Video: Live Session: Insights from the 2024 State of Cloud GTM Report | Duration: 3668s | Summary: Live Session: Insights from the 2024 State of Cloud GTM Report

Transcript for "Live Session: Insights from the 2024 State of Cloud GTM Report": Look at that. There we go. Hey. Hey. Howdy. Long time no see. Alright. Everybody, I know people are just filtering in. It is top of the hour. Welcome to our 5th annual tackle state of cloud go to market. Excited for everyone to be here. We're just gonna wait about 2 minutes for people to filter in. But while we wait, just in the spirit of the season being October 30th, I thought I'd threw throw out where's everybody from if you wanna put that into chat, and what is your favorite Halloween candy? Dylan, Brian, what's your favorite Halloween candy? That's a good one. I love it. I love, I love Halloween. I have a, wife who is extremely excited about that and all that, but her and I differ highly on our favorite. And so I actually have some right here. I have some black licorice. Most people don't, the phrase is getting a little bit. Most people don't love black licorice, but I think it's amazing. So I, even have a little snack here during the webinar. We'll see. Weird. Well, I have to I have to, first of all, say I'm glad I'm not trick or treating at Brian's house. That would be be kind of a a bummer to to get handed black licorice, at the at the door on that one. So oh. Yeah. I am a big fan of peanut butter, so I like the the Reese's peanut butter cups. Later on tonight, I'll probably or tomorrow night, I'll be stealing some of those from my kids. Nice. Nice. How about you, John? I am a Reese's peanut butter cup person, but I am also a nerd cluster, which is my favorite. Those are good. Yummy nerds. Candy. Yeah. And then maybe followed by some I didn't I didn't really know about those until you you pulled them out at a meeting one time, and they are they are very good. You've kinda turned me on to those. Traveling is a little addictive. It's a bit like traveling with a 14 year old. Like, your diet may take a turn for the worst. So, alright. So it's 2 it's 2 minutes after. We will start to get started. And, I there never is a perfect time to do events like this, and I know it's quarter end for some of our highest fee customers. So just wishing everybody a strong wrap up for offset q 3. And the last month has been crazy busy with the cloud events. Like, I feel like I've seen probably many of you on this call firsthand or in real life, but, you know, there's kind of this lull period before the next big wave of cloud events kick up. And Brian and I will both be at Microsoft Ignite. I'll be dipping into Salesforce World Tour. Dylan, Brian, and I will all be at reInvent. We're hosting events at Ignite and reInvent, so hopefully we'll get to see some of you in real life at those, and we will share the links to those events in the chat. And our agenda so if we go to the agenda slide, the oh, I can go to the agenda slide. So overview, we're gonna do the quick overview. We'll spend about 20 minutes on our 2024 findings. I'm gonna do a little fireside chat where we just look back at the things that surprised us along the way over the last 5 years of doing this, and then we're gonna do some predictions, and we'll open it up for q and a. If you do have questions along the way, please do fire them in there. We have some people moderating q and a along the way. And constructive chat is always welcome. We like friendly banter in chat, so feel free agree, disagree. If you have comments relative to things we talk about that you think are interesting in the audience, please feel free to share. So if we go to introductions, we kinda skipped that. So my name's John Janke. I'm CEO of Tackle. And we started Tackle in 2016 thinking that the clouds would change the way that software is sold, and marketplaces represented the initiation point of that. And Tackl exists simply to make the selling and buying of software through the clouds easier. And I'm excited to be joined by my 2 cofounders. So Dylan, why don't you go next? Yeah. Hey. Hey, everybody. Dylan Watts here. I'm the, CTO at Tackle. So, I spend a lot of time thinking about our product strategy and leaning in a little bit to help out the engineering team. But, yeah, very, very excited to be here today to follow-up on some of the predictions we made in the past and share some of our of our predictions for the future. Yeah. Hey, everybody. Brian Danger, the the third leg of this, this awesome stool. I, I have played a lot of roles here, but, you know, most recently now, I'm kinda head of the partnerships, really driving relationships with not only main three hyperscalers, but as we dip into more ecosystem partners, which is really cool, and, you know, Salesforce and other other, other channels that we're kinda looking into. So, super excited. High relationship guy. I think I know a lot of folks that are probably on this and listening, and I always do it connecting with everybody. So Great. Awesome. And I did see the question around, will we share the report? We will share the full report. It will go live immediately following this webinar. So you'll see it posted on LinkedIn. You'll also see it on our website, and this will be recorded as well. So, so, you know, this report, we started this in 2020 when we wrote our first report, and our customers would always ask us, like, what's happening across the landscape? Like, what data is available to inform our strategies? And back then, there wasn't any. Like and we had a couple people inspire us to kinda take matters into our own hands. Bessemer writes their annual state of cloud, which we were always inspired by from the earliest days of the company. Jay McBain, the first analyst to ever cover cloud go to market, he did that in 2020 as well. And we were maybe 30 people at that time, and it's pretty exciting to have a Forrester analyst start to write about the category that you're trying to create. But this report really was inspired by them, inspired by our customers, and it's evolved materially over the years. And I love nothing more than hearing from ISVs and partners that the research we conducted because this is a huge effort. This report this year will tip 10,000 words. It's almost 50 pages in length. That they're able to use that research in order to inform their business strategy, build justification for where things are going, and build support around cloud go to market. So there's 10 key learnings that we'll cover. We'll cover a subset, so the bolded ones are the ones we'll actually cover today. But at a higher level, the cloud go to market movement is fueled by 2 of the biggest waves in tech. 1st and foremost, the b to b software budget, which is north of a $1,000,000,000,000 and growing around 10% year over year. And the second is the Cloud budgets, which are rapidly approaching that $1,000,000,000,000 scale and are growing north of 20% year over year. These two super budgets continue to expand, continue to collide, and overlap more than ever before. And more more buyers continue to buy than ever, and buyer behavior change, we think, is a key element of this cloud go to market movement. And over the last 4 years, we've seen the number of unique buyers increase nearly 500%. And that number grew 70% just in the last year. Also, in addition to that, we're seeing the average purchase price through Cloud GoToMarket decline. It's actually gone down 80%. And this this aligns really closely with that aggressive expansion in the number of buyers because as the number