The $250B B2B Sales Channel You're Missing Out On w/ Tackle.io CEO + VP of Marketing

Good afternoon. Good evening. Wherever you are dialing in from today, thank you so much for joining. This is Zastraszale. And I am joined by John and Nicole from Tackle.io. We are excited about this session. We're going to give it a minute or two just for everyone to join before we dive into the housekeeping.

All right.

Again, to everyone who's joining, this is SaaS to Scale. If you've joined our other sessions earlier today, thank you so much for being part of the community. But I did, and that's what I found when I did Mind the Product. Nice to meet everyone. All right. If you're not asking a question, go ahead and put yourself on mute. You can keep your video on if you like. We are adding some folks into the session before we go in. Alright, let's dive into the housekeeping items. Again, this is a 30-minute session. It goes really quickly. It is intended to be interactive as with every other session we've hosted today. We encourage you to keep your video on and your audio when you are asking a question. If you aren't willing to, you know, if you're a little shy today and not wanting to turn on your video, go ahead and drop a question in chat. We will be moderating that and would love to hear from you. In the meantime, go ahead and say hi. Let us know where you're dialing in from today. Would love to hear where you are and what you're doing. Again, we are hosting one-on-one networking sessions this entire week, and would love for you to continue that conversation. Here is the link for you to join. It is in chat. And we're looking forward to a great session today. I'm going to hand it over to Nicole and John to kick us off today.

Awesome. Thank you, Tammy. Hi, everyone. Great to have you here, and thanks for joining us. I'm Nicole Bueno-Smith. I'm the VP of Marketing at Tackle. And in October, we released the first of its kind State of Cloud Marketplaces report, and This is made up of findings from hundreds of B2B software sellers and buyers, and it was really across all industries and revenue segments. And today we really want to share some of the key takeaways from that. Cloud marketplaces really represent a huge opportunity for software sellers to sell more and sell faster. And we think this is still a really large and untapped sales channel that you can leverage as part of your go-to-market strategy, no matter what stage of growth you're at. And John and I are really excited to talk to you about this today.

Yeah, and hey everybody, I'm John Yackey. I'm CEO of Tackle. And at Tackle, our core team is made up of career-long enterprise sellers and engineers who all thought the old way of selling enterprise software needed to change, and that the cloud marketplaces made up a new, more efficient way of selling. And our platform strives to make that really simple, and our team attempts to guide you through every step of your cloud marketplace transformation. Our customers include companies of all different shapes and sizes from Series A up to public companies, including Auth0 and Snyk and HashiCorp, PagerDuty, New Relic, Seek, Druva, and many others. And with so many trends accelerating right now, digital transformation acceleration, cloud adoption's accelerating, digital selling as a movement's accelerating, and marketplace buying's accelerating, we're excited to share our learnings from our research as well as our work with the cloud providers, sellers, and buyers. So let's dive in. So just in case you're not familiar with the cloud marketplaces, they represent B2B app stores where cloud customers can buy third-party software to run alongside their cloud infrastructure and have it go directly on their cloud bill. While we're seeing an explosion in the number of marketplaces that exist, today we're gonna focus on the 3 offered by the hyperscale cloud providers, Microsoft, Google, and AWS. And the dream state for these marketplaces would be to operate like the Apple App Store, but I think everyone on this call knows that B2B software is not quite that simple. And the good news is these marketplaces accommodate the ability to sell complex software as well as click-to-deploy. And Microsoft, AWS, Azure all have millions of customers, and they're rapidly accelerating— percentage of them are starting to use marketplace. To transform software procurement. And with the cloud spending— with cloud spending growing 30% year over year, there are huge pools of dollars available for sellers and buyers to take advantage of. So now that we're all on the same page about what the marketplaces are, we really wanted to clear up some common misconceptions that exist about the way that they work. So the first one, the first myth is marketplaces are only for developers. People don't buy enterprise software this way. And the reality is marketplaces started as developer-led motions, but really as more and more features have come out, they've evolved to support— like custom deals, they've evolved to support, you know, transactions of all different sizes. We've seen sellers do transactions into the tens of millions of dollars, all the way down to pennies an hour or even free trials. So these marketplaces have matured to support almost all software business models. The second myth is your software has to be 100% self-service to Marketplace. And in reality, Marketplace has started with click-to-deploy, but they're— they now support all different types of complex software, and we're actually seeing the biggest selection growth in Marketplace from much more complex solutions.

