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JUN 18, 2014 - NaN MIN

New Relic and Yammer’s Biz Dev Toolbox

  • Sales

Business Development can be used as a growth lever at any stage of company. It can even help define your go-to-market strategy early on. Whether you’re looking to expand your distribution through existing platforms or build an ecosystem around your products, An Le offers lessons learned from building BD relationships for New Relic and Yammer. She’ll also offer info on the tools and types of partnerships that drive your business objectives as your company evolves and grows.

  • Introduction
  • Building the Ecosystems
    • New Relic
    • Distribution, Ubiquity, Lead Gen and Revenue
    • Yammer
    • CMS, CRM, HR, ERP, Other
  • BD Tool Box
    • Co-Marketing Examples
    • Channel Programs Examples
    • Product Integration Examples
    • Feature Enhancement Examples
    • M&A
    • Build in Parallel
  • BD Goals Evolve
    • Establish Core Set of Partners
    • Build Customer Traction
    • Continue to Build Partner Ecosystem
    • Gain Ubiquity in Market Place
    • Drive BD leads through sales process
    • Maximize Revenue
    • M&A to Scale
  • Q&A
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Thank you so much for coming and thank you very much for having me. I'm honored to be here.

I know that a number of you had sat through Bill Lapcevic'sspeech which was maybe about a month or so agotalking about overall what BD is, how it's defined,how it can be used in startups.I really wanted to have a muchmore personal approach to this talking about my experiences, how I grew up withstartups and BD, how I've leveraged some of thesetools and then how over time I got into whatI call the BD toolset that is very much self described.Hopefully we'll be able to help you guys out in terms of howyou leverage BD throughout your startups and opportunities.

A little background around me, I am local; I actually grew up in San Jose.I know it's fairly rare to be from Californiaand work in tech, but here I am. I went to school at Stanford and gotmy BS in electrical engineering. I went on to work at a small semiconductorcompany you might have heard of; spent four years there doing a couple of different roles,anywhere from having a quota as a technicalsales engineer all the way through a BDMhandling relationships with folks like HP, IBM, Dell.

I went back to business school in 2007,graduated and I wanted to try a stint inprofessional services which lasted not so long. I joined New Relic at roughly aboutemployee 20 or so, grew to about 120.After two years there, I wasrecruited to go to Yammer where they did nothave a business development function; grew that for a couple of years andthen was acquired by Microsoft. I took some time off and now I'm currently serving as anEIR at Trinity figuring out what I want to do next.

The one thing that I would note from my experienceshere is not that there are a couple of good companies in there, I had a great time, but really you shouldnever go to school when I go to schoolbecause bad things happen when I graduate.The dot com bust in 2001.Intel is the only job offer that stuck after 11 otherstartups and firms revoked their offer or ran out of money.And in 2007-2008 the mortgage crisis;financial industry was hit pretty hard.A little bit of background there.

One of the things I want to talk about is whereyou start to partner and what kind of partnersyou look at as you're evolving as a company.Early on you're probably looking atawareness as your number one goal moving into distribution, lead gen, and eventually ofcourse we all want to get to the trifecta of revenue.

When I joined New Relic we were nascent. It was 2008 or so, we had about 20 employees and we had one bigdistribution partner and a handful of customers.It was when Ruby on Rails was very new tothe market and APM and the Cloud was a brandnew concept we had to educate people on.Lew Cirne was the founder of New Relic.He actually had founded a companybefore that called Wily Technology.That company grew to about 80 million or so in revenueand was sold to CA.

But one of the things thatLew hated about the growth of Wily was thatenterprise sales completely outpaced his revenues.It got to the point where hewas never able to get profitable.

He wanted to do things differently at New Relic.He really wanted to leverage BD and partners and channelsand inside sales to get to that same kind of growth ratewithout having to employ a huge enterprise sales team. And he focused on Ruby on Rails.

Building the ecosystem at zero,we launched at RailsConf a couple of years back,and our very first partnership was with Engine Yard.Engine Yard had roughly about 850 customers or so.The value proposition was a number ofpeople are now moving applications from anon-premise to a cloud-based hosting provider.You are having issues because people call you everytime there's a slowdown, every time there's an issue.They'll go and say, "Hey, the hosting provideris at fault here." But if I give you this tool, if I giveyou the ability to get visibility into your applicationthen you'll be able to say, "It's actually over here.I can help you troubleshoot it, I can helpyou look at the area in which your applicationis not performant and then I can hand it off."

