Partnerships 101: Let’s Talk Business

Pari: Hello everyone and welcome to the brand new episode of the Zinnov Podcast. I’m Pari Natarajan, CEO of Zinnov and I’ll be your host today. It is my pleasure to introduce Avanish Sahai, Board Member, Investor, Mentor for B2B SaaS Cloud Computing and Non-profits. Avanish has held several C-level and leadership positions in product, marketing, channels, and alliances across a range of early to mid-stage B2B companies, as well as tech giants like Oracle, Salesforce, ServiceNow, and Google Cloud.

He’s become a recognized expert on building and leveraging the power of ecosystems and platforms to scale businesses non-linearly. Welcome to the Zinnov Podcast, Avanish, great to have you with us.

Avanish: Hey Pari. So good to talk to you again and thank you for having me. Excited to chat on topic.

Pari: Great. So you’ve been doing this whole platform partnership for a long time and truly an industry expert. Can you take us through the evolution of platforms and the ecosystem around that? You had the client server era, then we moved to the cloud era, and now we are in the cusp of moving to the AI-led software era.

Avanish: Yeah, look, it’s been fun to be a part of the journey and I agree a lot has changed.

So maybe just to give a bit of context setting. I think in the old, old days, in the 80s and 90s, the typical partnership structure tended to be more of a, what we would now call a channel or reseller. There’s a bit of an arm’s length relationship and the channel partner reseller basically was a distributor of either hardware or software or both.

And it was a margin play. There was relatively little engagement between the participants other than a bit of a financial transaction. Then I think as you mentioned, the client-server era started to evolve and some more packaged software started to emerge and become more prominent and then I think the partnership model started to change.

So one, you had some mutual dependencies. You had SAP running primarily on top of the Oracle database. Guess what? They may compete now, but that was a form of partnership. You had to make it work together. There was a technology relationship there, or you had the big consulting firms, Deloitte, Accenture, EY, KPMG building practice areas around again SAP, Siebel, PeopleSoft, etc.

A big emerging category in the 90s and early 2000s, and frankly built massive businesses, consulting and implementation, delivery, maintenance support, etc. So that was, I think, the first set of big changes in the partnership world. Then as you mentioned, the cloud era really was a pretty fundamental change.

Why? Because now you didn’t have this decoupling of hardware platforms versus software versus services. Things were more tightly coupled and I had the privilege to help build one of the first ones in those which is at Salesforce in the late 2009 – 2010, where you really had a lot of deeper dependency, and that, I think, created this notion of an ecosystem which is not just a novice-led partnership, but really how do you orchestrate across all these things?

You’ll have tech partners, you’ll have ISVs, you will have these sellers, you may have managed service partners. You have a lot of different forms of relationship which we can talk more about, but then really it’s orchestrating all those to work together and that’s why I like to use the term ecosystem more and more because I think it defines it better than just a partnership.

And finally now as you mentioned, I think we’re in the cusp of the next generation of this. AI is definitely going to change a lot of things and it brings a new set of again skills, capabilities, and you’ll have companies providing infrastructure. You’ll have companies providing more models and expertise, and then you may have third-parties building applications and solutions and delivery. So, it’s a fun time to be involved in all this and seeing how things evolve.

Pari: Great. This sounds like super exciting times ahead. So stepping back into your experience with Salesforce and they were one of the first ones to build the whole ecosystem at microsoft.com and so on. And you had an interesting story about the name app store.

Can you talk us through Apple and Salesforce? They both almost build one, a consumer platform, and another one an enterprise platform.

Avanish: Yeah, this is part of the lore of this world of app stores and ecosystems in that, Marc Benioff, Founder and CEO of Salesforce were very close friends with Steve Jobs of Apple. Marc in fact had worked at Apple early in his career.

And as the story goes as the iPhone was being launched and Steve was considering how to build this ecosystem around the iPhone, which we now use every day. We don’t even think about it, but this notion of apps and how the apps would kind of add value to the hardware and iOS platform that they were primarily building. And the story is that Marc had the term App Store in his pocket and he essentially gave it to Steve Jobs so that Steve could launch the Apple App Store and which has now kind of become one of the primary ones. And then when Salesforce itself decided to launch its B2B version of that, we had to come up with a different name. And in this case, it was AppExchange which was launched in 2000. So, yeah, some fun history there of how things overlap in the Silicon Valley.