The third myth that we see is that if your competitors aren't selling on Marketplace, that you don't need to sell there either. And we see the reality is the case. So the leading software companies actually use Marketplace as a chance to gain a competitive advantage and win more market share. So instead of asking, are my competitors on Marketplace, we think you should ask the question, do your buyers have a relationship with one of the cloud providers? And we'll talk a little bit more about that later on. And the fourth myth is that buyers don't want to buy this way. In reality, buyers are used to buying digitally for B2C. So why wouldn't they want to buy this way for B2B? Jason M. Lemkin of Forrester is an analyst that covers a lot of this space, and he's found that 73% of B2B buyers said that buying through marketplaces is very convenient. So if you learn one thing from today, we really hope it's that marketplaces are a win-win channel for both buyers and sellers. They really can accelerate the direct and channel sales efforts that you already have in place. It's really not an all-or-nothing type of effort. For sellers, the marketplaces are going to offer an efficient path to customers. They provide access to new budgets and revenue. They're going to accelerate your sales cycle, and they're going to help get the cloud sellers paid as well. On the buyer side, marketplaces are going to allow you to quickly procure and deploy software and consolidate all your spend onto a single bill. I want to jump into some of the trends that we've seen that have accelerated the shift to— B2B digital buying right now. So the first trend is really that the pandemic has shifted the workforce to remote. And that's why we're all sitting here together on Zoom instead of unfortunately hanging out in person together in the Bay Area. And with this shift to being remote, it's pushed about 80% of the sales cycle to digital settings. And at Tackle, because of this, we've seen record-setting levels of selling and buying actually happening on the cloud marketplaces. And some of you may know that AWS's big conference, re:Invent, is taking place now. And they've shared some numbers around seeing a 50% year-over-year growth in active subscriptions actually on Marketplace. And so, as you can see, these trends are really continuing. The second trend that we've actually seen too is that migrations to the cloud are rapidly accelerating. If you follow any of the stocks of some of the publicly traded cloud companies, you've seen that the pandemic is really only increasing the demand for cloud usage. So as an example here, Lyft in their S-1 public filings talked about their cloud commitment to spend $300 million on AWS over the next 3 years. And we really see Marketplace as a chance to burn— as a great complement to this, and you can burn down that committed cloud spend there and make your third-party purchases on software to expand that ever-growing tech stack that I know everyone probably listening to this call has at their organization. And as a result of these cloud-first mandates and more and more buyers now starting their searches on the marketplace, we're also seeing nontraditional verticals like martech and business applications that are also moving over to the marketplace and listing there. So, it's really become all about meeting your buyers where they already have that dedicated spend. So, you've kind of seen the factors that are driving this shift to digital buying, but we wanted to also break down why do buyers like, buying on Marketplace. And I would really bucket these down into two key areas. It's that buyers want to save time, and they also want to save money. So, it's Q4 right now, and whether you're buying lots of software or selling lots of software, you know that procurement teams can be a bottleneck or a headache, whatever you want to call it, when it comes to purchasing software. Well, with Marketplace, your organization is already going to have a contract in place with the cloud providers. So you can skip a lot of that legal and procurement back and forth that occurs. And as a result, everyone's happier. Your organization's going to get the software you need faster, and the buyer quickly gets access to the tools they need. Another thing that sucks with software buying is that managing tons of software vendors. So you have to remember, like, you know, when an invoice is due, deal with the contract terms and how they might handle payments. Cloud marketplaces actually allow you to still get the software you need, and you get to consolidate all those payments into a single billing contract. So at the end of the day, marketplaces really offer a faster and easier buying experience, and it's going to reduce a lot of that friction in the process. And I'll transition it to John now to talk about some of the trends we're seeing on the seller side of things.