You would get happier customers, you have better relationships andpeople don't leave, people don't churn from your platform.This actually worked out really well because every singleEngine Yard customer is now every single New Relic customerfrom the get go. And we did the same thing with Heroku.By then we had a couple thousand customers and wewere like, "Hey, this is a pretty good strategy."We're going to call that distribution,and we're going to expand upon that to get to ubiquity.

What we did was we started off in Ruby.We then migrated to Java, PHP, .NET, Node.jsand we had to build relationships with all thedifferent hosting providers, all the differentplatform-as-a-service providers in those ecosystems.Eventually we wanted to go to where all the developers were.Tools such as RightScale, Pivotal, looking at Acquia, places where people were building applications; we wanted to be there and be in front of themto bring leads in. And eventually to revenue.We got to the bigger players, theRackspace, the Amazons, the Windows.

The note here is that these smaller partners thatare in your space that are very niche-centricto you are going to be easier to build on.

It took us two years to get into Windows Azure. Not to say that we didn't have those conversations early on. It's the fact that it was a process where we had to buildout the ecosystem, we had to have partners, we had to havetraction and prove to them why it was importantfor us to be. It was the same value proposition;it just took a longer conversation.

Within that we went from zero to 850to over 2,000, to roughly about 30,000 orso customers by the time I left New Relic.Today I believe they're over 80,000.From a ubiquity standpoint we have platformpartners and partnerships with tools and developersacross all these different technologies.From a lead gen standpoint anywhere from about5 to 10 percent of all of our leads that comein to New Relic are through business development.And I believe this is still standing where about 15 to 20 percent of our overallrevenue comes through our platform partners.

When I came to Yammer it was a very different story.They were around for about three years,they were about 200 customers and had gottento about five million enterprise users.We had a viral model where people would go andsign up with their HP.com e-mail address. Then I would be put into a network with anybodyelse who signed up and I could invite all my friends.That actually worked out really, really well.We got to a million users in 18 months through that viral model.

Our sales cycle was to say,"HP, you've got thousands of customers on our network.Wouldn't you love to be able to get visibility to that content?Wouldn't you love to have some sort of controls and processesaround what people were saying, and as an executiveteam really be part of your corporate conversation?"The problem was though that once peoplesigned on, if they were active within thefirst couple of weeks they would stay on,and it actually would be a pretty vibrant network.If they didn't, if within the first monththey were not engaged, they would probablynever be engaged and they would never come back.

Our problem here was we were tryingto drive engagement through BD.What we decided to do was buildan ecosystem around ourselves.

We wanted to be the platform across allthese different enterprise apps, and we splitit up into a number of different categories: content management, customer relationship management,HR, ERP, looking at things like ideation and innovation; anything that would drive users to come backto our platform, use us more often and makesure that we were a part of this conversation.

If you're a sales guy, how much of your dayare you spending on e-mail and Salesforce?If you had the opportunity to share that Salesforce object,that Salesforce record into Yammer and have a conversationwith product, or marketing, or customer successorcustomer support that would hopefully get you to bemore engaged and enthusiastic about using Yammer.Same thing with people who are NetSuite,same thing with people who are doing things on Box, if you're able to take that content,share it to Yammer, have the conversation around it — that breeds a huge amount of engagement.

On the flip side we were now the big players in the house.We had the five million enterpriseusers that people were excited about.I was fielding a number of new enterprise apps that werecoming out that were doing things like Mindjet orproject planning, other content management,the ability to do video and access chat, whatnot.If you're a small player and you're looking to build intosomething like Yammer the recommendation here is let'sfigure out what they want, what their pain point is.

If my pain point is Yammer's engagement, and I'mlooking for other apps that will help me solve that — if you give me the value proposition of feedinginto my data stream and providing me somethingmeaty enough to engage with, that makes me notice.

What it actually looks like from a Yammer standpointis we use OAuth and YammerConnect and SSON.Every single thing becomes an object.We use OpenGraph, the Facebook-popularized OpenGraphprotocol to push objects into Yammer and make themsearchable so you have universal search across yourenterprise apps which is another value proposition.Then of course through the activity streamyou'd be able to see what was going on,engage in conversations, really piggyback off that viralmodel and learn about new applications that maybe yourother colleagues are using that you weren't aware of.

At the end of that we found that users with two or moreintegrations were 20 percent more actively engagedon a weekly basis, and it shows in the numbers.Within that first year, and I apologize if thisinformation is a little dated, I left Yammer in 2013, but the number of people that were using the apps,that were companies using apps as well as theamount of information that was now being pushedinto the Yammer knowledge sphere through the Yammerplatform helped draw that engagement more and more.

