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Right Partnership, Wrong Timing with Dan Gericke · Founder F**K ups

• Ben Bagg: Today's guest is Dan G, co-founder of Shift Control and previously the CTO at Express VPN, where he helped scale the company past seven hundred people. Dan knows how the enterprise world works and that's exactly what got him. Early on at Shift Control, they became an AWS partner. And on paper it was obvious, right? The biggest cloud on earth, a marketplace, a co-sell motion, instant credibility with buyers. What they actually got was a mountain of work and a return of almost zero. Because at the time AWS couldn't issue GST compliant receipts, so Shift Control was actually forced to register for GST themselves, which meant putting up a guarantee to the government, cash they never really wanted to spend and won't See again for maybe another year or two. Now, of course, AWF AWS has fixed that receipt problem, but only July this year. And so here's the kicker: the deal sizes were never big enough for AWS to be the right channel in the first place. And nobody ran that map before signing up. Today we're talking about the partnership mirage, the compliance bills hiding behind a logo, and why early cycles are the one thing a founder can never buy back. Dan Gericke: Hey, thanks Ben. Thanks for having me. Ben Bagg: No, you're welcome. when you were, you know, in the early days, like what what did you think becoming an ambius partner was going to kind of unlock for for shift control? Dan Gericke: Well, it's kind of funny how you get into it, right? When so early on you you're during the AWS startup program, you get AWS credits, you get a startup account manager. That account manager says, Hey, you want to become an AWS partner, you know, like you're you're pr building a product, we have a marketplace. The marketplace does have its benefits. There are really cool things. If you don't want to onboard to Stripe, for example, you can actually transact and and sell through AWS marketplace and like have people check out. so you know, there there are some enticing things. There's also the co-cell motion. there's we got actually introduced to a accelerated program for getting on becoming an AWS partner. So instead of a you well for a lot of companies it can take anywhere from 12 months to 18 months to complete the process. And this was a six months, a six-week accelerated program. Previously I had I had helped some other companies go through this, so I kind of knew what was involved, technically at least, and and what needed to be done. So I was fairly confident that we were in the right place to be able to do Ben Bagg: Yeah. Dan Gericke: it. but yeah, so that's kind of how we got into it. And we said, look, it might not be that big of a lift. you know, the the selling motion through AWS might be interesting. let's give it a shot. And that's kind of how it came about. Ben Bagg: time out guys. Lots of you are watching, lots of you are learning from the founder fuckups that we've all gone through, but please do me one little teeny favour and subscribe so that we can keep growing the channel and get more great founders on. Back to the episode. So it sounds more like it was the whole ecosystem that kind of drew you in, like you said, with the accelerator Dan Gericke: Yeah. Ben Bagg: program, and of course you've got the account manager pitching and selling all this various other ecosystems that they have. but you were looking at it as how can it help our sales merchant at the end of the day? It was like how do we use this to build pipelines? Dan Gericke: Yeah, 'cause ta like when AWS when you go when you're on the AWS marketplace, you can actually then have people buy through AWS and if they have a large like commitment to AWS, it can draw down some of their commitment. so there's some benefits to the customer. So there are there are ways that it could be beneficial. It's just that in the end you really need to have a sales team that really works on this motion specifically and looks for those kind of companies. And you have to have enough deal size for it to matter to bring down that spend for those companies that want to do it right. So there's a there's a Ben Bagg: Right. Yeah. Dan Gericke: little bit of a friction there. But if you do have the right GTM and through maybe partners or direct that are more enterprise people that have decent AWS spend, then it can be a really powerful thing because AWS does co-sell. Ben Bagg: Yeah. Dan Gericke: And it's so they'll take like a they they get their salespeople get a commission for selling your product even though you don't give them any commission yourself because they your product essentially sells gets more compute onto AWS and more consumption. that's kind of the idea, right? Yeah. Ben Bagg: Exactly. Okay. No, that makes that does make a lot of sense. And so you were kind of looking at okay, we can get access to some of their big user accounts or usage accounts, which could perhaps unlock some fast revenue for us. was that did that reality kind of happen? Like once you're in, did did