What is up PartnerUp!? Jared here!
Sorry, we were two days late on the pod this week, BUT, it’s for good reason! We had to make sure inrevenue.capital was LIVE – dropping hot and exclusive right here on PartnerUp.
Now that the cat is out of the bag, I was delighted to welcome my good friend, the magnate of MarTech, Justin Gray to the podcast. I had to celebrate the launch of the first VC fund EVER dedicated to Partner Led Growth as a core thesis! In Revenue Capital baby, and partners Justin and Josh are no joke.
Not only did we dive into why one of the most seasoned partner practitioners (we’re talking about multiple THOUSANDS of partner led implementations of SaaS by teams under Justin) launched a fund, but also one specifically with the partner led thesis.
You’re going to love his takes.
Not to mention, we shared some of my biggest learnings Justin taught me on the frontline of partnering. Packed Services. And it changed how I thought about partner revenue and customer success, forever.
Do. Not. Miss. This. One.
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Full transcript:
Jared Fuller 0:00
Hey what is up, partner up, we're back. Holy cow, it has been an wild start to 2023. So we're in February now. It just be on the podcast today I finally let Isaac take a day off. It's the first thing the first time he's actually had like a formal vacation since we started working together. But I'm joined by a good friend here. He's joined us on a couple of the past events at PL X. And at the partner kickoff event. JUSTIN GRAY, JUSTIN GRAY. What's up? Welcome to partner up.
Justin Gray 0:40
Hey, man, good to see you again.
Jared Fuller 0:41
Yeah, So Justin, Justin's taught me a lot about partnering with agencies and service providers, like tactically like on the ground, like, there's a lot of lessons that we're going to unpack today probably around that, but just an hour catching up before the show, Justin, you're telling me you're not just doing that anymore. You're, you're kind of quasi announcing on the show talking about all of that hard work that goes into partnering with tech companies and being a service provider, you still think there's so much opportunity in here that you've launched a
Justin Gray 1:15
fund? Yeah, certainly in there's a bit to unpack, certainly even in that approach and what we're doing so as you mentioned, in December, I stepped out of my, you know, operator role in ship paradigm, which was the ultimate roll up from lead MD A decade plus marketing operations and go to market strategy
Jared Fuller 1:36
1000s of tech implementations, right, 1000s and 1000s
Justin Gray 1:40
of over over 4000 Wow, you know, primarily got our start within marketing automation. Marketo specifically, but then kind of grew to encompass all that sales and marketing tech has has become across the last, you know, decade plus, right. But so, you know, kind of did the integration within those organizations. And my eyes have been very much focused on what I think is a huge disparity around the necessary ingredients for growth within an organization. So I know we'll have talking about that from a partnership aspect. But I also think that it applies to how we fund and how we, you know, try to amplify those organizations today. So we are starting our own fund and not in doing so through an operator lens that I don't think is necessarily been attempted in the past, right. So you see a lot of the growth of all these kinds of operator backed funds and so on. But really going a step further into that by stepping in from the day to day from the ground level, from the tactical element within the organizations that we invest in bringing that go to market expertise. And certainly, which is the next rung partner led growth, which I think is you know, been the absolute success button that I've always pulled within my, my own businesses, but then also what we helped a lot of organizations adopt from a go to market standpoint, as well.
Jared Fuller 3:10
So you're doing this. It's you and you got a couple of people involved as well. You got Josh Wagner, who we also had them partner up before so I'm surprised it's funny I had Josh on before you but because Josh was so great to cosell with like he was so great to cosell with because it was like he knew whatever he was getting a bad rep, like a bad rep from you know, the tech provider. Sure. It was like he would teach them the nicest lessons. Like you know, he could come in and just destroy them. And he would teach them a nice lesson. So you started it, you brought Josh, so you got the band back together. So you have some incredible operators yourself from an executive go to market standpoint, but even frontline, like Josh has a heck of a leader and coach on that part, right?
Justin Gray 3:49
Yeah, so yeah, Josh and I are the are the primary managing partners in the business. But the interesting thing is, we've kind of got this, you know, ever, in fact, I just got off a call with one prior to top and on here, this ever expanding circle of, of, you know, what will initially be contracted operating partners, but then we'll start to kind of bring those folks into the business as well. So, you know, tech implementation to process and revenue operations to go to market strategy, and really anything that surrounds go to market so we've got just a plethora of relationships and folks that are excited to get started and, and really kind of parachute into these organizations and stimulate their go to market. Well,
Jared Fuller 4:28
I think, in terms of the thesis, this is this is really incredible. If we're in the era of ecosystems, I believe Justin, I've had my finger on the pulse of the market for a long time. This is the first fund to be created with that as a primary thesis, which I'm super beat Isaac and I to it, I think that we're toying around with this idea or like maybe we should go do this, you know?
