044 - The Partner Prophet Jay McBain Is Back...Has The Prophecy Begun?!

The Maven of Markets…

The Godfather of Partner Ecosystems…

The Partner Prophet himself, Jay McBain is BACK.

In an episode for the books that will go down in history.

Jay’s first PartnerUp appearance “The Decade of the Ecosystem,” was an instant hit.

But what is happening right now?

Is anyone listening to Jay?

Are there examples already of his predictions coming true?

Exploding VC and Wall Street investments… Community everything… Marketplaces for everyone… channel chiefs being replaced by ecosystem chiefs across the board…

And it’s only going to get wilder from here.

Don’t miss it.

** To follow Jay’s writing — https://go.forrester.com/blogs/author/jay_mcbain/
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Jared Fuller  00:00
All right back what is up partner up? Got Isaac back in the chair after we had you on for one week and then the next episode we publish I did solo with chips. So then everyone's probably like he only lasted one episode.

Isaac Morehouse  00:24
They thought the part of the the co host curse was was still in effect. But no, we're good. I'm back.

Jared Fuller  00:30
We're still here. We launched partner hacker since then. So super excited about that. We've had hundreds of people sign up for partner hacker daily, which is awesome. It's the first ever daily newsletter for partnerships. So we're just out here trying to iterate and help you out. So thank you everyone for the support. And today's episode is going to be awesome. I've been looking forward to this. Since I read his very first article that I read in forester, the trifurcation of the channel. That's where my mind started to like bloom all sorts of new nodes. We have Jay McBain for round two. Jay, welcome back to partner up.

Jay McBain  01:05
Well, thank you for having me for round two. I don't know if it's a Madden curse, or a Sports Illustrated curse or whatever it is, but somehow I got invited back. So that must mean something something good.

Jared Fuller  01:19
Well, you I think you've sparked a much deeper prodding and like an intellectual curiosity in a bunch of people. I mean, there's in the community when I talk about people that are actually diving deeper and kind of bubbling up stats across markets as a whole, but then also diving into deeper insights. I mean, most people are referencing the the work that you're doing, Jay, so we appreciate you doing that and excited to dive into the topic here today. So if I could, if I could talk to Jay very frequently I would so it's a treat having him here. Let's uh, let's kind of frame the conversation today a little bit. On the first first episode we had you on you framed up what you're calling the decade of the ecosystem, Jay coulis, maybe do a quick recap of like, why you think this inflection point is this decade. And then we can kind of talk about in the past two years, maybe perhaps accelerated by the pandemic, what things are actually changing in those early innings? Some examples? And so let's maybe start there. What Why did you make that prediction and brand this decade is the decade of ecosystem?

Jay McBain  02:27
Yeah, if you if you remember back, Bill Gates made a kind of a proclamation that we overestimate what's going to happen in two years. But we tend to underestimate what's going to happen in 10. So that told me that so much of my job is like what's happened in the next 18 months? What do we need to be planning for, you know, what changes what people process program technology? You know, what are the things I need my finger on another book, you know, that I think we all read back in the day, kind of the Seven Habits of Highly Effective People, is begin with the end in mind. You know, given the Bill Gates quote, given this end in mind, I just started putting my timeline on a decade, and saying that, first of all, a decade later, even if you're wrong on a prediction, nobody's gonna be able to track you down. So there's that buffer. But it also helps shape up things that are Uber trends, like at 50,000 feet, you'd rarely talk about changing buyers when you're talking about planning for next year, because it takes 10 years, because we're going to overestimate you know, changing buyers. Obviously, the pandemic did accelerate a lot of things in two years, which is interesting when you made these 10 Year predictions. And things are happening much faster than you thought. But to frame it up. One of the other tricks is to come out with something a declaration of some type that you can hold up and then go into detail. Decade of the ecosystem was after two decades, one decade of sales kicking off in 1999 with Salesforce, I was carrying a bag in 1999 made some good commissions for y2k, working at IBM. But a couple of years later, you know, I wasn't managing my territory with my gut. I didn't believe that you were born a salesperson. I was now to the seventh decimal point managing my pipeline like everybody else. Salesforce literally changed a job role. And the decade of sales and the sales tech stack and everything that came after that. It made a lot of companies very rich and who I believe Salesforce will be the next trillion dollar company out of that decade, two decades ago. Marketing, right 11 years ago, I was working with really small companies couple 100 People Marketo Eloqua, Pardot HubSpot act on, you know, thinking that marketing automation, what if we could do for sales we could do for marketing. 50% of our buyers today are out at cocktail parties saying that 50% of their dollars that they spent on marketing are wasted. They just don't know which 50% So what if we could tighten up marketing and get a marketing leader in the boardroom in front of that sales leader starting to win some of the budget. Let's not just keep hiring salespeople. Let's start focusing on marketing, that Mar tech stack grew to 8000 logos through the decade. The fourth place player, the five that I just mentioned, the first three got acquired by Fortune 100 companies, Adobe, Oracle, first Salesforce second Adobe third, the fourth place company today is worth $47 billion on 1 billion of revenue, 47x valuation, not bad HubSpot Good job. And guess what they did it with an ecosystem and a platform. Right? For 20 years in direct marketing and direct sales in the previous decades. 75% of world trade goes indirectly. How do you ignore how your product actually gets to market? How do you ignore the go to market the routes to market all the strategic elements of your business model, while trying to think that you impact the buyer 100% of the time, both in sales and marketing, you just don't. So this decade of ecosystem and I watched the tech stack and I watched the movements. I'm comparing them to the early days of HubSpot and Marketo. And look into the early days of Salesforce and say everything's there, the people changes the process and automation changes, the programmatic changes that we're seeing every day in the market. And obviously, the technology layers, hundreds of them that are building towards this tech stack, that's going to make it all work.

