podcast, and I got a partnership angle here. I swear, I swear I do.

Justin Bartels  11:50
I'm waiting to see this one circle back.

Sunir Shah  11:52
No, actually, here, the Facebook was wanting to go and Google wanted to go write the partnership side of it, rather than the arbitration side

Jared Fuller  12:00
of it. Right. And this is what's so silly is like, to me in Google, and, you know, Apple have more of a history of working with ecosystem and sharing revenue. Right. So like, you know, YouTube shares, 50%, with creators, right. AdSense is somewhere in like the 67. You know, like, if you want to put Google ads on your site, I think you'd get like 67 cents on the dollar. You know, there's plenty of examples of that. But I think the problem here is that Facebook saw news is kind of like the enemy in the early stage, and then they became bigger than the news. And then they didn't realize that like this, this is their ecosystem partners. To some degree, right. This is the content and community to actually engage the discussions like these are the links that people share, and comment on and create usage and drive more ads. And instead of realizing the market dominance and the position that they're in, and saying, Hey, we care about publishers, right? So here's how we're going to work with you and provide more of an experience like a platform experience for news organizations to engage in their platform and have something there. I mean, they don't have any products or partner products that are specific to those news organizations.

Sunir Shah  13:07
Well, they do. That's the thing. So what Facebook and Google, when they say they strike, Google struck, and I haven't looked at their exact deals. But Google has had the news product for a long time at Google News. And then Apple news has definitely demonstrated that,

Jared Fuller  13:24
but Facebook specifically.

Sunir Shah  13:26
And Facebook now has a news tab. So there, they have made a competitive product to Apple news and Google News called Facebook news called the news term. And they're looking to sign up news publishers. And the idea there would be for those who are looking for me, they have a fake news problem. Which was me, I don't know Facebook deeply cares about which publishers were being shared. I don't think they thought it uses enemy or they just didn't even care kickin, it wasn't even remotely interesting to them. I don't think they were paying attention until they realize over the last few years, how much the politics of the site were an issue. And now they have this news tab, because that's obviously a thing that people want. And it also will solve another problem for them. And it's generally a good thing anyway, to have. You know, in theory, the use tab, if we mean I think we all agree good journalism is good is worthwhile for society. So they built this news tab, and that but it's still in the infancy. And so the opportunity would have been, right, similar to what Apple's doing is providing subscriptions through Apple news and Apple subscriptions.

Jared Fuller  14:27
treat them like a partner treating them like a partner in their business and

Sunir Shah  14:31
sell sell acts like sell effectively newsletters into the Facebook news, I think is where they could have been going. But if you in my opinion, if you hamper them with all this crazy framework of law legislation, that's going to make them in antagonized position they're gonna people gonna lock into like the sub optimal plays. But the thing is like, again, the actual people who are have to consume the news, you know, they're Not going to consume the news if they don't want to, because you can't make someone cogitate something, the government can't force you to think anything. So, you know, if there's, you know, if the news isn't gonna be compelling, it's not gonna work. So there was a place, there's a place where it's not going to be good. If I think if you lock in now, I think it would have been better in a partnership sense to think about what is the overall vision and allow a more creative space to see how much farther down the path of this news tab news feed Central, like mainstream news could be in? Can that be a better product, ultimately, because I think the data that Facebook has, which is what also is in the law, they have to share with the publishers would be eye opening, because it would show you how little most journalism is generating value for average people. And maybe they can focus on things that are high value. You know, there are high value kinds of news. I'm not saying there isn't. But a lot of news is just repetitive, like tweets put together. And it's

Jared Fuller  16:04
a it's a take from an outlet on something where there's a 10,000 takes.

Sunir Shah  16:10
Yeah. And so what is, you know, there are kinds of journalism that do well, the post is a pretty good example, and economist and Wall Street Journal that are like deeper dives. Wikipedia is a good example of how powerful a deep dive is on a subject. Maybe that would work. Maybe Maybe if you want, if it's just a hot topic, maybe the Twitter level of commentary is enough, like alerts, I mean, there's different ways of structuring the news. Right. But if you, you know, if you power if you use the Facebook platform, and it's, you know, capabilities, its data, its engineering, its, its format to restructure and then generate a paid subscription to better quality news in your newsfeed. That could be interesting, may not work. But I think those that kind of creative space a positive way, ideally, would meant better. Australia is to put in more of a headlock arm lock position, i'm not in favor of bringing in that much government intervention when no one knows what the right answer is. Yeah, I definitely don't think forcing someone to pay when they can say no, is going to work? Because I'll just say no, it's there's,

Jared Fuller  17:17
there's 0% chance this works. Facebook will just say no. And I think the the greater point that's being illustrated here is what people are going to find out is kind of like the theme of what we wanted to talk to you more broadly about outside the news senior today was around, you know, kind of like in the casino, the house always wins. But when it comes to software, the market always wins. And I think, yeah, what's that

Sunir Shah  17:40
market no matter what the market always wins. That's right.