Another side of Yammer outside of building this viral modeland then selling top-down was the fact that Yammer,if you weren't excited about it, if you weren'talready on Facebook and familiar with the usagemodel it was actually a little bit hard to engage in that it required some sort of change management.It required some sort of transformation ofyou getting off of e-mail, talking to people, frankly willing to be open about what you'retalking about and share with your colleagues.

There's a level of visibility and transparencyhere that is lacking in a lot of corporations.

To help solve that we worked with anumber of SIs and innovation partners.Deloitte was one of the very first that weworked with out of Deloitte Australia.They brought the Yammer practice into the US and it was thevery first software that was deployed at Deloitte globally.There they built a practice around it.They helped pull in customers.This became even more important oncewe were acquired by Microsoft.

Over 90 percent of Microsoft softwareis sold through indirect channels.They have a large direct sales force but those are actuallyhelping those channels push that software through.So we're piggybacking off of the successes we'vehad so far working with Microsoft and thatbrings us to new enterprises, new regions.Again, by the time I left roughly less than 10 percent or so of all deals were brought to us through our SI partners.

What did I learn through those two experiences?This, again, is a very personal view of what the toolbox is.How do you think about when do you leverage,which tool and when, and how do you really getthat leverage as any early stage startup?The first layer, co-marketing and channel programs, I wouldconsider those that don't consider technical resources, thatyou can do with some business people and some negotiations.The product integration and feature enhancementdoes require technical resources but havetheir pros and cons for various reasons.And of course, eventually there's the M&A aspect once you get big enough or there's anopportunity for somebody to acquire you.

Co-marketing is a pretty simple one.It's like, "I love your product, you love my product.Let's put each other's logos on each other's pages."Which is nice, it's good. I'm aware of that but whatdoes that really bring me? Is it really sticky?

The one thing I would advise is co-marketing is fantasticin parallel or in conjunction with some other tool.

If you have a product integration, if you have a featureintegration, co-marketing is very importantto build that awareness of what's going on,what's available out there to get to that customer base.If you build a product integration with another company andyou don't tell anybody about it no one's going to use it.If you tell everybody about how great your two productswork together but they don't actually work togetherthen you lose a lot of the value of the marketing.It's something that needs to be consistent andlike any marketing it needs to be repetitive.

A couple of examples: This is pure co-marketing.Softlayer has an ecosystem where they put up websites.They have each individual partner website.They tell you about it. They leadyou back to your partner website.Again, useful in the terms ofawareness but it's not that sticky.If you don't co-market, if you don't continue to push e-mailprograms, if you don't talk to customers or you don'ttrain sales people then this doesn't really mean anything.Similar to Amazon. They actually have two versions.They have their SAS co-marketingpage and then they have their AMIs.Their AMIs are the ability to deploy a directintegration into your AWS infrastructure.The SAS marketing page is just this, a SAS marketing page.They get 5x more traffic through theirAMIs than their marketing page.

A couple of things that I would look for, and againit's a long list of marketing activities, but what I like to do when I bring on a partner and I have anintegration, I have some sort of a product fit thereand there's at least a little bit of stickiness,I like to do all these co-marketing things.I think of it as a go-to-market package or go-to-market bundle.You do joint PR, website presence, e-mail campaigns,newsletters, webinars, white papers, all the above.But you don't just do it once.You do it every month, you do it every quarter.You keep doing it. You check in on your partners.You provide them with data and statson how well things are going.You feed that back to them and say, "We should do more of this."

Channel programs. This is something that I'm somewhatloosely defining but it gives you anywhere from a very,very lightweight affiliate referral program all the waythrough to a much more involved SI partner relationship.Again relatively easy to get intoespecially if it's a referral program.You say, "Here's my product.I know you're a consultancy that works in this area.Can you please refer me or refer your customers to me?Then if I do I give you a 10 percent referral fee."

The problem here is that there areso many people to work with.There are so many mom and pop consultancies out there.There are so many people specializing incertain things that it's hard to figure outwho to work with and how well this will work.

I would caution to not do this until maybe you are a littlebit later, maybe you have more resources on hand.It can be incredibly resource intensive just to providethe overhead for this type of program if you are seriousabout making this something that will drive revenue.