Jared Fuller  06:19
What's so interesting how you frame it is it felt like a it felt like a movement in the early 2010s in marketing technology in Mark martec. Like, I had an agency in the, you know, the arts, and everything felt the same in terms of digital marketing, it was just spend an ad dollar on Google have a website. And that was pretty much it. Like it was really that simple. Put it on your business card. And then things took off. It felt like a movement, people coalesced. And we're working towards bringing about this change, you know, like HubSpot had great technology. But there was this movement of inbound marketing and like, Hey, this is a better way. And I think now I'm feeling that there's more momentum around the community of people in partnerships, trying to better the profession, and no build for this future, that I think whenever I first started reading your stuff, I'm like, Okay, this is really what's happening in channel. And this is why it's so hard for SAS, but now I'm seeing it as a much deeper thing that a lot of people are participating in. So I think that's a, what a poetic way to open and like kind of frame this, those three different decades. I want to now talk a little bit about, oh, go ahead.

Jay McBain  07:34
I was just gonna say I wrote my original report, you know, four and a half years ago called Death of the traditional channel, was my first official report at Forrester, when you read the trifurcation, that was after about a year and a half of learning. After what I saw these non transactional partners come in, back then I thought it was trifork aided across the customer journey, you know, the influence partners, the transaction assist partners, this retention style partner in a subscription model, I didn't know that every company would go all in subscription consumption. But they did. I didn't know that, you know, there'd be huge organization changes to be able to do this. But there is I didn't know that my tech stack would have, you know, 17 companies two years ago, then 34. And now probably about 75, all growing at triple digits inside the ecosystem space. But I had a feeling that partnerships are so much more than what's the channel has been synonymous with, which is just that transaction, that movement of money. And now we know of the technology alliances, the business and strategic alliances, and all these layers of the ecosystem. And you talked about results earlier on. Well, last week, Google Cloud, move their channel chief to the door and installed an ecosystem chief with all of those layers. And with the channel by the way, the transactional one being one element of it. Later on Rackspace, moved, there are two channel chiefs, North American and global to the door and introduced an ecosystem chief IBM, who committed a billion dollars with a B to build an ecosystem just hired that ecosystem chief, this is all in the last three or four days. You look earlier, Microsoft did that last year, wok their channel chief to the you know, to the door and put in who had been the peer of the channel chief for a long, long time, brought the ecosystem chief into run the broader channel at Microsoft sage did it. So I mean, we're seeing one by one almost every day now, companies coming to this a Tiffany and making the organizational changes that we had been predicting from you know, a few years ago. And it just makes so much more sense that that transactional channel we've had for 40 years is now one of five elements or one five direct reports into that person that's running ecosystem.

Isaac Morehouse  09:50
Jay, do you think that consolidation work so Okay, so I could be wrong about this assumption, but it seems like you typically have this process of like, like saying the decade of sales, as you mentioned, proliferation where there's just tons and tons of companies popping up. And then you have this consolidation process where just a few giants take the lion's share of the market. Is there something fundamentally different about partnerships that will make consolidation less extreme or less likely in your mind?