Jared Fuller  17:43
And I think how you describe that is a very interesting take on what it means like the market, the ecosystem, the relationships that already exist. And most companies, whether it's through arrogance, ignorance, or thinking that cloud means something different than how markets were created, in the past, what they think is, I can go direct, I can build direct customer, I can market to these customers, I can sell to these customers, they will they will care about me. And after talking with you more and more, that seems very arrogant. I don't think it's intentionally arrogant. But maybe maybe we can start with like how you came to that realization of like, the market always wins.

Sunir Shah  18:28
I mean, everyone knows a customer's always right. But the the reason why I say it so much. I mean, let's let's set the table about what I am actually doing with my career

Jared Fuller  18:38
and why you've been unless you've been on this journey for a bit a bit compared to some folks.

Sunir Shah  18:44
Yeah, gosh, too long. So, you know, so I run the cloud software Association, which is a network of all SAS partnership leaders 4000 people now. And I have APA, which is my startup to, which is a platform to bring SAS into the reseller. And retail markets. You know, that's great. That's a nice tagline. But why is this so important? You know, I wouldn't just do anything I could do obviously, work and I didn't have to start a startup but this problem has been the real issue. So we're talking about what happened you know, why is Why do I have to talk about the market will controls everything? Well, SAS is subscription based. And what happens is, SAS can get subscriptions you cannot, you cannot sell a subscription to somebody else. There are two fundamental problems that have blocked you know, the value chain distribution, any form of selling through partners, the service channel size, anything that subscriptions the data belongs to the customer. So how does a partner created an account that they manage the customer owns and controls? And second, how do you pay for the subscriptions? You know, if you get between the customer and these recurring monthly variable charges, the counting overhead is gonna like overwhelm you. Easily no matter what the vendor pays commissions it's so to be too expensive, and then second, You're going to be on the hook, maybe because you're taking on the liability of these subscriptions, you may not have to pay for them. So your risk in the margin in the middle is really high. And of course, you know, how do you even package package up a subscription, like a piece of a box of software that you can buy and push through into shopping malls, you know, or retail experiences, you know, down wholesale distribution, retail distribution, we can't do it. So what's happened as a result, the only way to go to market and with SAS has been direct. I mean, most of us are like 90%, basically, one famous one shape or form, selling directly to the market through direct marketing, direct sales, even our partner programs are effectively referral based, right, because there's only two solutions to this problem for partners, which is either just send the customer to buy directly, which means you give up control of the customer, or you're giving up the value opportunity for yourself in the middle, or you take on the billing risk, you know, which is just too enormous, right. So basically, everything is being bought directly by customers. And when you centralize that, it's good for SaaS companies, in many ways is kind of just Facebook, they have a direct relationship with all these customers, you know, you know, and then if you can do that, you become very powerful you become you become a representative of the market, because you have direct relationships with all the buyers, and then therefore, you can dictate terms to the market, a lot of people want that. But

Jared Fuller  21:22
I'm gonna challenge you there for a second, because in a lot like with Facebook, as users were not the customer were the product. And then their customers, there's often intermediaries there, like a lot of organizations don't actually touch their Facebook ads, right? Like there's an intermediary, there's an agency involved. So a lot of Facebook's revenues, disintermediated, by agencies running these ads, and like, there's specific, you know, companies that all they do is optimize Facebook spend.

Sunir Shah  21:49
Yes, that's right. So let's talk about, like the flip side of Facebook. So on one hand, the content side, they have a direct relationship, and I think they are very, very good at adapting to customer needs, you know, because that's the advantage of sass. But the disadvantage of sass, right, is that when you have a partner involved, right, you need a direct relationship with the customer to make just to make the transaction happen to push the partner out. Right, and then you end up basically killing and strangling channel, right, without putting in a huge amount of lift. No, so Facebook ad manager is has put a lot of investment in that just even to support agencies, right? Facebook has the resources to do that. Let's take an average company. I mean, you guys were gonna drift. I mean, it's not cheap for drift to support the partner side of drifting, you have put a lot of money and resources and capital to build up a partner portal. And even then it's incomplete. You cannot handle manage services. As far as I know, it's still referral based interest. Right? Is that right?

