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104 - Jay McBain - Halftime in the Decade of the Ecosystem · Partnerships Unraveled

• 0:07
  Speaker 1: Welcome back to Partnerships Unraveled, the podcast where we unravel the mysteries about channels and partnerships on a weekly basis.
• 0:13
  Speaker 1: My name is Efe and I'm really excited to announce our special guest today, Jay McBain.
• 0:18
  Speaker 1: Jay, how are you doing?
• 0:20
  Speaker 2: I'm doing great.
• 0:20
  Speaker 2: Thank you so much for having me.
• 0:23
  Speaker 1: Thank you, jay.
• 0:23
  Speaker 1: I'm thinking probably everyone who is tuning to us right now knows who we are, but could you still give us an introduction?
• 0:30
  Speaker 1: Let us know who are you and what do you do?
• 0:31
  Speaker 1: Yeah, sure, absolutely, I'm the chief analyst at Canalys.
• 0:37
  Speaker 2: Canalys is Latin for channel, so it's a firm around the world that over 100 people like me wake up every day thinking about channels, partnerships, alliances, ecosystems.
• 0:47
  Speaker 2: I've been in the industry 30 years, every one of those years in channel roles, being a channel chief for big companies like IBM, Lenovo, building software on the software channel software tech stack for seven years and now as an analyst for seven years.
• 1:06
  Speaker 1: Thank you.
• 1:07
  Speaker 1: To be honest, in this podcast, I love to use some data from Canalyst.
• 1:12
  Speaker 1: I think you guys do amazing research and it's always valuable insights, and a lot of the guests that we had previously.
• 1:18
  Speaker 1: They love it when I use some data that you guys have provided.
• 1:21
  Speaker 1: So, jay, you recently gave a keynote speech at the Partnerships Leaders Event, catalyst 2024, where you talked about reaching halftime in the decade of the ecosystem.
• 1:32
  Speaker 1: Now, for those who have missed your speech what do you mean by halftime and what kind of a pivot do you expect partnership leaders to make?
• 1:44
  Speaker 2: Yeah, so the decade of the ecosystem was kind of framed up probably close to seven years ago.
• 1:49
  Speaker 2: It was going into the decade of the ecosystem, but we had just lived through a decade of sales and a decade of marketing.
• 1:56
  Speaker 2: In 1999, it was really kicked off with Salesforcecom.
• 1:59
  Speaker 2: It's when we went into the decade.
• 2:01
  Speaker 2: This was about 1999.
• 2:03
  Speaker 2: We went in thinking that we managed our territories with our gut.
• 2:08
  Speaker 2: We think we were born to be salespeople.
• 2:10
  Speaker 2: Well, we exited the decade of sales in a much more scientific way thinking about pipelines, thinking about how the sales process works, making it repeatable, things like that.
• 2:22
  Speaker 2: The decade of marketing really clicked off in 2009, 10 years later, and companies like Eloqua and Marketo and Pardot and HubSpot and others started to frame up marketing automation.
• 2:35
  Speaker 2: Where you went into the decade as a CMO, you're at a cocktail party.
• 2:39
  Speaker 2: You're joking that you waste 50% of your marketing dollars.
• 2:44
  Speaker 2: You don't know which 50% that you wasted.
• 2:47
  Speaker 2: It was really funny back then.
• 2:49
  Speaker 2: But when you exited the decade of marketing in 2019, everything was a science.
• 2:55
  Speaker 2: There's not only those big four platforms, but there's 14,106 other MarTech and AdTech ISVs to support it, and the average CMO went from a 58-year-old to a 38-year-old growth hacker.
• 3:10
  Speaker 2: A lot changed in that decade.
• 3:13
  Speaker 2: So fast forward again in 2019, we kind of clicked off this decade of the ecosystem, which brings everything together, and I showed a bunch of stats Even a few weeks ago.
• 3:24
  Speaker 2: Salesforce now says that 89% of salespeople use partners.
• 3:28
  Speaker 2: The 11% who don't well, 57% of them will in the next 12 months.
• 3:35
  Speaker 2: So the world is partner-assisted.
• 3:38
  Speaker 2: Almost 96% of deals in B2B are partner-assisted.
• 3:42
  Speaker 2: So it's about time that sales and marketing start to work closer than ever before.
• 3:49
  Speaker 2: So that was the prediction of the decade of the ecosystem, and now we are halfway.
• 3:55
  Speaker 2: So 2024 is five years in and I'll say that, you know, it's been wonderful because of those Salesforce stats and I think that in second-party data, third-party data, the end of the cookie, marketing folks, sales folks, customer success folks, especially product folks with an integration-first buyer now believe in partnerships.
• 4:17
  Speaker 2: The hype cycle was wonderful.
• 4:20
  Speaker 2: We had all kinds of communities.
• 4:22
  Speaker 2: We had all kinds of books being written.
• 4:23
  Speaker 2: We had all kinds of communities.
• 4:25
  Speaker 2: We had all kinds of books being written.
• 4:26
  Speaker 2: We had all kinds of things.