they require too much of you to actually get the partnership moving or Dan Gericke: I would say that it works kinda like most channel partner relationships where you have to, you know, you you do deal reg a little bit or you you put qualified leads into the system. Then you can actually talk to an AWS account manager for that for that qualified lead to see if there's any way you can work together to try to make a deal happen. So that part is okay, but it requires you that more of a dedicated resource in your team to be focused on that kind of selling motion. And I think that's for us which which was the the the drawback is that we were just a very small team we're three people. There's no way we're going to assign somebody to not full time but to to really focus on just this motion unless it proved to be super, super like good. Ben Bagg: Yeah, yeah. That makes sense. Dan Gericke: So and what we found is that mostly like the deal size needed to be a bit bigger. So if we were selling fifty, hundred thousand, twenty thousand dollar licenses a year, then it makes a lot of sense because then AWS is also more incentivized to sell it and help it co sell. But at smaller deal sizes it's it's not as easy. Ben Bagg: Yeah. Yeah. And so I guess and then to do it properly it becomes quite difficult 'cause like you said, you meet a B D essentially who's literally an AWS B D, right? Like like inside the ecosystem, Dan Gericke: We need a B D yes, we need a B D function, yeah. Ben Bagg: they're working with the account manager, they're trying to motivate the account manager. Like channel sales is required, you've got to motivate your channel partner. yeah, so that's a lot of sales motion. Dan Gericke: I will say that the AWS team is quite good, like in Singapore especially. They are very on it. They are they try to help you out. They they will try to they'll meet with you, try to give you resources and but in the end, you know, there's only th you've got to do a lot of self serve. They'll help you through the process, help explain stuff to you. They'll even introduce you to other partners that you maybe can resell through or or partner with, but but there's still work, you know, and you still have to have the right types of types of product that really fit into that marketplace well. Especially if you have a product that that deploys AWS compute, right? So you Ben Bagg: Yeah. Dan Gericke: if your part of your go to market motion and sales motion is is to onboard like a bunch of ECS containers or something like that for for that customer, then it makes a lot of sense because it's Ben Bagg: Yeah. Dan Gericke: it mathematically it makes a ton of sense for them. Ben Bagg: then the commissions are looking quite sexy for the AWS guy and they're like, yeah, let me push you. And what else did the Puncha end up requiring from you? Because obviously it's hey, we've got a really hunt within this, but you also we also sort of talked about the GST issue. so I just imagine there's a a lot of paperwork, a lot of a lot of admin that kind of started getting sucked out of your small team in the early stage of the business where you probably want to like do your own sales, build your own product, fit focus Dan Gericke: Yeah. Ben Bagg: on your own business. Dan Gericke: Yeah, one area where we were lucky is we had already done our ISO twenty seven thousand one and SOCTube audits and so we were compliant. So there's an entire questionnaire and section of work that you have to do that can be bypassed if you already have those. So we didn't Ben Bagg: Yeah. Dan Gericke: have to do that piece, but we still had to do the AWS well architected review and and basically show AWS how everything's architected. It has to be in a specific format and and answer some other compliance questions. All that takes more time than it should, especially because Ben Bagg: Yeah. Dan Gericke: generating the diagrams for that can be annoying because you have to basically do like an AWS infrastructure diagram, and it's got bit a bit of back and forth. So that I Ben Bagg: Not a paperwork. Dan Gericke: it's a lot of paperwork, it's a lot of process and it's quite manual. Ben Bagg: Yeah. Dan Gericke: 'cause you'd you'd think like I my argument to them was like, look, you got we're running this on AWS, why can't you just look at the account and see what but no Ben Bagg: Ha ha ha Dan Gericke: we had we still had to create a a a diagram and they know they know that this is like a shortfall and I think maybe now with more AI coming into it it'll that maybe will become soft. But I think the biggest issue for us was the GST registration. To become an AWS partner in Singapore, as a Singapore company, you needed to be GST registered because they didn't have a way to do the GST receipts and stuff like that. So basically anything that you sold through AWS in Singapore needed to be a private offer and we had to take care of the GST on the back end, which is why Ben Bagg: Yeah. Dan Gericke: we required to be GST registered. And i if you know in Singapore, like typically you don't have to be GST registered until you make it