Pari: And we talked about the AppExchange and we also talked about the ecosystem. And what are some of the early successes, even before Microsoft in the client-server era? What would you call a great success?

Avanish: Look, I always tip my hat to Microsoft. I think Microsoft was one of the original companies. By the way, I’ve competed with Microsoft, I have been a consultant to Microsoft, I’ve been a partner of Microsoft, and I’ve worked in companies that Microsoft invested in, so I have a long history with Microsoft.

And I always admired kind of their focus on both the developer ecosystem they, I think really created that mindset of a more of an open environment, and even to date, and all their evolutions, they’ve kept the developer ecosystem as one piece of it. And then of course the whole partner ecosystem of resellers, channel partners, VARs all these different sets of businesses that frankly built their whole livelihood and their business around the Microsoft platform in the Windows era and now in the cloud era.

And Microsoft always has had a terrific perspective of respecting and working with their partners no matter how big or how small, and making them an integral part of their core strategies. I think Microsoft, we could all talk probably talk about IBM and others, but I think in the software world, I would say Microsoft has been probably the early and most successful story of really thinking this through.

Pari: And I have listened to your podcast where you interviewed the leadership team from AWS and their marketplace strategy has been a tremendous success, especially things like private offers and how do you see that evolve when you have Microsoft which is in the client-server era, then you had Salesforce and then AWS came in and then build a completely new ecosystem around it. So talk us through a bit more in terms of how they are a bit different.

Avanish: Yeah, so I think it’s important just to not put too many acronyms out there, but if you think about Microsoft, as you say, client server, there was a bit of this infrastructure relationship. Salesforce, ServiceNow, and some of the others, Platform as a Service where provided not just the core hardware infrastructure, but all set of services on top of that. Now, what AWS and GCP, Google Cloud Platform, Azure have done in the last, I would say really seven, eight years has once again transformed the business, which is most of us who think about starting a software business, we don’t want to be in the business of buying and deploying and configuring hardware, managing a data center, et cetera. And you want to be able to scale up, scale down, add services quickly, et cetera. So what AWS has led and it is truly mind boggling to see how much they’ve grown, how quickly they became kind of the leader. I think that’s 35 – 38% market of the Infrastructure as a Service play. And most companies now, large, small, startups, public, private, government, everybody kind of tends to think of cloud first. And what they’re doing is basically providing that infrastructure at scale globally with very high performance, high availability, a lot of flexibility around regulatory issues, etc.

And in doing that, them and GCP, where I used to work in Azure, they’re doing these mega contracts with end customers. And as part of those mega contracts, they’re bringing to the table what they call their marketplaces. And the marketplaces are third parties that have been configured or certified to run on that Infrastructure as Service platforms and make it really easy. Really emphasize easy from an engagement perspective. So it’s easy for customers to find them in the marketplace. It’s easy to maybe do a trial. It’s easy to purchase the contract. The contract process is actually built in and I’ll talk a bit more about that in a minute. And then it’s easy to deploy, change, configure, etc.

So it really is very customer-centric approach to use these infrastructure service marketplaces, GCP marketplace, Azure marketplace, AWS marketplace to consume software from third-parties, which is their ecosystem, and really ultimately the economic benefit is what matters. So let’s say AWS sells a big contract to an end customer. Those customers can then burn down the commitments they made to those infrastructure providers by deploying these partner ISV solutions in that environment.

So again, it doesn’t do justice to summarize it so quickly here, but it’s a fascinating evolution and if you look at some of the market researchers, including some of your competitors, I think they would say, look, this is one of the biggest trends in the software space, is consuming software through marketplaces is growing at an absolutely rapid pace.

Pari: Very interesting. So the initial way, was about more technology integration like you said, SAP and Oracle, they had to make it work together. But the go-to markets were not synchronized. Right now it seems like there is a high level of alignment in go-to markets if you’re in a marketplace, the salespeople can go and sell a billion dollars of credits and they can retire their credits by consuming the ISVs on top of the marketplace.

Avanish: Perfect summary, exactly right.

Pari: We talked about the larger companies, but if you talk to the CEOs of VC-funded large companies, everybody says, ‘Hey, I want to be a platform and then two things they want to do is sign a partnership with Deloitte and Accenture and that’s my partnership. And they’re a large company, they don’t want to work with smaller ISVs. They don’t have a lot of mind share. So how do you advise the CEOs of VC companies?