Justin Gray 4:48
Well, you know, and it really does come down to what is that? You know, and we're also working on and soon releasing a book on this topic, but what is that cheat code and you know, cheek But I think it's a bad rap in terms of the word cheat. But what is that that lever that you can pull? That's truly going to be a, you know, one plus one equals 10 type situation. And I see partner ecosystems when they're run properly, as as absolutely that cheat code
Jared Fuller 5:16
100%. So, tell us, tell us real quick, and then we'll get into some more stories were. So JUSTIN GRAY on LinkedIn, and then gonna be launching the site, what's the name of the fund? And where can we find you just because I know there's some, there are some budding partner tech entrepreneurs out there and ecosystem tech entrepreneurs that, you know, eventually probably want to connect with you read your content and have a VC fund that's on our side. Let's go people. This is exciting.
Justin Gray 5:42
Yeah. So the firm is called in revenue capital, you can reach us on in revenue dot capital site, we'll be launching here in the next week or so. And as I mentioned, we're also putting the book out, you can sign up on that site to get early access to the first chapter of of what we're putting together there. So definitely check us out, reach out, we're doing a ton of just connection and conversation out there in the space, predominantly focused on exactly what we're talking about here today, partner led growth.
Jared Fuller 6:11
Amazing, amazing. So I know it's been hard out in the market right now. I wanted to bring Justin on, this isn't a paid thing, by the way. So if it's felt like a paid one, it's just because I'm really legitimately that excited to have a VC that's
Justin Gray 6:21
you haven't hit me up yet. So
Jared Fuller 6:24
the VC that's on this side of the table, and is has the operator partner experience that Justin has, and Josh and the team at didn't revenue capital, and it's funny, that you named in revenue capital, because that's how you always signed off all your emails, Justin?
Justin Gray 6:37
That is correct. If you know, for me in the last, you know, five, six years, that's, that's been the side off. I mean, ultimately, that is that it's right in line with our thesis, right? Like, how do we, you know, we're looking for organizations that, you know, have revenue, they're, they have great product market fit, they've got a cohort of raving fans, but they need to scale that they need to, you know, really put the afterburners on and, and amplify that revenue motion. And again, I think, you know, what we'll talk about here today is is the secret sauce and doing exactly that?
Jared Fuller 7:07
Well, I think you've really, you really taught me a lot about what it means to drive revenue with your ecosystem partners. If you are, quote, unquote, the tech parent, meaning you have more in revenue, or you have more in headcount than let's say, your ecosystem of service or solution partners. And I've been working on something that's still in public yet, but I'm really excited about. But the underlying current between this is like, Look, our job right now in the partnerships landscape, is to drive revenue together, like all orgs, all eyes are on revenue. Anything that isn't driving revenue is getting cut across the board, and driving revenue together. It what's what's so interesting about this concept of like, if you're in the partnership space, you're in the partner tech space. So many people haven't done the job that their customers are trying to do. What do I mean by that? If you're in the partner tech space, you're in a partnerships function, how many people are you working with inside of your company? Let's say you sell the CIOs. Let's say you sell to sales leaders, you sell the marketers, you haven't really, so much of the many of the people on your team have not done the job that your customer is trying to do. And in order to drive revenue together, you have to have the people who have who has done the job that your customers are trying to do. And I think in a lot of ways, that's what makes it very simple. Something very complex, very simple is how are we driving revenue with people who have done the thing that we're promising our customers, you know, that they can do? Sure, are these service providers, or these technology partners that provide a capability that does change something? I mean, is it strategy is IT consulting? And I think in a lot of ways, just let's let's go, let's go down to like some, maybe some foundational levels and some of our backstory. I remember you came out to vote. I don't know, if you were already in Boston, you must have already been in Boston for something your conference. And you came by the drift headquarters. And I remember, you met with David cansail, CEO, drift and me. And I remember I was dressed probably something like this, you were dressed to the nines suited up DC looking, you know, like he was, you know, a Boston street bum bum as well. And he goes, DC looks at me, he goes, Oh, that guy looks serious. This is a real business.
Justin Gray 9:28
We fooled you.
Jared Fuller 9:31
Because this was a real business meeting. And I remember, you know, saying like, Hey, we're going to make something great here. It's going to be tough. It's going to be hard. But some of the lessons that I learned over the course of that kind of multi year partnership was tying this point back together. I don't think that drift really knew fundamentally, how to change the website into this concierge experience driving people to the next phase. Like I'll give you the perfect example. I was trying to figure that out with you I write with your team, like I was trying to get into the implementations, I was trying to help you build a service model. And you kept on saying like, Guys, you have to standardize a, b, and c and be able to make these things happen. Because otherwise, how am I going to make? How am I going to productize? It? How am I going to make money off of it? And so many companies just think they can pass a deal to the partners and go, Hey, look, you know, work on this, okay? You'll figure out what all of our customer success means. Let's unpack that. Out of that paradox, that partner paradox where a company really doesn't have their delivery model, their service model figured out where it's like, Hey, here's the exact customer outcomes in the packaging around that. And they're trying to partner with you as a service provider.