a million ARR in Singapore, Ben Bagg: Yeah. Dan Gericke: which obviously at an early stage we were not at. Ben Bagg: No. Dan Gericke: And so Ben Bagg: Well Dan Gericke: then in order so you have to do this thing called a voluntary GST registration. And Ben Bagg: Yeah. Dan Gericke: that process then required us to have a local bank, because we didn't have a local bank account, we had Digibanks because local bank accounts for smaller businesses are much harder to open. So we needed to open a local bank account, which then allowed us to do this this GST guarantee that they required. So we needed it for two reasons. Number one, in order to pay in and out the GST, you need Ben Bagg: Yeah. Dan Gericke: to have bidirectional gyro, and bidirectional gyro is only supported by local banks, not by digi. Ben Bagg: Okay. So like D B S or something like that, but you couldn't work with Airwallet or or Y or something. Yeah. Yeah. Dan Gericke: Yeah, yeah, yeah. OCPC, something like that. Yeah, right. It won't work with Airwalts or Aspire, unfortunately. Yeah. so that was a f technical requirement from GST. But then also when we applied, the the IRS came back and said, Look for for companies like yours, we need a guarantee. it's like a loan guarantee almost. Like so we had to give something like twenty K Sing, basically put it into an escrow account with the bank, that that gets held for three years. Ben Bagg: And Dan Gericke: So it's locked up, you know, and that and early on when you're a self funded startup, that kind of cash is critical. Yeah. Ben Bagg: Yeah. Self funded. Yeah, I wanted to ask about that because if you're self funded, so this is g you know, it's come out of your your bank, you would have preferred to have spent that on growth or product development or or obviously on your own business and now it's just sucked up. did any of this at the time feel like some some like shit, we've got this is a lot of effort. Like you know, who's tak what are we losing by doing this? Focusing on building the bank, all the paperwork that goes into it, getting the GST stuff and then we've still got to hunt within the AWS. Did anyone at some point go, Maybe this is a bit much? Or was it well we kind of like we're trapped in the motion, we've we've committed and we've just got a lot of shit to get done and we're gonna get it done? Dan Gericke: Yeah, I would say it's a little bit of both. We diff we did we asked the ourselves the question, like, is this is this too much? Is this the right time? Should we just do it? ultimately you need the local bank account anyways for some pa local payroll stuff at some point. Ben Bagg: Stop. Dan Gericke: You know, like you kind of think like, well, should we just pull this trigger now and deal with it? Or or we're at some point we're gonna have to deal with it anyway. So we just decided to deal with it up front. But yeah, I mean the question definitely came up is like, is this too much work? but then Ben Bagg: Yeah. Dan Gericke: you already have the sunk cost fallacy, which is like we've got a lot of Time invested, we got to the towards the end of the process and all we needed all that was left to do with this G S C thing. So Ben Bagg: And did you know did you know about that GST thing before you had committed? Did you know that it was gonna be a twenty K deposit? Dan Gericke: No, I we didn't know the cost of it. We we kind of understood the GST registration requirement, but we didn't know how hard it would be to actually get done. Ben Bagg: Yeah. And so you're already kind of gone through a lot of work, like you said, with the diagrams, like a lot of some cost value. And Dan Gericke: I mean basically th everything was done except for that. Yeah. Ben Bagg: then you get a call, not a call, but you you get told, by the way, your business, we need a guarantee, twenty K must have been a bit of a kick up the ass, you know, what the hell? That must have been quite Dan Gericke: Yeah. Ben Bagg: frustrating to be kind of the rug pulled out under you kind of thing. Dan Gericke: And there's no there's no like remediation, there's no escalation path for the so Ben Bagg: Government, yeah. Dan Gericke: it is what it is, you know. And I and I and I have, you know, some friends in IMDA and other agencies and I give them I tell them my experience and my story, you know, to kinda let them know this isn't maybe the best way that's for small businesses to try to operate and you know, because in general Singapore does make it easy to operate, but there are certain things that could be hard. Ben Bagg: Yeah. Dan Gericke: so it it's kind of w you know, giving the feedback I think is important and saying, look, this is the trouble we had. Ben Bagg: Yeah. Singapore very good at listening, Dan Gericke: They are. Yeah. Ben Bagg: actually, but you know, no market's perfect. And you're you're you're registering really early for GST, so it's probably not a very common Dan Gericke: Yes. Ben Bagg: issue that pops up, right? Dan Gericke: I mean the good thing in the end is we can call back the GST we pay in. But Ben Bagg: Yeah. Dan Gericke: so there's some