Avanish: It’s a great question and I do spend a lot of time doing that now in my retirement. And I think there are a couple of ways to think about it, right? I think first and foremost, and that’s what I usually when I have some of these conversations, those tend to ask them do you have a clear definition and picture of what being a platform means and why are you looking to build that ecosystem?

And the reason for that is the definition of could vary. Not everybody has to be the next AWS or the next GCP. It could be that you’re focused in a particular industry or functional area and you’re helping define maybe a kind of core data model for that function or business. And as part of being a platform, it’s about creating APIs that allow other technologies, and other companies to plug into that.

That’s a platform too. It doesn’t require a big investment perhaps, but it’s also this mindset of being API first. So I think having clarity on that point on what does it mean to be a platform? And then two, what does that ecosystem then look like? Is it exposing those APIs that I mentioned and having a bunch of other companies integrate to you, or do you have a very complex process redesign, consulting-rich opportunity that then the Deloittes, Accenture, EYs, et cetera, could look at that and say, I can build a multi-head million-dollar service line around this technology.

So there is a lot of… before those, I know that a lot of companies, especially VC-backed always had that as on their list of I want to get involved with one of the global SIs and GSIs.

But I think having real clarity on what you’re trying to do, number one and two, candidly, what’s in it for them. As you rightly said, they can’t engage with hundreds or thousands of small companies. They need to really understand if this VC-backed company solving a real problem that my clients have and around that, I can build a substantial practice area with hundreds if not thousands of certified consultants, et cetera. That’s kind of the thinking that needs to happen before you build the alliances function or hire your first partner management and so on.

Pari: Got it. Interesting. So one is to do the right thing for the customer. So it’s whenever there is doubt, do the right thing for the customer. Let’s start with that. And have very strong clarity on build by and partner.

Avanish: Exactly right. It is again, I think the partner, sorry, the customer first mindset is critical and that involves a huge number of organizations within your own team, sales, and customer success, et cetera, have clarity on that. And then two, it’s part of the alliance leader’s job to figure that thing out.

Pari: It gives a roadmap for leaders who are looking to get into building an ecosystem. Yeah, so my final question around the future, are there a new kind of ecosystem partners you can envision who would come in in the future? We have the developers. We have the market ISV, then have GSI, the regional GSI, large GSIs, you have the developer community which is more citizen developers, you know, a whole lot of… and citizen developers is relatively new with low-code kind of technology evolving, but other things in the AI world you see a new kind of partners emerge?

Avanish: Yeah, I think it’ll be fascinating to watch. So one thing I’ve been keeping track of and I think they’re starting to see some early stories around this is, frankly, we talked a lot about the companies we typically talk about are other technology companies or SI and so on. We don’t talk about a lot of end customers are actually thinking about how do they monetize their own IP.

So there’s one example which is public. So there’s a company called Visor, which is a joint venture between Salesforce and Ford Motor Company. And basically it’s Ford basically coming out and saying we want to build a software business that is complimentary to our commercial truck business.

And if you think about that, it’s a different bit of a different concept. And they’re out there and they’re selling their products and so on. I think, and I’ve had a number of those kind of conversations with large end-customers, traditional companies who are thinking about how do they become themselves, maybe a technology company or maybe a software company, but the only way they can do that is that participating with other ecosystems, I could see that happening in financial service, logistics and transportation and healthcare. So I think there’s a lot of interesting ideas that’ll come out of the continued evolution of the technology stack.

Pari: That’s very interesting. So somebody could build an AI model for FinTech and then say, ‘Hey, I can make that available on a Microsoft marketplace, AppExchange, or AWS, or GCP and other customers can consume that. So at some level, they are monetizing the assets they’ve built internally. Fascinating.

Avanish: A 100%. Exactly. And by the way, you mentioned AI a few times. I mean, in the world of AI, the models only get better as you get more data. And one way to get more data is to bring, maybe even use some of your competitors to make your suppliers, some of your customers, all into that same framework.

So, I think that there are some amazing things that are going to come out of that.

Pari:  Interesting, like how the tower infrastructure by the telecom company became a shared infrastructure. Similarly, the AI models could become shared infrastructure.

Avanish:  Great analogy. Great analogy. Yeah.

Pari:  Thank you, Avanish, for taking us through the evolution of partnerships, key industry success stories, and what organizations should be cognizant of when outlining their partnership strategies.

Avanish: Pari, always a pleasure to talk to you. Really appreciate it.