• 4:27
  Speaker 2: So all of us got to this point where we had convinced the world now that partnerships are absolutely key.
• 4:33
  Speaker 2: Which was in the audience?
• 4:35
  Speaker 2: Scott Brinker was there in the front row and there was a point in time where they differentiated their company.
• 4:50
  Speaker 2: They grew up this new growth hacker with what they called inbound, and it was education, it was events, it was an entire movement to change the game in marketing and I think we've done this movement in the partnership world.
• 5:03
  Speaker 2: But when they went ahead and hired Scott Brinker, he walked in with the 14,106 logos on his Martech ad tech stack, went in with the realization that there's 200,000 digital agencies and we need to convert at least 78% of them to tech services companies to do those implementations and integrations and consulting.
• 5:25
  Speaker 2: So they had this ecosystem mindset about halfway through their decade and I showed a chart of their valuation of their company and it was pretty flatlined at a billion dollars through the entire five, six, seven years of inbound.
• 5:41
  Speaker 2: But after those movements that were made into the ecosystem and becoming that most integrated marketing automation tool, they went from 1 billion to 40 within the next couple of years.
• 5:52
  Speaker 2: It was the trigger they needed and this is the trigger as partnership folks that we've got to take as well.
• 5:58
  Speaker 2: We've got to move from hype to operational excellence.
• 6:02
  Speaker 2: This is measuring, monitoring, managing every partner moment.
• 6:07
  Speaker 2: It's doing it in a reliable, repeatable and scalable way that CFOs and boards will invest into, feel comfortable investing into, and feel that they've got that science around partnering, that they were able to get in sales, able to get in marketing in those previous decades.
• 6:26
  Speaker 2: So that's what halftime means and there's really a call to action to pivot to operations, to rev ops, to all the things that we need to do to prove out what we know in our hearts.
• 6:38
  Speaker 1: Yeah, I love it.
• 6:39
  Speaker 1: So what you're saying is so now we know how to run a sales organization, we know how to run a marketing organization, but how to run a partner organization is still a lot of questions.
• 6:50
  Speaker 1: I think we are in the process of learning and you're saying that at the end of the decade of the ecosystem, then these things will be much more clear, but we're still in the process of coming up with the processes and the numbers and how to basically run this organization.
• 7:09
  Speaker 2: Yeah, absolutely.
• 7:10
  Speaker 2: And the one thing that is different from partnerships obviously is it's third party.
• 7:14
  Speaker 2: You know, in sales, getting a direct scientific process meant that you owned the measurements.
• 7:20
  Speaker 2: In marketing, you know, other than what we'll call attribution and some of the other alliances and agency plays and things like that, a lot of those first-party data, the clicks, the opens, the engagements and things were things that we owned and we could measure In partnerships.
• 7:38
  Speaker 2: There's just this stage where everything is third-party Our sales in, our sales out, our end-user sales, and then all of the 28 moments that lead to that and then, every 30 days, forever, all of the product integrations.
• 7:52
  Speaker 2: We're asking so much of our partners to help us, help ourselves to make sure that we understand how valuable these moments are, how valuable these moments are, and that we go and fund these moments appropriately to the quantification of how important they are.
• 8:10
  Speaker 2: So that's what we're being asked to do after 43 years of quantifying everything in partnerships only at the point of sale, which isn't an optimal way to do it.
• 8:24
  Speaker 1: Yeah, I fully agree, Jay.
• 8:26
  Speaker 1: Also, during your speech, you talked about five key trends to watch in 2024.
• 8:31
  Speaker 1: I would like to take some time to go through each and every one of them to get your thoughts why it's important and why it's important for partnership leaders to be paying close attention to these trends.
• 8:43
  Speaker 1: So the first one is you say that B2B buying is changing, and I also talked about this a lot.
• 8:48
  Speaker 1: You know there's a new generation of buyer.
• 8:50
  Speaker 1: There's a demand for digital first and digital only Buyers.
• 8:55
  Speaker 1: They don't want to talk to salespeople.
• 8:56
  Speaker 1: I think this is something that everyone can agree, and also what you just mentioned, that the importance of integration first and being marketplace friendly.
• 9:05
  Speaker 1: Could you elaborate more on how B2B buying is changing and how we should pay attention to this trend?
• 9:11
  Speaker 2: Yeah, absolutely so.
• 9:13
  Speaker 2: We've known this trend for a long time because it's demographics.
• 9:16
  Speaker 2: And there was a point 10 years ago we were trying to figure out baby boomers to Gen X, through millennials to Gen Z, were babies at the time.
• 9:27
  Speaker 2: But we were trying to figure out demographically when the shift happens.
• 9:30
  Speaker 2: And it was this year, 2024, when we predicted that the majority buyer of the technology industry which is $4.94 trillion of what businesses and governments spend on hardware, software and services we suggested that by the end of this year that shift in buying would happen where the majority buyer, both by quantity of buyer and budget, was born after 1982.
• 9:56
  Speaker 2: And here we are, so with a new buyer in the majority, we can understand a lot of things, suffice it to say, different psychology, different behavior and different buying journey.
