Hey hey PartnerUp, we're back-to-back with another show and a little bit of back-to-the-basics. You might be thinking you have your fundamentals down, but I challenge you to spend the 7 months Stephen spent honing Marketo's program relaunch!
Great ecosystems aren't brainstormed on one slide deck and shipped...
Today's guest is Stephen Ceplenski who designed and managed Marketo's Partner Program structures and tiers. He also worked on amorphous metals used in spaceflight. Whoah.
I've seen Stephen's program structure work first hand. All 900 cells! And let me tell you, you are going to want to take a similar approach if you want an ecosystem that lasts.
Everyone says to keep program design "simple" but the reality is ecosystems are complex. Stephen makes quite the case for seeing the full picture before leaving vital pieces of your partner program blindly behind on the cutting room floor.
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Transcript
Jared Fuller 00:20
We're live, we're back partner up. What's up? Justin? I think the thing I said to you in pre show was, how many unicorns were minted in q2, this year versus all of last year and the numbers. Audience can correct me if I'm wrong. I believe it's 137. minted in q2. So these are companies that you've north of a billion dollar valuation for the first time versus all of last year was 128. Whoa,
Justin Bartels 00:47
you know what that means? He means we have we need something above unicorn. There are too many unicorns, right? That's a corn special. A deca, deca, corn above unicorn.
Jared Fuller 00:57
deca corn is a $10 billion plus valuation.
Justin Bartels 01:00
Oh, okay. Okay. All right. Yeah, we're gonna start tracking that. You're just a diamond doesn't if you're a unicorn, apparently,
Jared Fuller 01:09
I guess. Oh, I guess. So. It's no longer that interesting. But I don't know necessarily what that means for ecosystem. What I think it means is that the spoils for the victors are going to be even larger. Because a lot of these companies, they're just going to be a lot of consolidation happening. And a lot of it, we're seeing that in the market right now. Acquisitions are crazy. So in addition to the valuations, I think we're entering a massive cycle of bundling, right? So companies consolidating things of their value chain, because I don't see that many enduring companies in that list of 137. There's not many that I think are going to be around in their current format in a decade from now, the way that they might have been, you know, a decade ago. Yeah. But today, we have someone on that's built an ecosystem that is still around today in sight of marchetto. So welcome, Steven to partner up.
Stephen Ceplenski 02:04
Hey, guys, thank you so much for me on. Actually, I was thinking the other day that Justin Bartels here was at Alexa and our first partner in the Global Services partner program, and marchetto, literally, his CEO had a cheque waiting for me the day we launched the program, you know, and Marketo, was founded in 2006. IPO in 2013. And we launched the first set of programs in 2014, which most people know about launch point, and over 100 service partners we had. So it's kind of weird to come full circle. And maybe perhaps it might be full hexagon, I don't know if it was a round, smooth transition to this point, there was probably a lot of angles in there. But really cool to be here. Yeah,
Justin Bartels 02:45
this is a way of saying I probably owe Steven a good chunk of gratitude for creating a career path for me, in some respects, now being part of the Adobe partnership with drift here. So Steven has been great. I mean, I know what you're
Stephen Ceplenski 02:58
talking about. And I know we're gonna talk about programs and like building them from scratch. But I have to actually say that if I look at maybe our top 10 service partners that we had at Marketo Oh, they were the epitome of the best partners you could have. And I don't know if it was on accident or on purpose or just karma. But part of what I'll tell you about today is the reality that your programs in your ecosystem are one thing, but really attracting the best partners in keep them close to you is you know, how you get to success. So you know, kudos to a listener I know that's proficient. And now something else right now. It was a good ride, like those five years. Were just brilliant. Yeah, yeah, for sure.
Jared Fuller 03:36
And that that kind of like kicks off the story, you know, around whenever you join marchetto. Steven, so for the folks that don't know, Steven led all of partner success at Marketo, prior to the Adobe acquisition and kind of helped build out that ecosystem services partners, post marchetto being a public company, and I think for aligning on a topic for today's call. I think we decided there's there's been a lot of conversations that we've had around specific areas of channel specific areas of alliances, tech ecosystems, you know, top to bottom, but I don't know that we've gone deep enough into how to architect, you know, Partner Program structures, right, and think forward into, okay, what does this actually look like? And how do I do it? Whenever I'm aligning a leadership team, you know, whatever stage of the business. So Steven, you had, you kind of talked to us and we were chatting earlier about this seven month period, right? You had the seven month period where your CEO was like, we're not launching something that is garbage to the market, right? It has to be great. And you had to go through an architecture process that I feel like a lot of companies don't have the luxury to it's like some CEO, or senior VP, grab someone in the company is like start the partner program next week. Let's go copy, copy this other company and you did very differently. Maybe talk Give me about why the choice was made, at the very beginning to go through this more serious architecture process for how to do it.
