In my last post, Cloud Platforms, Marketplaces, and Startups Part One, I examined the proliferation of partner ecosystems within the cloud software business, beginning with Salesforce AppExchange. Here, we’ll look at how startups can best navigate the plethora of partner ecosystems available to them.
Cloud marketplaces give startups a leg up
There is huge incentive for established business cloud providers to pursue a platform strategy and strengthen their ecosystem.
That’s why Okta launched the Okta Integration Network, giving its customers the ability to choose from more than 6,000 pre-built integrations with cloud and on-premises systems. It’s also why CrowdStrike opened the CrowdStrike Store to help its customers take their security to the next level with apps from partner organizations.
Monty Gray, SVP Corporate Development at Okta, recently told me about the Okta Integration Network:
“At Okta, we’re on a mission to connect people to the technologies they need to do their best work. That’s why we created the Okta Integration Network –– to enable organizations to integrate and connect everything from 20-year-old legacy technology to bleeding edge startup technology, extending the overall value of our platform and creating a seamless and secure experience for our customers in today’s best-of-breed world,” he said.
So, what’s in it for the smaller cloud startups and ISVs? If you’re 10-person startup, the real advantage is that you can have a number of large platforms out there that will provide APIs that let you easily hook into them. This can be an excellent source of high-quality customer leads.
But if you have 25 platforms to choose from, how do you pick the right one? Do you build a lightweight integration engine for several of these platforms? Do you make a bet on a single platform that is likely to deliver the most customers? Or something in between?
We recommend first electing one or two platforms and then building deep integrations that customers will love. Then down the road add a third or fourth platform. You rarely want to start off with multiple platforms at once, because this won’t allow you to build your integrations the right way and truly take care of your customers.
It’s also important to note that startups in these marketplaces that receive strong customer traction can help you get noticed by the likes of Salesforce, Okta and CrowdStrike who have venture arms that invest in promising, relevant startups.
“Salesforce Ventures has been investing in the next generation of enterprise technology companies for the past ten years, helping to accelerate their growth while providing our customers with more cutting-edge solutions,” said Matt Garratt, Managing Partner of Salesforce Ventures. “Portfolio companies not only receive funding, but also strategic advisory from executives and experts across Salesforce and operating support to help guide on sales, pricing, go-to-market and more. For every investment Salesforce Ventures makes, we align around our product roadmap and product vision. As a result, we’re able to identify highly strategic startups and help accelerate them into the market.”
Orange is better than green
We advise startups to think about their cloud ecosystem partnerships is terms of red, yellow and green. In 2007, our VP of products, Woodson Martin, who is now the Executive Vice President and GM of the Salesforce AppExchange, spoke at our first gathering of ISV partners at Dreamforce and presented a “red-yellow-green” slide.
If a particular feature or product line was red, that was a signal to partners not to get into that space because we were going to build that functionality ourselves. In the yellow zone were product lines we knew were important to our customers but that we hadn’t decided on yet. “Come talk to us about yellow product areas.” Green signaled “knock yourself out,” because we were never going to build that product line ourselves.
But here’s a little secret for startups. If it’s red, don’t bother. And if it’s green, also don’t bother. Why? Because green suggests that customers don’t care about that functionality. If they did, the platform providers would consider it. Instead, look for areas that are either yellow or orange (red plus yellow).
In these cases, you can have confidence that the platform provider’s customer base wants that functionality and, if you build it, they will come. As the platform providers grow their customer bases and they see the leverage from investing in their platforms and ecosystems, orange product areas become yellow, and the earnest ISV partner can be a leader in that category.
“We’re passionate about helping our ISV partners succeed, because when they succeed, we succeed,” Martin said. “The Salesforce ecosystem has grown into a powerful force, enabling our partners to better serve our joint customers while growing their businesses and spurring innovation. Our ISV partners not only extend Salesforce into new industries, they are unlocking opportunities around the world.”
Build a fire over years
Naturally, prosperity won’t happen overnight. We encourage our portfolio companies to think of these partnerships like building a fire over years. Start with the right kindling, build a great integration and be laser focused on end customer success. But if you can generate and cultivate sparks with one or two cloud platforms, in a few years they can grow into significant revenue streams and help make your business a roaring success.
By Matt Holleran
Matt helped launch the Salesforce AppExchange ecosystem about 14 years ago, and since then many other business cloud companies have launched their own partner platforms and marketplaces, including ServiceNow, CrowdStrike and Okta. But with so many choices, how does a startup choose when the time is right to join a partner ecosystem, and which one should that be?