• 10:09
  Speaker 2: A lot didn't change between baby boomers and Gen X, but almost everything changed between Gen X and millennials.
• 10:17
  Speaker 2: So what's interesting is they're very subscription consumption friendly.
• 10:22
  Speaker 2: Growing up with Netflix and Spotify Okay.
• 10:27
  Speaker 2: Spending a dollar a month on a toothbrush for the rest of their lives Very okay.
• 10:31
  Speaker 2: With digital marketplaces, which has been growing at 86% compounded for the last five years, we just put out research to say that there's a 39.7% compounded rate for the next five years.
• 10:45
  Speaker 2: This is a ridiculous level of growth in terms of how money changes hands in this industry.
• 10:51
  Speaker 2: So this buyer as well, not only subscription consumption friendly but marketplace friendly.
• 10:58
  Speaker 2: But they buy in layers Back in previous generations.
• 11:02
  Speaker 2: I worked at IBM in the early 90s when you couldn't get fired for buying IBM.
• 11:06
  Speaker 2: It may not have the best product across the portfolio, but the fact of buying the portfolio meant that you protected your job.
• 11:13
  Speaker 2: You know IBM through, you know services or whatever would get it right at some point and you know you could point to that and say, hey look, I did the right thing.
• 11:23
  Speaker 2: Well, nowadays they might only look to IBM for one of the seven layers of the solution, and that's if they look at IBM at all.
• 11:31
  Speaker 2: So they're out building a MarTech stack, for example, and they have to add security, they have to add data backups, they have to add security, they have to add data backups, they have to add AI, they have to add things to this Martech stack and build on.
• 11:43
  Speaker 2: Today is an average of seven layers.
• 11:44
  Speaker 2: The average hyperscaler deal AWS, microsoft, google is seven layers.
• 11:49
  Speaker 2: The average SaaS deal, which is Salesforce, servicenow, workday, marketo, netsuite, hubspot is seven layers.
• 11:56
  Speaker 2: The average cybersecurity deal today to get to zero trust or to SaaSot is seven layers.
• 11:59
  Speaker 2: The average cybersecurity deal today to get to zero trust or to SASE is seven layers.
• 12:04
  Speaker 2: So this new seven layer stack is a different buying than buying a whole platform of one company to do everything.
• 12:12
  Speaker 2: They also surround themselves with seven different partners, and that's according to McKinsey, so it's a team sport.
• 12:20
  Speaker 2: They're buying seven things with seven people.
• 12:22
  Speaker 2: The number seven comes up a lot in this kind of current research around a millennial, but suffice it to say their criteria changed as well.
• 12:30
  Speaker 2: You know previous generations, your service, your support, your things like your brand reputation, your price, all these things will be weighted on an RFP and they would, you know, attach how they made their decision.
• 12:45
  Speaker 2: Well, the number one criteria today is integrations.
• 12:48
  Speaker 2: You know we see this where I'll buy a product 80% as good as the next product if it works better in my environment.
• 12:56
  Speaker 2: We saw in consumer, where Apple announced 79% of people won't buy a car today unless it has Apple CarPlay.
• 13:04
  Speaker 2: Different industry, same buyer.
• 13:06
  Speaker 2: That would forego 120-year-old industry, forego $4 trillion in buying cars and just focus on the integration in terms of how they would purchase the second most important thing that they ever buy.
• 13:21
  Speaker 2: So this is the new buyer and it's very interesting to support this new buyer.
• 13:28
  Speaker 2: But we also know that this buyer has been around for a while.
• 13:31
  Speaker 2: They're the majority buyer of SaaS today for the last few years.
• 13:34
  Speaker 2: So us being able to figure out what they do and their digital first and digital only kind of behaviors 75% of them, as you mentioned, don't want to talk to a human so how we surround themselves and how we move them through those 28 moments before they make that purchase and then how we renew them every 30 days forever, should be an obsession by everyone, not only sales, marketing, customer success, product, but absolutely partnerships is the glue that pulls it all together, because this new economy is driven by partnerships.
• 14:14
  Speaker 1: Yeah, I love it.
• 14:15
  Speaker 1: And previously you talked about also HubSpot.
• 14:17
  Speaker 1: They're one of the companies that are platform first driven and they're a really successful company, obviously.
• 14:25
  Speaker 1: But the second trend that you talk about is that 2024 is the year of the platform.
• 14:30
  Speaker 1: Could you tell us more about that?
• 14:34
  Speaker 2: So this is a quicker answer because it got set up kind of by this new buyer.
• 14:38
  Speaker 2: The new buyer wants to buy a platform and if you ask five different people I've done this I've asked five different senior executives of a company, including the CEO, what a platform is, because in Las Vegas they rented the sphere and they, you know billboards up and down the interstate with platform written on it.
• 14:55
  Speaker 2: You get five different answers and while product people think of a platform as something kind of end-to-end single pane of glass, you can integrate all the options and product is only one part of a platform.
• 15:09
  Speaker 1: If you ask salespeople, if you ask marketing people what a platform really is.