Justin Gray 10:48
Yeah, so I think, yeah, that concept that you mentioned, which we used to frame is speaking CMO, right? Like, how do you really understand what one of your customer organizations is trying to do, generally, and then how your solution software, whatever it happens to be, fits into that mix, and, and can amplify, you know, their returns their growth, so on, so forth. And I think the underlying aspect that is really fundamental to doing that successfully, and that a lot of tech partners missed the boat on is truly sitting down and mapping out a maturity curve for their customers on that platform, but more probably, more importantly, within the discipline that they're supporting. So if we're talking about, you know, conversational, you know, a conversational approach to a website, right. There, there is that low hanging fruit where you plug in, you know, a chat client, let's generalize it. And then you've got, you know, those couple little steps to getting live and having your first playbook available there. And, frankly, that, you know, you could argue that that's the maturity curve, right? Yeah, we're up and we're enabled on the tool, someone's using it, they're seeing some value for it. But so many of those maturity curves, and that outlook is framed by the software providers purview, you know, how do we get them live on the tool, feeling good about what they're paying us on a monthly basis? And we don't really challenge them to go further with that we don't really look at what is that, you know, KPI that you're trying to drive? How do we ensure that the entire team knows what that KPI is, which I think is one of the most fundamental things that needs to ship and software is, you know, measuring ourselves by the KPIs of our clients. So you know,
Jared Fuller 12:38
lots of vendor, lots of vendor language, vendor milestones vendor think, but not customer milestones, customer outcomes, customer think,
Justin Gray 12:46
right. And you're seeing the results of that in a big way right now with you know, what we're terming as a market shift or potential recession, right? Everyone's looking at their their p&l, and they're cutting costs, they're not cutting, you know, investments, they're not cutting items that are they're generating, unbelievable returns for them. And that's all because those providers didn't fundamentally understand what did, why did they sign why do they sign on the dotted line? What were they trying to generate? And then how do we challenge them to keep going further, you know, we're within that that maturity curve. And so how do we ensure that we're measuring ourselves on that that client? KPI dashboard, but at the same time, how do we also challenge the client? How do we get them to think further and I think that's where, you know, you mentioned drift, potentially has or has so much potential to go deeper with with their clients, because everyone I talked to has a couple playbooks up and running, they're seeing good results with that, but they're not pushing that envelope. And I think that's what we're trying to get you guys to focus on, you know, at the end, and then shift and drift. It's great, we've got these, these, you know, fundamental milestones that we need to achieve. But what's next? And how do we build that into a service that can be delivered with consistency and with quality, both internally, as well as externally, as you start to ebb and flow and, and kind of scale those services teams, like, as a services provider, we know that everyone is going to do a portion of their, their enablement, their, their lawn services, their their customer success. But those are also very difficult teams to scale. And they're, you know, seasonal, or they have, you know, a lot of flow at the end of the quarter. And that's difficult to staff and, and really ensure that we've got the degree of quality that we need to support our customers. So we can be that, that overflow for you. And one of the first things that we want to do is, again, understand that maturity curve, where do you want to get customers to? And how are we going to ensure that what we're doing is consistent with what you're doing? And then hey, take the Pepsi Challenge with me. If I can generate higher NPS if I can generate higher results. Give me more work at that point. But I want to be able to develop that that even playing field so that we're we know everything is being measured by the same yardstick?
Jared Fuller 15:02
Yeah, so we're in the beginning, I wanted to jump right into accounts, because obviously, there's pressure on that just like every partner person. What we ended up doing is exactly what you said, we co authored and CO published, the conversation marketing Maturity Model, or the revenue acceleration, maturity model, whatever we branded it as. And we had these distinct five phases. And we built out the pages say, the intellectual framework, but at least the the conceptual framework for what this maturity curve looks like. And that gave us I think, a much better starting point, because then our marketing team started to use that language, our customer success team started to use that language. It obviously built brand X, you know, attached for lead MD in terms of our ecosystem. And that was co marketing, right? So we went out, we talked about it, it provided long tail value that always had lead MDS branding on it. And in a lot of ways, that's where some partnership stuff should talk, like, hey, let's fight this intellectual battle out in public. Isaac, you know, counterpart and out here today, he likes to call it learning out loud. It's kind of what we did. We're private meetings, but we went and said, Hey, here's what we think this looks like.