benefit, but yeah, we also have to make sure everything's GST invoiced and there's the GST submission process with the co c Corpsec and the county firms and there's a lot more overhead to to running GST for sure. Ben Bagg: Once you're kind of in this now, we've we've done all the paperwork, we've got to do the B D motion, we've got the cash in the bank in in the escrow, and now you've got to start working it, right? You've got to make this channel work for you. when did you realise that ROI might scale on the on the zero end that something that you first imagined when you first started working with AWS. Dan Gericke: As part of the six week program, Is it six weeks? Anyways, it's something it's short, right? It's like a three-month program. It's a very short program. as part of that accelerated program, we went to certain certain workshops with AWS where they kind of really explained in more detail how the seller motion works. And I think at during those workshops, I got a more clear picture of like the the reality Ben Bagg: Yeah. Dan Gericke: of, you know, like obviously AWS doesn't sell for you unless they have an incentive to sell Ben Bagg: Yeah. Dan Gericke: for you. not that I thought they were gonna do anything magical, but you know, you kind of get the reality of of how it all works. So and then, you know, you have to basically re register deals and then you have to close certain amount of deals to get to a certain level and then kinda you get moved up to the next phase and the next phase Ben Bagg: Yeah. Dan Gericke: where you get more co marketing support and you get you know, all these other things. So, yeah, I think it was fairly early on where we realized put trying to push people through AWS that are smaller businesses just to be able to say we closed the deal through AWS maybe isn't the easiest. Ben Bagg: Okay. So actually when you were you were motivated to drive your customers through AWS, not necessarily because AWS was the right path or the best path, but because you needed to go up those tiers so you could unlock the real benefits of AWS. Dan Gericke: Yeah, and interesting en in interestingly enough, you don't actually need to close them an in AWS marketplace. You can do it outside. Obviously they prefer inside, but you can register someone in their their little opportunity pipeline thing and then say the deal is one and it still counts as a deal one even though you it's sold outside because ultimately they still get AWS increase of of consumption of of resources, right? and Ben Bagg: Sure. As long as AWS are winning, they're happy. Yeah. Dan Gericke: Yeah. But but still like to t to push the to push things into the AWS sales pipeline and then go talk to the account managers and stuff like that. What the account managers can give you is essentially maybe some insights into into that organization, maybe some other connection points. For that it's really good. but Ben Bagg: Yeah. Dan Gericke: if you already have those and you're just trying to close the deal, there's not that much they can do unless they can give you like a discount for something else or credits or so you can somehow sweeten the deal. But at our deal size typically it wasn't worth it for them. Ben Bagg: And did 'cause obviously what we're talking about here really is a a sales strategy via a channel, AWS. And so did any real deals ever come out of the channel? When I say real deals, what's the Dan Gericke: Not out of the channel, not sourced by them. Not yeah, not definitely not sourced by them. which I understand 'cause we never made it to the to the higher tiers where they would actually assign more of a a dedicated salesperson. I think your product needs to be the type of product that that lends itself well to those deal sizes and that type of motion for those types of enterprise companies. So if your product isn't like that, then like if you're doing basically product led growth motion to smaller businesses, like AWS channel probably isn't the right one to start with. Yeah. Ben Bagg: Was that something you were trying to do, part of leg growth? Dan Gericke: We we were I mean we've always been trying to do product led growth, but the reality is it's you know, founders led sales is the way you start, no matter what, and you hope to be able to have a good enough product that at some point it tries. Yeah. Yeah. Yeah. But it's always gonna be Ben Bagg: You want to get to that stage. That's the dream. Okay. Dan Gericke: like for the first few years, you know, it's always gonna be founder led sales for sure. Ben Bagg: So the so obviously the channel wasn't producing many deals, but would you say it was making your deal flow a little well, your sales cycle, your sales process a little bit faster, slightly improved conversion rate because we were in within the AWS ecosystem? Like Yeah. Dan Gericke: I would say it gave us some credibility. you get a little bit of credibility. You can you know, you can tell people you're an AWS partner, peop you you've gone through the at least with AWS partner cr badge, you you say that you've gone through some security reviews, you've