Stephen Ceplenski 05:09
Yeah, so I actually believe that everybody should do this. And people don't. They because they're slightly lazy, or they just don't understand the value. If you're building a house, you architect the house, you draw everything out, down to the 16th of an inch for people to build, so that you can sell it value. And we do this in engineering, we do this we're building product features out, like we design down to the feature function module that you're actually going to code. And so all of a sudden, we look at a partner program, if people want to skip that part, maybe they don't know. Or maybe just they think it's too much pedantic work, that's not worth it. But in the case of Marketo, at the time, at the time, our founder and CEO Phil Fernandez was very adamant that our competition, especially Eloqua, and part up, had robust partner programs that were beyond that product, right? They were part of Oracle and Salesforce. And that should be our goal, and we should try to exceed it. And so in that vein, I was asked to architect everything first. And until we had cross functional alignment and agreement, we would not launch it, it was seven months elapsed time was probably really six or five and a half months of my time, we spent that last period really figuring out how we're going to launch our first 10 partners, what kind of press we're going to do right to really get visibility. So when I looked at this, you know, task I was given which my entire bonus was based on, I talked to a number of people who basically did an outside in architecture. And as a software engineer, that is completely against the grain for me to look outside of what everybody did, and figure out what the best of it is, and then figure out how to do it internally yourself. Makes no sense to me, you don't know how they did it, no matter who you talk to, they're not going to tell you the hard parts. And you're really not focused on what your goals are, what you want partners to drive for revenue, what ICP you want them to go after, what industries you want them to go after, and then how to architect your program to enable that. And so I took the approach of doing really a cross functional matrix of thinking about it last night. So if anybody's familiar with naec, mec, he usually exclusive, completely exhaustive analysis, we'll look it up on Wikipedia. It's not that complicated. It says analyze everything, completely everything you're going to need for all types of partners, for all programs for all resources, and make sure that everything you analyze is exclusive of each other, there can be no overlap. And the reason you do this is that it gives you insight into the analysis and allows you to pick and choose what you want to do and what you need to do that. For me believe it was Excel matrix. It was I think, Jerry, you've seen this, it was about 15 columns by 60 rows. So 900 cells, if you will, that you start there, but you don't end up with 900 solid, you end up with about 200. Because once you do an analysis of the kind of partners services, technology, distribution, OEM implementation, whatever, and you map it against your internal work preparation for partners, your onboarding and enablement of partners, supportive partners, and expanding, when you do all of that, you pick the kind of partner you want. You choose where your strengths are, and you choose what your weaknesses are, because you have to build that. So I will just kind of summarize that by saying I fully believe that if you completely analyze the market, you're going after the partners you want, and the things you're going to have to provide an A program. It's a lot of work, and you do a lot of deletion, but will you come out with is the core things that are necessary to drive revenue, especially source revenue from your partner ecosystem, which at the end of the day, barring everything else, that's what everybody looks at, you know, influenced me Okay, influence. So that, you know, that was that was seven month journey, if you will, that I took
Justin Bartels 09:01
so you got you got seven months, and you didn't take two months to do market research from Aruba.
Jared Fuller 09:06
Correct? Correct. I feel like I was having this conversation the other day because I'm going through I don't know if I'd call it a similar process. But one that's much more around architecture and product slash project management and thinking about treating our partner programs much more like a product. And I think a lot of business people in BD people approach this as a financial problem meaning how do we go will seek or reverse engineer some target where partners are sourcing X amount of revenue, right y amount of pipeline, like we're achieving these goals and we work backwards through activities, but that lens fails to bring into the picture. How do you actually activate partners cross functionally, what is our solutions consulting team doing to train you know, our best essays on how to get the most value out of the product and integrate with all the tools What is our marketing team doing to empower, you know, product marketing to differentiate and bring these things to market? So you have all these various departments. And there are I mean, there's deliverables, there's things that need to be produced to make these, you know, partners in this case channel, right? So the service partner world, successful. And that's really gathering of requirements. And then there's like a build process. And then there's a deploy process, which seems much closer to product management than it does financial operations or planning. Right. So I think, Steven, like you getting brought in from the software side of the world, and having a background in engineering and product development. Like, how was that influential versus maybe the way colleagues or you've seen other people think about it? Like, do they typically Goal Seek from a spreadsheet numbers? And you were approaching it from? What is it going to take to build the product that partners need?
