Channel? I Do Not Think That Word Means What You Think It Means
Haddon Hall; Photo by Rob Bendall via Wikipedia
TL;DR: If we are thoughtful in how we define things, we are likely to be more successful in executing our strategy. I learned this from almost 20 years of experience in the 'Channel', and from the film “The Princess Bride”.
In many ways, achieving Go-To-Market (GTM) fit with a deep tech and AI startup is as daunting a task as storming the castle of Prince Humperdink with only three men. Luckily, a simple change in how startups think and speak about their company’s GTM partners can lead to better strategies, more informed decision making, and higher chances of success.
Copyright restrictions prevent me from using the image I really wanted for this article (the meme of swordsman Inigo Montoya who challenges how gang leader Vizini’s uses the word “inconceivable”). Instead, here is a licensed image of Haddon Hall, where some famous scenes in the film were filmed.
A preamble? As you wish
Since 2002, I’ve built, scaled, and managed partner operations and teams for companies from Seed to Fortune-50. I have been mostly successful in my efforts, and have pretty much seen it all when it comes to working with service firms and resellers.
Each one of us has their own experiences and opinions. This is not a post about semantics—we are all allowed to (respectfully and inclusively) call things how we want to—this is about being thoughtful and deliberate, so that our words form decisions that carry more weight.
So, who are the players?
(Note: in this article, I am only going to focus on sales-related channels, not technology-side partnerships with Cloud Providers—covered in an earlier article—or ISVs.)
Fezzik the giant: resale as the core business
Fezzik is all about relationships, and when he gets going, he makes quite an impact. Similarly… resellers, VARs, and the distributors that often work with them excel at customer and vendor relationships—often long-term and committed, with great coverage of the customer’s procurement.
This is the group most commonly referred to as “channel partners”, and they build their business around reselling technology, usually wrapped with a medium-complexity level of service.
That said, they also know it’s a small world out there, and people move around, so they’re conscious of their credibility and reputation, and are careful to commit.
Lastly, their sales people worry about strange things like mortgage payments and therefore prioritise vendors that are predictable when it comes to deal protection, sales cycle, and commission.
What does that mean for you? Three main things, in my opinion.
Relationships as a company mission. Have enough people defined as responsible and accountable for these relationships, especially beyond the Channel or Bizdev team; start with a few partners, so that you can provide them consistent attention across their teams; and then make sure you can do all of this consistently over time, to build trust and gain mindshare—yes, your more established competitor is in there every week schmoozing the sales reps.
Empower partners to sell. Partners have a broad and generalist model of selling, and they can and do sell different technologies together, successfully. Don’t expect them to give you disproportionate attention at first, and if you have a disruptive product, don’t assume they can evangelise it nearly as well as you. Remember, you are here for the scale, so focus on products and technologies that are relatively easier to sell—and more importantly cross-sell—by a channel AE and SE, and create customised supporting content around that objective.
Be boringly credible and predictable. That means you need to have a program that is as robust as it is responsive to feedback, with clear and easy to follow elements around discounts, enablement, deal registration etc.; ideally, define segments and/or territories where partners can roam free, without the fear that you’ll take a lucrative deal direct; and above all, be consistent and transparent about the give and get.
From my experience, when this works, it REALLY works.
Miracle Max: expert opinion as the core business
Potion maker Miracle Max, as we know, has a very narrow and deep skillset, that comes with strong opinions. Similarly, consulting firms often start from an idea of, or a strong opinion on, how to do something specific—build, deliver, secure software, etc. They don’t often scale to the point of diluting their ideology, indeed some of the most effective firms I’ve come across are proud of maintaining a balance between commercial growth and ideological integrity.
Their focus is on billable hours (and not reselling), and on making the client successful by adopting their ideas and methodologies. For some vendors, this type of relationship is crucial; for others it’s really a nice-to-have. If you’re in the former group, what sort of things could you do for them?
Invest in the technical story of your product, and how it supports their ideology. Consultants are usually solution-agnostic, but when asked by a client about solution choice will often have their preference ready to state.
Make them look good in front of their client, consistently. Avoid taking over the wheel in the evaluation phase, and also make sure that your own field organisation (from sales→solution engineering→account management→support) knows and respects the partner’s position in their accounts, over the whole customer lifecycle. I've seen great vendors churn customers because they dropped the ball (i.e., didn't engage with the partner regularly) after deal close.
Show them that you can bring them pipeline from time to time, and make it easy for them to join your partner program, get self-enabled, and make a referral fee if they happen to nudge a client your way (and make sure that a referral process is manageable for your own finance team too!).
Consulting firms may not have a wide market reach, they might be strictly agnostic about products—but they often have outsized influence over their accounts.
Inigo Montoya: long-term transformation as the core business
If there one thing we know about Inigo it’s that he is patient, having spent decades looking for the man with six fingers. Moreover, he is talented, knowledgable, and versatile… in those aspects, he is a bit like a system integrator (SI) or a managed service provider (MSP).
SIs, especially the huge global ones (GSIs), can have unique access to projects, initiatives, and budgets approved by and managed from the C-Suite. Their focus isn’t on reselling, nor is it on achieving a mid-term outcome—they are in it for the long term, and are focused on transformative projects for huge corporations.
MSPs, who can overlap to a significant extent (i.e., many MSPs are also SIs), add to the above an emphasis on a curated set of tools, or in some cases even a fully integrated platform, to realise these transformations.
Given the depth of their knowledge and the nature of their customer base, this group has arguably the best potential to help you evolve your products towards enterprise needs. The problem is that this is usually a multi-year journey, which for a young start-up can be daunting.
Before you take this path, here are some questions to consider:
Are your company and your portfolio ready for this long game, or are you still finding product-market-fit or go-to-market fit? If you have found it, will you be open to feedback on product roadmap and pricing?
What are you enabling for them i.e. why should they care? Is it that selling $1 of your software unlocks $4 in services? Is it a product gap in their managed platform?
Do you know which of the SI's practices and in which geos you want to pursue? This is a significant lift for a startup so less is much, much more.
Do any of your target customers already work with the SI/MSP in this space?
Similar to the point on resellers, is your company ready for this team effort, and is there an exec sponsor defined? Can you identify sponsors on the other side?
Given the nature of these partnerships, make sure your answers to the above are solid before you move.
Westley: the bigger picture
Westley (spoiler: he's also the Dread Pirate Roberts) understands that the world is full of grey areas, and sometimes you need to make unlikely alliances to meet your goals. Similarly, the emergence of the major Cloud Providers, the rise of disruptive technologies, and the reality of co-opetition all mean that the overlapping areas in our ecosystem-Venn-diagram have significantly grown.
Resellers are building more services; consulting firms look to diversify; SIs and MSPs are trying to resell—and everyone is learning how to manage their traditional GTM in combination with the explosion of Cloud Marketplaces.
This is great news for startups, even if it seems confusing: there are now so much more synergies and opportunities across former siloes of your GTM, and that introduces a lot of efficiencies too.
As startup people, we often play around with the boundaries and definition of investment rounds (Seed/post-Seed/A) or product categories, so we shouldn’t be surprised that in the age of Cloud, DevOps, and AI, our GTM partners are also striving to evolve what they are and how they're defined.
As long as we are thoughtful, consistent, and partner-friendly, we have a great chance to win together.
--
What's your view on the evolution of GTM partnerships?
I'm keen to hear your (respectful) thoughts in the comments! If you need help with a similar challenge for your company—feel free to reach out.
