Niall Wall, Box SVP of Business and Corporate Development alongside Vicki Lin, Stripe’s Head of Ecosystem and Cecilia Stallsmith, Slack’s Director of Platform Marketing discuss scaling your revenue via indirect channels and platform ecosystems. They talk about how to get started building your ecosystem, measuring the value of that ecosystem and trapdoors to avoid when building your platform.
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FULL TRANSCRIPT BELOW
Vicki Lin – Head of Ecosystem @ Stripe
Niall Wall – SVP of BD, Channels & Emerging Businesses @ Box
Ceci Stallsmith – Director of Platform Marketing @ Slack
Ceci Stallsmith: Hello everyone. How’s SaaStr going? All right, that was quiet. Well we wanted this to be a really intimate and interactive session, so in order for us to do that we wanted to poll the audience. We can’t really see you very well, so we need you to clap in response to my questions.
Vicki Lin: Ceci, we’ve got a big bet riding on this.
Ceci Stallsmith: We have a big bet riding on this.
Niall Wall: There’s a free cup of coffee in the green room riding on this bet.
Ceci Stallsmith: Yes, so here you have represented Stripe, Box and Slack. We wanted to poll you. Who uses Box for their work? If you use Box, clap. All right, solid. If you use Stripe.
Niall Wall: Oh wow, okay.
Vicki Lin: Yeah.
Ceci Stallsmith: And I’m being really self-serving right now. If you use Slack. Yeah! All right, well the bet panned out in my favor. I’m very lucky.
Niall Wall: I think we called the first one, but not the second and third.
Vicki Lin: Yeah, we didn’t call the second or third, so thanks everybody.
Ceci Stallsmith: Well to kick things off and help you understand how this panel is going to work, it’s a little bit unusual. I’m going to be both moderating and participating. You can create whatever combined word you’d like for that to be the case. We’d like to just start with quick intros to tell you why we are qualified to talk about scaling revenue via platform and ecosystems. Vicki, if you’d give us your intro.
Vicki Lin: Great. Thank you Ceci. I’m Vicki Lin. I have been at Stripe for about four years. For those of you who did not clap, Stripe is a set of developer APIs that help businesses accept payments online and do all sorts of innovative things in moving money in the cloud. Stripe’s ecosystem is quite large and thriving. We’re really proud of it and want to do more with it of course, but we have about a couple thousand partners in our ecosystem today helping bring businesses onto Stripe through their platforms or extending the Stripe functionality once customers have a Stripe account.
Ceci Stallsmith: Great, and Niall.
Niall Wall: Yeah, so Niall Wall. I’ve been at Box for six years. I presume, hopefully most people know who Box is. We’re a cloud content management platform. I have a number of different roles, but the way we build or think about our ecosystem is how do we help or work with partners to differentiate our solutions, and how do we actually work with partners to reach new customers. On the differentiate we have about 1,400 companies who have ISVs, or companies who’ve built or embedded Box as a content layer into their applications. Then on the go to market side just over 40% of new ARR comes indirectly around the world through partners. I’m happy to talk about both of those as we go through this session.
Ceci Stallsmith: Awesome. I’m Ceci Stallsmith. I run platform marketing at Slack. I’ve been doing that for three and a half years, so I got to join before we launched our platform, launch it and scale it from there. We have over 1,500 apps listed in our app directory, so those are with third party partners. We also have a lot of developers who build with our API just for their own Slack workspaces as customers, and 90% of our paying customers actively use apps in a given week. For some context as well, I actually worked with Niall when I was at Box back in the day as a founding member of the platform team there. Then also went into venture capital where I invested in API first products.
Ceci Stallsmith: So, we want to … Oh, here’s who we are. We wanted to show you how our logos have changed over the years, Slack’s being very recent.
Ceci Stallsmith: We want to help you think about, all right I’m probably a SaaS product if I’m sitting in this room, it is SaaStr, how do I think about whether or not I have the opportunity to build a platform or an ecosystem. We want to get to practical getting started tips. We’re going to go back in this exact same order. We’ll try and keep it a little fresh, but Vicki can you tell us how to think about getting started with building a platform or an ecosystem?
Vicki Lin: Yeah. At Stripe we’re really fortunate because I think one of the first things you have to do when you want to build an ecosystem is focus on developers and APIs. Because that was such a core part of Stripe’s DNA from the very beginning, it was completely a natural decision to really focus on our ecosystem. A couple things we did early on that I think were very successful were we provided zero friction in actually getting started with Stripe. Even today all you have to give us is an email address and you can access Stripe’s APIs, you can get up and running as a platform, and you can be onboarding customers almost immediately.