Justin Gray 16:10
And, you know, service providers always looking at, you know, I called the book end, what are the services that I provide that are going to ready someone for your services? And then once I've got them live on that piece of technology, what am I going to try to do for them in that kind of post environment? Right. And that, that, you know, that intellectual piece that that understanding is also helpful internally? You know, whether it's a service provider software, you know, all all sides of the equation? How are we thinking about those attachment services? What are we? What are we going to do next, for this client that, again, is going to provide value and us build trust in us, both individually and jointly as a partnership, so that we can see that roadmap, you know, some services firms are building, you know, internal buy in on a partnership as well. So I think one of the most fundamental things, you know, through partnership is putting yourself in the seat of the client, and also putting yourself in the seat of the partner, how am I going to provide value to them? And then obviously, that value is going to come back in spades.
Jared Fuller 17:10
Right, 100%. The next thing I want to I want to hop into was, you know, we, I think we did a handful of deals back and forth, you know, opportunistically kind of managed trying to figure it out, here and there for a while, in fact, I I won't go down that rabbit hole, what I wanted to get to was the second that we started talking about package services. There's, that was such an interesting lesson on how you built that with Marketo. And then how we were trying to build that drift, a professional services organization. This has been like one of my biggest insights was like, Okay, we're building this professional services organization. And there's not a single person in this PSR, who's ever been a CMO. So how, like, right, and then I go, and I talked to so many PS and CS leaders, and I'm like, no one on your entire team has ever done the job that you think your software does for that client. Sure. And it's, it's so hard. So we're some shake up and some headcount and whatever, and I finally had a CCO that was like, open to like, Sure, let's, let's bring in a partner, we need to capacity, right? Sure, well, we'll take those deals, like throw them over to us, you actually were like, hey, no, no, no. Stop back. There was a whole bunch that went into that conversation with me. And maybe let's go to the point where I was like, okay, Justin, you said you wanted to do these packaged services kind of from the beginning? Now we're open to it. Let's do it. You're like, wait, no, there's a way to do this the right way. But start the combo there.
Justin Gray 18:40
Yeah, I mean, again, I think it all comes back to the relationship that we build with our client, it has to be rooted in result, it has to be rooted in quality. Right? And so how do we in that parlays over into the partner as well? How do I ensure that what I'm going to do is in line with what you want to have done, and is up to that standard, and frankly, I want to exceed that standard. So, you know, we started something called packaged services, I think around 2015, and it was really in response to what was happening within Marketo at the time, because obviously, like a lot of early stage software organizations, it's, you know, figured out in the early days, what's the client need? Let's, let's throw some smart people on it, and throw some
Jared Fuller 19:24
CSMs at it, and it's helping it's quote unquote, helping the customer but it's, it's different across 10 CSMs.
Justin Gray 19:30
Yeah, absolutely. So you know, that that motion is different, the outputs are different, the results of the client are different. And so you know, when they were when we were initially talking with them about, you know, doing outsource or outdoor services with your ventually, we did about 35% You know, what, and more kind of was still under their own flag, about 35% of their implementation. So if you bought Marketo in 2015, through what 2019 A pretty good propensity that those would ultimately come to us. and trying to figure out how we could deal with that type of volume. And really defined the partnership around the customer and their needs. You know, we developed this package services concept, which was not too different than what we did in the early days of starting, you know, a marketing ops or a marketing automation consultancy, because no one knew what an implementation of Marketo look like, in Oh, 920 10. It was just you got the opinionation of whoever was in that seat, get a little bit of enablement. And then largely, you're kind of left on your own at that point. And so, you know, we need to define, alright, lead scoring, lead nurturing, lifecycle and process, here's your different campaign frameworks, we had to define what went into those implementations. And so, you know, back in those days, we do kind of small, medium, large, very much the software approach, right, you know, which one meets with your needs. And Alright, here's how I'm going to train my, my consultants internally, on how to perform those items. So not only defining what the outputs were, but really defining what those tasks, frankly, what are those milestones and tasks that go into delivering that. And that's how we created quality in what was a very immature hiring pool at that point, because not that many people had run marketing automation back in the day, even right, you're largely hiring folks that have a resume that looks like logos, right? Oh, you did that over it? You know, ServiceNow and snowflake, great, you know, you must be great, let's hire you. There's not a lot of curriculum. And in fact, you can't go to school for that still. So by really productizing and packaging those services, we're able to create that understanding that learning internally, the consistency with our client, really smoothed out the sales process, because they knew exactly what they were getting. And even some of the frameworks by which we were delivering those services. But then it translated really well to what we're talking about, you know, how do we look at that beyond? Obviously, that marketing automation lens, and into different solutions, like a drift or, or a seismic or any of the other groups that we did this, this motion for? How do we, you know, again, define what success looks like? And then how do we create a roadmap to get there.