Yeah, we actually had a couple questions in the chat, so maybe I'll try and hit those quick before continuing. So the first was, interesting topic, what about other marketplaces like Salesforce.com, SAP App Center. And I, I, our focus today is really around the heterogeneous marketplaces. So if you look at our customers, many of them sell software that's either on one cloud or many clouds, or could get deployed in a variety of places. And the more homogeneous marketplaces like AppExchange tend to have products that are built very specifically to be coupled with the products from that marketplace provider. We do think marketplace as a movement is something that we'll continue to see accelerate, but for Tackle, we're, we're very focused focused on those heterogeneous type marketplaces. The second question was around our support in China. We actually do not work with China, and the marketplaces have some limitations around how they work worldwide, but they continue to increase the global footprint for Marketplace, and as, as they do that, we'll continue to look to embrace and evolve our sellers to be able to sell where the marketplaces offer service. So I'm going to pivot back to the conversation and we'll come back to questions as we go. So, you know, really the buyer-led revolution that Nicole talked about, we see all sellers want to sell where their buyers want to buy. And all companies are trying to figure out what does the era of digital selling really mean? You know, will direct sellers continue to be as successful in the past? How can we embrace product-led growth and integrate that into our product solution? Or, you know, what can we truly do to to embrace content-led selling and discovery. And in the majority of instances, software companies are seeing marketplace as a complement to all of these models. And 70% of the survey respondents to our State of the Marketplace report said they would invest more in the cloud marketplaces in 2021 and beyond. But those same sellers expressed some challenges that they're, they're looking to overcome. And the first challenge was a lack of resources or time available to embrace marketplace inside their company, and the second challenge was really lack of clarity around how to translate their business model to the cloud marketplaces. And we'll share tactics to overcome those challenges a little further into the talk. So I— this is the— this is the top reasons why sellers want to sell in Marketplace, and we find that once sellers start selling this way, they really love it and tend to expand significantly. And a few of my favorites from this slide are number one, streamlining procurement. Like every seller has their nightmare procurement story about how they wasted a ton of time trying to figure out how to work through procurement. And really that time was low value for their company and ultimately low value for their customer. And everyone I know wants to do deals faster and spend less time with procurement. Marketplaces enable that. Number 2, accessing the cloud budgets for your software. And this is especially compelling for companies who may not have a dedicated budget line item or a clear budget that's already allocated to your solution. And in marketplace world, the cloud budget becomes your budget, which can be really powerful. And just last week, we had a customer who had a 2021 transaction get pulled forward because their buyer had an enterprise agreement with a cloud provider, that was precommitted that they needed to burn down in order to meet their commitments. They were able to use that to pull their transaction forward, and it was meaningful to this company. So the last— my last favorite point on the slide is having an avenue to co-sell with the cloud providers. Cloud sellers get paid when you sell through Marketplace, and while doing— truly taking advantage of this requires some finesse, when you do it and do it right, it can be a turbocharger for your business. One of the first things that happens as enterprises or companies start to make bigger commitments to the cloud is they rethink their entire tech stack, and to— they want to ensure that all of their software is ready to make the leap to cloud agility. And this tech stack rethinking sets the foundation for the future, and frankly, no software company wants to get left out of this tech stack rethinking. So, and cloud is a winner-take-most market, and those that crack the code on the value equation for the cloud buyer are set up to reap the benefits of this acceleration in migration to the cloud. And you really can become a leader of cloud in your software category. And we started to see sellers get excluded from transactions for not having Marketplace as a buying path, and in our State of the Marketplace report, we made a prediction that in 2021, you'll see more buyers declare, marketplace-native buying experiences as mandatory in order to— as they look to streamline procurement and leverage their cloud budgets.

John, before we jump to this next section, there's a few more questions that came in. Do we want to take those real quick before we jump?

Sure.

All right. The first one— yeah, go ahead.

Oh, I— yeah, I was— is it possible to get into the cloud marketplace if your solution has an on-premise component? All the cloud providers have slightly different rules about this, and I think in general they all want you to run components of your product on their cloud, as well as have a clear value proposition for how your product helps the cloud provider or your joint customer succeed with consuming core cloud services. So there are a lot of solutions out there in Marketplace that have a mix of in the cloud and potentially on-premise. Components to them, and it's just one of those things that, you know, either, you know, our team could help you navigate, or your partner leader from the cloud provider could help you determine if you could be a fit based upon the definition of your software. Let's see, who knows about green or carbon zero? No, it's not exactly— I don't know, is it? I, I don't have anything. I'd say anybody in the chat who knows about green or carbon zero clouds, uh, feel free to respond to that question. And I'll look at the rest of these, Nicole. Maybe why don't you pick up, and we'll come back to them.