you've your architecture is well done and a few other things. So I think that is bene a benefit. You get f some free SEO for marketplace listing, which is also good, essentially. So it's not a bad thing. It's just you have to d weigh the the investment versus the ROI. A bit and decide Ben Bagg: Yeah. Dan Gericke: whether that's the right time for you and if the product is right. Like you Ben Bagg: Yeah. Dan Gericke: might be better off going with a with a more direct type of partnership with people that actually downsell to the types of customers that you have, and then go to AWS later. when you have something like, especially now they've recently introduced this bundling capability. So I could like bundle my product with somebody else's product together, and then we can co-sell inside a bundle inside Ben Bagg: Yeah. Dan Gericke: AWS, which is actually much more interesting. Because if we're Ben Bagg: Yeah. Dan Gericke: smaller and somebody else is bigger, they could sell and just attach us and it would all transfer. So that's interesting, but that's fairly new. Ben Bagg: Okay. No, that is interesting. But at before, because obviously this is a new thing, what was kind of keeping you in at the time was it because we'd spent a lot of time in it already, a bit bit of pressure. Dan Gericke: I mean there's nothing once you're done once you're in you're in, so there's nothing like to Ben Bagg: You just gotta crack on. Dan Gericke: Yeah, like if you don't use it, you're still an AWS partner. it Ben Bagg: Yeah. Dan Gericke: it really at that point depends on how many leads you put into the platform. if you wanna l you know, use their their account managers for information or not. and at su if if your deal size gets good enough or the or you have the right motion if you can get the right credits or you can Or you can draw down that person's commit, right? If the if their commits drawn down, then it's also a benefit for them. Ben Bagg: And it Was there a point where you're like, well 'cause obviously kind of Fred here is about what the RO might have ROI might have really been zero at the time. I imagine now it's kind of become a bit of a compounding interest thing for you guys. It wasn't really working necessarily in your best favour at the beginning, but now it's like because you've put in that long term work, it's actually starting to re rewards. So would you say the ROI is now coming in the later stage of your partnership rather than the earlier stage? And I guess the mistake here in a way was that most startups can't really afford to wait the the seven for the compounding interest. Obviously you guys were able to make that work, but would you say now the ROI is starting to hit? Dan Gericke: I think we have opportunity for it to start like paying back now, yes. there are s they have some new programs, this co sale thing that they have now, this this bundling thing. So there are now better opportunities and and also they've fixed the d GST thing. So the the so before you Ben Bagg: Yeah, yeah. Dan Gericke: couldn't like people couldn't buy direct on the Amazon marketplace for in Singapore as a Singaporean company. Every rest of the world they could, but they couldn't Ben Bagg: Okay. Dan Gericke: click through and s and check out on the on the marketplace as a Singapore company. But now they can. So some of those those hurdles are resolved. Ben Bagg: Get your twenty K back now. Soon. Well three years, right? Dan Gericke: Night well soon. yeah. Yeah. Ben Bagg: Wow. So this is this you've been in the s ecosystem for three years, nearly. Dan Gericke: about two two something, yeah. Ben Bagg: do something and really only now the ROI is starting to be wouldn't not actually earn, but actually you can now see it. Like you're like, okay, it's coming. Dan Gericke: Starting starting to see I would say w not actualized but visualized if you if you will. Like yeah. Ben Bagg: Yeah, I know. Dan Gericke: but yeah, you know, and it's because of our our go to market motion in the and the type of product we sell. So if we sold something that was more of a cloud product, then it that would be a completely different story. Ben Bagg: Yeah. Dan Gericke: but our product sits on top of Google Workspace and we make IT easier for people. So it's it's not something that necessarily you sell so naturally through an AWS. If we were doing something like a data platform or something like that, it would be a lot different, right? Ben Bagg: That's really interesting that you say that, 'cause it's you said it's not really something you would sell through AWS. Yeah. Our strategy in the in the early days was to to sell through AWS. What was what do you think at the time, like looking back, was the math that should have been done before signing? The things that we probably should have kind of considered before getting into this? Was it maybe Dan Gericke: I I think going back to what I know now, like w if you don't have a sales team, this is probably not worth it. I I think you need to have a dedicated sales team that that is p like knocking like using these resources for their benefit and it's