Jared Fuller  22:50
We, we don't do any true resell. Right. So we do have referral based where partners are like managing quote, unquote, implementations, but the paper is still ours, right? Like we have a direct relationship. In a traditional sense. No, it's it's not managed service by partners.

Sunir Shah  23:06
Okay. And so my point is just to get back to the point of what the market wins, and you don't so because everything is centralized, it's very easy to SaaS company, to feel like everything should belong to you, and that you know, everything. And then everything that you have is everything that there will ever be right, because you have direct relationships with customers, you can have a lot of information that's useful, and you want more direct relationships with customers, because it's powerful. And that's really the only thing that works. And no partners is really that effective at selling through to you. But what you're missing, fundamentally is no one can sell for you. And so that's why that you're missing that part of the market. But why is it important? So this gets to the reality of the world. So if you look at the macro economics just to shock you, and then we can talk about what happens in the customer on a day to day basis. Most of just b2b software, most of b2b software is sold to partners of the 500 plus billion in 2019. A b2b software that was sold 64% through 24 billion was sold through partners. b2b SaaS is not that effective. of the 100 billion dollars sold in 2019, less than 23%. That's a high estimate, it's probably closer to 15% 15 billion to 23 billion was sold through partners completely upside down. It's almost all direct. So I mean, of the $325 billion, SAS is like $20 billion. That's not an effective partnership channels strategy and how many decades has been the PC revolution was a lot faster Lotus 123 went to $100 million in annual revenue in one year, because they got to shopping malls on the backs of IBM, like what SAS company has got to $100 million arr in one year. You know, you can't do that without the leverage. You may be counting

Jared Fuller  24:48
on one hand, right?

Sunir Shah  24:50
I can't think of a single one that got to $100 million fresh,

Jared Fuller  24:54
totally Fast Company anyways.

Sunir Shah  24:57
I can't think of another I think I can think of a single one. wasn't

Jared Fuller  25:00
already Oh, slack is cool and No, I mean, no. Was that two years two and a half years?

Sunir Shah  25:06
years, years and years and years and years and your tenure overnight success? Plus do it with me and beer. So we'll see how come? It's true. So the the case, so what's what's going on? What's my point here? So customers, they are the market, and they just live on their lives, right? They don't, no offense, they don't care about anything. Right. And they have all the money, so they don't care about us doesn't even know about us, they just go about their day, trying to figure out and deal with the problems. And so if you read Crossing the Chasm by Geoffrey Moore, which is absolutely the best marketing book out there, I mean, he defines to paraphrase a market is a defined group of people, similar buying needs refer to each other, for purchasing decisions. And a lot of people get this wrong, they think it just means word of mouth marketing, it's no, it means anywhere you look for information, you know, in order to construct an idea of what your problems may be, because some people don't even know what their problems are, they have to learn what the what the problems are, and what the solutions are to those problems. And, you know, and so I give an example. It's not business when I bought a car, you know, yeah, I looked at autotrader, and Edmunds, I looked on YouTube, I looked on Reddit, I walked around my neighborhood, I asked my father in law's, my brother in law asked my friends, you know, these are all the different places I might look for information, right? for how to purchase. And in a business case, a customer, yeah, they're gonna obviously look at things that you can access to direct marketing. So they're gonna look on Google, they're looking on Facebook, they're gonna look on podcasts like this one, they're gonna look, you know, they're gonna look on other blogs, they're gonna go to conferences, or whatever these things you can achieve, you can reach using the direct marketing budget to buy access and placements. But some of the and the good chunk of actually some of the places you look for other companies that are between you and the customer. So whether it's another software product, because they're already building a system, it's not like they have nothing, they have an ongoing business of operating. So they have already have a system in place, your software better integrate with that software. I mean, if your drift, you know, you're gonna have to work with HubSpot and active campaigns of the world because customers already have those things, right, you have to work with these six, right? So you have to integrate in order to get to that customer. Or they might be working with a service partner, like a marketing agency, and you better make stuff work for that service agency, so they can make money bringing you to that client, otherwise, they won't do anything. Right. And the market will win. companies who who insist on going direct or basically giving up of this 30 to 50% of the market that the customer lives in and saying I don't want to put my brand anywhere near those things. Of course, some other brand will come and take it. Right. And when and so HubSpot is a fantastic example of that, you know, you guys are in Boston, I you know, right. So the, they have 40% of their agency, their revenue comes from the agency market, they just crushed it, inbound marketing agencies, they totally dominate that space. Right, and no one can beat them. You know, it's very difficult to be HubSpot, because they have built entire businesses on the idea of inbound marketing. All these agencies, you know, Moz is another fantastic example, SEO Moz. That community, you know, built all these SEO agencies, and they score it up that whole channel. And that's just the service channel. But you know, that's an example of what happens when the market pulls, you know, they're gonna pick whatever companies they want, the products that align to are gonna do really well. And frankly, you can't win without a market without an ecosystem strategy. There's no, there's no number one player in any category does not have a market ecosystem search, you