• 15:12
  Speaker 2: It's synonymous with partnerships and the biggest platforms in the world whether the hyperscalers or whether big SaaS companies or big security companies happening now in security provide this level of gravity where they don't make outbound calls anymore.
• 15:29
  Speaker 2: There's this whole inertia around them.
• 15:31
  Speaker 2: Think of a planet you know circ's, a whole level of gravity where you've got a lineup of technology integrations that are looking to add value to your platform, to your set of products, where, to the customer, one plus one can equal three, where your advertising moves to better together and if you buy that product, we make it 10 or 20% better.
• 15:55
  Speaker 2: You can't buy that product without buying us.
• 15:56
  Speaker 2: So that's you know.
• 15:59
  Speaker 2: I mentioned 14,000 in MarTech, but there's 5,000 in sales tech.
• 16:04
  Speaker 2: There's 6,500 in cybersecurity.
• 16:06
  Speaker 2: I could walk down every buyer, because there's 250,000 SaaS companies today that are lining up into this platform world.
• 16:15
  Speaker 2: Also platforms.
• 16:16
  Speaker 2: There's economics, there's services partners lined up out the door.
• 16:20
  Speaker 2: Like Salesforce became a $35 billion company direct, you'd wonder what's their use for partners.
• 16:27
  Speaker 2: Well, 220,000 partners joined Salesforce.
• 16:32
  Speaker 2: Servicenow grew up direct, but there's 250,000 partners.
• 16:36
  Speaker 2: Why are there so many partners?
• 16:38
  Speaker 2: Because there's an opportunity at Salesforce to go make $6 and 19 cents in services for every dollar Salesforce sells and they don't really want or need you to sell because they've got a good marketplace in the app exchange and in a subscription.
• 16:55
  Speaker 2: It really doesn't make sense to have a reseller collecting money.
• 16:58
  Speaker 2: But again, if you could make two or 300% of the deal, why would you ever be there asking for 10% of the deal?
• 17:05
  Speaker 2: And that's what they were able to successfully do in a platform.
• 17:10
  Speaker 2: And so platform companies are measured now.
• 17:12
  Speaker 2: The larger ones are measured in the hundreds of thousands of partners, like a Microsoft already has a half a million partners and there's 400 new ones that join every single day.
• 17:21
  Speaker 2: So that's platform economics and everything changes underneath it because you've got a lineup now of tech alliances, service alliances, you've got a lineup of customers and whether it's in Redmond, whether it's in the Salesforce tower, and whether it's in Redmond, whether it's in the Salesforce tower, nobody's making outbound calls.
• 17:40
  Speaker 2: They're managing inbound demand for all of these different sets of people, constituencies, and they're making the value and the kind of value multiplier work around every one of those dollars.
• 17:59
  Speaker 2: So this is kind of the new economy and every company is facing platform economics and it's not just technology, it's pharmaceutical companies it's banks, it's insurance companies, it's auto companies, it's manufacturers.
• 18:10
  Speaker 2: it's all across the board and we got confused thinking every company is trying to become a tech company over the last 10, 15 years.
• 18:17
  Speaker 2: It's not true.
• 18:18
  Speaker 2: Wall Street is telling them to become a platform for their buyer.
• 18:25
  Speaker 1: Yeah, and you mentioned that ServiceNow Salesforce.
• 18:29
  Speaker 1: They have hundreds of thousands of partners that are not doing any resale.
• 18:32
  Speaker 1: And I think this ties well into my next question, or the next trend that you talk about, where the economics of partnering has changed for the first time ever, where a partner compensation has traditionally been tied to the point of sale, now it is or at least it should be at the point of value.
• 18:52
  Speaker 1: What do you mean by this?
• 18:54
  Speaker 2: yeah.
• 18:54
  Speaker 2: So if you look back and go back to 1981, august the 12th, that was the first IBM PC running Microsoft, kind of the first B2B channel kind of officially set up.
• 19:05
  Speaker 2: Before that there was Apple education resellers there's a few people out doing things in the retail world but that was kind of the establishment of the B2B channel.
• 19:16
  Speaker 2: So fast forward 43 years.
• 19:18
  Speaker 2: We anchored the program the same way, or we valued partners the same way.
• 19:23
  Speaker 2: It was first of all on their ability to collect money on your behalf.
• 19:27
  Speaker 2: So the resale portion was always what was paid for the front or back-end margins or the gross to nets that you paid as a manufacturer went to the partner that triggered at the point of sale.
• 19:41
  Speaker 2: So it was a revenue reduction kind of.
• 19:43
  Speaker 2: And you learned this in college about the wholesale price.
• 19:47
  Speaker 2: The manufacturers suggested retail price and all the things in between.
• 19:52
  Speaker 2: That kind of made all the local businesses that are resellers.
• 19:57
  Speaker 2: 75% of world trade goes indirectly.
• 19:59
  Speaker 2: So that was the logical way to measure it.
• 20:02
  Speaker 2: The problem comes when you have two different partners and one partner did all the marketing, they did all the selling, they did all the engineering and you want a deal in your sleep and then they do all the work after.