Jay McBain  10:21
Yeah, I never like to talk about consolidation. Because 10 years ago, when we started this marketing decade, there was 10,000 SAS companies today, there's 175,000. So just on raw numbers, the market regardless of how much m&a And how much, you know, consolidation, it's blooming to the point where at the end of the decade, I predicted a million SAS companies. So just by raw numbers, the innovation is off the charts, new companies being created, you got no code, low code tools, you can RPA you and I, this weekend, could go write something in the last mile, you know, go buy a URL for five bucks and put a LinkedIn thing up. And by Monday morning, we'd be selling. So this world of innovation is is there and it's vibrant. You know, we'll the larger companies, like when I mentioned the three Eloqua, Marketo, and Pardot, all getting acquired Pardot actually got acquired before they got acquired by exact target. So are the bigger companies or the fortune 100 companies calling Forrester asking across the tech stack? Are they asking very specific questions? Absolutely. Are they tracking when I published that over a billion dollars of private equity went into this tech stack last year another good measure of ecosystem growth, Wall Street's behind us 76% of CEOs think their business model is going to be unrecognizable in five years. And ecosystems are the number one reason why. So for the first time, we don't have to go upstairs to say how important partnerships are. They're coming downstairs saying why aren't we moving fast enough. So the good news here is Wall Street's on board in our senior leadership, and our board is on board. So in that case, it makes this decade of the ecosystem and now add a pandemic to it, you know, take off like a rocket.

Jared Fuller  12:03
You, you opened with kind of talking about some of the changes recently at the channel chief level to the ecosystem level at SAP and Microsoft, etc. And we've even seen that at startups like I've had Braden on from Sentosa, who's chief partnerships officer is a co founder of a SaaS company that raised from Softbank billion valuation. So we're seeing at the bottom, and you start seeing at the top, that's where like, something's happening here. But I wanted to double click on this, because I think in the trifurcation of the channel piece that I'm talking about, I didn't quite understand what you meant, whenever you talked about the role of like a channel manager, partner, manager, whatever you call them, someone that's responsible for managing a book of partner so to speak, activating them and nurturing them creating a great experience, you said that they should become I think you even said community managers was that the language you used in the article J.

Jay McBain  13:01
Here, here's their ecosystem, lead growth or community growth, or depends who you listen to whatever acronym. But there's two really kind of interesting, you know, parts of this equation, I you know, I love the people elements, and what community management really means, as opposed to darkening the sky with Channel account managers in this old sense. But here's the big change in trifurcation. I didn't really get it nailed at that point, because I was talking about more of the customer outwards. Obviously, demographic shifts, there's firmographic shifts, there's a lot going on. And then obviously, the pandemic, you know, changed everything to digital or digital only. I knew the channel was changing. Every company in every industry is becoming a tech company. Software is eating the world. All these things are becoming true so fast. You mentioned being a digital agency in the aughts. 78% of the 200,000. digital agencies we trace are now calling themselves tech services companies. And now all the creative and concierge white glove stuff is on page for the website, accountants 81% of them are now tech services companies partnered with Dynamics and sage and NetSuite and into another's and they're doing the implementations the integrations. And yeah, on page four of their website, they'll do their your audit your accounting, your tax, whatever else work you want to. But keep in mind that every industry, every professional services firm, everybody's coming in. So there's now millions of partners playing in this. How do you cover if you do a coverage map or a capacity plan? In the old sense the way I used to do them at IBM or Lenovo, my calculator would break. The only way now when you're dealing with millions if your Microsoft and 400 new partners join your program every single day. It's got to be self service. It's got to be fully automated. There can't be humans involved. But I'm obsessed over what those 400 partners read. I'm obsessed about where they go. And I'm obsessed about who they follow. years ago, six years ago, I published like the top 100 People in the manage services space. 80% of them six years later changed jobs. Only 25% of the people dropped off the list. A super connector is a super connector is a super connector, I list off, if you see my blog, you know, the top podcasts which this one is, you know, at the very top, I list off the top magazines, the 59 of them, I list off the 143 social groups that are there's 14 spheres of influence. And so in that world, I'm not going to put 10 People in the lobby of CW, I'm going to you know, maybe put one person there because they're really big. But I'm going to deploy people to capture those, you know, 10,000 sales reps in terms of what they read, where they go, who they follow, and I'm going to capture them that way. And that's just a huge change. And now every company seems to have a community leader,

Isaac Morehouse  15:55
what do you think is the is the break? Or? I don't know, do you do see more people attempting to create their own community, or find existing communities and sort of, you know, get a get a foothold or find a way to work with them? You know, what, how do you how do you weigh those two things?