Stephen Ceplenski 10:57
Yeah, good observation. So as the ladder, I can't tell you, it was on purpose, it's just the way half right. But, you know, retrospectively, that's really a good analysis. Um, one of the things they think about is, everybody wants to have partners give you the company, the benefit, you want to benefit by the revenue, you want to benefit by the exposure market presents a large ecosystem. And it's very difficult. And she actually been a partner to think about why would the partner want to do this, I take that same philosophy, I took that same philosophy at Marketo. internally. So in order to launch that program, I needed engineering, customer support, sales, obviously, marketing, both like partner marketing events, and the website, professional services, alliances, channels, finance, sales, Ops, and enablement to all feel like they wanted to be part of the partner program, not because they were told to, but because they were going to get benefits. And I could go through any one of those departments and explain to you why I went to whoever the head or the VP, well, let's,
Jared Fuller 12:00
let's do this. Steven, let's, let's take a department, let's take a department, let's say engineering, right? So you're like, what, what's my partner program have to do with engineering, maybe talk through some of the things that you talk to Engineering Leadership about and got them bought into the partner program that you got benefits or processes or programs in place with engineering that benefited partners that if you just launched with, here's 20%, revenue share and these benefits that you wouldn't have had otherwise, by not working with engineering, right?
Stephen Ceplenski 12:29
So I think first, you engineer his initial responses, oh, I have to support sandboxes, and pods, and the API, and it's going to cost money and time. And so there's a lot of work in there. For us. That's all true. That's all true. But the flip side is you've got partners who may be doing more advanced integrations, more advanced implementations, hitting bugs, problems, bandwidth issues, throttling issues way earlier than maybe even services is, and maybe playing around more, because they have the freedom to because they want to drive their business more than even the company and market on this case. And so by the engineer, we know that, first of all, yes, you have to do all these things. But here's what you're gonna get in return, quick visibility into things that are happening in the field, unreal deals that you would have never seen before, the ability to get your beta out to people who are bought in under NDA under contract, legally obliged to do things just not some random person on a beta, that are incented, to let you know, early what they say, because it affects their implementations and their reputation. And so all of a sudden engineer is like, oh, wait a minute, it's almost like I have a private beta environment that I can work with directly through one or two points of contact, they're going to give me very well advanced notification on things that are in the beta or in product releases that are about to come out. Yes. So that's a benefit for them. That we could we could discuss whether it's a big enough benefit. But in this case, it was more than enough for people to think about how do I get advanced knowledge on what's taking place in reality, not in my test beds internally with fixed test cases that are only testing a certain set of things and not going outside of the bounds? Okay,
Justin Bartels 14:15
so Jared gave you the the the middle hanging fruit, we'll give it middle Hey, not too hard, not too easy. I'm supposed to ask the hard hitting questions. So why should sales ops care about partnerships and ecosystem? What was the value of that? That that's, that's why I'm architecture.
Stephen Ceplenski 14:36
You must have got the 20 bucks I sent you because that's actually a low hanging fruit to to be honest. That's an easy one. So what is the purpose of sales ops? Right. It is the the analytical and financial support of your sales operations, to look at what you're spending where the income, you know where the revenue is coming from. All the financial reports. Working that goes to the board. If If money is coming in from partners, and let's just take 2018 and marchetto 70% of revenue. So 70% of 700 million do the math. If you don't know what that revenue is coming from, you don't know how to attribute it to partners and region, you know, by segmentation of industry, from a sales ops perspective, when you go report to CEO C level execs on the board, and all of a sudden, you've got, I don't know what 17 times seven 1/7 and five, I know 40 110 million, call it yet 110 million home and you can't tell your executives where it's coming from. So sales ops, you know, they have a responsibility to do the financial analysis. And so getting them bought in a partner program involves making sure we have partners attributed as partners, making sure that their clients are attributed those partners, if it's sourced revenue versus influenced revenue, is that that's the no sell through situation or not, they need to report on it. And yeah, so it's, you know, to me, it's a no brainer, but I get the question. Thank you.