Jared Fuller 22:12
What's so interesting about this is, it really shifted my perspective, that successful solution or service or agency partnerships, whatever, by name, whatever name, you want to call them, I think you hit the nail on the head with package services. Like if you have a customer success organization, and your software requires, let's say change management and an ops and process that might be orchestrated across the data. So across a map or a CRM, or some platform, there, there is a need for some professional services, like most software companies have that need. And if your software can accomplish something great, then most companies should and are willing to pay for it if you're running a halfway decent process. And what I learned is about when a company hits that phase, or you're launching a new product, you know, if you're a big company, and it's a new SKU, and it's a new thing, new sales, motion, new marketing, new everything, you're running the same issue. So it doesn't matter if you're a couple 100 employees like it was at the time or a few 1000 Is this is that the CS team and PS team is going to be looking at it through one primary lens, which is the product lens. They're really looking at it through the product lens, and then they say they're listening to the customer. Well, I'm listening to what my customer is telling me that they need. And your customer didn't buy your software to be told what to do by CSMs that haven't done their job. So by bringing in that partner from Jump Street, like Justin, like ship, paradigm, lead MD or whoever it is, and going, Hey, we want to productize or package some services. So that way we have the capacity it when this works to sell it and just send it directly to you and keep you know, maybe just enough margin to pay the A like that seems to me to be like the right answer. Would you agree with that real quick? Justin, like software company keeps just enough margin to pay the that's it?
Justin Gray 24:02
Oh, from the services angle? Yeah, absolutely. Like you have to incentivize people.
Jared Fuller 24:06
Right? So keep just enough to pay the what what's the benefit? Well, you're not carrying the capex, right? From your CFO perspective of having that headcount on staff. So it's like, yeah, look, it's not a net profit center. It shouldn't be it's a net Success Center.
Justin Gray 24:20
But more so to your point, right? Like, if you're, if you're staffing a reasonably decent services firm, right? These folks should be living and breathing, that that customer, headspace, right, the CMO, the VP of demand, whoever it happens to be like, and you can't afford to do that, within the software organization, you can think, you know, afford to incubate a completely different business. Like our goal is to be constantly learning and understanding what the marketer is facing. That's our obsession, right? And so you're bringing that obsession to the brand and the in the success of a software platform. So I think There's so much value in, in working with, you know, not only a services provider, but one that can really provide that, that customer lens.
Jared Fuller 25:08
Absolutely, and they should be done together. And what I ended up creating, and I released partner kickoff.com. So like, feel free to check one out if you if y'all haven't seen my partner ecosystem roadmap, like Justin has his fingerprints all over this as I realized, like, Okay, we need this, this partnerships, person that's really about activation and onboarding, whatever that's called. But then we need this like delivery person that's sitting on the Proserv team, it's part of their objective to bring partners in and get their input on our packaging for Proserv. Work with them collaboratively, and then do like, I don't know if this is industry speak or not? Justin, when we were calling ride alongs? Is that something other people use?
Justin Gray 25:49
Some derivative of that? Sure.
Jared Fuller 25:51
Right. So like, what did we end up doing? It was like, Okay, we kind of conceptual we had this maturity model, we are committed to like doing, you know, 10, you know, deals that we do with you, right, so like, there was some, you know, financial commitment from both parties, right, you had to staff it, we had to commit the budget, etc. And then it was like, Okay, let's do some ride alongs. Well, what did that mean? It was like, well, we're gonna have RPS and ces team. And then we're going to have our partners team going through an implementation at the same time. And maybe the first one, our CSM PS team was leading, because they knew the software better, maybe you know, the client, what they need better. And eventually, that inverts where the partner is kind of like taking the lead on all of it. And I was like, I feel like our new CCO barge, and our head of success and all that they learn more about our customers and the job to be done from our customers throughout that process than they could have anywhere else by going through that together driving those outcomes together with you.
Justin Gray 26:51
Yeah, I think there's a couple real hot buttons there. And I'll try not to go too far down the rabbit hole. But you know, on that explicitly, right? I so many, what's the typical playbook for creating a partner program, like, at some point in their certification always rears its head, right? Like, how do we create, you know, that that agreed upon level of proficiency. And that certification is always something devoid of actual client work, you know, that shadowing aspect that right along aspect, it's always like, watch these videos and fill out this multiple choice exam. And sometimes there's the shadowing element. But I mean, you're gonna find out far more about your platform, in the throes of an actual real world situation
Jared Fuller 27:35
implementation, like we need a real customer accounts we decided to go into right away.
Justin Gray 27:39
Yeah, totally. And you're gonna use not only the client's needs, but how you know, your software reacts to those needs, what you need to customize, and then use that as a training ground in the proving ground for for onboarding new staff, new partners, so on and so forth. It's just such a critical aspect. You mentioned something a bit ago in terms of measuring clients through the software lens, right. And this is my biggest diatribe on on SAS today, which is that, you know, we use usage as a proxy for success, which is just absolutely insane, like not to take anything away from a lot of the, you know, great CS analytics platforms out there. They're, they're one signal, but they're not the results based signal. And so I think, again, you have to understand, you know, looking through that cmo lens, or that, you know, whoever it happens to be on the, on the executive side, the person stroking the check at the end of the day, what fundamentally did they want to achieve and there's also an art to doing that. Because as you have conversations for from within the organization, you're gonna get folks that are saying, Yeah, I want to be more efficient. I want to cut out this this manual process, you know, right now efficiency and manual process, a lot of those solutions are getting axed, right, you're really looking for who's who's driving revenue for us who's who's facilitating growth, whose division killer
Jared Fuller 29:01
vers vitamin, vitamins, vitamins are not are out that was like crypto, crypto was a vitamin is gone right now, you know.