The same goes for the larger SIs.If you are working with a Deloitte or Accenture,often times to actually penetrate their ecosystemit requires a full-time head because you're talking aboutgetting the right partner, getting to the right program.Each of those different offices are actually standaloneoffices even though they lie under the Deloitte brand.Deloitte Australia is not Deloitte US which isnot Deloitte Boston which is not Deloitte SF.Each of those are relationships to manage.Until you get to the point where you feel you haveenough resources and the partner and model you want togo to, I would be wary of starting something like this.

On the positive side the revenue share is relativelylow and it could also bring you some great awareness ifyou choose the right partners and have the right brand.

Some examples of these for distribution are onesthat are very large that you're probably aware of.Certification programs like Microsoft or SAP or Salesforcethat have entire ecosystems around their products topush their product into the market. And they're somewhatlike the Microsofts, every single time there needs tobe some sort of professional services custom deploy.That's what makes these ecosystems very vibrantbecause they actually make a ton of money off of it.

There are also smaller affiliate programs such as theNetSuite referral program or something like Twilio,where your consultancy are building inthese APIs on behalf of your customer.Even from the lightweight all the way to the larger onesthere's great examples of how people have made this work.

From a product integration standpoint, and this is wherewe did most of our work at both Yammer and New Relic, it's the API integration. It requires some sort of OAuth or SSO.You're pushing data that's relevant to yourcustomer across your different partnerproducts and there's a UI/UX integration.The value of this is incredibly sticky.Once you have gotten the buy in and the tech devs toactually put in the time to do this work, they're notgoing to tear it out. They have no good reason to.The problem is also that these things change over time.As your product evolves, as your feature evolves,as the API changes, you'll have to continue tomonitor and make sure that these are working well.

One nice thing is the frictionless integration by the user.The user can go and pick it up and say,"This is great, I'm going to try this out.I get a free trial. It works really well with thisother product that I'm spending all my time on." But back to the fact of if you don't do any co-marketing,if nobody knows it's there no one's going to use it.It's putting those two pieces together of drivingthrough those co-marketing channels as wellas having a great product integration experiencethat will really make this successful.

The typical rev share, and you're probablyfamiliar with these marketplaces, there's AWS — all the platform hosting providers do this, Heroku is another really good example; it's roughly about 15 to 30 percent revenue share.

One of the things I would caution as well is when you lookat formulating these contracts, making sure you understandwhere the pricing belongs and who owns the customer.

This was a huge, huge point of interest for us atNew Relic because our model was we're going to giveevery single customer the bronze version of our product,which is kind of the lower paid version.We're going to give it to the partners for free and thepartners can then in turn give it to their customers.It's a value add. Everyone is happy all and all.You get a product you get to use, you get more visibility.We get a new customer and the customer feels like they'regetting something for free that they're not paying for.

But what we needed from our partners was tomake sure that we had access to the customer.One, for customer support purposes, any time they'd call we would be able to figure it out.Two, and more importantly to revenue, that wecould have that contact information and therelevance to be able to make that upsell and call out, cherry pick the best customers and make surethat they were using the right product for their uses.

Customer information, who owns the customer? And then the pricing model, who actually billsthe customer and at what point in time?Is there a channel conflict if they decideto move over directly on to your platform?These are all things that you should reallythink heavily about as you're building out yourstrategy and as you're creating these contracts.These things might evolve over time.

This is great for both distribution and lead gen.A couple of fantastic examples ofcourse is the Heroku marketplace.There are add-ons that will get a 30 percent bumpjust because they sit on that top banner out there.If you do a whitepaper, if you do some sort of a blog post,all of a sudden you get tons more traffic.The problem with these marketplaces is that they're huge.They've gotten to the point where there are maybe20, 30, 100, 200 different applications on there that aredoing really interesting things for a particular customer set.

For you to really gain leverage through that customerset you have to make sure that you're prominent,that you're doing well within that ecosystemand that marketplace is working well for you.

The initial strategy many people take is,"I should be in all marketplaces everywhere."Which is, again, good but it's not going toderive the type of value and goals that you wantunless you're actually putting the effort into make that partnership a real relationship.I would go and I would meet withmy Heroku partners once a month.We'd share feedback, we'd share things that worked.We gave them heads up in terms of product.We did a road show every time there wasa product release or new feature going on.It's again building that relationship and maintaining it sothat you're top of mind for them and they're more willingto do things to promote you within their marketplaces.