I'll jump into this section then. So, yeah, as Sean mentioned, no one wants to be excluded from these deals. So, now, we're going to kind of COVID in these next— this next section how you can actually start to implement a marketplace strategy. And this is really going to vary by what stage of growth you're at, but it can apply to everyone here. This chart breaks down the respondents to our survey based on their ARR stage. In the $0 to $20 million ARR category, you're scaling your business. And this is when you can really start to build a go-to-market strategy that's powered by Marketplace from the ground up. And Tackle's our own best use case here. We drink our own champagne and built our go-to-market strategy selling deals through Marketplace. And these deals get done 75% faster than deals that we do direct. In this next category, the $20 to $100 million ARR category, we have many customers like Auth0 who do deals on Marketplace that are 30% larger than deals done directly. And then companies that are in that $100 million to $1 billion in ARR stage, they're just now really trying to retrofit Marketplace into their business model. And we've gotten feedback that companies here, they might lack the tooling that they need to scale efficiently. So Tackle's really invested heavily this year in solving for those problems. And usually we see these companies have a go-to-market strategy that's made up of resellers. So marketplaces might be seen as a bit of a threat, but they can also offer an alternative that can be 10 to 20% more cost efficient. A company that we think is doing a really great job here in this area is CrowdStrike. And their CEO George Kurtz said on an earnings call that marketplaces actually cut the sales cycle down by 50% for them. So companies at all these different stages of growth that utilize marketplace as part of their go-to-market strategy see deals that are faster, larger, and they have shorter sales cycles as well.

Yeah, maybe just before we go on the next one, there was a question around the, the Apple App Store and revenue cuts and just expectations around the cloud providers and how these marketplaces might evolve. And it's a really, really great point. And I think, you know, if you look at evolving your business with marketplace, it's really important to progress your partner status within the cloud provider ecosystem, and all of them give you avenues to drive down the cost of this channel. And we, we hear from sellers all the time that, you know, compared to other channels or other pathways to revenue, the marketplaces offer an extremely efficient way of going to market. Marketplace plus direct selling can be really efficient compared to maybe other layers of channel models that you might use today or have thought about using. Okay, so for the 39% of startups looking to build and scale their go-to-market systems, here are some steps you could take to try to get started. And, you know, I like to think about marketplaces giving your sellers some roads to drive on. Think, you know, access the contracts, access the budget. And a lot of times as a startup, those first sellers are out trying to pioneer your sales motion, and giving them some tools to pioneer with can be extremely useful. And, you know, my number one recommendation is to start to validate demand and think about, you know, where do your customers have strategic relationships with the cloud providers, and would it be easier to buy from you by putting your product on their cloud bill? Not all customers are going to know if they use Marketplace. The term Marketplace is still pretty new and emerging, even though these Marketplace have been around for a while. All of them will know if they have a strategic relationship with one or many of the cloud providers. So another key step to think about is how do you complement the clouds? And that could be where does your product run, or does your product offer a unique value proposition to one of the cloud provider customers? Because that can be a really strong signal of where to start. And, you know, starting where you're built or where you have the best value proposition can be really compelling. The last thing I'd say is keep it simple. You know, you want to start with a minimum viable marketplace approach, and oftentimes people think about automation and integration and auto-provisioning, and those are really great things you can think of— think about over time, but we'd encourage you to think minimum viable marketplace, start generating revenue, and grow into automation and integration with your success. And I'd say a caveat for all startups, as you're thinking about Marketplace, you need to have a level of repeatability in your selling motion and your pricing in order to succeed with Marketplace. So if you don't feel you're at product-market fit yet and you don't feel you have that level of revenue repeatability, you should wait until you do in order to start marketplac— but that doesn't mean you can't ask your buyers if it'd be easier to buy from you via the clouds. So pivoting more towards the other side of that spectrum and looking at the more mature companies, we have a few suggested actions for them. And all, all more mature companies have invested significantly in go-to-market systems and tools and are trying to figure out how do I integrate Marketplace or retrofit Marketplace into the system I already have running. And, you know, one of the first suggested actions, a lot of these companies don't have fully SaaS-ified cloud-native products. And you actually can use Marketplace to change the way you do commerce for your product as a first step towards SaaS transformation. It can really be a SaaS transformation quick win. So that's one option for a way to start. Number 2, you can think about— you should really think about leveraging Marketplace to do deal fulfillment to start and then grow into organic purchases. Everyone wants Marketplace to be the revenue easy button where people just start buying your product without having to do anything. You actually have to invest in kicking off the marketplace flywheel and starting with fulfillment, executing on deals and understanding how those deals work, building stories for your sellers, buyers, and the cloud provider partners is a good way to do that. Number 3, think about upfront how your solution helps the cloud providers drive core service consumption and their customers get value, because if you have that story from day 1, that's another way to accelerate your marketplace flywheel. And it's really important to think about this as your business evolves with the clouds, because the more they see benefit from your product for their customers, the more interesting your product becomes to their global field sales organizations. You know, in the last point, we said this specific to startups as well: don't overthink integration. And we see this a lot with really big companies where they're like, hey, I, I've got this process, I need to integrate Marketplace day one, and they overcomplicate everything. It's think fulfillment, build some marketplace selling muscle, think about automating over time as you have success. And we also see more mature software companies buying companies in order to become more cloud native, or, you know, building new products in order to have more of a cloud focus. And a lot of times in larger companies, these are great places to start a marketplace business transformation. So You know, kind of quick recap, then we'll have a, you know, things you can do. Start with some recon work, those questions about, you know, would it be easier to buy from us on your cloud bill? Who's your strategic cloud partner? Keep it simple, you know, pick one marketplace and scale. Don't try to overcomplicate it when you start. Thinking fulfillment to get your marketplace flywheel spinning and then growing into organic. And lastly, this is strategic. This is a strategic, revolution, and I bet everyone on this company who has responsibility for revenue is trying to figure out what digital sales really means. And, and now is a great time to think about how Marketplace can help you accomplish your digital sales revolution. And if you need help with your strategy, we're here to help be your guide. And thanks for joining us and look forward to answering some more questions.