Jay McBain  16:16
Yeah, I get quite I probably get asked this question more than any other. And literally a few days ago, I wrote a personal blog on LinkedIn, answering the question, five different ways. But the point was, and it wasn't even a forester blog, it's just I get asked so much, and I call it the Field of Dreams approach, build it, and they will come. And you know, I just looked at one of the tech companies today, I just had a big briefing, they built out community tools, and it looked really impressive and things like that, but they're selling to people who have this mistaken belief that they're gonna build this one stop shop for all these different millions of kinds of partners with, you know, 65 billion permutations, which is a real number, in terms of the things they could be focused on in the market and that last mile. And here's my advice. You know, if you want to build a community, great, you know, that maybe covers 20% of your problem, your collaboration, your communication challenges, the partners are telling you, in the advisory councils that you run, they all come out with the same advice, by the way, the 80% of your problem is outside your firewall. This industry is 40 years old, if you're looking at technology, the watering holes that people attend, and I break that blog down into 14 Different kinds of watering holes. And we look at peer groups, and we look at Slack channels, we look at social channels, we look at vendor groups and distributor groups, we look at consultants, we look at analysts like me, and you know, here's 14 Different kinds of communities. But let it be known that your buyer is already part of it. They are already dug in on not only what they read, everybody gets 300 emails every morning, and we open a couple of them. You know, they're dug in on the places they go, the average person will travel twice a year to like a Vegas or Orlando or like to a bigger show, they might go to a road show as well. But you know, they're not on the 150 events a year that run our industry. And then the most important thing for everybody in almost every conversation I have comes down to the law of a few, which was another book, Malcolm Gladwell, the tipping point, any market, you could take any intersection, any geography, any buyer type, any industry sub industry, any segment of the market sector, you could take any product area, or any business model like managed services, it literally breaks down to 100 people. Right now in ecosystems. I haven't done the work. But you know, between the three of us, we could probably rattle off 50 names that are driving the most noise. And our thought leaders, they come from different backgrounds, they work for different companies, they have different titles. There's almost nothing that connects the dots between these 50 people. And you know, if we sat down for longer, we'd come out with 100. If we actually scored it like I do on an algorithm, we'd come up with a list in Priority sequence from one to 100. But the fact of the matter is, what makes these people special is they understand community. They understand that the watering holes are already established. And the answer to your question is be visible every day. If you're going to do one podcast if you're going to do one event in Vegas, if you're going to do one, you're going to capture the group that that kind of surfaces in front of the trust that they've built. But if you want to partner with the biggest magazine on the planet, in channels, it covers less than 10% of the channel. If you want to partner with the biggest Association on the planet. It covers less than 10% of the channel unless you start to be visible every day and understand the watering holes and understand the 100 people that have the highest influence You're not going to get anywhere as a vendor anymore. I don't care how many Channel account managers you hire.

Jared Fuller  20:05
It's amazing. It actually brings up a kind of what I'm seeing on the frontline in startup land right now, Jay, where communities themselves are becoming a business. And the entire go to market is partnering. Like, as a business model, you could not typically launch at least not as many, as I've seen get created in the past six months, launch a community. And everything that you do is partner driven, all of your monetization is partner driven. Isaac and I are going through some of this stuff right now. And it's just amazing how everything around this is 100% partner driven with communities. And that's where I'm seeing a lot of early adopter changes. is actually, I wanted to get your take on this because I'm not sure if you've seen this part of it yet. Cuz it's it's a very narrow, early adopter sliver, which is VCs. So VCs in the past, I don't know handful of years have really invested in the concept of what they call platform and what we call platform probably mean different things. But in short platform is basically the product that is the value one of their founders or portfolio companies can log into. And I'm seeing at person VC firms, so not giant, you know, 100,000,200 $500 million funds, maybe a billion, they'll have an AI scientist, they'll have a plot of VP of platform, a VP of that four or five people dedicated to driving value to their portfolio companies. And their primary strategy for acquiring new port coasts, right, either customers is through driving value through platform and community to their their people. And what's crazy is I mean, I'm not I haven't seen as many cycles, I've seen about 12 years. So maybe one or two major disruptions from a professional standpoint. What's so interesting about that is I'm not I haven't seen, let's say, the tech b2b, like the hyper growth companies that are normally the the first adopters. I saw it come out of VC. Such a weird thing. Why aren't we seeing like we're seeing big companies, launch communities or participate? But I haven't seen the functions change yet. Right. So the the partner people that I'm talking to are still like, I'm targeting accounts, I'm trying to sign them as a partner. They're not thinking the same way that those early VCs are, which are much more like you're thinking, why is it? Do you think that tech is kind of lagging behind with the function of partner manager channel managers need to call it something else? What's what's missing from the debate?