actu has the time to actually live in that channel and and work it. If you don't have the time to live in that channel and work it, then it's really tough to to make it work for you. Ben Bagg: Yeah. So when you're sort of a founder led sales team and you're obviously building the product as well, it's actually gonna be quite challenging because it's kinda like a full time job to be basically l Dan Gericke: Yeah. Ben Bagg: it's like AWS ecosystem is l you're LinkedIn. You've just gotta be hunting it now. Yeah. Dan Gericke: Yes. Yeah. And it's like you register a a a lead in there and then you can then you find out who the account manager is for that lead and then you kinda talk s schedule a meeting, you find out some more information, see how you can maybe work together to do something. Like that's this is what this is the the way it kinda works, right? so Ben Bagg: Yeah. Now if there was a founder listening here who's also looking at AWS as an option, you know, what do you think is kind of one a one hour sanity check that they could run to kind of what they should calculate to see if this actually makes sense for them before sight? 'Cause not everybody can do two and a half years working a channel, putting twenty K up to get to the point you're at. so what could be a one hour sanity check do you think? Wish you did back before. Dan Gericke: I think talk to somebody who is in who's using the channel now to understand how they sell through it. Once you understand it, then you can decide if that's for you or not. or if you're ready for that or not. Because the investment is not zero. You have to work the channel properly, otherwise it won't work for you. I think that's the biggest thing. Like find somebody that's doing it and get and and hear hear the the ground truth of how it works. Ben Bagg: Yeah. Do you think a lot of the time people go in and I know I'm not sure if this is the same for you, but you get a bit of rosy tinted glasses, you know, like I said at the very beginning, like kind of that logo can kind of entice us in. We get rosy tinted glasses. Well, for an A B S partner, people gonna trust us, they're gonna buy from us really easily. But actually the realities are you have gotta work it. It's not all right, it's a badge that can help give you some credibility because AWS are kind of lending you that credibility because you pass some kind of assessment through them. But at the end of the Dan Gericke: Yeah. Ben Bagg: day, the sales motion, the hunting, the deal closing is not any easier. Because you also you said you had Dan Gericke: Yeah, I would say Ben Bagg: ISO and all this stuff. So you already had like security credibility, right? Dan Gericke: Yeah. I would say don't chase that logo. It's it's chase you're chasing the AWS partnership as a way to because as a way to make more sales because they have the right ins in the right places in your type of customer that wants to buy your product and they're happy to buy it through AWS. there are other benefits of of of selling through AWS marketplace. Like there's a a you can choose to do it like a normalized sales agreement and like a com like terms and services. So then Ben Bagg: Yeah. Dan Gericke: the legal teams of the other this is always a bigger enterprise deal problem, right? So the legal team of the other company doesn't have to review your TOS, Ben Bagg: Yeah. Dan Gericke: your custom TOS. It's the normal standardized TOS that they've reviewed a bunch of times through Amazon. So there's Ben Bagg: Yeah. Dan Gericke: like this kind of little stuff that can can really be time savers enclosing a Ben Bagg: Yeah. Dan Gericke: larger deal. But once again that means that you have to be selling to bigger companies, larger deal size. Ben Bagg: Yes, if you're yeah, if you're s trying to sell to say the finance industry, like banking sector or something, you don't want to go Dan Gericke: Yes. Yeah. Ben Bagg: through that whole three month legal procurement process. This reduces your sales cycle in theory. So if your ICP Dan Gericke: Yes, it it definitely can for sure, yeah. Ben Bagg: is that kind of account, it does definitely start to make sense. Dan Gericke: Billing is also kinda handled for you. So the ha billing's handled by AWS, right? So you you they they collect and then they pay you the the fee is quite good. So, you know, like s some of that overhead maybe goes away. Ben Bagg: Do they do they cover a little bit of the the cash flow shorts that can come? For example, I had a big enterprise client back in the day who paid me like six months late. Dan Gericke: Mm. Ben Bagg: That hurt me. I'm wondering if AWS just pay you. I don't Dan Gericke: AWS will collect. It's very hard to not pay AWS because then you're gonna not because then you're gonna they're gonna turn off AWS. Yeah. Ben Bagg: They're gonna knock on the door of a nice legal team with a powerful powerful set of seats. Dan Gericke: Yeah. So they will collect f they will do their best to do the collection for you, which is which is ideal. Ben Bagg: Yeah. Dan Gericke: and then and then I but I don't think they will pay you