of buyers grow, transaction sizes tend to go down. This is not just about the enterprise anymore. We see buyers of all segments of the market. We'll talk more about that in our predictions. And it's also based upon the fact that PLG and usage based business models have come more online than ever before. And even though the average transaction size is going down, large transactions continue to be a major thing. We've seen large transactions happen in the 100 of 1,000,000 of dollars scale. And we expect both of those trends to continue. More buyers, average transaction size coming down, large transactions continuing to grow. And as we look at this, we are firmly in the adoption phase of Cloud Go to Market. There are now thousands of successful ISVs, but there still is a group of super sellers who really push the limits on the platform and the capabilities. And there's a rapidly growing partner ecosystem around cloud go to market beyond just ISVs. But even though we're seeing tremendous growth in cloud go to market, it's still extremely early. Like, going back we'll talk a little bit in a second about the numbers, but marketplace has become central to all cloud benefits for all partners. And we expect that gravitational pull to continue, especially as the clouds wanna be able to attribute the investment dollars they make towards ISVs and partners to outcomes for their customers. So we think marketplace and co sell becomes the way that that happens across all cloud provider ecosystems. And we're around the $20,000,000,000 range for throughput for cloud marketplaces this year, which is tracking to the predictions we've made over the years. And that's representing sing a single digit of the overall b to b software market. So if we say the b to b software market's a $1,000,000,000,000, we're still in single digit percentages of that migrating to the clouds over time. But those numbers are compounding fast, growing nearly a 100% year over year. And as we think about this this movement, you know, I've started to talk about it in a reframed way similar to the way that cloud migrations used to happen in the past. And if we rewind time and we go back to 2010, you know, AWS's business was estimated to be about 500,000,000 back in 2010. And we think about migrations associated with AWS back then, they were probably measured in single digit 1,000,000 of dollars, maybe tens of 1,000,000 of dollars. And today, you know, nearly 15 years later, infrastructure migration continues to be a gigantic business that's growing really fast. And Cloud go to market represents this next wave of migration. B2B software contracts are migrating to the Cloud. And this is not only a huge opportunity for top line revenue for the Cloud providers, it's a major driver of consumption for the Clouds as most of this ISV infrastructure is built on top of the cloud infrastructure. So at a at a high level, it's, you know, do we think this will ever be a 100% of b to b software? No. Highly unlikely. But 25 to 50% of b to b software budget migrating to the clouds over the next 5 years is very, very feasible. And there's there's no question cloud go to market's here to stay. And in the era of efficiency, all software companies continue to look for the most efficient paths to buyers. And buyer behavior continuing to evolve towards digital experiences, marketplaces are set up to reap the benefits. So let's get into the actual learning. So, 1st and foremost, in the early days, like Tackle, we helped ISVs launch their cloud marketplace presence. Some of our customers were wildly successful going from 0 to 100 of 1,000,000 or even 1,000,000,000 of dollars of revenue flowing through the clouds. But many early customers struggled to actually unlock the value of selling through marketplaces. We spent a lot of time with our customers and the cloud providers decomposing that problem, and part of it was technology. In the early days, both marketplaces and Tackle, there was a lack of business model support, lack of listing types, lack of co sell automation, lack of data. But over the years, the underpinnings of the marketplace have gotten far stronger and our platform has followed suit. But the much bigger problem we saw was this is an organizational transformation problem where companies struggle to have the right strategy, people, process to truly unlock the cloud go to market flywheel. There are playbooks on how to operate cloud go to market. We publish many of them. But the reality is every ISV every ISV's go to market is a little unique and you have to really mesh your cloud go to market strategy with your existing go to market strategy to have it work. So last year, we introduced this tackle maturity model, and it anchors the way that we engage with our customers ever since. From the very first conversation with Tackle where we do a readiness assessment to determine where you're at in your cloud go to market journey across strategy, people, process, technology, through to setting your goals and even measuring them over time, You'll see the underpinnings of this cloud go to market maturity model all throughout the state of cloud go to market. So we just wanted to do a little bit of background on that as a refresher for everybody. So let's actually get into the numbers. So 36% of ISVs identified themselves as being in the establishing foundation phase of cloud go to market. We typically see establishing foundation as 0 to 5% of revenue. Building adoption is the 5 to 10% of revenue phase, driving adoption 10 to 20%, and scaling adoption 20% plus. So 37% of ISVs also identified being in the building adoption phase, and the remaining 27% are split between driving and scaling adoption. So said another way, 64% of ISVs are doing more than 5% of their revenue through the clouds. So a few short years ago, and this maturity model is relatively new for us so we don't have the 5 year view on how this will evolve, but a few short years ago, these results were far more skewed. There was a smaller population of super sellers sellers making up the lion's share of the dollars. And actually breaking the 80 20 rule here, I think is a big milestone for marketplace maturity. So said differently, 27% are strategic on the right hand side and 73% are transactional, but still 64% are greater than 5% of revenue. So what's it take to make it into the strategic cloud go to market category? You need a plan, you need a product strategy, you need executive alignment, you need a better together story, you need clear goals, people, process, and ultimately, technology to make it happen. So I'm gonna turn over to Dylan to jump into the next one. So, boy, we have we have learned a lot about Cosell over the last couple of years. We were the we were we were the first to to develop a a Cosell product back in 2022. And since then, it's become a ubiquitous part of every cloud GTM cloud GTM platform. And it's something that all of our customers are interested in. It's something that that all of them are doing. Now we've learned, like I said, we've learned a lot along the way. Probably the biggest learning is that co sell is not a light switch. It's not something you can just turn on or or or or or turn off. It is truly a journey. There's there's stages to it, and your strategy has to evolve over time. The good news is we've learned that co sell is effective. Of deals that are influenced by co sell, their their response to this survey said they are 40% larger, and they close 20% faster. Now now that's great, but it really doesn't matter so much if you only have a couple of co sell