Justin Bartels 16:05
All right. I get it. Nice. Nice. Yeah,
Jared Fuller 16:09
there's, there's architecture architecture to be done around that tracking in the the throughput the flow through, if you will, of partner activity to, you know, dollars in the door, right? And are we on pace, etc. And I think most partner, people that have been in a situation of owning a number, and seeing that happen with sales ops realizes it would have been much easier to architect this and like, have buy in and have this built prior to like jumping in and then arguing about credit, right? Like, if you're midstream on this, you're filling that problem might be a good time to reset on the architecture. But I have probably a much harder follow on question. And this is to sales ops in architecture, that this is a very interesting one. It's almost like an epiphany I've had in the past couple of weeks, there seems to be a causal disconnect between operations teams, and partner teams around two concepts. One concept is partner pipeline. So these are the activities that drive pipeline. So you can think of the traditional kind of service mapping funnel of like, account mapping. So hey, we, we share these customers, these are your customers, these are our opportunities, this is what we're going to work on. And then like maybe an account review. So let's dive deep with an account executive or an account manager and your delivery team on this particular account. And then there's the actual like tripartite client call that might lead to, you know, a demo. So like, boom, source pipeline, right? What about the activities that have nothing to do with pipeline, but everything to do with partner activation? So I'll give you a bunch of examples development of a joint value proposition. You could think of things like training sessions lunch and learns, like there's, I have Kevin Linehan on our team has put together a mind map of I think he has about 60 partner activation activities that don't map to the five partner pipeline activities. Did you have to think about or architect or talk to sales ops? Hey, there's a bunch of stuff we have to do in partnerships that isn't driving pipeline, if we don't do these other things, pipeline will never happen. Did you? Did you go into this pipeline activities versus like activation activities exercise? Or did that happen later on?
Stephen Ceplenski 18:31
So the answer is yes, we didn't do it. The day we launched it happen within the first year. And it primarily happened because I was a one man show. And once the program was launched, I was able to hire five additional people. So by the end of the second year, there was six of us in the department. And out of those other five were people who manage the program who's coming in, are they vetted, are they certified? Have they passed the test? But I had to partner account managers Pam's, you know if you want to use the acronym, and that was their goal, or their role, their role was one, manage a couple partners to make sure that we're driving revenue. But really what I built was an enablement and onboarding team. And we basically had a set of goals to get to 100 partners within three years from zero. And so you know, extensively, if you just divide that equally, that's about three partners a month that we were validating, enabling, onboarding, doing go to market with doing market market planning, making sure there wasn't overlap within regions across different partners. So we didn't have contention, making sure that services was aware. So those partner account managers own a set of partners more so from an enablement standpoint, than a driving revenue standpoint,
Jared Fuller 19:42
is that how they were compensated?
Stephen Ceplenski 19:45
They were not cut we none of my team was on a individual compensation plan. We are on a team plan of hitting 15% of partner source revenue the year before 10, the year before five. So we were we were compensated from an MBO perspective? Well, from a revenue perspective against those numbers, but then we had internal embryos that I gave to the team. Were those um,
Jared Fuller 20:07
I'm curious with those tied to months quarters annually. What were the over those plans. So for example, you have this source number, then you might have, you know, four quarters was a tight against the quarter, because I'm trying to unpack if you're going to architect this the right way and focus on bringing partners in that are bought in or activated and they have all of these other activities that might not be one to one pipeline that will yield them bringing deals to the table. It's kind of like you're always chasing the number in the future. Because what you're doing now, is it going to translate into pipeline and dollars this quarter? It's for next quarter in the following? How did you architect that compensation? Because I like the team goal. But did you feel like it was aligned in the quarter to the work they were doing now?
Stephen Ceplenski 20:56
Love to take credit for architecting. It I was told how it would be handled. So we were essentially measured on the year, the calendar year. And the MBO that I gave individuals were quarter based, what we wanted to avoid was perhaps hitting or exceeding your quarterly number, but not hitting your yearly number, which was the most important to the C suite.
Jared Fuller 21:19
If that makes sense? Yeah, that's, that's interesting. So the MBO is where those performance KPIs or where they also compensation KPIs.
Stephen Ceplenski 21:28
They were results based. So I would say for example, as a partner account manager, you need this quarter to onboard 10 partners, they must have at least 20, certified marchetto experts on their team, they must drive at least $300,000 worth of revenue, right? There was very specific numbers. Obviously, the onboarding was different than the long term. But we really focused on certified people within the organization, how well do they know the product? Have they taken the test? How many implementations have they done? How much revenue are they driving? And so the Pam's were measured against that, for those that they were bringing in over time, less so for those that they were bringing in that quarter, because clearly, they weren't necessarily driving those metrics.
Jared Fuller 22:10
Interesting. So said, sales ops, then you know, was was able to partner with you kind of like bringing this question full circle, on making sure that you can measure those activities that were not just is that deal sourced or not, but some of the other things as well, so certifications, or other partner activation activities, that wouldn't necessarily be closed one revenue in quarter.
Stephen Ceplenski 22:32
Correct. In the case of Marketo, we were Salesforce customer, I believe the largest Salesforce customer To be honest, and the guy who ran ops at the time, this was a no brainer for him, he had included partners and all of his sales ops work previous companies. So the discussion was very easy. And we basically built out in the Salesforce data model, all the attributes that required for the partner program. So it would be who the partner was, where they're located, number of certified, certified employees, the revenue, they were generated, sourced and influenced over time, a couple other attributes in there, you know, if they participate in certain things, so we had an entire sub record in Salesforce that we would manage to pull all our reporting from.