Jared Fuller  28:35
know, that definitely not publican during companies, that's for sure. That's for sure.

Sunir Shah  28:39
Yeah. Because the market will just reject you will find something that aligns better with itself and then continue on, you know, so

Justin Bartels  28:47
do you think part of that's driven by just the difficulties in measuring the effectiveness of the, you know, activities in the market selling through partners working that route? Because it seems like, you know, a lot of the confines are, I can't perfectly fit my partner program, my ecosystem strategy into an Excel spreadsheet that like I can my direct marketing and direct selling activities, do you think that plays into it a lot?

Sunir Shah  29:13
Well, there's a lack of attribution because there's a lack of activity. So it is true also, that partnerships are not driving a ton of revenue compared to direct. It just is. And this is basically what those numbers show you.

Jared Fuller  29:25
I'm happy to interrupt you here multiple times, because you just say things that are just so like, that should be quoted that you said there's a lack of attribution because there's a lack of activity. Like, I think that is the single best objection I've ever heard of your CFO is like, Hey, this is too complex to you know, attribute and blah, blah, blah, it's like, well, that's because there's a lack of activity, so we don't pay mind to attributing it, right, like directly use 99%. Right now, partner activities 1%. Of course, we're not attributing it.

Sunir Shah  29:53
It's not worth investing time in but this is the, this is true. So there's a lack of attribution. So If there's money, people want to invest and figure it out. That's right. I mean, you look at the analytics stack, you know, built around direct, like direct marketing and ads. Like, it's ridiculous because there's so much money moving through there. Right partnerships is not really there yet, although it's getting a lot better. I mean, the CSA, you can see the number of PRM tools that have emerged in the last three years bonkers, you know, account mapping is a new category, you know, what we're doing that bind is new, it keeps happening, because the demand has shifted. I mean, the problem is Predictable Revenue like that, like the recording sales method is reached a limit. I mean, it's it caps out because you cannot phone everyone on the planet. It's not even the United States, you can't phone everybody. So you have to go to find these secondary markets, the channel, and that's normal. in technology, that's just SAS took a lot longer than most would have expected, given that licensed software had totally crushed it in the 80s. And built, Microsoft has a trillion dollar ecosystem. They are ridiculously huge, like they are, you know, one or 2% of the world's economy is Microsoft, and its ecosystem. They're just ridiculous. So everyone thought that SAS would have an equally fast channel, but it didn't happen, because the mechanics are wrong. Like what? Phil? Yeah, you can't attribute the partners. Because no, no one's figured it out. But let's talk about attribution and how to score partnerships, I think people get a lot of really confused, because people don't really understand how partners operate, because people are very used to direct sales and direct marketing. But really, if you understand there's only one customer lifecycle, because the customer is only with money, right? They're the ones with new money, everyone else is meaningless. So there's a lifecycle, right? They come into the top of the funnel, they end up converting, then they have to adopt, you know, then there's the expand, you know, adoption, retention, hopefully they don't leave. And then you know, they love you so much. They refer you someone else, it's basically the lifecycle. It's the same for every customer, whether they're coming from partner or not. And the only reason partners are in involved is that the customer has demanded, because they are the ones who are right. Always they demanded that they need this partner. And but for this partner, they will not get through the lifecycle. So whether it is jeetu crowd, which is a former partner who got them the information to come to your site, or if it's a service partner, who said, Hey, we're going to get drift because it's part of our rollout stack strategy, you're just going to get drift. That's the plan. Or if it's post, you know, post purchase often happens in HubSpot. I bought HubSpot I have no idea what I'm doing with this, I need an agency to get this rolling. You know, the customer has demanded there's some other company involved, you know, or even you know, with with drift yet, okay, we we got drift, but I need to now integrate it, you know, with something beyond Gmail or whatever. So I get HubSpot. You need to work with these products, you know, in the lifecycle in order to get the customer from the beginning to the end, you know, so every partnership function, every goal, the partnership from the KPI level, is driving to an underlying customer KPI under underlying customer lifecycle. I think people forget that. And they make up these weird terms, which I hate like partner source revenue and partner influence revenue, which is just us handwaving. As partnership teams is like, no, we're doing really important work, please, please score it so we don't get fired. I partner influence revenue. Oh my gosh. But you know, if you if you thought about it more, like I mean, these are real things are substantive. But like what are they for is like what well, you can talk apples to apples to your marketing team? Well, you have mq, ELLs I pq ELLs, partner qualified leads, I mean for the partner function, right? success team, you have success metrics, we have partners who are helping with the onboarding, adoption has the exact same metrics, but they're driven from the partner flow. And then every likes specific partner KPI is really just the tactical set that you need for that specific kind of partner to get them to drive to the underlying customer lifecycle metric. Great. If you understand that it becomes a lot. I wouldn't say easier, but more, it's more correct. And so it's easy to talk to your compatriots at your company, you know, CFO, where does this come from? The issue is that what is the activity that, you know, what is the activity that we are measuring? You know, that that is the real underlying question that, you know, we continue to ask ourselves, and maybe we shouldn't send this podcast to the CFO