deals that that you've that you've submitted over over to the cloud providers. And that's why that's why we suggest that as you're building your co sell program, one of the first metrics that you should capture and that you should look at is the number of deals in your overall pipeline that are influenced by co sell. Take a look at that, figure out where you sit, and then set goals for where you want to be. We recommend setting your your first goal that you should try to get to around 15%. Try to get to 15% of all of your overall deals being influenced by co sell in some way. Now why 15%? Couple of reasons for that. The first off is that the number one, problem that I see when I'm speaking to ISVs about Cosell, who are just dipping their toe into this Cosell water, is they as they say, they've they've they've submitted a handful of deals over to the cloud provider, but they haven't got anything back. The cloud provider hasn't sent any to them, and they really haven't helped out on those that they submitted. And so they get frustrated, and they they start to think that maybe co sell isn't for them. But I'd urge you to to push through that a little bit. Try to get to that 15% number because it is sort of a a a give a give to get, a program. And the the the respondents in this in this survey agreed. You know, only 16% would agree with the statement that that cloud providers offer valuable leads or referrals. So this is something that you have to work. Again, it is a it is a it is a journey. Try to get to that that first goal. And according to our data, that's where we start to see the cloud providers lean in, and you'll start to see, cloud provider originated deals that are inbound to you. And that's what can get your co sell flywheel spinning so that you can go from 15% setting a new goal of 25% all the way up to 40%. Now there's a there's a minority of companies who who are saying that that, almost all of their deals are influenced by co sell. They're up into that 76 to a 100% range. But, again, that's that's a pretty small a small, number of ISPs who have had, super successful experience. We think that that on average, you're gonna have a a lower percentage of your deals that are that are influenced. But, again, what you're really trying to get to are the the bigger deals that close faster and the new leads that you never knew about before that are now being sent over to you from those from those cloud providers. That's what you should be that's really what you should be aiming for. Now in 2024, at the start of the year, we said that 2024 was the year of co sell, for us and for and for all of our ISP partners. And that really turned out to be true. But to sneak in a a little bit of a prediction early, I think that 2025 will be the year, of co sell through Salesforce. And the reason for that is because they hit these big numbers to get to even get to 15%, much less like 40%, you really have to build automation into your system. You you have to get it as as close as possible to the CRM so that you're able to register more deals and more high quality deals faster to help you get the attention of the of of these cloud providers. And, you know, what what kind of a a product leader would I be if I if I didn't throw out a throw out a little bit of a pitch? You know, our engineering team has been working really hard to evolve our own, Salesforce app for Cosell. And coming out at the beginning of the year is gonna be the 2 point o version of that Salesforce app, which is gonna really change the workflow and the experience with a goal of allowing you to to hit these numbers and to see the the success with with your co sell programs. So, again, that'll that'll be out just just after the beginning of the year. But if you're interested in getting in, an early access program, just just let me know as we start to start to preview this new, co sell experience with with many of our customers. And for me, I'll I'll handle it I'll hand it over to Brian next. Yeah. Can you forward it, Dylan? Just click forward. Can you click click forward in this slide, Dylan? It should be on learning 4 now, Brian. Oh, alright. I'm just sweet. Thanks, Dylan. I'm excited to present learning 4. It's cool. You know, marketplace is no longer an experiment as it was 3 or 4 years ago. Right? It's it's now an integral part of any modern SaaS company's go to market strategy. And for companies that are trying to move through the maturity model, like John was talking about, and cross the chasm from alliance led and sales supported models to driving more of, like, sales led and alliance supported model across the chasm, integrating the full sales team and support structure is now more important really than it ever was. And so when we look at when we look at the the results of this year's respondents, we see that 38% of the folks introduced new or additional incentives to cloud support marketplace transactions. Right? It's already known that comp neutrality is key to the sales teams adopting marketplace. We've kind of been through that before. But any new channel, really, as we're kinda growing it, we're actually talking about seeing folks actually do promotions or even spiffs to make it comp positive for a period of time to actually build muscle around transacting through marketplace. You know, making it comp positive, kind of putting a little incentives in to get things going faster, builds excitement, creates win wires, develops trust internally even that deals will happen faster and be larger and actually transact easier, which is great. Tangentially, when we look at the challenges, respondents said, as they what was holding the organizations back from growing and scaling on marketplace, we see that almost 60% lighted cited lack of adequate training on how to engage with cloud market places as the number one reason. This is a huge opportunity for companies to lean in on education and support from organizations like Tackle, obviously, where we have many self-service options, highly experienced coaches some of you are using, and we can provide consistent support and guidance to growing network of advisory partners as well to leverage, and overcome this challenge. Lastly, I wanted to touch on the fact that the trust with the cloud providers is growing. This is something that some people think about and really are kinda worried about. Right? But when we asked respondents how they feel about registering deals with the clouds and what their concern is about these deals being stolen and taken to a first party service from the cloud, their concern is diminishing, which is really great. Last year, a little over 42% of respondents said they were concerned, and this year, that number is down almost 10% to just 34%. So it's clear that these themes all tie together. Right? It's critical to enable and train your sales organizations to understand how cloud markplaces work. It's also key to get buy in from all levels of your organization to make it comp neutral or even comp positive in the beginning. And it's obviously smart to leverage the experts that have been doing this for over 8 years, like our coaches and advisory network here at tackle. Io. Back to you, Dylan. Thanks, Brian. And when when we were when we were first getting started, there there was a there was a big question in the market about whether there would be multiple marketplaces or if one marketplace would turn out to be the winner and there would be consolidation to one marketplace. We made a big bet early that it was gonna be a multi marketplace world, and that is more true