Jared Fuller 23:12
Gotcha, gotcha, there's, I see a number of different ways. And we've had a few folks talk kind of about the operation side of tracking those things. So hit up the this is where I'll do my midway, the mid plug, the mid roll, plug for the CSA, the cloud software Association, so I'm gonna give them a shout out mid roll, you thought it was coming in the beginning, I dropped it in the middle. If you need some help on how to get those things, you know, architected in Salesforce, hop in come check out cloud software, association.com, hop into the slack group. And lots of people have kind of solved that challenge before, if you have an ops team that hasn't encountered partners before. I'm happy to share some insights. So happy to partner with them. So that's my interlude. And we're going to go back there. The good work it right, you thought I forgot? Because I because I did. Let's, let's go back to that beginning, Steven, where you talked about initially, in I'm not sure where Phil got this sense of this insight. You mentioned part Ott and Eloqua as them having competitive programs is maybe the the reason for taking this architecture phase so seriously, but you said a word we were talking earlier about unnatural walls. Anyone that's been in this game, from one company to another, see those walls pop up. And it was intentional to try and go department to department from the beginning to avoid those unnatural walls from happening. Where did that foresight come from? Like or how did you get leadership bought in to seeing this thing that will happen in the future? To realize like, Hey, we're preventing future pain by taking some medicine now, versus most companies go No, go do it. Leave us alone. And when you need us, come back to us. And that's where the walls originate. Talk us through you know how you got through that. processor, you know, Phil arrived at that conclusion.
Stephen Ceplenski 25:04
Sure. So I mean, Phil, obviously had been a number of companies before marchetto. He was an epiphany raschel actually worked as well. So he had seen a lot of this, you know, a decade before, I'm actually going to give you an answer, which may not be as exciting if you want it, here's why. By the time it was decided to launch business development alliances, channels and partner program, the walls were already there, and everybody knew it. And one of the ways they knew it is when we sat down and said, you know, those already 15 partners out there who are driving X amount of revenue from Marketo, with 100 certified people selling deals that we don't even know about, because all they're doing is placing the order with us. And we don't do anything with them. We don't enable them. We don't market with them. We don't promote them. We don't talk to them. We don't invite them to anything, we don't measure them. So it was really obvious that this ecosystem had formed on its own, not as big as anybody wanted, not as robust, not as managed, but it was already there. You know, Mark had been in business, but I say 2006 13, seven years. So there was a natural ecosystem. elicitor lead Md pedowitz group demand based, like there were just companies out there with 2030 employees doing this. So if you say, how did we not know this? The answer is because there's this big brick wall between you and the partner system. So for me, that was actually the easy part. Like it was like, okay, folks, this is a no brainer, you didn't even know this. Now, the question is one how to break down that wall? And two, how do we reduce the size of any wall, so there is no friction between anybody who wants to be a market partner, and that we can trust because they're smart, they're enabled, and they're driving revenue. So it's a little easier than I think maybe other situations where there perhaps weren't any partners, and people don't know there's a wall? Because in order to have a wall, you need two sides. So if there's nothing on the other side, you could argue there's a wall, right?
Justin Bartels 26:53
So I'm curious if you had this process, what did the partner research look like? were you doing similar things with those partners? I know you'd come and visit us a couple times. And you're at a I was low on the on the pay scale. I didn't the I didn't get the the court of Steven here. But what did that research process look like with the partners to figure out what they were looking forward to the program to complete outside of the wall?
Stephen Ceplenski 27:19
Yes, there's two pieces to it. The first was Who are they? Then the way I found found those that list out was essentially a good professional services, which was a profit center at Marquette Oh, and say, What partners that you're running into that you wish wouldn't be doing your work for you. So that was a very quick shortlist of 10 to 15 partners. And then I just, I literally just reached out I'm not the kind of person who's going to do an ad or something I just reached out who's the president of Exeter? Who's the president of dementia? I call them? Hi, I'm Steve. I've been here for months like this is what I'm trying to do. And across the board, with the exception of maybe one disgruntled partner, everybody was so hungry to even get that attention, that they were completely transparent and forth, right. Oh, what's your question is, I had a set of things I asked like, how many customers do you have on even in business? What are your average deal size, but your ever sales cycle? Are you specializing integrations? Or are you doing management? You know, like being an administrator of Marketo? You know, what's your renewals? Like? Are people doing very low level stuff? Are you doing more advanced, you know, actually building complex campaigns. So there's just a set of things that we could kind of put partners into buckets to say, hey, these guys are doing very low level stuff, but needed for small customers, these folks are doing more implementation and management and then you've got some more advanced consulting taking place where the the level of maturity and where they were on the maturity curve was equal to or higher than marchetto services.