Jared Fuller  34:08
because no, I love I love my CFO, Jimmy Kay. He, the thing is, is like you know, you have to have the the overarching and compelling case that that probably stretches across the customer lifecycle pod two weeks ago with Norma Walton Paul like you know, what she said for building ecosystem economics was like, you know, starting with the customer experience and working all the way through it and then yeah, I your metrics across the customer experience, not to these things like partner influence and source revenue. I completely agree. You have another controversial take on this because you're just full of controversy scenario, which we love in the podcast world is there's a there's a fight. Yeah, you're just one beer in so this is gonna get more interesting. Um, you there's Always a question with it's like, Where should partnerships report into? And there's typically two answers. Like I only hear two answers, I hear CEO or head of sales. And you're like, both of those are very wrong. Tell me what you think?

Sunir Shah  35:14
Well, I think partnerships is better in the marketing function. So people bring it into sales, because they're looking at, like, what they look at is just this channel sales function. They're just looking at grinding out pq, S, basically, channel sales through the pipeline, that's fine. You could have an army of channel salespeople, but your head of partnerships is really a marketing function, like your head of partnerships, is not a salesperson, they're looking at this market thing. And they own things that your VP marketing won't own, that that's in the marketing framework, a really good partnerships person, and I think it's consistently true, if you understand that no company wins their category without an ecosystem strategy. because fundamentally, customers, the goal of of every aspect of your company is to get your story told, everywhere a customer looks for, for information about making purchasing decisions, first ahead of your competitors, then the only times you need a partnership function when it when those companies between you and the customer require relationship, because you know, between you and your company, so diplomatic corps, but the partnership person, they do some things we're doing, like all the partnership, people are really good head of partnerships, they understand the customer ecosystem. First, they're oriented from the customer side, they mapped out the whole market, from the customer's point of view, because they're looking for, you know, who do I need to work with, around the customer, they have a very keen sense of what what the day in the life of the customer is, they have a very, they have probably the clearest idea of the position of the company, because they have to they're there, they're selling through someone else, they're getting someone else to tell the company story, it's gonna be broken telephone, right? The CEOs favorite story about the company is not translatable by some partner who doesn't, you know, you're only a small part of their story, right? You need to be they need to be able to tell your story quickly as part of their story. And that's the third thing, you know, great partnership, people are really good at positioning, because you're you're selling through someone else, like you're not closest to the customer, the other company is closer to the customer, they don't care about you either. They don't care, you have to sell their, their own stuff to the client, you need to really understand your partner's position and the story, they're telling you about themselves, the client, and then convinced a partner that your story makes their story better and stronger. Right. And so these are all marketing ideas, that specific tactical set for a particular partner channel, maybe channel sales, maybe it's more sales function, but partnerships includes what is the product even doing, you know, what is the marketing position? You know, what, what, what are, you could do most of your partnership activity are going to be like branded marketing activity. So you need to be able to drive market activity and PR and brand partnerships from the from the marketing team as well. So this is why I feel it's a marketing function, you know, you wouldn't have the product impact support because they're part of the fulfillment side with partner success. Yes, there's gonna be a sales component because gonna be like, a big group of people who are on the phone just grinding up pq ELLs, right? And the channel sales team, that's fine. You know, I think sales can own those, that team, but it's not the whole partnership function. And if you don't have an ecosystem strategy, you know, you're gonna just, you're gonna be wiped out by someone who is more aligned to the market. Right? So I mean, you know, Bob Moore from cross being had a really good blog post about this, about how RJ metrics was very focused on sales. And then Looker was very focused on building an ecosystem and being the platform, the network, you know, of data, and analytics, and who won? Yeah, you know,