Same thing for Jive and same thing for Yammer.Every time there's a platform that people are lookingto leverage off of and they're looking to say,"How do I distinguish this app from another?How do I say this is working better?How do I promote this to my customers?" Because they're not going to use all of them. But, from a New Relic standpoint and Heroku,a large number of Heroku users use New Relicbecause of the promotion, because of that top line.

Feature enhancements.Two different aspects of feature enhancement; one is that I am a product, I'm a platformand I'm trying to build in additional things.For Yammer we used Crocodoc, we also used Bitly but we just white labeled those into our productsand eventually it's kind of a buy or build strategy.The other aspect is if you're lookingto be an API from the beginning.If you're a Twilio and you're saying,"I'm going to build my business off of being an enhancementto everybody else." What does that look like? Early on you're thinking about your strategyand how you want to draft the BD and go tomarket. Is it that I want to enhance my products?Do I want to be a product enhancement to other people?

The value here is once the integration isdone you have access to all these customers.

If you are a customer of Yammer then every singletime you use Yammer you're also using these five otherthings that we've integrated in the product.The downside is that they're typically notbranded, so it's a white label, and youdon't get access to the customer at all.Yammer then is your customer and thenYammer's customers are hands off.

On the flip side if you do a powered by,this is also an interesting branding element.You're typically trading off some revenueshare for the powered by branding.This can be a little bit cluttered if you usetoo many of these different options so they'retypically fairly strategic about who you chooseand who you incorporate into your products.It's a high cost of change and then limitedaccess to customers is the biggest one.Pay-per-usage is the agreementthat we have seen in the past.Whether it's the number of documents, whether it'sthe number of leads, or it can be an overallenterprise license agreement that is also fairly common.This is a pure revenue play here.

A couple of examples: we talked about Twilio.Stripe is another good one. Any kind of payment processing,anything that goes in the back end, shopping carts; people will cobble together a ton of great toolsand then just have it completely branded as them. Crocodoc and Bit.ly we talked about, and GoodData as well.GoodData will take any of your data, put it in, give youa beautiful visualization of that data and you can move on.

M&A. While we were at Yammer we hada product build or buy strategy.We did a bunch of different feature integrations but as wewere saying, "We want to have a chat functionality.We want to have a video meeting/online meeting typeof functionality." We wanted to have the abilityto look at documents and then do some sort ofcollaboration on the documents a la Google Docs.Product team would be there fleshing this out and saying,"This is our roadmap. These are gaps that we see. These are things we're willing to build."Then business development on the other side would belooking at a ton of different companies that were lookingto integrate with us, but also looking for opportunitiesin which they could feed into our product road map.

We ended up actually acquiring onecompany by the name of oneDrum.It was a team of, I believe eight or so engineers out ofScotland, and they had been incubating for about four orfive years and created a product that was very similarto Google Documents but was for Microsoft documents.You could load Microsoft documents and have five or sixdifferent people collaborating. You got to highlight the changes.We thought it was so compelling that we brought it inand ended up buying the team and moving them over which may have set up a nice little roadmapfor us to get acquired by Microsoft as well.From there it can be distribution, it can belead gen, it can be revenue, all of the above.

I wanted to go back to the framework herethat we had initially talked about looking at the maturity of the company all theway on the left and the ease of partnering.Early when you start awareness is a really big thing.

I think that especially if you're a two or three man startup,especially if you're a CEO who's doing biz devor you have maybe one biz dev resource, youreally have to hone in on how well you use yourresources for the goals you have at this time.

Establishing your core set of partners:Are you planning to be a feature enhancement? Are youplanning to do a lot of product integration? Are you lookingto build a platform or be part of somebody else's platform?That will help define who you choose your partnersto be and how you spend your BD resources.Hopefully, once you've had a couple of good channel partnersin there you can build customer traction fairly quickly.You have your customers that can then leadto other customers, and there's a littlebit of a viral model going on here, word of mouth, especially through the developercommunity and getting to distribution.

Continue to build out your partner ecosystem. We've had a conversation about, "If this was the world,if I could do everything, I would do all these things,I would take all these tools and I would applythem to get leverage as much as possible."Being realistic, you really have to pick and choose.Are you thinking about co-marketing,are you thinking about partner integration,are you thinking about feature enhancement?How do those things interact well with your product today? How does that interact with your product well today?