until you have collected on their side. But typically yeah. Ben Bagg: Okay, okay. But someone like I don't know, DBS are not gonna slow pay AWS. They can s they can afford to slow pay s startups. what's the start up gonna do? Dan Gericke: Yes, exactly. Yeah. Ben Bagg: yeah, okay, yeah, that makes sense. That makes sense. That that can definitely be a lot of value there. And you know, I've I I was thinking when I was planning this conversation with you, like what what are we talking about here? And I I was kind of thinking that we're talking about like cycles. Like when you're in the first few years few years of your business, this the th the actions and strategies you pick, those are the cycles that you really can't buy back. Once you're in, you've spent that time or money. And so just wondering what you think doing a going into the AWS route at the early days cost you in time and momentum. Perhaps like you said, you you've got a founding sales led team, but the AWS requires all that heavy handed time. Did it did you lose time on what could have got you more direct customers? what do you think might have been a lost cycle here? Dan Gericke: I mean certainly there is lost time on on product development that I could have been doing on something else by dealing with some of the the paperwork. You know, there's also something you have to build where you where the marketplace can automatically Ben Bagg: Okay. Dan Gericke: onboard your system. So you have to build some infrastructure to to let the marketplace buy and and onboard and stuff automatically. so there's some some definitely engineering time loss where we could have been working on on something else. Ben Bagg: Yeah. Dan Gericke: the I I would say one thing I've realized as as being a startup founder is that you can build the perfect product but it's very hard. It's still you gotta sell it. So you know, if nobody knows that you have a perfect product then they're not gonna onboard to the perfect product. Ben Bagg: Yes, exactly. Dan Gericke: and most of our products probably aren't perfect. so The sales thing is really important. Focus on how like focus on selling direct and then figure out like w like and finding what channels might actually work and maybe not dipping your f toe into these more in involved channels until you know or you have somebody that's giving you good advice that says, actually this channel will be great for you because of these reasons and this investment is Ben Bagg: Yeah. Dan Gericke: worth it. like if I would have maybe talked to another founder who's gone through it and and asked these questions, maybe I would have made a different decision up front and done it just a bit later, you know. Ben Bagg: Yeah. do you think it 'cause obviously we talk about time you could have that I mean you talked just now about like the learning speed, the learning where to sell, how to sell, like how do we distribute a great product basically. so you you kind of the cost is you lose a little bit of that. Do you think you also lost the op option for for traction? I guess what what hurt low which loss hurts the most, you know, cycle of of maybe learning or getting some traction, maybe the cash that is then spent on developing the product and and features that are required. What hurt what loss hurts the most? Dan Gericke: I mean at that point we were already we already had enough clients to where we were where we're profitable at that point. So we weren't necessarily hurting the most on the on the cash out. It it wasn't awesome. Like obviously we would have rather had that around. Ben Bagg: Yeah. Dan Gericke: Like nobody wants twenty thousand dollars or whatever locked up in where you can't touch it. But so I think it was more just opportunity cost of of if we're not doing this, what could what else could we have done? And it's almost impossible to say if it would have made any difference or not to work on something else at that point. But certainly we know that that for the initial phase, the AWS Ben Bagg: Yeah. Dan Gericke: partnership maybe gave us some credibility with with clients, but it didn't necessarily close sales and close new sales. So but I but I think that like now that we're talking with some bigger partners, we're already in the marketplace and actually we met them at the AWS marketplace partner marketplace events. So we are getting some introductions to big bigger partners that are willing to work with us, which is good. So there are benefits, there are drawbacks. I think it's it's definitely a timing thing. You guys Ben Bagg: Yeah. And I guess your business would have matured over the last two and a half years, your product got stronger, Dan Gericke: Yes. Ben Bagg: the positioning's got stronger, your messaging's got stronger. So now being at an AWS partner event and you run into a a large enterprise, you can you can actually manage that deal quite well now. Dan Gericke: Yeah, that's it that's that's exactly right. I mean early on we were when we were that early we you know, our product ha was an idea, we had some stuff built, it worked, but it ness it what didn't evolve