Jared Fuller  38:50
I was an RJ metrics customer back in the day, and where are they now? Where are they now? What I want to speak to here is, um, this is another shameless cloud software Association plug, because when you were just talking sooner, it felt like therapy. For me, personally, it's breaking up a little bit like therapy, I'm like, yeah, cuz that's my like day in the life right now is being in these very different positions than just a typical, like, sales leader, right, manager, director, whatever it is, I don't care about the title. It's, I'm not selling, that in some ways, I'm positioning and I'm, I'm getting very close to making sure that like, where we're going with like aligning marketing and sales on the drip side, for example, in like, trying to convince agencies where they need to build sales relationships. What I'm starting to hear is like on two calls today, as a matter of fact, I had agencies that are already actively engaged in ABM campaigns and influencing sales rep behavior around that. And I don't know that the rest of the company knows necessarily how agencies are already doing the stuff that we're trying to tell our customers to do. It's like why not just align with these people. These people already training sellers on how to engage with target accounts, right through marketing campaigns. And that's that's a different thing than selling. Right. That's information that's, that's market intelligence. Right. Which leads me to like a very interesting question is like, the way that I've thought about partnerships I haven't spoken about publicly, I think to anyone before, is I view partnerships as market intelligence as a primary function, like what's actually happening outside of your walls. And that includes customers and includes agencies and includes technology companies that includes analysts like I pay very close attention to what Forrester and Jay McBain does, right, like what's happening in the market. And I feel like my responsibility, maybe there's other people out there like me that are feeling this right now. My responsibility is to help educate the company. But I don't know how I honestly don't know how it's so hard to like, try and get all the stuff that I learned that these are conversations that other people in my company are having? What would be your advice around that is like, if part of the function is marketing, right, like market intelligence? How do partnership practitioners or leaders get that into the company?

Sunir Shah  41:10
Yeah, that's a good question. That's a really good question. We were thinking about it a lot inside the cloud software Association, about where we're going with 2021. And, you know, we had the advantage and disadvantage of not having the conference. So we were able to focus more on online masterminds and masterclasses we were doing a lot of like, what's on your mind, with partnership people? And we're also looking around for people with resources to answer this question. So I have some answers that I've brought in. So I'll give you my advice. But this is something that I think we're we are working on as an association. So I think a lot of people don't even understand their framework role in a company. Like, this is just trying to get you like owning the positioning, understanding, just like you said, the market intelligence st run this exactly saying exactly the same thing. That's absolutely what you know, I believe, and trying to educate people on and it's not about how many phone calls, you have your partners, because that's not important. It's what whether how many of this kind of company are telling the company's story? How many other these like service companies or integration companies or whatever are telling your product story to their customers? That's the only thing that matters? You know, it doesn't matter whether the company ends up on a phone call with you with a pq, well, it cares. No, no. So here's where we're going. So what is the framework of partnerships? What is the partnership person? Who is the head of partnerships? What are they supposed to own? And how are you supposed to communicate it? Here's my strategy, I have a game. For instance, mapping the market, that's a difficult problem and getting people to understand and see the market as a whole is a difficult thing to do. But I've done it, you know, both at freshbooks, and oh, Ark as an executive, and then actually, as a consultant many times, I have a game, it's actually if you go to sneer.org, slash risk, the rules are there. It's called the game of marketing risk viewer played the board game risk. It's based on that

Jared Fuller  43:03
everyone's going to this site right now, actually, so this is gonna be hilarious. Yes, I will find all your emails every crash your site.

Sunir Shah  43:12
Through doc sense, I'll get all your email address.

Justin Bartels  43:14
I'm just curious when comm Shaka is on this risk board.