Justin Bartels 28:52
Great. And quick hack, I guess, call it a hack. If you're wondering how to do something similar you don't have a professional services or we find a lot of partners through gone setting up trackers or chorus progress, of course, as well. Setting up trackers to listen for keywords like partner agency, are a great way to find partners that are in your accounts and working with your customers in order to create that shortlist. If you're thinking about how do I how do I identify my shortlist of partners to start with and start talking to and you don't have a professional services org that's competing with them right now. And those are the top of their head.
Jared Fuller 29:25
That that tracker that tag and Gong is one of those. There's a couple. There's a couple of hacks that we've shared on here. Like, I don't know, social proof is what everyone needs to believe in partnerships like what a partner has actually done. And we have a channel called partner wins that anytime the partner is doing something cool, you know, it's a win, that's something worth doing. screenshot it, drop it into partner wins, and that becomes social proof we can share with other people in the org. That's a great one. Justin, the tag one is been incredible because especially whenever you have someone that might not be ecosystem centric in the organization And they're looking for, you know, like, I've never seen one of my account executives encounter a partner, I don't know what you're talking about, pull up the filter and gone and filter by their reps and go, Oh, yeah, there's 17 calls in the past quarter where one of your prospects has mentioned agency on the call. So they're there, you just haven't talked to them about it at all. That's, that's definitely a good, good hack. Steven, looking at that, that seven month period of, you know, architecting, the program, you're a little bit wiser, you've seen the story now. Let's go back. Like, let's say you had to do it again. Or if there's some company out there, that's like, we need Steven to try and do this for us, or consultants or advisors, I think you're, you know, kind of working on the side helping some companies out with some pre programmed stuff. What would you do differently? I mean, that's the trite question, but let's go back, like, what do you what do you recommend now that you didn't do in market as early days, obviously, $4 billion outcome in a second largest software company in the worlds pretty dang good. But what would you do differently?
Stephen Ceplenski 31:02
Yeah. So there's two things that come to mind, both of which I will say that I fought hard for but maybe not hard enough, you know, you have to choose your battles. And when you're trying to launch a couple 100 million dollar partner program, you have to decide which things you're just gonna let slide. The first one was, I'm a firm believer that you give before you get if you're starting to partner program and trying to incentive ecosystem, it's kind of like opening a bar restaurant. And people come and you say, it's $20 cover, and they say why you say, Well, I don't know what you're gonna do. When you get in there. You're gonna buy food or drink or stand around. I mean, that's just silly. What you do is, you get, you know, patrons, and you make your place popular. And then when you can you charge. So tie that back to, in the beginning, the company wanted the partner program to be self sustaining, even covering all of its costs, therefore, we had to charge partners. For entry. I fought it hard. It was $10,000. It wasn't, you know, an astronomical number. But I just thought it was unfair to launch a program where no one really knows if we're going to deliver on the benefits and ask for money. But I bowed to that, because, you know, it's either that or probably go get another job. So I think that that's just a mistake to try to monetize something. So early on the fact that matter is if you build a successful ecosystem, you don't have to worry about monetization is driving so much, so much business, that's irrelevant.
Jared Fuller 32:29
The second thing is living. I want to get up there. Before we go. We'll come back to the second thing, because I'm so on the fence on this issue. Do you give your software and your program away for free? Do you charge for it? And I will get in trouble if I named the name but I will say I had a long conversation with a he's a good friend of mine. It was responsible for a program that dozens of billions of dollars. So it's a very successful company. Jared, I'm right here and channels a big part of it. What's that?
Justin Bartels 33:01
I said, I'm right here.
Jared Fuller 33:04
Justin, yes, Justin. And I'm trying to get him to come on the show. He's scared to super easy to get sued if he comes on the show. No, that's why can't we had mentioned that the name right now. But he was completely on the other side of the fence. He said, The reason we were so successful is that we could hire an army of salespeople to target right, these partners and sell them and activate them. And we know that only 20% are going to produce revenue of the you know, 100% that we signed. So he said the Pareto principle was to our advantage, and that we could monetize the development of partners. Now, you had to have a really good program and really good software that could help that partner. But I'm torn in between, like, if we give it away for free, how do you approach the CFO to do large scale partner development? Right? Because the maybe the lifetime value is there. But the first year is really no ROI. And normally, you measure CAC LTV, you know, kind of like year one, year two, year three, they're kind of all things equal in this situation, when you give it away for free. Yes, it's your last leader, right? You might be able to give it away, but can you justify it in the books? Can you go hire that army of people? What's your thought to that counterpoint, Steven? Well,
Justin Bartels 34:24
and and I think we should separate charging for the program versus charging for the software, right because Jeremy you mentioned were they charging for the access to the programmer. Okay,
Jared Fuller 34:34
both in both were mandatory. And Steven saying give them both, right you think given the program and give them the software?