Once you have that initial set of partners — and I like tothink of it as I'm going to go after a couple of marquees. I'm going to go after a couple of Rackspaces and Windows Azures.Then I'm going to have a number of other very quick tractiontype of partners that I know are friends and family,I can work with well today, they're a similar size,similar state, and build that out as the topdown as well as the bottoms up type of strategy.Then from there fill it out and make surethat I have great customer success stories, that I have great partner stories. I've got great metrics todetermine why my product is valuable with this marketplace. And then figure out who I want to build with next.

This is where you might want to startthinking about having an affiliate program,or a group of people that are trusted consultants, that you have customers that you have worked with, building out that SI, starting tobuild into a lot of those ecosystems.Feature enhancement is probably a good time at this point.

This was a big thing at New Relic,the idea of gaining ubiquity especially if you are unique,especially if you are new to the market;making sure that you are there before your competition is.

If you have some sort of integration in place, if you'realready there, hopefully you have a set of customers withinthat market that makes sense already and you're blocking out,blocking sockets, blocking and tackling, getting inthe way of your competition, having a really easy foray.A lot of it is land grab early on and making surethat you have the partners that would be important.

Eventually you get to the point where you have a greatoptimized deal flow, you're looking at all the leadsthat go through, you can cherry pick the best ones.That moves into maximizing revenuethrough established channels.Eventually once you're at a series C, series D, maybeyou're looking at IPO, looking for M&A to be able to scale and this may be talent acquisition, it may be for all thevarious reasons, getting a number of customers, etc.

A couple of key things I want to pull out.The BD tools can work in combination andin parallel depending on what you'redoing and what your constraints are.None of these are standalone.I would actually recommend that you don'tstart out doing all of them at once.

Your BD goals will change as you grow and you want to makesure that you measure for what you're trying to get at.

If you want to maximize revenue in the first yearyou probably don't want to go into huge distributiondeals because that will get you lead gen.If you're actually looking at distribution and youwant free customers coming in you should actually measureyour BD team basically on: the number of people who are going in,your site awareness, the number of leads that flow through,the people who are trying your product and then eventually move into a revenue play.Making sure that the goals and themetrics align is incredibly important.

Finally, supporting your team.BD teams tend to be very small.They're usually a couple of people, maybe a dozen at scale,but they require technical resources,they require marketing resources.They probably require some level of executive direction.Making sure that your team isn't going out there and saying,"We've got this great deal, we've signed this agreement,"but then I don't have the resources to back it up andactually create the integration. That's not helpful.

If I am promising to have some sort of a blog post ora webinar or a tech lead out there, and if I don'thave that for my co-marketing, that's not helpful.I can't do this alone.Even though you have one person who's very resourcefulthat can get you there to the last 80 percent, can talk about the product, knows the APIs,can do all these things; you're still going to need support.

Making sure that the goals align to what you want to do,having the right support for your team will ultimatelylead to a lot more success and be able to leveragethese really great distribution channels as you start.

And that is it.

Q: How does a startup pick which systems integrator to work with?

A: It's a great question. I think that the biggestthing you would look at is: Is their customertarget the same customer target you want? Yes, you have a customer that is lookingto use my product, but is this a one off? Is this something that is replicable or not? Is it a custom build for this one customer? If that's the case then okay,I appreciate the offer and I like the relationship,you can have that one customer but I'm not going to spendthe time building the overhead of a relationship with you.

If you have a large set of customers that reallymatch up to what I'm trying to do and I seethe value of this, again it's the multiplier effect.It's not the one customer I'm going after, I'm goingafter the tens, the hundreds of thousands of customers.If you have a set of customers that can all really valuethis one certain thing you're talking about then yeah,I would definitely take a look at it.

Q: When integrating with a partner company, do you borrow engineers from product team or do you build a separate integration team?

A: I've actually done it in both ways.Starting off at New Relic we would have tochampion our project to the engineering teamand find somebody who would want to work on it.I think that's fairly common, where everybodyis focused on the core product and thenintegrations tend to be an ugly stepchild.That's the way that we worked initially. I think that once you start proving traction,and again if your executive is supporting thestrategy of actually going through these channels; we ended up hiring a specific businessengineering lead and then grew out that team.

I think you can get by relatively earlyon by having a couple of key partnerships.It works really, really well eventually ifyou have somebody who's focused on the team,knows the API and maybe is helping build outthat platform for other integrations to happen.

At Yammer we started off with just myself andthen about six or seven months in we ended up hiringa gentleman who was focused on building out the APIs.We also had a product marketingperson that was dotted lined in.We also had a product manager on theAPI team that was dotted lined in.Even if they weren't part of the overall structurethere was a responsibility there, and theyfelt obligated to making this channel work.