Jay McBain  22:38
Yeah, what's missing, especially in tech is the permutations. So if you think that community is, you know, somewhat linear, that I'm going to join a community and through all of my personal growth, as I become more mature, as my business becomes more mature, as I go through all the different cycles, that I'm going to maintain the same community, it just doesn't happen. The second thing is community itself isn't a great business model. Because it's very, very hard to monetize. So I've got a group of people like minded people, and there's all these wonderful reasons to, you know, join in a community to get even if they're competitors, there's just so much value. But when it comes to actually asking them for a nickel, well, now you either have to be that learning, education, training, certification competency, now you start looking like an association, you either have to go down the road of subscriptions and advertising and you know, kind of be in that type of role or selling the data even worse. So you've got to choose at some point, how you're going to make money. And it's difficult because if you go back to the decade of marketing, when I did my startup, I went out to the big three, and they were too expensive. So I had to buy act on which a lot of people did. And guess what, when I raised $5 million, and when I started to build the company larger, the first thing I did was drop act on get out of their community, I was one of their, like, people speaking at their event. And now I'm on Pardot. So, right, you know, what happened there as I matured as a person and things. So they've got a churn rate, they've got obviously people that are cheap. The other problem and you know, us as analysts faces as well, is IP isn't protectable anymore. There's nothing that maybe I've written on ecosystem models behind the firewall, that a few people now in the previous couple of weeks, haven't published on a public blog. Not I'm not saying anybody copied anybody else, but I'm saying that IP is not a protected thing that's easy to monetize anymore. You can have protected IP that has an element of customization or ability, you know, to go in and double click on it and make it real. But the point is, you know, whatever you write or whatever you record will probably end up in some public A cine blog at some point. So it's not a great business model to start with. But for companies that are driving it to an actual platform, you know, I don't have to talk about Dreamforce, or I don't have to talk about the half a million strong Microsoft communities and everything else. I mean, it's a wonderful right element. And last thing, I'm going to say long solo way to say that those companies who focus too much on build it, and they will come the Field of Dreams, end up not executing that outside the firewall, and fail in the market, because they're not attending the watering holes, that their best partners or best partner prospects are at. Yeah,

Jared Fuller  25:42
and that's what I want to double click on one more time, because this is the position I found myself in and a lot of my peers had as well, is we weren't thinking we needed to build the ecosystem, we were thinking, how do we attack the existing ones? Right? So from a channel manager, partner manager perspective, you know, we were figuring that out, and, you know, b2b SaaS land. Today, though, do you have any role models or examples of, hey, this company is doing a good job at partnering with it going to the community not creating their own per se? Because I would say, I was having this debate with Alan the other day. And I was like, Look, before you try to build an ecosystem strategy, you should try to like win in someone else's ecosystem, I think is like a growing company. That's where you should start. And there's a lot of gaps there for growing companies right now. How can I even go attack a community or an existing ecosystem in when there anything that you might want to comment on that, Jay, that you've seen, or? Because I just I haven't seen it proliferate through the market and the function yet?

Jay McBain  26:47
Yeah, so I actually lived through it, you know, about 12 years ago, I left a Fortune company, Lenovo, and joined a 200 person company in upstate New York called AutoTask. And we made, you know, pretty strategic decisions at the time for that next element of growth that says, you know, we're not going to go and build out and darkened the skies with salespeople, we're not going to go out and create a whole big marketing group, we're going to go all in on community community is going to be our go to market, it's going to be our route to market. And we're going to do it at the grassroots, because we really can't afford to do anything bigger. We're not running a Superbowl ad on Sunday for $14 million, having a little QR code bounce around. So we're out of the League of many of our competitors. So we're going to do it at the grassroots. 10 years later, the company went public at 4.2 billion as data, so that was a community approach within a decade, to turn a $20 million company, a little bit of private equity help into a $4 billion company, community only. And there's other companies like they compete with like ConnectWise is a community only company that's really at a billion and a half. I could name off dozens of security companies now that are doing it successful, like threat lockers and other things. So there are a lot of successes and instead of talking about the big companies like Salesforce that have billions of dollars to spend on community, let's talk about the companies that have hundreds of dollars. And you know, trying to buy at the hotel lobby bar, you know, beers for their customers.

Jared Fuller  28:19
Right. I think the the an example of that would be like HubSpot inbound community has fragmented into hundreds of individual kind of communities, so to speak. And the job for someone that's wanting to partner with HubSpot is not to go and try to own in like, participate in hub spots. community because HubSpot has tons of decentralized ones now, I mean, Microsoft, Salesforce, everyone's kind of experiencing this, that how to community strategies, they've become fragmented. And you just got to live where you're where your customers live in those semi autonomous communities, because you've also said that they can be broken down in a bunch of different ways. I mean, you know, vertical geo delivery models, like micro community, like, these are just the watering holes, I think that's a great way I'm gonna that's like one of these things that I'll just repeat forever. Now, J like forever.