• 20:16
  Speaker 2: So you have this customer for life.
• 20:17
  Speaker 2: That didn't cost you any money.
• 20:19
  Speaker 2: So you pay that partner the exact same amount that a partner that showed up at the 11th hour in an RFP won the deal because they charged a nickel less, collected all the money and was gone in the night.
• 20:34
  Speaker 2: So you had to do all this marketing, selling, customer success.
• 20:38
  Speaker 2: You had to do everything and then you had to pay a partner on top of that.
• 20:42
  Speaker 2: So that's, you know, made salespeople upset, made marketing people upset.
• 20:47
  Speaker 2: Customer success makes everybody upset.
• 20:49
  Speaker 2: But as a channel person, you're looking at it going.
• 20:53
  Speaker 2: I have no other way, I have no other mechanism to treat those two partners kind of the same.
• 20:58
  Speaker 2: And even the law there's anti-combines, there's all kinds of antitrust type of laws you can't treat partners differently financially, trust type of laws that you can't treat partners differently financially.
• 21:10
  Speaker 2: Until we started to think what if we could measure, what if we could manage kind of the moments individually?
• 21:17
  Speaker 2: And borrowing from Martech in the first 28 moments, like what are the ways we can do things differently?
• 21:19
  Speaker 2: What are the things we can do differently every 30 days, forever, to better measure that point of value and then coordinate or quantify that moment of value against the revenue we're earning and the profitability and everything else.
• 21:35
  Speaker 2: And that's where the surge of activities come in the channel tech stack.
• 21:40
  Speaker 2: Hundreds of entrepreneurs are now playing in this game of giving better visibility to partners and partners, by the way, are delighted by this and they want to serve up this data because they want the manufacturers to see the wonderful work they do.
• 21:55
  Speaker 2: And so the first of the type was done about three years ago by Microsoft and they kind of smashed their original resale program and took the money from resale and spread it like peanut butter.
• 22:09
  Speaker 2: So it's a point system where you can earn points in those 28 moments leading up to the sale.
• 22:14
  Speaker 2: You can earn points whether you collect the money, whether it goes through a marketplace, microsoft or another marketplace, whether it goes direct, it doesn't matter, because they've dictated that collecting money now the margin for that is 3%, the same as swiping your credit card at a restaurant.
• 22:31
  Speaker 2: So all the other points that go into a 10, 20, 30 point deal are outside of that or on top of that 3%.
• 22:40
  Speaker 2: And then every 30 days forever, microsoft ended up putting two thirds of the whole bucket of money post-sale.
• 22:46
  Speaker 2: So not only you know, they can ensure that customer for life, but they can enrich, upsell, cross-sell and obviously enrich every 30 days.
• 22:56
  Speaker 2: And what happened, you know, three years later?
• 22:58
  Speaker 2: Well, it made some VARs upset and there was some of the 106 channel magazines around the world that ran cover stories negative about Microsoft.
• 23:06
  Speaker 2: Every other partner, the seven partners, the six other partners, loved it because they could show Microsoft the value and what they were doing to the client to get that customer for life.
• 23:17
  Speaker 2: And so three years later, microsoft became the most valuable company in the world and they beat their competitor, aws, for 26 straight quarters financial quarters, and it wasn't even close.
• 23:31
  Speaker 2: Last quarter was 30 to 20.
• 23:33
  Speaker 2: So this was a change in program.
• 23:36
  Speaker 2: This was a change in partnering, measurements and understanding and qualifying and quantifying those value items that now we're working with thousands of companies to kind of implement similar systems so that they can really recognize the power of the decade, of the ecosystem and the seven partners that surround each customer, instead of just spending it all and focusing it all on that single point of transaction yeah, I think this is also way more valuable for the end user, the customer as well, because then if you're paying the partner for the work that they're doing and it's not only the point of transaction then you actually make sure that you pay for the partners, for the integration to help the customer to increase consumption of the tool.
• 24:27
  Speaker 1: So then it's a whole different game.
• 24:30
  Speaker 2: There's actually an interesting thing that I just kind of thought of, as you're saying.
• 24:33
  Speaker 2: That is in this multiplier you know in that $6, let's say, to get a product to work, the customer has to decide how much they insource and outsource of that.
• 24:42
  Speaker 2: They could insource all of it and not spend any of it externally, or they could outsource all of it and spend it all externally.
• 24:49
  Speaker 2: I, you know, no one would suggest either of those, but there's probably two to three to four dollars somewhere in the middle where somebody can do it bigger, better, faster, cheaper than you can, and it makes sense to outsource key things.
• 25:03
  Speaker 2: But it'd be wonderful at some point whether the customer puts up their hand and says well, I'm insourcing, you know, three of those six dollars.
• 25:13
  Speaker 2: So whatever money Microsoft you had laid out for that long term, every 30 days, forever, post sale investment, the customer might line up and say why don't you invest that in me?
• 25:25
  Speaker 2: Up and say, why don't you invest that in me and give me Azure credits, Give me a discount on my Office 365 or my Dynamics?