than ever. These 3 the 3 big hyperscaler marketplaces all have significant traction, significant number of sellers and buyers. And if anything, we we see even more marketplace players, entering the market in the in the future. Now we still recommend as a best practice to start with 1 and to find success with 1 before you think about, expanding across these marketplaces. And and the and the the number one question that I get about this is where to start. Which marketplace should we go in first? Should we just go to AWS since it seems to be the biggest? And my answer to that is always no. It it really depends on your business and the profile of your buyers. And to figure out where to start, you you have to do some, TAM analysis and look for your overlap with the individual cloud providers. Tackl provides some tools that that can help you do that, to help you look at your active pipeline and to find out where you have the most overlap. But that exercise is so important. You you have to go through that to figure out which cloud provider is is right for you so that you will see that see that success because you have to, get some proof internally to build up the business case for, for expanding and going between other marketplaces. Now we we do still see that that AWS is in the lead here with with 76% of respondents, focusing on on AWS, but 54% with Microsoft and 34% with Google. Now these numbers represent, how many how many ISPs have listed in those perspective marketplaces. But I do have to say that if you instead look at the number of transactions or the number of sales in these marketplaces, the numbers tell a little bit of a different story. GCP is not so far behind as these numbers might suggest. And I I think in the I think in the future, what you'll what you'll see is us and these cloud providers changing the way that we report on this. So it's not just are you listed in these marketplaces, but but how how many transactions are you doing? How many how much sales volume are you are you actually doing? And if you look at that, it does get quite a bit more even. When you when you are thinking about going from one marketplace to multiple marketplaces, there are a few things that you should think about. Number 1 is have you had success in one marketplace? Have you built up that proof that that this is something that your company can do? And it's somewhere, most importantly, that your buyers are are are are wanting to or are wanting to engage with. After that, make sure that you have demonstrated great product market fit. If you're an earlier company who's still trying to find product market fit, then adding multiple marketplaces may not be something that you wanna bite off until you figured out what that is, what your product offering really is so that you can make good choices about how to how to put them on these marketplaces. Then make sure that you've taken the time internally to build out a great ideal customer profile that you know who your ICP is. And then to take it one step further and to think about your cloud ICP. This can often be a little bit different. It's often a more narrow version of the ICP that that you've built out in general. You need to find out who your buyers are that are interested in cloud marketplace, and that will help help guide your decisions as you're working with working with those prospects and trying to get a deal closed. Now you can give them better direction on what they should be thinking about. And, again, Tacklea has tools that can help you build out your ICP and focus your sales efforts on individual prospects. The last thing I'd I'd suggest is to make sure that you have a field ready seal sales kit for each cloud. It's important that they are built out individually because your value proposition for each cloud might be a little bit different. And this kit is for your internal sellers so that they know how to approach customers who are interested in a particular marketplace. But it's also you've also gotta think about tying it into co sell. It's also for the cloud sellers. So as they start responding to your to your, co sell opportunities, that they also know how to talk to customers about your product within the context of a cloud marketplace. Once you have those things ready, you're ready to think about expanding into multiple marketplaces. Of the respondents in this survey, about 45% said that they already sell within the big three marketplaces. This is great. It's great growth over previous years. But maybe an even more interesting stat is if you think about the the the slide that John showed in the beginning of the maturity model, those who have crossed that chasm from to go from being transactional to being strategic, they view they view this as a strategic program for their company. 78% of those have listed in multiple marketplaces, which is a great indicator that as you think about move as you think about transforming the strategy and really go becoming strategic, that that is a great time to think about, about listing across multiple marketplaces. And keep in mind that sometimes multi marketplace 2 is enough. Doesn't necessarily mean that you have to be in all 3. Only 28% of respondents are in all are in all 3. So don't don't just assume that you need to go from 1 to 3. Think think really carefully about that. Sometimes the right answer for your business is 2. But think carefully and and about the right time and the right way to expand across marketplaces. And back to you, Brent. Very cool. Thanks, Dylan. Appreciate it. So this next one, the the year of the channel. I'm excited to present learning number 6. Right? This one is, kinda near and dear to my heart. No surprise to me whatsoever. I've spent a ton of time this year working with ISVs of all sizes and shapes to to help them navigate the channel journey with respect to marketplaces. Lots and lots of stuff happening here. The numbers in this segment continue to grow. I don't think that's any surprise. Each of the last few years, we've seen the percent of transactions going through the marketplace with a channel partner grow pretty significantly. All 3 major hyperscalers. I'm not sure. You know, a lot of folks kinda have have done transactions initially through CPPO and then through Microsoft as they added it. And recently, you know, all 3 major hyperscalers now offer efficient ways. I mean, you doing business with the marketplace and channel. Right? Google just recently joined the party this year, releasing MCPO, marketplace channel private offers. And it's, it's exciting to kinda see this continue to grow. 60% of the respondents reported doing business with a channel partner in the last 12 months. Right? And that's up over 12% from the previous year. But the key to that stat I just mentioned is that that's what's just happening in the trailing 12 months, 60% in the trailing 12 months. What's even more exciting is when we ask folks, you know, what they think about the year ahead and how many they think they will, how many folks think they will actually go through market, Marketplace with a channel partner, a whopping 87% of respondents said they anticipate doing a deal, on marketplace with a channel partner. So that that's pretty pretty amazing stuff. Right? Although the clouds are making it much easier, though, and, you know, ISVs to transact software with the channel in marketplace with some of these programs are coming out, it definitely continues to be a complex problem to solve. Right? And I think people are folk are kinda realizing this. Right? Oftentimes, channel partners are selling not just software, but the MSPs and the channel partners at the front end are really selling an outcome to the customer. Right? And when they're selling that outcome, it involves not only software, but almost always involves services and support as well. And sometimes, if you think about it, it even involves other multiparty. Right? There's financing partners. There's maybe distributors, other key players as part of the story as well. And so, you know, the net net here is that we've made a ton of progress, but there's a lot left to be solved in this space. But I'm excited about how tackle is gonna be involved in these multiparty transactions and marketplaces. The good news here, though, is we're seeing that all the hyperscalers driving towards a lot of advanced solutions to accommodate these multiparty deals, complex revenue recognition and reporting. All of this stuff has to work together. And Tackle has a real a front row seat to what's happening and and kinda continually working with the clouds and our customers to help them navigate. You know, it's really exciting. 