Jay McBain  29:08
I mean, if you look at the history, I mean, look at SAP, you know, been around a long, long time, there's been this SAP user group that's pretty famous, you know, splintered off into subgroups and stuff, and try to build a hierarchy around it. Very, very difficult. Because there's human behavior and psychology that comes in here. We want to be with other humans. But it gets to a point where it becomes too big. And so when I talked about in the blog, I just wrote intersections. If you start at a security intersection, you're 20 years ago, you're in a small group of people that are trying to think this way in a, you know, big product area, well, then it gets too big. Well, let's do security in North America. Well, then let's do security in North America to this type of buyer. Let's now add in a midsize clinic. Well, now that's it. So you got to keep the community in a possible shape. I sat on the board of the largest IT Association CompTIA and this was the point with communities, it starts to splinter when you get to a certain size, and they were aware of that, but what ended up happening is it became unmanageable. Because you had communities that were based on a business model, like manage services, you had communities based on a product like Cloud or mobility. You had communities based on geography, the Canadian crew, the UK, the Australia crew, and then you had communities based on a movement D, and I women in the channel, you know, things like that. So guess what happened at the event, I walk in, and I'm a woman in the channel, that is a managed service provider working in Australia, that is driving security or mobility, which attend which one do I attend? Now I have to attend four communities, each covering, you know, 25% of my world. That's four hours of my time, and I'm only getting 25% value out of each one. If you could put together a community of Australian women in technology that are driving security, that now becomes more important that intersections of those things. So there's a natural build, and there's a platform opportunity here to create those communities at scale. It's happening in the marketplace world, which is settling down on what a sustainable marketplace looks like. And how many of them there will be. And it's happening in communities is how many intersections keeps it at that human level? And what are the numbers? And how would you ever manage all of the splinter groups like HubSpot is actually doing a pretty good job of and Scott Brinker and others that are they're kind of running, the alliances and everything else. So they're handling it so far. But they're also taking a very open approach. They're not trying to build it into a hierarchy. They're not building a reporting chain. They're letting it run like an ecosystem.

Jared Fuller  31:54
It's you, I feel like you read my mind because where I was going to go from communities to marketplaces, there's this interesting intersect. And I feel like similarities where communities have been around marketplaces have been around but I'm seeing in the decade of ecosystem to kind of like reframe our Convo and center us. The the biggest changes I've seen so far, I think communities certainly something this year that I've seen accelerate more than ever. And then the other one is marketplaces. So if you look at, you know, funding, because that's something you track technology companies, if you look at new entrants, and I wonder if there's a way I don't you probably do know, if there's a way to track GMV through marketplaces and b2b. Is anyone doing that yet, Jay? Or is that something that we might see soon?

Jay McBain  32:39
Well, we're doing it through survey at this point, because none of the big marketplaces will disclose right numbers at that level, like, you look at the earnings of AWS, Microsoft, and they're actually not reporting their marketplace revenue yet, because it causes a little bit of channel conflict. Right now, Microsoft had always sold over 90% of their business channel, they're not really want to jump up and down and say 30% of customers are not buying in a marketplace. But we not only ask customers, how much and where they spend it in priorities and journeys type of surveys. But the other thing we ask is about behavior, and psychology. And, you know, we look at millennials, we look at Generation Z, we look at the impacts of the pandemic, we look at the business models, you know, 76% of companies going through this business model change in five years, subscription, consumption, usage based value based product led growth, all of these new models lean themselves into a Digital Point of Sale. When I buy seven things, I want to procure and provision in the same place, I'll probably do it in the place, which is the base layer, I'm spending a million dollars on Salesforce, all acquire the next six layers there. If I happen to be acquiring that base layer in infrastructure, I might start over in AWS, but I'm going to extinguish my credits that way, the CFO likes it, the buyer loves it, vendors like it. And partners are starting to take advantage that all these big marketplaces are building ecosystem friendly. It's kind of the future PRM running it through a marketplace. And now on the marketplace side, we understand the super winners now. I predicted 20 marketplaces are going to close about 80% of the marketplace opportunity, which I said will be about a third of 7 trillion by the end of the decade. We're talking trillions here. But the big 20 are going to capture most of it. We now know out of the hundreds of market place development companies for niche marketplaces, if I want to do those intersections. I know now that you know miracle raise 555 million app direct keeps raising hundreds. We know that Vin data up in Saskatoon, Canada raised 119 million. We know Ingram acquired cloud blue. So we're starting to get and we're doing research that actually ranks these companies on their ability to run an ecosystem on their ability to do other feature function, ecommerce and other stuff in the marketplace. And those are, you know, four of the leading markets. Replace firms that are probably going to drive 80% of the other 20%. Again, we're still talking a trillion. So that's a big, big number. And that's why these companies are getting billion dollar, you know, checks written last year, and why companies like tackle.io, which sits in the middle of all that is also raising incredible running not only incredible money, but they're raising it from Andreessen, Salesforce ventures, HubSpot ventures, Okta. I mean, the group of investors that are potential acquirers are already picking favorites. And they're picking winners. And much like early in the decade when there was about 150, marketing automation companies, when we started to see the Wall Street money come in, that allowed us to pick the winners because, you know, when you get to hire an unlimited amount of people and run an unlimited amount of Superbowl ads, you know, it's very tough. Everybody else has to kind of become a player in your ecosystem. And not compete direct.