Vicki Lin: We also didn’t even ask people what they were trying to do. We didn’t worry too much about are you trying to bill for your own SaaS product or are you actually trying to integrate Stripe to offer to your customers. It really actually in the early days didn’t matter. Now as we’ve started to scale it matters increasingly more because we want to help support different use cases, but in the early days we really just wanted to get traction and get developers up and running.
Ceci Stallsmith: Awesome.
Niall Wall: Yeah and at Box it was a similar type of story. Box started as a consumer file sharing company. We quickly learned that that’s a tough market to be in, so about a decade ago we pivoted to focus on the enterprise. But in order to get the flywheel started we always had this notion of for shadow IT we wanted to be one of those rogue apps that users were bringing into the enterprise to get their work done. We always had this weird dynamic with Freemium where we would just give away 50 gig for free, if you remember that Ceci.
Ceci Stallsmith: Oh yeah, I still have that account.
Niall Wall: Yeah exactly.
Ceci Stallsmith: It got shut down recently.
Niall Wall: But we learned that that’s kind of expensive. You want to be relevant to a certain point, and once you have a minimum viable relevancy if you will, then you’ve got to pivot and focus on the things that are actually relevant. We actually did that. It was maybe controversial at the time because we were spending a lot of money serving the free accounts of the users, but that was super important because it allowed us to be one of the top apps that were being brought into the enterprise. Then we can use the security and compliance and control that IT would actually buy into to control those accounts. That’s how we got started in building our ecosystem.
Ceci Stallsmith: Cool. I actually got to build Box’s early ecosystem with Niall, so there’s some extra fun stories there that we might go into. The thing that I am really passionate about, I’ve done this a couple times at different companies, is figuring out how to build a platform flywheel. What you see up here is a very simple flywheel. On one half of it you have product market fit and on the other half you have partners and ideally developers integrating in order to reach your users. The platform flywheel, the basics of it are you have a product that suddenly has market fit, you have customers who are joining that product. A developer or a partner will see that product and say hey they have a lot of users, if I integrate with them I’m going to get users, or I’m going to be able to use that tool very effectively for my product. Then you get demand from partners and developers. Once that demand kicks up, they integrate, they build useful things on your product, and suddenly your product is more useful.
Ceci Stallsmith: If you look at the case of Slack, we actually built our first 80 integrations ourself in house. Our platform wasn’t originally built for external developers to build for all of our customers. It was built for our customers to build for themselves and for our customers to use the integrations that we built ourselves for them. This went really really well. We saw a wild product market fit with our integrations so much so that developers and partners were just banging down the doors to get access to our APIs, which weren’t built for them to be using at the time. When we launched our platform we actually were taking our APIs and making them consumable to third parties for distribution on an app directory. We’ve just seen a lot of growth and success of the platform since then.
Niall Wall: I have a question on that one for both of you. If you think back to the time when you were trying to convince your engineering team to invest in those first 80 apps, or back when Stripe were actually trying to create the APIs, what was the dynamic and what did you learn from that in terms of the alignment with the need to build an ecosystem with the scarce resources and engineering to actually go do that?
Ceci Stallsmith: Yeah, I’d say at Slack it was quite easy to convince because a lot of people think some of our very early days, like 2014 growth, was due in part to integrations, so because we were seeing so much pickup of them it was very obvious, like we needed people to be able to build more integrations on us. It was very easy to make that case and we still to date have a, I lead a whole platform marketing team. We have a pretty significant platform team in house. The demand for fighting for resources for platform wasn’t hard, whereas at Box I know it’s been different. You want to speak to that?
Niall Wall: Yeah. I mean because I think earlier stage companies are always, well every company is resource constrained, but especially when you’re at the very beginning. The notion of what might happen in the future when you get an ecosystem, many people will see the benefit at scale of getting to a platform and then getting the flywheel going, but at the very very beginning it’s important that you think about what is the alignment with your engineering leaders and the senior leadership team on what the company is trying to accomplish and then stick with it. I mean when we’re doing the One Cloud there was always this debate about do we build out APIs, do we do the integrations, or do we do it ourselves, or do we let other people do it.