90% of folks say they're gonna do a deal with the the channel and marketplace in the coming year. So lots to happen there. And maybe maybe one of the the biggest changes that we've seen over this year, is the adoption of free trial, usage based billing, and product led growth features on the marketplace. These are this is all functionality that's been available from the cloud providers for quite some time now, but it's only in over the over the course of this year that we've really seen adoption. We we originally predicted back in the state of cloud go to market report in 2020 that this was gonna be a trend that was gonna happen. This is something that we really we really believed in and that we started we started to build out. And, to be fair, it has it has taken a a bit longer than than we thought it would, but it has happened. It it is finally here. We're seeing, 34% of respondents say that, they're they're using now a a free trial within their listings, where there was a period of time where this was awfully close to 0. And now 36% are using usage based billing. Some quite sophisticated looking at looking at partners like Orb that we've integrated with to to to support very complex, usage based billing models. Some are still on the more simple end of the spectrum was it as it we we make it very easy to to to get started. But, the the adoption is just going up and up. But why why now? I I really think that there's there's there's 2 reasons. 22 things have happened. 1 is that buyer behavior has changed. Buyers have started to see success on on bigger deals being transacted through the marketplace. And as the procurement teams have have seen how easy this this is, how how simple it makes life, they've started to push more and more of, like, hey. Why don't we use that everywhere? Why don't why don't we use that as a way to control all of the free trials that our company is engaging with? And why don't we why don't we even use it to have have have more, control over these usage based products that that we're buying, and that that we're and that we're using every day. So more so that buyer behavior has really changed. And then, new types of buyers have joined this marketplace party, specifically, getting back to Brian's last slide as as more channel partners are using marketplace, that means that they are reaching a wider, buyer audience and getting more and more SMBs involved. So as you as you go down market a little bit and you get more more of these smaller kinds of companies who are engaging with marketplace, there's more of a demand for free trial. And there's more of a demand for product led growth types of platforms so that they can they can get in at a low price point, and then they can grow as they see success. So there's many, many more of of of these buyers who are now interested in marketplace and who are now trying to use these these strategies. So we started started to go past a bit of a tipping point here where marketplace is no longer just for some people. It's really for everyone, every type of every type of buyer. And ISVs are starting to recognize this as we get requests to go back and revisit listings that have been around for a long time to think about how could we how could we add, a free trial to this. What if we added a couple dimensions that were for usage based pricing? We get we hear those, every single day. And to throw in one more, sneaky prediction before we get to the prediction section, I'd say to to take a look at at other marketplaces that are coming online that are, that are focused on this problem. I I I I'd take a take a take a close look at Pax8 as they sort of re rethink the way that marketplaces interact with channel partners, specifically MSPs, and these SMB buyers in particular. I think that that's gonna be something that really changes the landscape, coming into 2025. Now as you think about how to get started, maybe you already have a have an offering out on the marketplace, but it doesn't have these features. The first thing, I'd I'd urge you to take a look at that look at are all the different products and all the different packaging options that you offer internally. Do you have a do you have a a way for for a customer to start for free if they engage with your sales team? If you don't, you definitely need to think that through before you before you add a free trial just to a just to a listing you might have. You've gotta really build up a free trial strategy internally that you get all of your stakeholders aligned on, that everybody's comfortable with. At that point, you might need a new listing, or maybe there's a way to retrofit an, an existing listing, but don't be scared of creating multiple listings. You're really just giving buyers more choice. The second thing I'd I'd urge you to think about, we'll talk a little bit more about layer layer, but is to think about experiences where the that you might have where this could be integrated. Think about things like what landing pages do you have that's targeted, at these types of buyers. On your pricing page, do you have a do you have a free trial option? Maybe that would be a great point. Think about an integration with a free trial marketplace experience. Or even within your within your app, don't forget to think about conversions and upgrades because they might start free, but what we all hope is that there is gonna be a time when they when they convert from free. And you wanna make that as easy to happen, especially if they start with Marketplace. They have a great experience. Now how do they how do they upgrade their Marketplace so that maybe now they're on a longer term type of a commitment? Make sure to think that through and to make it really easy within your application. That ends the that ends our our our learning section. We're actually gonna do our little fireside chat right now, so we'll stop sharing. I think, like, it's it's so funny just listening to the usage based free trial PLG. I I think it really shows the complexity just like how how sophisticated some of these models have come have gotten and how much there is to think about as you think about launching them. So, so we're gonna do a little bit of a reflection. So 5 years into this, Tabitha's 8th birthday was earlier this year, which was a big milestone. And there's all these milestone moments when you're building a company. Like, reInvent used to be a timeline. We we cut you could almost set the clock of the company off of every year's reInvent. Our