Justin Gray 29:09
So, you know, replace that usage metric, or at least replace it in pole position with the actual KPI of the client. So number one, and we saw this during COVID Lot, whenever was sending that email, you know, how is this pandemic affecting your business? If you were measuring, you know, a customer KPIs, and it had that as your Northstar from the very beginning, you knew how that pandemic was going to impact that client knew what that shift was going to be for them. And you could reach out with Yeah, hey, you know, thoughts and prayers, hate to say it, but he also in addition to that, here's what we've come up with, that can impact your business today, right? You know what that that value forward recommendation, or feature or whatever it happens to be, is already going to be and you can provide some value right from the get go.
Jared Fuller 29:56
What do you think? What's What's so interesting? About this learned experience or shared a struggle, so to speak, and you kind of learning through this process with you is why do you think so many Cs and PS leaders from the SAS native world, right, so they're coming from venture backed, growing, are so reticent or not? They don't have that approach. I mean, I was in the partner team and even like doing package services, like, oh, we can sell the services and just send them directly to you. That makes a lot of sense to me. Like, we don't need to bring you into a sales process every time. Is it just an exposure thing like CS and PS people aren't exposed to that isn't even an option. Like, every time I've talked to a CS leader about this, that SAS native, right, so there are some channel folks that like kind of get this. But, you know, new generation new subset of leaders, new era of companies, a lot of that leadership's gone from day to day operating roles. Why is it that it's such a hard thing for us to figure out? Do we just need to evangelize it? Or what's your take on that? Well, I
Justin Gray 31:02
think everyone goes to what they know. And I don't think that brands have seen a lot of examples of success in this area, because it largely has not been tried to do to your point, I think there's also some perverse incentives. Within there, there's first and foremost, the customer trust and knowing your customer and, and being close to that customer. And it's a kind of a really dirty pill to pass that on to someone outside the organization. I think that's where you don't have that relationship and that trust, that's when the partner team needs to do its its job better, quite frankly. But then you've also got, you know, folks have been told for a long time, like you need to create value for that business, you need to create a revenue center for that business. And I think, you know, most people have seen that directly in terms of staffing up headcount and, and charging for those services. That always seems to be kind of the second milestone, the first thing is just do it, get the customer successful, you know, get to get them implemented, shorten that timeline, and then everyone goes to Alright, how do we monetize this? Which is fine, like you need to be charging for your services to support a partner model, because the partner Sure, sure wants to. But then I think there's another rung of maturity in there, which is, how do I drive even more value for my organization in terms of outsourcing this to a partner, because most of the folks like you mentioned that cover the cost of an AE, there's other margin in there as well, even if they don't want to pass all that outside the organization. You know, there's a wholesale rate there that will support showing a profit line within that business. And so there's really no excuse to if if you are doing each one of those maturity steps. Well.
Jared Fuller 32:48
So I want to kind of recap this segment. And I want to go into another topic where we get back to like VC a little bit, is, from my point of view, the lessons that I learned working with you and the other partners in you know, kind of our ecosystem is that I fundamentally believe that service solution agency partnerships, whatever you want to call them should really originate and start in the success and services side of the business, not in the sales side. Like they never he definitely did. We definitely did a lot better together. After we had some of this stuff figured out on the front lines. And we knew we could drive clients success together. And you realize, okay, I can I can upsell an account that drift sends to me easily. And we can more easily identify accounts where drift can make an impact. And there was no net cost to us doing that, like in fact, we could save headcount. So instead of us focusing 100%, myopically on just driving revenue, we could save money up front drive customer value, and then create long term, you know, revenue opportunities back to us. Like partner success has to start with customer success every single time. I fundamentally believe that now, and more importantly, if you're going to have a great business, and if there's anything you want to hang your hat on partnerships, people it's this, it's that you got to bring the people who've done the thing that your customers want to do to the table, and you have to die on that hill with your CS leader, unless your CS leader just happens to be the world's best X or Y at the thing that customers wants you which I just don't see that happen happen ever, during those partners in help. You know, key takeaway here, if you're not offering partner services that your sales team can sell, you are severely damaging your potential for having any kind of ecosystem. So I think that's a really big takeaway. Justin just laid out some groundwork on how he's done it not just with Marketo 1000s did it with drift it was seismic there with a lot of different tech companies, which I thought I mean, I want to I want to write about this with you like at some point Justin really detail this into a playbook because it's really good stuff, man and no one not to my knowledge, no one's wrote about
Justin Gray 34:42