Ceci Stallsmith: Well I think that gets really well to something that’s on our sort of second slide here, which is how do you measure whether or not an ecosystem is actually paying off for your business. I think that that’s the number one thing. As I’m sort of referring to with Slack, we just had so many customers using these integrations and saying they’re really valuable to them we knew that it was making our product stickier to have really good integrations with the products that our customers use everyday with Slack. How do you think about measuring the value of your ecosystem?
Vicki Lin: Yeah, I mean I think the key is you don’t build an ecosystem to build an ecosystem. You really ultimately have to be solving a compelling business problem that is existential to your company and the ecosystem just happens to be the most effective tool and lever to do that. For Stripe, again our core product is an API. You cannot use our product unless you code, but of course there’s millions of businesses out there that want to accept payments online, and so it was a natural extension for us just to focus on our user, which in many cases are our partners who are integrating Stripe to offer to their customers. For us it was never we are going to build an ecosystem what should we do, it was here’s a real problem that our users, our partners, are facing in that they want to onboard their customers, they want to make it easy for their customers to accept payments and manage their payments once they’re up and running, and so that’s the problem we solved. That makes measuring value easier because you’ve already identified what business challenge you’re tackling.
Ceci Stallsmith: Perfect. If you see this graph, it’s not question marks because we didn’t complete the slide. It’s what are you measuring in terms of your platform’s success. One of the ways you can measure platform success is how many people are adopting integrations. For Stripe it’s how many partners are asking for this value. How do you measure platform success at Box?
Niall Wall: We do it in two ways. One is on the differentiate dimension we measure IWAUs, so integration weekly active users. The life blood of many SaaS businesses is are people using the products that we’re shipping. In our case we actually measure when we ship a new update. For instance, when we integrate with Slack we want to make sure that while Slack is being used for collaboration, Box is the content layer for that. We’ve done the instrumentation to measure that. Candidly, it’s sometimes harder to show cause and effect. When you push a product it takes a long time for customers to actually understand and then change their behaviors, but over time, so we have pretty good longitude data on IWAU.
Niall Wall: Then on the other side we do measure, because we do use an ecosystem to reach new customers around the world and different types of partners, we look at ARR. I mean that’s a … If we want to go deeper in this we can, but we actually look at things like the relative, the average seat price net of margin for a channel partner versus direct. We look at things like do we, the net new logos versus upsells or cross-sells coming from channel versus direct. They’re actually things that we pay close attention to.
Ceci Stallsmith: Yeah. Great. One other thing I would add here. If you’re really practically trying to figure out how do I measure and scale a platform or an ecosystem, the same way that you’re building a funnel for your sales team you can build a funnel for your platform. The very very simple way to think about a platform funnel is at the top you’re going to think about your partners and developers. How many people are interested in building on my platform, you should count them. Then you should look at them and say if I’m managing them lightly, you only need one person in the early days to really be working and interfacing with this group, that could be a BD person, that could a dev rep person. You’re going to say okay I’m engaged with this many people, that’s like the next step down in my funnel. If they’re engaged, then they’re building.
Ceci Stallsmith: After building if you have something where you’re going to publish an integration or something of that sort, there’s a marketplace for Stripe, same for Box, same for Slack, we have a directory of apps, so published in the directory is the next step. Then the bottom half of the funnel is where customers actually discovery and then adopt and then use those integrations themselves. It’s a very simple kind of standard funnel, but a lot of the time in businesses, I’ve worked in platforms for a long time, a lot of the time people actually don’t think to just straight up build that funnel and have a dashboard to look at the health of your ecosystem overall.
Vicki Lin: Ceci to add onto that I think once you start to get some of those integrations live, I think we all know who our best customers are, and so one thing we have done is looked at okay who are our highest value customers and what percentage of them are using one or more integrations, is that measurably contributing to their stickiness on Stripe and their experience on Stripe, and if that’s positive … Again, as you get more mature you can tie it to renewal rates, or ability to upsell cross sell, but even the early days from a qualitative standpoint you will have an early directional signal of are my most valuable customers actually using these integrations or not.
Niall Wall: Given that, do you change now that, because we struggle with this a little bit at Box, now that you’ve gotten some flywheel going, when you think about the needs of the most valuable customers versus the long tail, how do you make those decisions? Do you build the APIs irrespective of which type of category or partner or ecosystem partner is actually going to use them, or do you actually have whether it’s a go to market, or the tools, or the way you treat them, or the way you think about them? How do you make sure that you don’t lose sight of the long tail?