company off sites ended up being one of those. But we wanted to just take a little look back and be like, what surprised us along the way? And, you know, Brian, why don't we start with you? Like, what are some things that have surprised you along the way as as we got ready for today and and even just thinking more broadly in your customer and partner conversations? Yeah, man. For sure. It has been a it's been a long crazy ride. Right? I mean, when we started out 8 years ago, like we said, September 23rd was our 8th, 8th anniversary. When we started out 8 years ago, we were solving for friction, you know, and some of you were there with us. Right? We were solving for friction in getting listed. Like, it became the friction around getting listed and how would you get listed. Then it quickly moved into how would we do co sell and just actually do functional co sell as those things kinda pull together. And and now it's really clear, even these comments, is the friction is around how to scale and grow that system efficiently. Right? I I didn't really you know, what caught me surprised is I really didn't realize how the friction would be solved and then kind of move forward. Right? And the what what's been great is that the clouds have been fantastic at at making this stuff easier. Right? They've been a great job they've done a great job of solving some of these basic functions, getting listed, doing simple co sells. You know? And it's actually why we've kinda realigned our business model away from charging for listings and aligned our success with our ISV success. Right? And letting list in listings like Dylan just mentioned. Like, you shouldn't be scared of putting more listings up, experiment, and do things. Right? You shouldn't be have trouble with that. But but that doesn't mean that there's no friction. Right? The friction just kinda seemed to move a little bit forward in the process. Right? The things that I was talking about earlier in in the learnings. Right? 1 party, 2 party, multiparty, that stuff is still hard. Where does distributors fit in? There were some comments there. Now, you know, AWS just released multicurrency. You know, there's even multi language kinda issues, pay as you go, private, public offers. All of these things have kinda really been, you know, going going pretty quickly. There are so many features and so many functionalities. I mean, Tackle and and our team is is working super close with all three clouds, trying to understand the road maps, meeting with them on a biweekly, quarterly, monthly basis, you know, and trying to bring these features to life within our customers and and folks in the market. Right? And I love to tie it off kind of like a really good friend of mine, Mark Harpster, who many of us know here, who's been involved in marketplaces even longer than I have. You know, has always kinda said, you know, marketplace used to be like a 3rd grade math. It was really simple, and now it's like college calculus. And and I really believe that is the truth. Like, this is tough stuff to do now. And so we're happy to be, be a partner with you guys, you know, in that journey. Dylan, I don't know. What do you mean, Dylan? Well, I yeah. I've been I I've personally been, been been been a been a bit surprised by the mix of different types of software companies who are now interested in marketplace. When we were when when we were first getting started, probably for most of our history, like, what we what we've heard is, hey. Marketplace is great for your DevOps companies or security companies or infrastructure companies, but it'll never be, something for for business applications. And and that's really that that that's really shifted. It's toe totally changed, totally different now, where these cloud cloud go to market is really for everybody. You know, last year at re:Invent, sales Salesforce made a big announcement that they were making a a huge commitment to marketplace. And it seems like they were the first domino that when when when they when they were knocked down, they sent off a whole train of new types of software companies who are who are looking at looking at marketplace and thinking about how they can also take advantage of this and how they can get in on it. And that, very glad to see it, but it has it has, it has surprised me a little bit. I don't know. Were were you surprised by that, John? Yeah. I I mean, I remember thinking in the early days, wow. This cloud go to market thing will really be a thing if Salesforce ever embraces it. It was so that was one one of those moments, where you're like, wow. It's it's actually happening. And maybe, like, even building on that, I think one of the things that surprised me is just, you know, we kinda grew up as a company working with growth stage startups. A lot of our early customers were in that, say, 20 to a $100,000,000 pre IPO run. They were investing a ton in their go to market systems, and turning on these cloud channels just seemed like a really logical thing for them. But as those companies started to have success, enterprises started to show up. Even back in, like, 2018, 2019, I remember talking to some of the largest software companies in the world, and the problem for them is so different. And this gets back to that organizational transformation problem. There's exponentially more stakeholders. Every product traditionally makes decisions on its own. Maybe rev ops isn't fully integrated into the business strategy process. You can end up with a very fragmented, you know, Frankenstein kinda solution when you're trying to layer cloud go to market into that. And I think having worked with some of these customers, both those who failed as well as those who've now succeeded and seeing how different and complicated it is for an enterprise, versus, you know, someone maybe single product, not portfolio product. That was a big a big surprise for me and I think a big learning that continues to I I we continue to learn that learning today. Yeah. Lots more surprises to come for sure. Alright. Cool. We we've been answering questions along the way. I know Patrick, Riley from our team has been answering questions. So, we're running a tiny bit behind, but I think we'll still land the plane on time. So we're gonna shift gears into predictions. So, I mean, this this for me is always a fun part. So we try to make this report as data driven as possible. You know, this year, we not only did the survey, we used tackle prospect and all the transaction data that we've seen to complement our research, but there are some parts of cloud go to market that are just too early to call with data. And we start to see early signals of change and evolution, but we can't, like, fully pin it as to an exact stat to make it happen. And this is, you know, really what we use this prediction section for. And it's funny. Like, this year's predictions are not as bold as maybe predictions in the past. And we were reflecting on that as and and we're like, are these just boring? Should we not do predictions? I still think they're very valid. It's just a signal that this market is maturing. We're in that, like, full adoption phase of cloud go to market. It's not changing wildly every single day. People know what they need to do. They're growing their revenue. They're on a path. So, I'm excited that that we're only gonna go into 3 of our predictions today, but we'll show them all to you. So Brian's gonna cover the first one, the obligatory AI prediction, that everyone was expecting Brian will cover first. Yeah. Yeah. Yeah. For sure. I get