it. inadvertently. They're just did a great pivot because I fundamentally agree, right? Like you have to work with the areas in the organization that are closest to the customer. And frankly, that CS team happen is normally that that epicenter, they know what the client needs. means they know how to provide that value. And they know the right types of, you know, additional services might be additional tech as well, like, hey, whatever you need to enable that, that customers goals, bring it in within that layer. It also, however, plays in a major way on the go to market side and you hit the nail right on the head in terms of acquiring revenue more efficiently. Like that is the thesis of in revenue, right? We the reason that we're focusing not only on on parachuting operators into the go to market motion, but specifically, the partner led motion and building partner led ecosystems is because we can do that more effectively, we can deploy capital it within businesses and and get more from that investment, right by not flooding headcount into that those those eight areas of the business, we can onboard, great fundamental AES that can speak the language of the customer. But then we can also partner them and pair them with, with other folks that, frankly, have the keys to that relationship, or can amplify that relationship. And so okay,
Jared Fuller 36:03
this, this is where this is gonna be really fun now, so I didn't know I was gonna get to talk about this, but I'm excited that I do. I've had this feeling for a while in VC, that it's like, Look, you gotta hit that unicorn, you know, that one, you know, one out of 10 companies might make a return, but one out of one 100 returns the fund, right? I felt like there's a big opportunity to like, have a fund that's like focused on operational efficiency, right. So like partnerships, like better unit economics, make the dollar go further, because there's long term implications to the things that are being done today, there's compound interest and value on that investment. That you could consistently bat triples or, you know, a 5x, or whatever. And it's like, the rate of return might be, hey, we can do 5x on five deals out of 10 or 2x, out of whatever, and not have to worry about placing these wild bets on companies that may be you know, 100x, right? Return? I mean, is that, is that part of the thesis on what you're doing? Like you're perfectly fine with a, you know, 3x 5x? Within a reasonable timeframe, obviously, over 10 years that? Sure, but um, is that part of your thesis?
Justin Gray 37:10
Justin? Totally. I mean, we're looking at that the type of applicant amplification, you mentioned in a two to 4x, you know, two to four year timeframe, right? Specifically, based on what we're talking about here, right? Like, how do I how do I hire smarter? How do I get more out of my, my resources? How do I amplify the go to market and even increase what would have been, you know, flooding headcount in there, through a partner ecosystem, and probably one of the most, the most influential aspects that I ran into, when I was looking at the VC space, and I'm not gonna say DC is broken, everyone knows it's the moviemaking business, they are doing exactly what they want to do. What where we want to be different in that is, is, you know, making those unit unit economics more friendly to the founder, and to the organizations involved there, I'm not willing to kill, you know, nine of my port goes to see that, that crazy blockbuster hit on the 10th. And when you look at where even why founders get in relationships with with VCs, is a great survey, it's linked on our website will be linked on our website, where you look at what founders expect to get along with that capital. And then you look at what VCs, it's where they believe they're providing value along with that capital, right. And the two most disparate categories are hiring, hiring in relationships, and go to market customer acquisition. That's where VCs believe that they're providing the most value. And we're founders actually believed that providing the least amount of value, it's the highest.
Jared Fuller 38:49
I was like, I that is definitely not where they're providing the most value.
Justin Gray 38:52
Right? And so you look at that, and obviously, companies are starving for this they want that's the reason why they are giving up large, large portions of their company. Right. And unfortunately, they're not getting that, that that gift that that that resource from from the same folks that are providing capital. So we want to take those disparities and get rid of them also provide the capital allocation. But but really focus on that, that better unit economics better efficiency message, which I think is a perfect right fit for what we're seeing in the market right now.
Jared Fuller 39:26
Yeah, because I mean, there's also this no man's land of m&a. You know, where there's just nothing there. Like it's, there's never any deals that happen. There's rarely any deals that happen between about 200 million and a billion, right? It's like this weird like, so you hit this escape velocity where there's no buyers and no one cares. And there's lots of deals to be done between 10 and 100 million tons of deals to be done. And I feel like the appetite for founders is if you can secure the bag on a $20 million deal. And you had your investors in at a $5 million investment. And you did that in two, three years. No investor is gonna hate you. Now you might, you know, Sequoia might be like, Oh, that was a loss, you know, like, you know, screw that founder. But it's like,
Justin Gray 40:10
well, it didn't go to zero, we got, I think the stats 98% Plus, you know, going to zero at this point. So, I mean, that's great returns in my mind
Jared Fuller 40:22
100% 100%? Well, I love that that's part of the thesis. If whatever, you're recruiting the long tail, the long tail of LPs, I'm not your first, you know, LP obviously. But the long tail of LPs have to throw a check your way. Question about the companies that you're looking at now and the innovation that you're seeing, is there anything, Justin in terms of the the tech ecosystem around partnerships, technology or ecosystem technology? And or how businesses are going to market market with partner with partnerships? Is there? Is there a preference for your fun, this is just me out of genuine curiosity for Hey, we're looking at technology that can affect the go to market motion with ecosystems and partnerships, or we're looking at technology companies that are going to market partner letter ecosystem approach for more efficient unit economics. Is there a preference in the thesis either direction?