Ceci Stallsmith: Such a good question, and now that we are in a quiet period it’s a little hard for me to figure out how to answer it without sharing things I’m not supposed to anymore.
Niall Wall: Oh come on.
Ceci Stallsmith: I know. Let me think for a second.
Niall Wall: Alright.
Ceci Stallsmith: I think actually at Box you had to cut losses here and think about where to focus the platform. Do you want to speak to that first and then I’m going to calculate a really safe answer in my head.
Niall Wall: Okay. Yeah so we built a partner program to help scale the long tail, but most of our energy is going, there’s really 20, 30 apps that most people use day in and day out that our customers are saying hey I need you to integrate with this line of business app in this particular way. That is consuming a lot of our resources, but what we do is we build everything with a platform first mentality. So it’s API first, even for our own services that are being consumed in new products that we are building. That would be a best practice here is just make sure that you don’t deviate your APIs irrespective of the type of partner, but yeah we struggle with this candidly because the 1,399th partner is not going to get the same attention as a Slack integration.
Ceci Stallsmith: Yeah. This is the thing. I’d be curious to hear the Stripe thought too. I mentioned we have over 1,500 apps in our directory, and obviously you’re going to have some that are some of the biggest SaaS products in the world and some that are more long tail products. Our hope when we launched the platform, and you can actually look up this blog post. It’s one of the proudest things that I’ve done at Slack. It’s about releasing our platform roadmap. We did that back in the day after we launched. We said hey we’re building a platform and our belief for our platform is that for us to succeed the value of everything built on our platform in sum should be greater than the value of Slack by itself. That to me, it’s actually from Bill Gates, but it’s the definition of a really successful platform, that the stuff built on top of you in sum is greater than you by yourself.
Ceci Stallsmith: We’re on that path and in order to succeed down that path you really need to have both the head, the really big companies that you’ve obviously heard of integrated and available to your customers, and a successful long tail. Making your long tail successful, I think you basically just have to have a really strong business development team that’s going to work in with them, figure out who’s finding good product market fit, and then helping sort of usher them into success with your customers, whether that’s through more just growth strategies for them or introducing them into the sales process. There’s way to bring a couple of your more long tail players up and along with you. We have the Slack fund in part to help do this. What are your thoughts on this one?
Vicki Lin: Yeah. I think the strategy is very different depending on the size of the customer you’re targeting. For Stripe we started with startups and founders and entrepreneurs, but we rapidly moving up market and have increasingly mid market and enterprise customers. I actually think we are starting to do slightly different things depending on what the core customer set needs. Obviously it all has to make sense collectively on your overall product experience, but I think frankly what an enterprise needs for their ecosystem partners and integrations is very different than a startup. One of our most popular integrations is with Slack right now, but that’s a startup oriented integration. It is not an enterprise integration.
Ceci Stallsmith: Yeah I think one of the really interesting things here … I was in venture capital before this as an investor and one of the reasons I was most excited to go to Slack to work on platform is the opportunity for those longer tail companies to grow on your platform is an exciting one. I think that, I don’t know for me any platform where you can see someone who’s going to build a startup on your platform, ideally integrate with other things too, but be able to grow and become a significant or bigger company, I just love providing that opportunity and that’s something I’m really excited about still for the future of our platform in particular. You can look at companies like Guru and Workday, or not Workday, Work Ramp if you’ve heard of Work Ramp and Troops, they’re all companies that have grown up with us as a Slack platform company and I think they have really exciting futures.
Ceci Stallsmith: One thing it would be fun to talk about are pitfalls. We’ve had a little bit of prep call conversation. Vicki, what are some of the trap doors or things to avoid when you’re building a platform?
Vicki Lin: Yeah. I mean I really the main rule I think is to try to avoid trap door decisions at all possible. Give yourself optionality. Again, especially in the early days. I still feel like a lot of what Stripe is doing too is in the early days. These are very tactical things like we rolled out our first official partner program over the summer. One of the hardest decisions actually was naming, like what do you name a partner who’s in the program. We were conservative. What we did not do is we did not put in a gold, you weren’t a gold partner because one of the things of naming, providing gold, silver, bronze in your program is then what happens two years from now when you want to add another tier-
Ceci Stallsmith: Platinum.