to talk about prediction number 2. Right? AI driven cloud buyer intent data will have a broader impact across all go to market efforts, not just cloud go to market. So exactly as as John said, like, you can't have a webinar these days without a little AI ML discussion somewhere in there. Right? And it's clearly dominated the news cycles for well over a year now. And and oftentimes, it's hard to to kinda even separate what's valuable and what is what is hype. There's a lot of stuff happening. Right? But there's no doubt it's here to stay, and it's gonna be part of all the software development data analyst, analysis going on in the future. Right? And as more data is created constantly, we're saving and growing and expanding the data. More and more of it is being analyzed by the AIML models. Right? Cloud go to market is is sure to benefit from this data, continuing to drive intent and making tools like tackle prospect, which some of you use, more valuable and drive, you know, more buyer intent. But what's really cool when you think about it is that this intent data will start to span a wider piece of the entire revenue organization. I think people are starting to see this. Right? Some folks are using, you know, our intent data tied in with, you know, 6th Sense and some of these things to kinda do these things back and forth. You're seeing this kind of revenue stack grow. Right? And there's gonna be more and more dependencies across all the systems in your sales and revenue software stack. And as we all know, this is the key. Right? Models are only as good as the data that feeds into them. And I believe what we're gonna see is a real focus on data and product integration in the future as these models try and get bigger and better and more accurate. Right? So it's gonna be pretty exciting to watch in this coming year and be able to report back on it at next year's webinar. Right? But I think we're gonna see customers and cloud intent data continue to move up the stack and move forward. Right? It won't just be attached to buyers and specifically targets, but it'll come into play across your entire organization around go to market. Right? Expect to see more models driving, like, territory planning, account based marketing, demand gen, rev ops, and even, like, sales themselves are all kind of being tied in with this AI, ML model, as we see it. Right? And the last that I think is really interesting that I think some folks are thinking about but is gonna come quick is that, you know, I wanted to bring up the fact that, you know, these enhanced data options are gonna become more optional, and I think that's key. Right? Organizations are really struggling to think through this with legal and and navigate, through, you know, what they wanna be part of and what they don't have. And I think, you know, the organizations really wanna leverage a wide set of data are gonna have to decide if they wanna opt in to be part of a bigger dataset, and there is or therefore, you know, be part of potentially receiving better signals with more attributes. So expect there to be a lot of discussions internally and externally around data and how it's gonna be used to drive value and and really what one's data is worth internally to to drive these models for for more growth. Mhmm. Yeah. It's been so awesome to just see the continued evolution of a data driven go to market system, not just with tackle and cloud buyer intent data, but all across the lanes. And, I mean, our other predictions so we have we have a couple predictions centering around international. One being buy side international, the other being sell side international. We have another around business model evolution that's kinda building on what Dylan talked about around usage based and PLG. We have one relative to SMB, which I think is an interesting category as you see the buyer population continue to grow at that 70 plus percent year over year. You'll naturally move down market. But I think one of the ones that I think is most interesting is this idea of the evolution of storefront. So, Dylan, do you wanna talk through the prediction around storefronts? Yeah. Absolutely. This is a this is this is a this is a fun fun one for me because it's something we've been thinking about for a long time. But I think the data has really showed that, that the time is right, that that this is this is something that's gonna happen. I mean, if we look back at some of the learnings that we just went through, you know, we've seen a over over the years, we've seen a 500% growth in the marketplace buyers. There are just so many more buyers now. We talked about there's different types of buyers. There's there's SMBs. There's enterprises. There's there's everybody in between. And there's more and more types of sellers. It's not just ISV selling their own products. There are channel partners involved. There are distributors, involved. What what what this all what this all adds up to is that this year, we're gonna we're gonna see, a big ribbon cutting. We're we're gonna see many, many ISVs who are going to we're gonna open up their own storefronts. And what we mean by a a storefront is an experience that the ISV controls, for the purchasing process even though the transaction will be happening through all all of these, hyperscaler marketplaces. So think Shopify as maybe maybe the best example. They they've, enabled tens of thousands of businesses to create their own web storefronts, all customized, all show their show off their products in a different way. They completely control the marketing. But the transaction for all those stores is streamlined on the on the back end. None of those, none of those store owners have to think about, do they accept credit cards? Do they accept PayPal? Do they do they accept all these different payment methods? Shopify has made that really, really simple. In the same way, we we're we're we're gonna see the same thing, in in this industry where ISVs will need to control their buyer experiences. That's not something that they just wanna ship off to to these cloud providers. They need to to they need to control the entire pipeline from the time that these leads first hit a landing page, to when maybe they can get them on a free trial all the way through a purchase. So ISVs are going to want to build out their own storefronts that transact, when the time for a transaction comes through through one of the marketplaces, and they're gonna want to be able to give their buyers choice. We've already we've always said, sellers wanna sell where buyers wanna buy. And that is more true today than it ever has been. We talked about, multi marketplace, but ISVs want to give their buyers choice. They want they Ruh roh. Uh-oh. Thought that was me. Nope. Uh-oh. We lost him. Alright. So I'll try and pick up where Dylan left out. I see this one, their buyer's choice, and I think the way software is discovered is still evolving. And even though the buyer participation is growing massively, discovery is still different from buyer participation. So we think storefronts will will create a a a different and unique flow that further complements this cloud go to market motion. Alright. So we do have a prediction on distribution. I know there were some questions around it. That one is uniquely complex, and and may require a deeper dive to follow. But, really curious to see how the economics of distribution fit in with cloud go to market from a long term standpoint. And then our final prediction. So this one, you know, traditionally in the past, everyone was really