Q: What is the ideal relationship between business development, sales and marketing?

A: That's a great question.I think that the answer is the typicalbusiness school answer: It depends.If marketing is over here and sales isover here, BD is somewhere in the middle.Depending on where you are in your companylife and what your objectives are it canbe closer to here or closer to here.I like to think of BD as a product and marketingintegration as well as having that sales responsibility.It evolves over time, is the best answer.

Early on you'll be doing a lot of co-marketing, you're leaning on marketing for content anddistribution and you're looking at productsto help you build out these integrations.

From that standpoint with those earlier goalsand those earlier metrics you're very much onthe marketing and product side of the house.Eventually you start shifting as you growtowards revenue generation, towards lead gen.Then you work very closely with the sales side to say: Whatis a good qualified lead? Where am I actually making money? How do I get these more better qualified leads fromthese partners into your hands so you can close the deal?

Q: Once you integrate with a company, how do you handle customer support?

A: That was actually very much thecase — it was learn as we go.The typical process was you would talk to a company,you'd get your business terms in line,understand that you want to work together,have some sort of a deal contract.Before everything was cemented in you'dbring in your technical resources.They'd have a meeting of the minds and talk about whatthe integration would look like, how long that would take.That would get completed and done.The paperwork would get done.You start a co-marketing campaign out to that customerset to get them excited and interested, have them flow in.Then the question of customer support comes up.

What we would typically do is the first line of supportalways goes to, if it's a platform, to the platform first.Then we would have a direct line into supports on our side.It'd be, there's a Heroku issue, Heroku takes the call.They're like, "It's actually a New Relic issue,"they push it over to New Relic.That would be tagged as a Herokucustomer that has a New Relic issue.Then we'd have Zendesk shared supporttickets, and then we would revolve around that.

We tried to keep our customer support as, and I thinkthis is probably a good recommendation across the board, every customer whether it's partner or directwas a customer and we treated them equally.

The times when there were outages,the times when things went down,things didn't always work out, that support would ramp up.We dealt with it like we had an outage ourselves.

Q: What qualities are you looking for in a business development hire?

A: This is a great one. And this is my personal journey as well.I didn't think that I would end up doing BD forfour or five jobs over the course of my career.I started off as an engineer; I was very much excited about hardware.I actually did it for a while and I was like,"This is not as fun. I can't talk to anybody."I have found that I love working with people who havea good sense of product knowledge, that are personable.

The deal making I think comes in terms of understandingthe contracts and understanding the business termsbut it's much more of a "what's in it for me?" kind ofrelationship if you're looking to approach a partner,especially if they're bigger than you. At any point in time it should always be: What are they getting out of it? What is their pain point?How am I solving their problem?That very much is a personable sales conversation. I'm getting you excited enough that you'regoing to devote resources and you're going toexpose all of your customers to my product.

Early on I would have somebody who had some sortof product awareness, was very personable andwas able to execute up to the 80 or 90 percent.They could talk about the APIs, they understandthe technology, they understand the data flows.They can describe the ideal situation in whichyour two products would work together andthen present that in a way where people getexcited about it and want to work with you.Then you would think about bringing in somebody technical.You'd probably need some sort of legalcounsel to review your contracts.It is a combination of having some technicalbackground and being a little bit sales-y.

Back to the question earlier of is it a product person,is it a marketing person, is it a sales person.It's a combination of those thingsto make a really great BD person.

Q: If you have a lot of enterprise customers, but the larger market isn't aware of your product, how do you grow with BD?

A: I'm getting your point here. It's like you havea certain number of enterprise customers, you've beenvery driven to do direct enterprise sales for a while, but there's still a huge untapped market maybe in the SMB, maybe in the smaller space whereyou want to get traction through BD channels.I would almost think of it as two separate things. If you're in a place where you're startingin a new market you can't have the samegoals as that enterprise sales team does.I would consider understanding, again, wheremy customers are, what tools they're using,what platforms they're on, how do I get to them,what kind of consultancies are working with them; then picking a couple of those top different partnersto be able to attract that particular customer set.

Again it's contrary from the enterprise sales model.The enterprise sales model is notgoing to be a great BD channel for you.But you want to get to scale, you want to havethousands and thousands of customers acrossthat lower tier of customer, or lower base.Going in through, we talked about, whatthe channel strategy is going to be,what the product integration strategy is going to be.How do I solve their pain point in away that is interesting and how do I getto them where they're already living?

