Don Seiler worked in enterprise sales and partnerships at Microsoft. Subsequently, he oversaw strategic partnerships for a networking automation startup and formed their tech partnership with Microsoft from the ground up.
Don shared his experience and advice for those thinking about partnering with a large cloud provider. Having been on both sides of the relationship, he explained how startups can make the most of it, at what stage it is worth pursuing, and what the cloud marketplaces are looking to gain in their relationships with startups.
I worked at Microsoft as an Enterprise Modern Workplace Sales Specialist so I have experience leading sales strategies and account planning with customers and partners to close $20M+ a year in revenue. In that role, I saw firsthand the value of a technology partnership with Microsoft.
After MSFT, I was recruited by the CEO of Gluware to lead strategic accounts and channel strategy. At Gluware, I led the effort to implement a go-to-market strategy with Microsoft, including launching an Azure Marketplace offering and laying the foundation of a co-sell partnership.
Gluware’s software provides intelligent multi-vendor network automation and orchestration, eliminating time consuming and error prone manual CLI changes, providing agility and optimizing network performance and security.
Reconfiguring and enforcing network policies is a big challenge for an IT organization moving workloads to the cloud or adopting SaaS solutions.
For example, a Fortune 500 global pharmaceutical company was told by their outsourced network management team that it would take 6-9 months to manually change QoS and VLAN settings on 400+ global routers required to deploy Win10 and OneDrive.
Using Gluware’s software, a small team of network architects were able to make the changes over a few nights. They were able to then “tune” the router configurations to optimize the network performance monthly for 5 months, saving over a million in third-party network management provider costs.
After hearing how Gluware enabled this global pharma to accelerate their O365 adoption, Microsoft invited Gluware to a program for startups with the goal to achieve co-sell status with the MSFT field sellers.
Normally the Microsoft startup team is looking for the next SaaS company, like an early Salesforce, to grow their platform on Azure. But in our case, Microsoft saw how Gluware could address networking challenges, enabling customers to move quickly to the cloud and accelerate Azure Consumed Revenue (ACR), a key metric that MSFT’s field sales and business units are measured on.
The process of partnering with Microsoft is very programmatic. They provide the tools, support, and guided process on how to become a partner and launch an offering on Azure Marketplace.
As with any startup, Gluware had finite resources to invest in the MSFT partnership. Since I had significant experience with Microsoft, I took lead on defining the strategy and leading the programmatic steps.
As half of a two person sales organization at Gluware, I was also responsible for direct customer engagements with Fortune 1000 clients across half the United States, so I could only spend 5 to 10 percent of my time on the MSFT partnership steps and strategy.
I found the MSFT startup team great to work with and understanding of our limited resources and competing priorities. The MSFT team was organized and provided guiding hands that really helped to streamline the process.
For organizations who are looking to go-to-market through Azure Marketplace or other cloud marketplaces, there is the "programmatic side" and the requirements around that, and then there is the tactical field level engagement.
Once Gluware was officially in the program and making progress in the steps to publish our application, I was able to begin the tactical steps of networking with the Microsoft field sellers such as Azure sales specialists.
These resources were very receptive to Gluware's value proposition and began identifying accounts and contacts for "soft introductions" before we officially launched on the marketplace or obtained co-sell status.
From a lens of going through it, and knowing the potential for success, I think you have to have a certain level of maturity as an organization. You want to be sure you have the resources to execute on the partnership and that your product is far enough along to merit the investment. It’s not something you want to do if you are going to pivot your product or significantly change your technology.
You also need to clearly define who your target market/ICP is, and ask yourself, 'does this cloud marketplace service them?'
If you’re a vertical solution selling to mid-market or enterprises, these marketplaces can greatly speed your buyer journey and shorten sales cycles.
Microsoft, for example, has a significant presence in healthcare and financial services, two of Gluware's target markets.
Microsoft's brand awareness and account coverage can help build awareness of your product with senior decision makers in that vertical. That’s powerful when you lack brand awareness as an emerging organization.
As you hit milestones in revenue and new logo acquisition, the cloud providers have mature marketing programs allowing startups to leverage their brand and execution efficiency.