curious. Like, we would have this anchor prediction around cloud go to market throughput. And, in 2021, it was the 1st year we made a revenue prediction around marketplaces. And at that time, we'd said we'd they'd get to 10,000,000,000 by 2023 and 50,000,000,000 by the end of 2025. We went on to update that to say a 100,000,000,000 in 2023. We said a 100,000,000,000 by 2026. There's a lot of variables in this formula. And the simplest way to think about growth is, is there enough of a market available for growth endurance to continue? So what is growth endurance? Growth endurance is this Bessemer talks about this and they're scaling SaaS companies to a 100,000,000 in a ARR guide. If you've never read it, it's a great one if you're a student of software. We all know that as numbers get bigger, growth rates are harder to sustain. And as you get bigger, a lower growth rate may turn into far more dollars from a growth standpoint than the percentage implies. And growth endurance is just how long can you sustain high growth rates over what period of time, and is the market big enough to support that? So in the marketplace movement in general, like, you know, we called a 100,000,000,000 by 26, Canal has called 85,000,000,000 by 2028. Jay on stage, partnership leaders earlier this year said he thinks that they may have under called it. At this point, no one's debating that Cloud go to market is a large thing and that it's here to stay. But exactly how big and how fast is still the question. And even if we just took those two numbers, our 100,000,000,000 2026, they're 85,000,000,000 2028, our 100% growth rate, they're 80% growth rate, we meet in the middle, it's still a pretty massive number. So the thing that's interesting is the only people who control the answer to this question are the clouds. And the clouds haven't had a very strong willingness to share the data publicly that could inform how ISVs and partners work with them. And it's really interesting. Like, looking at ISVs, back in 2020, CrowdStrike was the first ISV to ever share their cloud something about their cloud marketplace business on an earnings call. And I remember that point, like, reading the doc and seeing George Kurtz's comments was another one of those really exciting moments in the cloud code market movement. But so many other ISVs have gone on to follow suit. Like, Varonis told a customer story about their SaaS solution being purchased through Azure Marketplace earlier this year. Okta talked about their AWS Marketplace business growing a 130% year over year at a $175,000,000 run rate. Elastic talked about doing large transactions from Cloud. Confluent called out being partner of the year for Microsoft and their strategic relationship influencing their glow growth. And Salesforce is probably my favorite one where last quarter, Salesforce talked about 3 of their 10 largest deals going through AWS Marketplace. ISVs are talking about this publicly in their earnings reports, but the clouds continue to be quiet. So why is this? Like, this is a massive business. These are all massive businesses. Right? And they are federated lines of business divisions. They're huge. Is cloud go to market not strategic to them? We all know it is strategic. We know it's important to the future. We know it's a key investment area for them. So when will this cross that chasm to be so important to them that it becomes part of their earnings reports? We'll never know the exact data. We'll continue to make predictions. We'll continue to measure our predictions. Other analysts will as well. But I'm really excited to see if they'll start to publicly call out what these businesses mean so we all can make better prioritization decisions as we get in the future. Pete, I will share the link. It's best if you Google Bessemer, scaling to $100,000,000, there's a report there that goes into growth endurance as a specific step, just to answer your question. Okay. So we have 3 minutes left. We'll go to the next slide. First off, thank you. Thank you all for joining us today. This is clearly Dylan, Brian, and I are really passionate about this topic. This report is only possible based upon the insights you all share with us via our annual survey. So thank you to everyone who participated in that. It means a lot. We can synthesize that into, I think, some really unique insights for the industry. This is our longest report to date. I mean, 10,500 words is pretty crazy. It's almost a book. It's like 50 pages long. You'll CSD compose it into smaller topics because there are so many different ways you can talk about this. I think distribution and channel, I mean, that could be a very lengthy subject in and of itself. Product led growth is a distinct category. There are all these different subtopics here. We continue to try to just research, be thoughtful about what our customers need, but we will break it down into more detail. I do wanna give a shout out to our marketing team who really makes this happen. So, you know, Andrew, Michael, Mary Louise, Ashby, so many others, this would never come to life without them. And if any of this struck a chord with you all and you wanna dive deeper, we are here. Like, feel free to shoot us a note. We'd love to we always do executive team reviews just talking about findings, or we'll be at the cloud events coming up. So we only have about 2 minutes for questions. So, I'm trying to figure out how are we gonna choose questions. Patrick, do you wanna okay. Alright. Great. Perfect. Since the clouds have started to cap the benefits of marketplace purchases, how do you see the change of growth rate since they can't keep taking limits away? Well, you can always count on mister Muslin to come through with a with a nice hard question. Exactly. Thank you. This one. Oh, well, you know, my my first first impression. Like, I'd I'd I'd say that that Mike is right here. I mean, it it it is totally true. But I'd say, I I think that it's not always in the cloud's best interest to to do this. Like, they could keep doing this, but I don't know that they will because I think it is is they'll they'll they'll they'll see. I think they already are saying that that's in their their best interest to keep the incentives, as high as possible. Because, again, they are they're benefiting from all this as marketplace usage grows and the volume of transactions grows. They're they're beneficiaries. That's that's my first reaction. I mean, maybe the the the other reaction that, you know, we were talking about earlier today, as you look at the fees, like, the fees have eroded to the point where there's not a lot of dollars. You know, 3% for new, point and a half for renewal. It you know, do do they evolve to increasing fees again to enable more? If if the buyer and seller ecosystem's happening and the clouds could send you the highest quality leads that exist in the industry, would you pay more for that? So I do I do think there's a there's a tipping point where does market does a marketplace business become an independent p and l that they could report on, like AdWords at Google or, like, advertising in Amazon, or is it a cost center? I think we're still trying to figure that out, and they're trying to figure out the solution to how to make this economically scalable business for them and for all of us. Great question, Mike. Appreciate it. Alright. That is time. Thank you. We're here for all of you. We really appreciate everyone joining and look forward to seeing you all at the cloud events over the coming weeks months. Yeah. See you all soon. Thanks, everybody. Yep.