Jared Fuller  35:58
I, I wonder if this cycle like Isaac, you brought this up, kind of like this, you know, bundling and unbundling centralization, decentralization cycles, these cyclical things that happen in business and just as humans in society, if there's an analogy here, Jay, or if you see something similar, Shopify didn't make sense to me as a company, when Amazon was just taking off in the early early days, it's like, never direct to consumer like that became a thing Shopify exploded, they armed the rebels, so to speak. So it was Amazon versus Shopify, its 1000s of independent stores versus the largest store in the world. And in b2b, we might be seeing maybe something similar with these infrastructure companies blossoming where you have, you know, the, the, I guess, role specific kind of functions, so like app app exchange with Salesforce, right, AWS for the tech side, and their marketplace. Do you think that we are going to see, I mean, I guess app direct, and some of these players are indicating that that more and more companies will participate in their partners, marketplaces with offers and things like that. And that earlier, companies will also try to compete on the marketplace level, since they already have active buyers in their, in their apps in their portals. Is that something that Amazon to Shopify? Were we gonna see AWS Marketplace, App Exchange marketplace against the masses so to speak? Or is there too much lock in with that procurement value?

Jay McBain  37:25
So I mean, the key is when you talk about sectors and segments in the market, never bet against SMB. These are the entrepreneurs that drive the world economy. You know, there are 10s of millions of SMBs that are really smart entrepreneurs, I think a couple of them are on this phone here on this call here. So the fact of the matter is, Shopify took a different angle, the enemy of your enemy is your friend. And as Amazon, you know, goes and builds out flower capabilities, it to deliver flowers, guess who, all the flower shops in the strip mall, from your house partner with somebody to defeat that experience, or at least compete against it. And so on the marketplace side, now, it's not Amazon, it's AWS. So I've got a really good community of users, I've got a great platform that has some great last mile opportunities to innovate in and around and add value and create network effects. And so there's a wonderful sub platform, I'm never gonna get as big as AWS. But I don't want to just have all my customers go acquire my stuff as layer two through seven on an AWS platform, I can earn that initial layer the cake, the seven layer cake, so I'm going to build my platform. And now like CRM, and like marketing automation, we've now crossed the chasm where you can't build your own marketplace. You know, yeah, you can build the wireframes, you can put in some WordPress ecommerce, you can't you know why it's not the technology, it's actually the catalog. So I want to make my catalog useful. In other words, I want to do the seven layers, which means I have to pull in AWS and Microsoft and you know, 10s of 1000s of things on the catalog to make the marketplace useful for my customer, to pave the rest of the cake. They're not going to go to seven marketplaces and buy seven different things. The point is, they're going to go to the place that has that long tail that solves everything with one click. And so now, these app directs and miracles, why they're getting so much attention is they're on this massive phase of building out their catalog. Every one of the 175,000 ISPs that I talked to, ought to be in conversations right now with AP direct, because that's a really easy road to get to that midsize clinic to get to that small bank in Canada to get to that pharmaceutical company in Germany, because I know that all of those niche marketplaces are going to be run by four or five companies. That's the difference here and that's the same thing. We talked about communities. That's the level of consolidation that's happening. in the marketplace today, and that's why both of these stories are so exciting. App direct is the synonym here to Shopify. And app direct will take a company and enable them to go stand up against AWS or Microsoft or AppExchange, or even HubSpot, or one of these big 20s.

Jared Fuller  40:19
I'm, I'm increasingly interested in this topic and how you laid it out. I think everyone can expect maybe a little bit more from me on this topic in the future, I have something in the works that I haven't announced yet on the marketplace side. But I'm very intrigued by this and your take on it, Jay. Maybe, maybe final point and a couple plugs before we wrap up, folks, because I'm sitting here like, you should have seen Isaac, if you're not watching us on YouTube. Isaac and I both we both had our hands on our chin just like staring at Jay as intently as we've ever listened to anyone. So we're geeking out here with you, too.