• 25:33
  Speaker 2: I mean it'd be interesting, and this is maybe five or 10 years from now.
• 25:36
  Speaker 2: But when measurements get so perfect and the buyer becomes so educated.
• 25:40
  Speaker 2: That says in that formula of how much they're going to outsource, they want to collect the benefit from the manufacturer of whatever they keep in-house.
• 25:49
  Speaker 2: So that's kind of an interesting side thought there.
• 25:52
  Speaker 1: Yeah, no, that is very interesting.
• 25:54
  Speaker 1: Yeah, I agree, Jay.
• 25:56
  Speaker 1: Also, you know we did a webinar a while ago.
• 25:58
  Speaker 1: We talked about partner marketing and you mentioned that.
• 26:01
  Speaker 1: You know the end of the cookie is coming.
• 26:03
  Speaker 1: It's inevitable.
• 26:04
  Speaker 1: A lot of browsers, search engines it's inevitable.
• 26:06
  Speaker 1: A lot of browsers, search engines.
• 26:08
  Speaker 1: They already said that this will be the last year of the cookie and this also kind of ties back to your last point, where it's going to be more important how we measure and collect the data, and it's also going to be important that we collect the right data from our partners, the second party data.
• 26:26
  Speaker 1: Could you elaborate on that please?
• 26:29
  Speaker 2: Yeah, starting early days of the internet, like 1995, it didn't take long until we became the products on the internet.
• 26:35
  Speaker 2: Every single thing we do on the internet is kind of free.
• 26:39
  Speaker 2: All the social media tools, all the things, everything kind of was free, which was an odd economic model, but it didn't take us long to figure out that our privacy is what paid for it.
• 26:49
  Speaker 2: When you have a conversation in your kitchen and Alexa overhears it and two minutes later Facebook is showing you an ad, you realize pretty quick that you are being listened to every day and that data, that third-party data, is very valuable.
• 27:04
  Speaker 2: Google, facebook and others became trillion-dollar companies in the sale of that data and that became this new MarTech.
• 27:13
  Speaker 2: That decade of marketing was really around, this third-party data.
• 27:16
  Speaker 2: Well, that's going away.
• 27:17
  Speaker 2: Apple's already taken away the cookie because they don't have a dog in the fight.
• 27:22
  Speaker 2: Google tried to sell version two of the cookie to europe uh, european union a few weeks ago and failed.
• 27:29
  Speaker 2: And you know, with 45 of the world's population going to elections in 2024, pretty much the world population have told our governments that we're done being the products on the internet.
• 27:42
  Speaker 2: So they're telling google.
• 27:44
  Speaker 2: And last two weeks ago google lost an antitrust suit in the US.
• 27:50
  Speaker 2: So this day of the cookie is quickly coming to an end and the economics of being on the Internet are going to shift around that.
• 28:00
  Speaker 2: But where third party data goes to is second party data.
• 28:03
  Speaker 2: When you look at a customer in those 28 first moments, everything they read, everything they listen to like a podcast like this, every event they go to, every person they follow.
• 28:13
  Speaker 2: Everything that happens in those first 28 moments ought to be partners of yours, if they aren't already, and you should be quantifying those moments.
• 28:22
  Speaker 2: But that's every e-book, every white paper, everything that happens.
• 28:26
  Speaker 2: It is pretty much partner driven.
• 28:29
  Speaker 2: If you're lucky as a CMO, the customer might come to you in three or four of those moments, but not anymore.
• 28:39
  Speaker 2: So 24 in your best case scenario and 28 in your worst case scenario are the moments that you're going to have to better partner for second-party data and there's now five layers of a MarTech or channel MarTech stack that have been built that you can better attribute those moments, that you can better share in that and match and map those moments, you can better platform those moments so that you get to see the second-party data or even first-party data if it's platformed well and this is the new marketing going forward and it's partner driven.
• 29:13
  Speaker 2: So all of a sudden you know partners have become to the front, not only in the first 28 moments, but again, remember, when you enrich every 30 days forever and upsell, cross sell, the marketing never ends at the point of sale, which it did in the past.
• 29:27
  Speaker 2: Nowadays you just keep and you shift your language, you shift the campaign, but now you're trying to keep that customer every 30 days forever.
• 29:35
  Speaker 2: The marketing never ends and second party data never ends and this is a whole new economics, it's a whole new way and that whole decade of marketing is probably going to shift into a new decade of marketing at the end of this decade of ecosystem because of it.
• 29:54
  Speaker 1: What do you mean by that?
• 29:55
  Speaker 1: So how do you think that it's going to shift into a new decade of marketing?
• 30:00
  Speaker 2: Well, the first decade of marketing was to get after and hire these younger growth hackers that could hack all this third party data and could hack all of our movements and our privacy on the internet.
• 30:11
  Speaker 2: And when we're buying a car, watch us as we're watching those YouTube videos.
• 30:15
  Speaker 2: Watch us as we're reading the magazines.
• 30:18
  Speaker 2: Watch us as we're configuring pricing, quoting the car.
• 30:21
  Speaker 2: Watch us as we're downloading the invoice pricing the dealer.