Sunir Shah  43:18
I'll get there. So the talk about invading Asia. So the game of great marketing risk is really about mapping your market while you do is you take all the stakeholders in your company who have touched the customer, I mean, everybody, so VP, marketing, VP success, VP, sales, co Product Manager, yourself, whatever, anyone who's like, likely to, you know, you're gonna have to your peers who spent a lot of time with customers, and, you know, hopefully have done some market research before and you give a report, but even if you haven't, people generally know, then you just brainstorm. It's like, who does the customer refer to? for purchasing decisions? What's in their life? What's what are they going to solve problems in their in their day to day, right, so you start a numerating. And we've heard numerous, some around drift like HubSpot Active Campaign shirt, whatever, MailChimp, fine, you know, clearbit, whatever. You can enumerate tons of software products, service companies, as well as marketing agencies might use sales, consulting agencies, sure, whatever. You know, there could be jeetu, crowds, cap terrorists, whatever, anywhere, they're going, you just enumerate them, and you brainstorm for 20 minutes you say it out loud, you put them on index cards, this presumes may actually be an office to get some time and this is

Jared Fuller  44:25
what everyone's gonna be dying to do. Whenever offices open back up, this will be the first thing that something that's actually

Sunir Shah  44:35
Oh my god, okay, so, so you brainstorm you put them index cards. And it turns out, you know, it's like the board game risk. So each of these index cards is a country. And what you'll find is they kind of relate to each other and they clump together and they've kind of formed continents as groups and economies actually relate to each other to on the table and you can basically lay out on a table, the map of the market. It's amazing to see that because no one's that most people don't spatially like make a map. in their mind and what they're going through the customer that most people have never done this, which is amazing to me. But as a partnership person, this what we think about all day long, because we're trying to fit into all these companies. So that's useful. And then you can start talking about your strengths, weaknesses, opportunities and threats, competitive pressures, assets, whatever, against these mark and these markets, and it comes very easy to decide what the strategy is. And here's come shocker, you know, unlike board game risk, well, you should never invade Asia, because it is too big. And it's surrounded by too many continents that can attack it in marketing risk, always invade Asia, because it's the biggest market with the most, you know, opportunities to next markets. So it becomes very obvious you basically gonna go Okay, of course, of course, you guys will be doing marketing software, SAS integrations, that makes absolutely obvious the most focus for partnerships, clearly. And then marketing agencies or whatever, okay, sales consultants, I don't know, whatever your agency program is, right, then you focus on that, right, and then that, and that that's a very good way of communicating the structure of the market. And if you own that, as a partnership team, this map of the market as getting information updated over time, right, that's a very useful asset that partner team has, because most of the rest of the company is not even paying attention. So that's number one. Number two, is the positioning, I know VP marketing or VP products are going to want to own this as well, good luck. They're very focused on what messages they're putting out in their channels, you need to be focusing on the story that actually other people can tell about you, which is the most important kind of positioning, because that's what positioning is. It's a story that other people tell about you, in their own minds to separate you from the galaxy of other whole bunch of other things. And April Dunford book, is really good. She's very tactical about how to do this. But you as a partner team should be doing a lot of like surveys, qualitative data around customers describe this product, in your own words, how would you describe this? in your own words, your friend or colleague is actually better question. What's your most favorite thing? least favorite thing with the product? You know, there's one thing you could improve? What would it be these kind of questions, you should be running these constantly with the customers, what other products are you using, what other services are using, make sure you understand that. And then, and then when your partners as well get really good at trying to summarize their positions and back to them in a way they agree, because that's a good habit to get into. Because, you know, you have to fit your position into their position, if you make a map of not only your own position, but the positions of things around you in the market. I've never really done this, but because I just do it in storytelling. But if you write it down on that market map, like, well, this is what this these people how they described themselves, right? Then it becomes easier to go to VP product. And VP marketing is like, well, this is our story. This is the stories of the people around us in the market. And this is how we fit in. That's what positioning is, right? It's like how you position relative everything else, right. And this is what the customers think we are, whatever they think you are is probably what you should be. So you know, and this is the gap. And so this is what we need to do a line and the CEO will always be unhappy with their position, unless it's like, you know, Facebook, you know, you always want more. So if you want to change this position, if you want to change your positions, like how do you take this story we're telling and making it bigger to eat up more of the positions around us, right? But you know, who, without this kind of like, deliverable, what is your CEO gonna base it on, like he or she is gonna base it on on their gut, which is the people they talk to at conferences, and most CEOs don't talk to customers anymore. So then you're kind of in trouble. But there's something you can do as a partnership team, because you have to do it anyway. Right? So you might as well deliver that. So those are two ideas as tinyurl.org slash risk. That's where the rules of marketing risk are. This this is,

Jared Fuller  48:49
this is gonna be a fun one. I have it up on my second screen. I'm trying not to look at it so I can engage with you because I want to go play around with it and make this an activity for us here soon. I think a lot of folks will as well. I think this podcast in here. This is one that folks are going to listen to a couple times because you dropped so many little nuggets of wisdom and things that have big implications for like their function and their role. And I think there was a little bit of therapy and a little bit of identity crisis.