If it's a hosting provider,if it's an infrastructure provider,if it's some sort of cloud or automation tool,make sure you're present where they're currently usingthings and stuff, and make yourself available there.

Q: How long did it take New Relic to set up a co-marketing agreement or to complete a full integration?

A: It varies quite a bit.If you're looking at a co-marketing agreement it can beanywhere from a couple of weeks to maybe a month.If your heads are aligned, if you're talking to the rightpeople, if you're talking to the person who is of status, typically that can be done fairly easily. ButI would caution that if you're talking just to theBD person you may not be getting the full leverage.You should probably also be talking to their channel people,their marketing teams, their product people.

It's really your job to not build a relationshipwith one point person at a different company,but build a relationship with the company.That will help you over time.

These onetime contracts for a campaignwill last a couple of months.You could sign a year-long agreement butyou'd want to auto renew that over time.If you're building the relationship it'salso building it across the organization.For a product integration, again itdepends on how sophisticated your APIs are.Are you building these as specific one-offs to integratewith this one company that you'll never use again?If you don't have that yet it canbe a couple of months to get there.Do they have the engineering resourceson their side to actually support you?Do they have APIs that you can read and write to?Those are the considerations you would make.

For New Relic we got it down to if you had agreed with us,the conversation can be anywhere from a month totwo years depending on if it was Azure or Heroku,we could get the integration down to aboutless than two weeks, a week and a half.

Q: How do you manage your time and energy dealing with partners and consultancies?

A: I found the consultancies to be challenging early on.We had an affiliate program at New Relic thatwe started quite early and we had roughly a dozenor so every quarter of new consultants coming in.These are your mom and pops, a 2 to 10 person shop thatdid a very specific thing in a region that we weren't at.

It provided us with some awareness but at the end of the daythe number of referrals that we got through it, the actualamount of business that we got through it was relatively low,so we didn't want to spend a lot of time there.That's something that you just want to spin off a program,get a referral fee, get some customers out there.It's fine, but I would caution around brand awareness andif they are doing things to misrepresent your company.If there's no certification process,if you're actually not talking to them,you just push your logo out there; there might be some issues in consideration.

If you're looking to work with somebody who is much larger,it's a 1,000-person, 1,500-person consultancyit would probably take more time and effort.

How much effort you put into it will reallybeget how much value you get out of it.

If it's going to be the Deloitte that we workedwith that would probably be at least half a person'stime to get to know who is the specific partnerthat will be your champion within Deloitte.How can you use them to talk to other partners? How can you get a practice in place? How do you get case studies out there? How do you remain top of mind with them asthey push out product to their customersbecause they work with so many different people?

Being on them, being repetitive and once you have established the relationship,maintaining it is still quite a bit of overhead.

Q: What role does business development play now that New Relic is established, and what metrics does BD use?

A: Early on we were responsible for leads.It was a qualified lead that came in through a partnerand that was the number that we were tracking.We were still tracking revenue but it wasn't as important.It got to the point I believe three or four years in when we actually started looking at revenue asa growth indicator, and it still had remained at the prettysolid 15 to 20 percent as the company grew, which was great.

The way that New Relic has continued to function has beenmuch more marketing heavy and that's probably what you see. It's like the nerd life, the t-shirts, make sure youdeploy your agent now, Bermuda t-shirt, the spam e-mail.Everyday for the first week or two weeks you get an email every single day. That's still true.What we've done is we've taken these BD relationships andwe've pointed the marketing targets toward those as well.

You have a slightly altered view of the world if you'rethrough a partner versus if you're direct, but themarketing channel still feeds through the BD channel.

We're still looking at different partners togrow the ecosystem but the biggest change isthe fact that New Relic is now a platform.Before it was, how do I get New Relic to bedistributed through all these other platforms?Now New Relic, again, compared to the Yammer example,is the bigger player in the housewhen it comes to APM and analytics, so people are coming towards them and building out tools andthen leveraging off their 80,000 customers that they have.

We did make the transition maybe a year or two ago.Again, my information is a littlebit dated because I left in 2011.But we did make the transition from being purely lead focused,tracking revenue underneath, to actually having some sortof revenue component to those metrics. Then got bigenough to the point where we had built out large ecosystemsaround specific technologies and got to the pointwhere we had enough customers and enough leveragewhere people were looking to draft off of our business.

Now today, the New Relic platform I think was announcedsix months ago or so with the ability to push datainto New Relic and into having a visualization widget.

Thanks a lot!