Stephen Ceplenski 34:43
Absolutely give them the entire suite, whatever it is every feature, you know, obviously throttle so they can't go
Jared Fuller 34:50
this use it but give it away to their customers for free and more. They have more they use more they know the more they can sell the more they can build on top of it. Did you Honey, let me like, this is where these conversations can get fun. I'm sure there's an example of a partner that you brought into the program, and probably lots where it's free for training and program and all of that stuff, and the software is free. And it's like they just didn't commit. Right? Like they just didn't go in. But or you think like, no, the people that actually committed went through it, and they were happy to get it for free.
Stephen Ceplenski 35:27
Yes, but that's natural, like you expect some partners to be the best, some to the average, and some to be the worst. The idea of trying to prevent the average and the worst from happening is a waste of time, create the ecosystem soon naturally gravitates towards the top focus on them and prune the folks at the bottom. But back back to maybe the original question. I think it also depends on where you are, if you're in the first two years of a company, let's call it you know, SAS company, and you might start your programs and your partnerships early, you know, you're going to bring them in, and you may monetize earlier, and think if you've been around 567 years, and you're deciding to launch a partner program, you're hard pressed to charge because you haven't proven that you're that interested in partners, because you spent five or six years without them. So I really think that you ought to go a couple of years and say it's free, and those who produce the top revenue, the top 20%, set a bar, the top 25%, we will continue to give it to them for free, and everybody else you monetize. So it kind of depends on how mature you've been in your approach to a partner ecosystem, within a reasonable timeframe of you know, vert, your your, your, your MVP, first product.
Jared Fuller 36:41
Interesting. So the The second thing of doing it differently said giving it for free, so I interrupted you. So the second thing, do you recall what the second thing you do differently would be?
Stephen Ceplenski 36:54
Yes. The other battle I fought and luckily, I had a lot of really good friends and engineering was giving you know, the case of marchetto was an instance right was on a pod, but it was an instance. And the instance was licensed, licensed, so it had the base features or additional features. And what I wanted to give all partners in that first year, the full platform, every feature ABM when it came out everything that was a war that was a war because people said an instance costs $8 a month times 12. And they did the math, and they're like, wow, we're gonna do 200 instances. So why are we spending this money that they didn't think about, that's an investment, not an expense, and you're going to get 10 times that, or 20 times that back in revenue. So that was a bit of a war. And I ended up only able to give the base marchetto set of features two partners. And then I had to work secretly with someone I actually knew on the engineering team to enable other features and didn't tell anybody. I've never done it before. But I'm a firm believer that if you want your partner to know all of the product, and go well beyond where you would ever go with it, then you've got to give them all the product. Now you could set a bar and say if you don't drive $100,000 in business, we can't give you the product for free. That's okay. That's okay. But you got to start somewhere. And again, I believe in giving before you get
Jared Fuller 38:14
interesting. So you had some partners like Elise looks at her, Justin, you know, that's good business, so much so that they sold the provision to build out their b2b arm. One of the things that I think people are thinking about during a structuring phase, and I don't want to go into a giant conversation about tears, but more so the the things that I feel like people attach themselves to is like, awards, right? Or like best partners, and like making your partners famous, if you go back to I think it was episode three with Pete Buddha, who I think is the best in the world and making partners famous Pete was just maniacal about this point. I feel like marchetto at the later stages, right? So kind of like 2018 like 2017 2018 they started doing things like the fearless 50. Right? And you started to make your best customers and make your best partners famous. Where did awards and kind of like tiering and recognition fit into this architecture process? Was this something intentionally designed or that that happened later on in terms of recognizing results and creating FOMO, if you will, of like, hey, look at what this person is doing. Shoot, I want to do that. I want to do better than that.