Sunir Shah  49:15
I like it better my toast.

Jared Fuller  49:17
Yeah. Hey, I mean, I genuinely enjoyed it. I was Geeking the heck out on this thing. My

Sunir Shah  49:22
goal now is to make Justin break.

Justin Bartels  49:28
I'm just laughing because I know off of that, just that last risk to tidbit like Jared has already been up to like I think 2am the last three nights. But now he's completely going to scrap but he's been working on it. He's gonna be up till 3am tonight, building part of ecosystem risk board tonight and then I'm going to get it to in the morning.

Sunir Shah  49:48
He should see my actual deliverable for those consulting and you when you consult, you want to write down every step along the way and turn into a process. So I actually have a framework and template to deliver the outcomes of these reports. And they're like, predictable. They look. They look ridiculously intense. They just drop like a 60 page like analysis of the market on on the client like, this has to do with this. You're supposed to pay me more money client. That's, that's what this means. I think

Jared Fuller  50:15
I need to talk to you about that too. I need to like get my hands and be able to like see some of this before and maybe we can turn that into some extra extra or like

Sunir Shah  50:24
we could go analyze drifts ecosystem as a podcast.

Justin Bartels  50:27

Jared Fuller  50:28
there we go. There we go.

Justin Bartels  50:31
I think you have to like you got to drop a CSA poll and ask like, how many partner folks played risk played Settlers of Catan played those, you know, those big strategic board games growing up? Because I bet I bet you know that as a precursor to a life in partnerships is

Sunir Shah  50:49
to be fair risk is a terrible board game. So I'm sorry. Oh, it's a sec. That's all I can talk about. That's a whole different ballgame published in America. It's only reason people play Monopoly was number one. Also terrible board game. Number two, but they've won market ranks one and two and four board games, even though they're awful compared to up to 10. Well, that's a positioning less. Oh, thank

Jared Fuller  51:12
you. Okay, good. At least you're on the kuttan boat. I'm just

Sunir Shah  51:15
like it down the other night.

Jared Fuller  51:16
I have boards and boards. I even have the Game of Thrones kuttan. You know, like, even even the bastardized version. Maybe we'll see

Sunir Shah  51:24
each other on board game arena.com, which is I do.

Jared Fuller  51:29
Oh my gosh. All right. Well, we got to wrap this one up, folks. Before we go, reminder, because this one you're gonna listen to a couple times. So listen on Apple, Spotify, your Alexa, wherever the heck you're at. And don't forget to check us out on on YouTube. Like, Subscribe there. Justin is a fan of only five star reviews. So leave us one if you're on Apple podcasts, and then come join the conversation at the cloud software Association. You get to hang out with us in the air and get more of his knowledge drops on the regular weekly newsletters, amazing events, where you get just the collaboration from the entire ecosystem, the partner ecosystem that you get to take back into your company. So we buy

Sunir Shah  52:06
the drinks, although right now it's BYOB. Yes. So

Jared Fuller  52:13
last thing, your quick take on opening backup. My guest is June July. But I mean, even the numbers are falling faster than we are looking to book

Sunir Shah  52:21
the conference in q4. I am Mary Yeah, the borders will be closed still

in q4,

no way.

Sunir Shah  52:30
I'm in Canada. So like, can't sneak across the border. I might have to use doing homeland style and wander through the woods or something.

Jared Fuller  52:39
Just Just find the body of water someone can get in here on a boat and it'll be fine. But qq for any, any regions picked out yet.

Sunir Shah  52:49
We're gonna do in California. Yeah. The vaccines rolling my wife is getting a vaccine right now.

So no, I

Jared Fuller  52:56
think we should be fine. I feel very confident about you know, 1.5 to 2 million a day in the States, it'll ramp up to 3 million. And just, we've already had over 100 million cases. So I mean, we should be there by June, July. So

Sunir Shah  53:12
yeah, I am. So I'm betting I'm betting that things will be open. The board will be open travel, people will feel comfortable traveling. conferences will be happening. q4. In the meantime, it's still eight months away. More online stuff. In fact, we do a lot of online stuff. This cloud software Association that's not like boring virtual summit stuff. But these kind of conversations between partnership leaders. We're also gonna talk to each other. As to what we do, there's no

Jared Fuller  53:42
books, there's no manual. There's no degree, there's certainly no degree. So come join the CSA and sincere thanks so much for joining us, Justin. As always a pleasure, my man. We'll see y'all next time. Thanks.

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