Isaac Morehouse  40:52
Let me let me throw a final. Yeah, let me throw you can, you can make some plugs. But I'd love to know, Jay, when you look ahead, the when this decade comes to a close, this could be this could be crazy, you don't have to, we're not going to hold you to it. But give us what's a dark horse company that nobody's talking about now that you think at the end of the decade will be one of the one of the big winners,

Jay McBain  41:15
what I would do if you're thinking about your 401k, if you're thinking about being that early HubSpot investor, is squarely go into. And you can do this because I published the tech stack in the ecosystem. If first of all, you believe this is the decade of the ecosystem. And second, if you believe that I've put together the most comprehensive list of logos that are competing for this decade, the next thing I would do is last year's list of 183, I'd run it through LinkedIn, I'd mark every company that's growing by triple digits, I'd walk those companies over into CrunchBase. And figure out how many of those employees were brought by just recent investment versus revenue growth. But you can you can multiply each one of those employees by probably 200, or 250 grand if you want to look at revenue instead. But the fact of the matter is, there's 10 companies that I'm really excited about. And they're on an absolute rocket ship. And when I talked to private equity, and when we watch companies like Andreessen and OpenView, and, and Bain and some of these companies starting to write checks that earlier VCs would be writing in the past, and ready to write $100 million, check to, you know, 60 people in a garage. That's when I start to get excited. And, you know, we know that AWS and we can all watch Amazon stock price, they're a multi trillion dollar company, we can all watch this growth, we've missed the curve. Now for app direct and everything else. I mean, we know that they're going to be successful, it could be a massive acquisition by Shopify or somebody someday, but you know, right now, we know that they're going to be a multi billion dollar company. The next thing, I'm looking at the adjacencies, when I brought up tackle, for example, or when I bring up a crossbeam, or when I bring up a partner stack, or you know, somebody doing something on the, you know, side of that that may only have still a couple 100 people, that might be a multi billion dollar IPO, I start to think of myself like, what are they actually doing? And does it apply? The one story is, you know, when I had a startup, it took me six months to get on the AppExchange, I had to take some of my best product people and bring them off our product to get on AppExchange tackle will get me on 20 marketplaces in the future, and not take my people off their jobs. That seems like a really valuable thing. And now the market is saying that that's valuable. And that company is is going to go so those are the companies. So who's competing against tackle, who's competing against crossbeam, who's competing against partner stack, who and by the way, I could give you three other names in each of those categories. That's who I'm starting to get excited about.

Jared Fuller  43:47
It's going back to some of the things we've talked about as it does feel like a movement. It's exciting. Jay, thank you for your contributions and for hopping in again before, before we wrap folks, I want to remind everyone, we're going to be in person, I've convinced Isaac to go SAS connect April 26 27th to 2728 always forget, SAS connects. It's the first time in a couple years due to pandemic. I'm super excited, we're gonna be there we'll have a partner up table. So you can register and soon you're actually gave us a discount code. So partner up you get 50 bucks off, come swing by the booth and we'll just say hi, you know, do a quick recording or something. We'll produce some content there. It'll be fun. I miss certainly missed that. So we'll see you folks out there. And then if you want a little bit of partnerships, love every day in your inbox get your PhD with partner hacker daily but otherwise J this was amazing. Next, next big event or something that you're doing speaking out what what should we be paying attention to for folks that are like Oh, I'm gonna go follow Jay on LinkedIn now. If they weren't already, what next big event you got coming up that we should pay attention to

Jay McBain  44:53
always think about watering holes, you know the association of strategic alliances professional, the channel partners events, you know, in telco and managed services with 6000 people in Vegas, you think about the b2b marketing exchange, you think. So think about the criss crossing of this decade of the ecosystem. And now all the people that are involved, those are the intersections that we'll want to make sure that we're telling this story in. And that's how you could follow my travel is making sure I make a very linear decisions later this year, on how to make sure that all of the people, the matrix folks, the marketing, the sales, the customer success, the product folks, everyone who should be thinking about the decade of the ecosystem has a voice. And I think that everyone out there, you know, running their own companies or thinking about their own companies should be thinking about those same intersections.

Jared Fuller  45:47
I could not agree more and I think we're delighted to have you speaking at some of those events that are preaching to the choir, but maybe challenging marketing and sales. Marketing. We'll see you on the road part of the intersection. So we'll see you all next time.

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