• 30:24
  Speaker 2: We were so smart getting into the dealership because we knew everything that we didn't even want the dealership.
• 30:29
  Speaker 2: I could buy a car without a human now because of that.
• 30:33
  Speaker 2: So in this kind of new world, you're not brokering on our privacy.
• 30:39
  Speaker 2: You're not going to see any of these moments unless you go to the guy on YouTube or gal that's running that and convince them to share data with you.
• 30:48
  Speaker 2: And it's a one plus one equal three.
• 30:50
  Speaker 2: Go to the magazines, go to the people that do the invoice and dealer pricing.
• 30:54
  Speaker 2: Go everywhere and where you do your configurations on what car you're going to buy and you have to partner up on those 28 moments.
• 31:03
  Speaker 2: And now you'll be pulling in the data second party, which is actually allowed under the European Union and US government and it's a business to business allowed way to share data, but listening to us and unbeknownst to us is going away.
• 31:16
  Speaker 2: In this new decade of marketing that I think will come after the decade of the ecosystem, they're going to learn how to better do second party data and it's not brokering our privacy.
• 31:26
  Speaker 2: It's actually partnering with the places that we've freely given up our privacy because we want to get to the best outcome.
• 31:33
  Speaker 2: And you and I, and I think most people would say that if I am buying a car and there's a reasonable way that as I narrow down the choices, I don't want 365 brands of car reaching out to me, 65 brands of car reaching out to me but if I've narrowed it down to a midsize SUV with a hybrid engine and I've got it down to three, I want to engage those three companies.
• 31:57
  Speaker 2: And it may not be with a human, but it may be digital, but I'm okay at that point sharing my second party data to make sure that I make the right choice and I have the right outcome.
• 32:09
  Speaker 2: I just don't want my when I mentioned right now in front of Alexa that you know we're buying a car, my Facebook is going to be jammed right after I get off this podcast with people thinking I'm buying a car.
• 32:24
  Speaker 1: So what I'm getting from this, jay, is that I think that in the future, the marketing leaders they have to be partner leaders.
• 32:31
  Speaker 1: They have to understand the economics and the mindset of how to partner.
• 32:35
  Speaker 2: That's exactly what it's going to be.
• 32:37
  Speaker 1: What makes them?
• 32:38
  Speaker 2: tick and what would make that person on YouTube partner with you versus anybody else, or partner with everybody, and you're part of that network.
• 32:48
  Speaker 1: Yeah, I fully agree.
• 32:49
  Speaker 1: So we went through four uh trends that you you expect to happen in 2024 that actually are happening in 2024.
• 32:58
  Speaker 1: Yeah, and the last one is that it's about generative ai.
• 33:03
  Speaker 1: Obviously it's a very hot topic.
• 33:04
  Speaker 1: Everyone loves to talk about it.
• 33:06
  Speaker 1: But you say that generative AI is a huge opportunity, but just not the way we think.
• 33:11
  Speaker 1: What do you mean?
• 33:14
  Speaker 2: We're a year and a half from it becoming the biggest consumer trend of this era as it writes poetry and music.
• 33:21
  Speaker 2: It's dazzled us with its ability to write a 1200 word blog.
• 33:24
  Speaker 2: For us, it's pretty amazing from a consumer perspective.
• 33:28
  Speaker 2: 1200 word blog for us.
• 33:29
  Speaker 2: It's pretty amazing from a consumer perspective.
• 33:30
  Speaker 2: But suffice it to say, you know, we thought that that would be instantaneous business success.
• 33:34
  Speaker 2: That's not true.
• 33:35
  Speaker 2: When we're going into a chat bot with our airline or bank, we don't want it to write poetry.
• 33:41
  Speaker 2: We're not dazzled by its ability to speak English back to us.
• 33:45
  Speaker 2: What we're dazzled by is the ability for it to tap into business data and know my entire history with the airline or the bank, know everything about my account and be able to do the work that a human would be able to do move money around, change a flight, et cetera.
• 34:01
  Speaker 2: And that's not there.
• 34:02
  Speaker 2: 85% of the world's data sits on premises and it has not been trained and tuned into large language models.
• 34:08
  Speaker 2: And so where everybody got it wrong coming out of generative AI, is this instantaneous success?
• 34:14
  Speaker 2: And I go back to a Bill Gates quote we tend to overestimate what's going to happen in two years and we underestimate what's going to happen in 10.
• 34:24
  Speaker 2: And that's we're in this two year cycle right now that, from a business perspective, we're getting a little bit disillusioned because it wasn't instant.
• 34:37
  Speaker 2: All the cost, weren't ready to just dump 50 years of mainframe and mid-range data EMC storage, ibm storage, dec storage I mean they weren't ready to go do that.
• 34:51
  Speaker 2: They're basically running small pilots at this point and most of the pilots are just in kind of marketing and selling, kind of using some of the SaaS tools, and they're not dumping the troves of data.
• 35:03
  Speaker 2: That will happen, but that's over 10 years.