Justin Gray 41:20
Well, certainly towards the latter, I would say there's also a preference in terms of the category the area where they play, right, like we love I love verticalized SAS, when it comes to partnership potential and the possibility for ecosystem out there. I love. Yeah, I love tech enabled services. For almost the exact inverse reason I like vertical SAS. And so I think there's some sweet spots out there right now, right? Like, I mean, from an investment standpoint, I also love AI and automation. But from a partner potential, I really love those those former too, because I think there's such a, the ability to, again, leverage those relationships out there, create hyper value for the client. And those spaces just open themselves wide up for that potential, quick
Jared Fuller 42:10
kind of like way to end the podcast and the conversation in terms of like, the appetite for founders, the types of companies, you're looking at seed to series, a kind of that range. Yeah,
Justin Gray 42:19
I'd say seed plus, right, like we're looking for, you know, organizations that certainly have product market fit. They've got that cohort of raving fans are delivering success, but they haven't built that, that go to market motion in an effective and scalable way. So, you know, focused on plugging kind of that go to market trough, very much around the potential for for partner ecosystem partner lead growth. So that's one of our obviously one of our main signals that we evaluate deals by, which is, you know, how effectively have you either, you know, identified some of those potential partnerships? Or where can we see that, that low hanging fruit, we've got a, an exercise that we actually just ran our first investment through a couple of weeks ago, within a workshop, you know, an ideal partner profile exercise very much a lot of the same stuff that we've been doing for years, right on ideal customer.
Jared Fuller 43:10
I've never heard a VC I've never heard a VC say that exercise ever before. So I love that
Justin Gray 43:15
I did it before I funded the business. So
Jared Fuller 43:18
wow, that's a value add, yes,
Justin Gray 43:20
erect, I mean, value add is, is squarely how I describe or focus our goal.
Jared Fuller 43:27
Amazing, amazing. Um, I've said on the podcast at the beginning of last year that I truly do believe that the CEOs and entrepreneurs of tomorrow are the best partner people because they have to have this. And again, I'm qualifying this with the best there's certainly charlatans in every role. But if you really are a change agent, partner professional, you have to be able to help your marketing organization go to market together, you have to be able to help your sellers sell together, your success, Team retain together, you have to be able to do all those things, which makes you a fantastic candidate to be an entrepreneur. But here's my plea. I'm gonna tie this all back full circle, what you just said, with all of your experiences, like our thesis really isn't partner tech, please don't go out and build more partner tech. Please don't go out and build more apart. I have heard of so many people that I really loved. And I'm like, Why didn't you go attack a vertical and just build a partner led company, you hope you could have killed it? Why did you go build the 700 version of PRM that I know is not going to work? Like, you're not going to replace my PRM I could care less about it. I don't even know if it works. Should we even have it? And I'm joking. I'm totally saying this tongue in cheek like we you have to have it in certain ways. And there's totally different ways to do it. And there's already really good vendors out there. It's the kind of the point like remin partnered all of our partners stack crossbeam reveal whatever it is like there's not more budget to go attack there. But I think there's a lot of opportunity to go disrupt businesses that are resting on their laurels and verticalized SAS areas, or create communities or tech enabled service companies just like you said, you where your mastery is a partner person is such a competitive advantage right out of Jump Street?
Justin Gray 45:05
Well, I'll show you something funny here. I'll just rotate my screen quickly. So one of my partners in this firm was actually in all bound. So years ago, I think I think it was a little bit early in that business. But it is really fascinating what's going on. In partner tech right now, I agree that we don't necessarily need more. I think though, there's some additional value add to be realized within within those offerings today, but I'm excited about the space. I'm excited that all of the focus that is kind of bubbling and about the boil over I think, in the partner ecosystem area and love what you guys are doing.
Jared Fuller 45:44
All right. I love it. Justin, I can't wait to write and talk with you more about some of the stuff that you've done in the past because I think that needs to be democratized, put out in the world grow a bigger market, right rising tide raises all shit grid. And the founders are soon to be or would be founders out there. Definitely go follow JUSTIN GRAY on LinkedIn. He's taught me a lot and then check out in revenue dot capital. This is a fully shameless plug for me that is not paid again. I'm just doing it because I really, really love the lessons from this one. Justin, thanks so much for coming up on partner up. And, folks, we'll see you all next time.