Stephen Ceplenski 39:27
Yep, great question. So in the four years I was there it happened in the third year, the beginning of the third year, so 50% of the way in. We honored partners at summit gave out awards Partner of the Year digital services partner, your technology Partner of the Year. I also created these nice little things for your wall, which is a certificate signed by Fidel and myself that you know, says your Platinum partner, a gold partner, whatever very simple thing costs. $50 partners will go crazy on LinkedIn, posting it on their website. So that was important. For us, I think we needed to get to a place where the recognition was based on reality. And that just took a couple years to get there. But firm believer in that, like put the partners on stage, you don't need to hear you or your company talk, you need to hear them talk. I think that just resonates with customers, employees and partners. Like,
Justin Bartels 40:17
I think, having been in it, I think one thing that mark Kennedy did really well is viewing partner and community as one in the same. And when I say community, I mean all the people around your business, your customers, your fans, your advocates, influencers, and your partners, a lot of times I see companies that kind of separate, it's like I have my community that invite my customers to and they're part of our events and talking on stage. And then there's the partner lane. And some reality, you know, as partners, they can be very powerful, influential people in your community, they can be the ones that bring them into the deeper layers and get them more engaged or teach them and educate them for free. And I think that's why I love here at drift we like our partner marketer rolls up into our content, content community, you know, VP, and that keeps partners front and center in mind when it comes to architecting our community around drift and, and their role to play. And I think marquetta Did that really well, especially in the later years with the fearless 15 highlighting and making them part of the list as well as the customers to
Jared Fuller 41:17
in this case, Steven the adjusting the the HubSpot user group that they're referring to is like hugs, right? You have these regional events for like discussing some topic, etc. And it was notorious for having, you know, tons of partners there maybe even more partners than like customers in the beginning. And Marquez version of that was that what was that called? mugs, mugs, mugs. So hubs, I believe HubSpot might have like copied a little bit of what marquetta was doing there just in the SMB. I think that's just and that's exactly your point, right? Like, imagine having these user groups and not having partners there. All right.
Stephen Ceplenski 41:54
We, we actually had partners run the user groups to sign up and submit and they would say we want to run a user group in Salt Lake City. Great, they would run it. That's fantastic.
Jared Fuller 42:05
Are we I mean, this is topical right now. Because Honest to God, a year and a half ago, I was all over user groups in these types of events. And for the past year and a half, I haven't thought about it really at all. And now I'm like, Wait a second, should we start doing this again? Like, it was a really good playbook whenever there's demand in a region, and then you kind of get your account teams and your field and you know, a city where you don't have presence like Indianapolis, but it's like, man, we have these two partners there. We have Steven Jane, you know, an am and an E there. We got 40 customers? Like why not give that list of the partners in court create an event? That was something we were thinking about pre COVID? Should we go back there, Steven? like is that yes, no. on the horizon before the end of the year?
Stephen Ceplenski 42:49
Yeah, I mean, that's a it's a straight out, yes. Now think about it. And I'll tell you why. From a corporate standpoint, when you're trying to support, let's just call it United States, all these different regions, and you are in one place, it's not easy. So you have people on the ground, especially a partner, who in some ways are more incented, to promote themselves, to show you their skills to show you their capabilities and their successes, they're going to be more incentive than someone in sales who are going to fly out, because that's not their focus. And so they just add this level of energy, the swag that they bring the little awards they give out, we asked them to record everything. So we would get a full recording that we could put on community of the actual end user group. So my, my answer to you would just be a quick Yes, like without any thought.
Jared Fuller 43:37
I love that, I think that's going to be the perfect place to wrap because it's kind of inspirational, I like we just thinking about it just now I'm like, I guarantee I'm not sure that everyone's dying to go back to the mega mega mega events, because those were always exhausting, but like, you know, a boutique group of 2030 people that really care about something in the region, right. And putting a couple partners and great customers together and figuring out the next best thing is, I mean, that's a that's fun, it's more interesting, it's intimate, we need to definitely go back there. So if you can go do that, that's going to be one of the tactical takeaways from Steven here is like, hey, that works. And it's probably gonna work again. So get your get your people together, get your customers and your partners together in Region, it's not that hard. We can all run a SQL query or have ops run a SQL query, right, Justin? Yeah, those reports pretty easy.
Justin Bartels 44:26
partner up pugs launching in 2020.
Jared Fuller 44:30
Actually, and that's what that's how we'll end is talking about the annual conference for cloud software Association. So I'm super excited for it. Go to cloud software. association.com get registered. It's the only partner conference in the world for SAS. And it's going to be fantastic. So register. Gonna be a blast this year. We'll see you all. see you all there to Steven. Justin. Thank you for this episode of partner up. We'll see you all next time. Oh, Justin. Last thing before we go. You're watching us on YouTube. They need to like and subscribe by subscribing
Justin Bartels 45:01
follow like stars only if it only lets you
Jared Fuller 45:05
on Apple podcasts
Justin Bartels 45:07
on Apple podcasts. And I mean, if you if it only allows you to do five guests will take five but six stars preferred please. Yep. And let us know if you have any questions related partnerships or any topics you want to see covered. Drop us a note on LinkedIn. Find us on the partner app site or black. There we go. All right,
Jared Fuller 45:30
Steven was a pleasure. See you next time. Thank you guys. Appreciate it.