You can't underestimate the value of an AWS or Microsoft brand recognition to startups. At Gluware, we were able to get a joint press release about our availability on the Azure Marketplace, providing additional visibility. In addition, demonstrating a Microsoft or AWS partnership can help efforts to raise funding.
You have to balance these benefits against the opportunity cost, such as being realistic on resourcing requirements. In the case of Azure, your solution needs to comply with the technology requirements to be certified on Azure and the organization needs to become a Microsoft partner. They have lowered the floor on becoming a partner, but you will still need a couple employees to get certified to the partner program that your solution aligns with. While this helps the employees’ resumes, it should be factored in when you’re thinking through your time to market.
As a sales leader focused on accelerating revenue, I believe one of the biggest advantages of joining a cloud marketplace is the commercial transaction mechanism and access to budgets allocated to the cloud providers.
As a startup you have to realize it takes 4-6 months to negotiate terms and conditions with an Enterprise customer. It doesn't matter how great the technology or if the CIO is your sponsor, organizations' legal teams have to evaluate risk and also the financial sustainability of your company.
By selling through the cloud marketplace you leverage the terms and conditions in place between the customer and cloud provider, speeding up the sales cycle and eliminating what can be a frequent deal blocker.
There’s also the ability to transact advisory or consulting services through the marketplace. You can offer design services engagements or workshops without having to negotiate a master service agreement (MSA). This enables a startup to get revenue for pre-sales engineering and other activities while strengthening the engagement with the customer.
Behind the scenes, the Microsoft Partner Program provides programmatic introductions, mutual lead sharing, and the ability to market your solution with other partners such as SIs, VARs, or consulting firms. You can build strategies with these partners and even create advisory engagements that the MSFT field sellers can fund for clients if the engagement will accelerate ACR.
Finally, I would add there are additional resources and benefits to being a MSFT or AWS Partner that is valuable to startups. For example, receiving additional licenses of O365, Azure credits, dev tools, and education enablement as part of the Partner Program.
Additionally, we had access to designated MSFT resources that helped resolve technical issues in migrating our application, advised our dev team on best practices, and gave insight on future Microsoft offerings that aligned with our solution direction.
Microsoft probably has more coverage of enterprise accounts and the tribal knowledge and relationships cultivated over decades of working with those accounts. If you approach it correctly, a marketplace partnership will give you a 10x return within the first 12 months.
It is important to understand the big picture of the relationship. It’s not the type of relationship where you can simply expect new deals in 60-90 days, and if not, it is seen as a failure. Unless you have a distinct or well-known product, just launching your software on the marketplace doesn’t mean you will instantly get orders.
Leadership needs to understand a comprehensive go-to-market strategy is required for it to be successful and have reasonable expectations. There is a programmatic engagement to launch an offering, but you have to put the effort into executing the marketing and field engagement steps to get returns.
Every organization is different. It is rarely a “build it and they will come” approach in these large marketplaces. You’re creating another channel to reach customers. It has to be worked through the lifecycle of the buyer, just like any channel. That's where you can have economies of scale.
That crawl, walk, run motion where you get first customers, ensure they become reference customers, and then marketing the client outcomes applies here also. It is important to educate your sales organization on how the cloud marketplace program works so they can guide buyers on how to optimize this partnership.
I think it is both positive and extremely disruptive. I have been in the industry over 10 years, working at leading VARs and as a channel manager. With the size and scope of AWS, MSFT, and Google, they are going to be, if not already, the primary go-to-market for many organizations.
Look at how major cloud providers negotiate with their customers. Clients receive discounts based on the commitment level of their spend. The customer can spend that commitment with any solution or offering from the cloud provider or their marketplace. So as a startup or emerging company you can capture that allocated budget or you will need to find additional budget on your own.
These marketplaces take 20 percent of the deal, which is in line with reseller channel partnership models. It is a win-win relationship as the marketplace provides a lot of benefits, including eliminating the need to negotiate the legal terms and conditions or process the payments.
I think the cloud marketplace channel is going to explode. It accelerates sales cycles and reduces COGS, which is why organizations at all levels, not just startups, are focused on partnering with the major cloud providers. They see significant short and long term benefits.