• 35:06
  Speaker 2: And so the revolutionary part of generative AI, where everything changes and we start talking about impacts on the world economy, impacts on every one of our true impacts on our lives, is when our co-pilot on our shoulder is interacting with every other business's co-pilots and our thought processes go out and you know it's not just booking a trip with our airline.
• 35:30
  Speaker 2: Everything is taken care of and there's a constant amount of communication back and forth that is alerting us when we need to know, based on our own psychology.
• 35:40
  Speaker 2: That's 10 years away and it's going to be wonderful because it's actually this afternoon when we're recording, apple's going to show us version 16 of the iPhone, which is the AI version.
• 35:53
  Speaker 2: All the PC manufacturers are going to go into a double digit growth phase over the next couple of years selling PCs that are AI capable.
• 36:00
  Speaker 2: The edge is going to be AI capable, which is fantastic.
• 36:04
  Speaker 2: 50% of AI is going to run at the edge, which is fantastic for partnerships.
• 36:10
  Speaker 2: Most of the services companies work at the edge.
• 36:12
  Speaker 2: So it's going to be great for our industry for 10 years.
• 36:16
  Speaker 2: It's going to be fantastic.
• 36:17
  Speaker 2: It probably will push our industry, once we're through some of these economic challenges, into double digits for a few years of growth and over the course of a decade we're going to have 59% growth in generative AI services.
• 36:30
  Speaker 2: We even have 19% growth in like telco and some edge type of opportunities.
• 36:36
  Speaker 2: There's opportunities abound.
• 36:38
  Speaker 2: Products that are pretty flat, like PCs today, are going to get into double-digit growth for the next eight quarters.
• 36:45
  Speaker 2: So I mean this AI phase is going to be wonderful for the entire tech industry, but as consumers we're going to be a little disillusioned for the next 10 years as these slow, methodical processes take shape to train and tune these models.
• 37:00
  Speaker 2: So they're actually smart enough that we'd actually want to work with them.
• 37:05
  Speaker 1: Yeah, I fully agree.
• 37:06
  Speaker 1: To be honest, I'm very excited to be living right now.
• 37:11
  Speaker 1: I think AI is a huge opportunity, but I fully agree with you.
• 37:14
  Speaker 1: I think that when it first came out, it's still the early days of AI, but we tend to overestimate its capabilities.
• 37:22
  Speaker 1: But I think, as time goes by, we're going to see, we're going to know how to work better with AI and we're going to also train it on the data, so it's actually going to help us run our business.
• 37:35
  Speaker 1: I fully agree with you.
• 37:37
  Speaker 1: So, Jay, to summarize, we talked about five key trends that you see that's happening in the market right now, in 2024.
• 37:46
  Speaker 1: The first one is you said that B2B buying is changing.
• 37:50
  Speaker 1: You say that the consumers want.
• 37:52
  Speaker 1: They want digital first and digital only.
• 37:54
  Speaker 1: They don't want to talk to a salesperson and they're looking for integration first and marketplace friendly products.
• 38:01
  Speaker 1: The second trend you mentioned is that 2024 is the year of the platform.
• 38:05
  Speaker 1: The most valuable companies.
• 38:06
  Speaker 1: They're all platform companies and we're seeing that every company out there is trying to become one.
• 38:11
  Speaker 1: The third one you mentioned that economics of partnering has changed for the first time ever.
• 38:16
  Speaker 1: Where partner compensation has traditionally been tied to the point of sale, the reseller partner.
• 38:22
  Speaker 1: Now you're saying that we're seeing that the partner compensation is, and should be, tied to the point of value.
• 38:30
  Speaker 1: The fourth point is the end of the cookie, how the cookie is dying the Apple already introduced it and the importance of how we track partner data, how we access and measure second-party data.
• 38:45
  Speaker 1: And finally, generative AI is a huge opportunity, just not the way we think.
• 38:50
  Speaker 1: Is that a good summary?
• 38:53
  Speaker 2: That's a great summary we could have said it much faster if you just said it, not me.
• 38:58
  Speaker 1: Well, thank you so much, Jay.
• 38:58
  Speaker 1: Thank you for joining us today.
• 39:00
  Speaker 1: Before I let you go, we always like to ask our guests to invite the next guest on the podcast.
• 39:04
  Speaker 1: What do you think we should have?
• 39:07
  Speaker 2: which is on the front lines and it's what partners are thinking and how partners are going through all these trends and how optimistic.
• 39:24
  Speaker 2: I just posted a couple of days on LinkedIn how optimistic partners are.
• 39:28
  Speaker 2: 88% of them are in growth mode.
• 39:30
  Speaker 2: They're growing by double digits.
• 39:32
  Speaker 2: Some of them are growing by over 20%.
• 39:34
  Speaker 2: They are thinking really nicely about this market and I would tap into her brain in terms of what that thought process is happening, you know, at the partner level.
• 39:45
  Speaker 1: Yeah, we would love to have Michelle on the podcast and, michelle, if you're listening, I'll be sending you a message.
• 39:49
  Speaker 1: Thank you so much.
• 39:50
  Speaker 1: Thank you for joining this episode and see you in the next one.