Yep, and we got a few more questions that have popped in, in the chat, and then, you know, if you have some more that come in, we can also take if you just want to shout them out. All right. Want me to shoot you some, John?

Sure.

All right. So someone asked, Amit, what does a marketplace sale look like versus a regular direct sale, direct SaaS sale, specifically for non-self-service SaaS offerings?

Yeah, so if you went to one of the cloud marketplaces and searched for a product, you'd see— you know, I'll use New Relic as an example. If you went to AWS Marketplace, looked at New Relic, you'd see— you could go to newrelic.com and buy New Relic or do a free trial of it there, but you'd see their marketplace listings more engineered for a slightly larger scale purchase. So it's more targeted towards like a mid-sized buyer versus an initial land. And you'd click subscribe, you'd select the products that you want, and then that would trigger a bill to your cloud bill that would trigger a registration where you'd collect some details about the buyer. That would drive a notification to you as a seller, and then you'd be able to execute on your fulfillment of that order as a secondary motion. So it doesn't have to be subscribe, purchase, auto deploy. Really, you could have a, you know, customer success person then reach out to the buyer and say, hey, we saw you just purchased our product, uh, we want to help you through the last mile of fulfillment. And it's probably a lot more detail we could get into on that process. We have some great content about that or happy to chat more after the fact. I see a question about FedRAMP and federal marketplace. The federal marketplaces are— there's some layers to this. We evangelize the SaaS business model with marketplace just because it provides, you know, a premium experience, and I'd say the kind of experience all sellers expect as they're running a SaaS company. Not all the federal marketplaces support that business model, and then there's different layers for federal based upon, you know, intelligence community marketplace supporting only certain listing types versus the commercial marketplace supporting other listing types. I do think with, you know, the JEDI contract marketplace was part of the JEDI contract, you know, in that you need to be able to support a marketplace-style transaction in order to sell in federal in the future. The way the government is enforcing that is, I would say, still emerging, but I do think that's a movement that will grow significantly over the next year. Couple years. We got 1 minute left. So what stage is the right time to start thinking about Marketplace? Yeah, I mean, I would say like start early. Think about Marketplace early. Start validating demand with your buyers, asking that question of would it be easier to buy from us on your cloud bill? There's some really amazing examples of companies who are built Marketplace native. One of my favorites is Matillion, who's a data preparation a migration company, and they built their go-to-market from scratch with Marketplace and still do 95% of their revenue through the Cloud Marketplaces. And I actually think, you know, as a startup tackles a great use case, we built our company selling through Marketplace. 95% of our business goes through Marketplace. There was no line item for cloud middleware, Cloud Marketplace middleware when we started, so we were able to use the cloud budgets in order to grow the company. So never too soon, but never too soon or too late, but you want to have product-market fit.