into like the thing that it is today yet. And even today we're still tuning it a bit, you know, on on specific types of product market fit and stuff like that. So and how to sell it the best, like Our product selling it to the end user maybe is a little bit harder, so going through the partners in the channels actually might be easier. So we're exploring that more heavily now and that's where the AWS partnership will be much better for us for sure. But we didn't explore Ben Bagg: Yeah, for sure. Dan Gericke: that so much up front. Also because up front early on you want to sell direct so you can understand your customers better. Ben Bagg: Yeah, yeah, you need to. And what what do you think of 'cause you've mentioned it a little bit about like when you speak to somebody who's gone through the program before, but what do you is what else do you think of foundership asked before sort of saying yes to a big partner program like AWS or there's multiple different types of partner programs out there. Dan Gericke: Yeah, I mean there's a bunch of partner programs out there. so your question is like what type of questions should they ask? Ben Bagg: Yeah, before saying yes to committing to one of these big power problems like you Dan Gericke: I think the biggest one is how does it work? What do you what kind of resources do I need to make this run? what kind of investment besides the time to set it up do I need? Because if you f if somebody else explains to you, okay, this is so this is how it works. You sit down, you put the lead in, and then you do this, and then you get this back. And they don't try to sell for you, you have to do that, but you can get this information. And we right, like once you and then this is how the deal closes, and what the benefit you get from deal closing the deal in this in the partner ecosystem or not, and what you have to pay in terms of commission or not, like once you kind of understand all of that, and then also what It took for them to onboard technically and time-wise, you Ben Bagg: Yeah. Dan Gericke: know, then I think then you make a better decision. Like there, I saw other people in the program that were suffering, struggling through the security questionnaire side because they didn't Ben Bagg: Yeah. Dan Gericke: have SOC2 or ISO yet. So for them, it was like they had to do a bunch of uplift to even get to the security standard that it required. Imagine doing that very early on. I mean, yes, they should be doing that no matter what, but the reality is, right, like that's a huge investment. Ben Bagg: Yeah, most most most startups will probably put unless depending on what industry they're in will probably put the stock side of things and the security elements a little bit later on in their in their G Yeah. Dan Gericke: Yeah, when somebody starts asking them for it, right? Ben Bagg: And what what do you think of red flags that a founder should look out for in a partnership program? Dan Gericke: I think part partnership programs, I think the big ones, the the red flag I I don't know if it's a red flag, but the the thing you have to watch out for is that they're big for a reason and you as a small guy is gonna get very little attention. Ben Bagg: Yeah. Dan Gericke: But if you go with more direct partnerships with other people that are doing stuff like you or that are selling onto your customers, then that relationship is a is a more of a one-to-one with a partner and you and you do a bunch of one to one relationships, not in an ecosystem necessarily. I think that's Ben Bagg: Yeah. Dan Gericke: a much healthier probably way initially to figure out the motion. Yeah. Ben Bagg: Try to avoid these, I mean, giant ecosystem partnerships and find some Dan Gericke: Yeah, unless your product is literally selling parts of their like Ben Bagg: Yeah. Dan Gericke: their thing. then it it then it's of course almost like Ben Bagg: Thing I should Dan Gericke: it makes perfect sense. But if if not, if you if for example, if somebody buys your product and that doesn't gener that that doesn't mean you create ten new ECS containers or ten new EC2 instances, then there's no incremental gain for AWS necessarily, Ben Bagg: Yeah. Dan Gericke: except for some small compute gain, then then maybe it's a little bit harder of a of a sell. Ben Bagg: Yeah. Yeah. And what's what's the rule of thumb you wish you'd had at the start? Dan Gericke: I mean probably just focus more on the on the direct sales, founder led sales and and don't get distracted with all this other stuff. Like focus on you, focus on direct partnerships, don't don't get as enticed by the the ecosystems, because ecosystems are there for people with the right staff to work them. Ben Bagg: Yeah. Honestly some of the some of the folks that I coach it's the it's kind of the same thing. It's not necessarily about ecosystems, but it's always about focus. Like Dan Gericke: Yeah. Ben Bagg: focus is the superpower of a of a founder. Dan, thank you so much for coming on and sharing your story and I and I'm I'm sure founders can can learn from Dan Gericke: Yep, no problem. Thanks for having me.