Vicki Lin: Who better than gold, platinum. Is platinum better than gold? For naming we sort of said okay the first thing we’re going to go out with is you are a verified partner. It’s not the flashiest thing for sure, and from a marketing perspective it doesn’t inspire the hoards to sign up to be a verified partner, but it’s descriptive, it’s accurate, and it gives us future optionality as we want to layer in benefits, layer in higher requirements that we can tweak the naming without having to go back to our verified partners and say you are no longer the gold tier, you are now the silver tier.
Ceci Stallsmith: Niall, what are some of the pitfalls?
Niall Wall: Yeah a couple of them. I think that, this sounds weird, but a pitfall is assume that you’re going to be successful and then work back from that, and you don’t always do that. What I mean, I’ll give you a couple of examples. Back in, this is a long time ago, but when I joined Box one of the things that we were thinking about is do we give a free version of Box to every mobile device in the Android ecosystem. That was a big decision. We fortunately did not do that. We assumed we were going to be successful in doing so, i.e. lots of people would start using the product, but that actually would have been difficult to scale the business.
Niall Wall: Then on the other side, on the go to market side, we have been fortunate in building consistency of terms and conditions in our partner, on our channel programs so that a channel partner in Japan will get the exact same structural benefits as a channel partner in Europe or in other geographies around the world. We were actually fortunate, and it’s maybe not a pitfall as much as a we assumed we were going to be successful and therefore we were able to avoid catastrophic hey we have to change the terms and conditions of our partner program while you have a bunch of customers already come through that channel partner. I would just assume every company here is going to be wildly successful, and then make decisions on that basis.
Vicki Lin: It’s funny because I actually think in building our your processes and tooling you should actually assume that you are not going to be successful. I think one of the key things that we did early on was be willing to just throw some manual process at the entire partner experience. Partners would give us their information through a type form. We didn’t have a partner portal. We didn’t really have a very rigorous vetting of what your integration requirements should be to be on our gallery.
Niall Wall: Was that, were the contracts the same with each partner and just the processes by which you manage those different, or was it actually you’re just trying lots of different things individually with each of the types of partners on the contract, or the business model contract itself?
Vicki Lin: Yeah, the core relationship with partners was the same, it’s just we didn’t invest a lot in the back end tooling and the processes to scale because we were quite sure how many partners are going to want to be on our partner gallery, are customers going to find value in that partner gallery. You don’t want to spend six months building out entire partner back end infrastructure if you don’t know for sure that this is the thing that is going to be successful. It could be a completely different thing.
Ceci Stallsmith: Having done this a couple of times, your partner app directory is the thing that you’re always going to be like oh I wish it was better, but you can’t get resources to make it better because is it a high enough priority, like we should probably shift this other feature above it. It always slips. That happened again and again at Box. We were really thing to launch the platform fast when I got to Slack. We actually also kind of like, for the first version of our app directory built on Airtable just to get it out. It was a bit duct taped. Since then it’s a lot more up to snuff, but I do think there is a lot of value in sort of making the process manual at first to prove whether it’s going to work or not and whether it’s viable.
Niall Wall: Yeah, and just for the record we have a lot of improvement in our back end processes as every company does.
Ceci Stallsmith: Every company always does. We have only a couple minutes left. One of the things we wanted to talk about was just making sure we gave really clear takeaways from this content because you’re probably attending a number of sessions today, it could easily be in one ear, out the other. I’m going to have each of us give a very clear here is what I hope you take away from listening to this talk. Niall, how about you go first.
Niall Wall: Yeah. I think the most important thing when you think about an ecosystem in my view is organizational alignment and measurement. You have got to be crystal clear and that has got to come from the leadership team of the company because it’s not cheap to build an ecosystem. But identify the why is it important for your business to build an ecosystem. Make sure you have intentional and visible metrics that you can actually measure success, and make sure that’s aligned to your engineering and product teams and your go to market teams. It sounds simple, but from experience if you don’t do that at the get go you’re always going to be fighting for resources and justifying what might happen in the future.
Vicki Lin: I mean mine is developers first. Your APIs are first class citizen. It should be as important to have your APIs be world class as the rest of your product. It shouldn’t even be a conversation. If that isn’t the mentality of your engineering team, it’s difficult. That’s how, developers have a lot of different places they can go today to build a business, to integrate with, and the easier and better experience and more value you’re providing developers, the more likely they’re going to get your attention.
Ceci Stallsmith: Cool. Mine is going to be a little intense sounding, especially while I was in venture I met with a lot of younger and older companies that were saying we’re a platform, we’re a platform, we’re really focused on building the ecosystem. I think that’s awesome and we should all strive to build that, but being a true platform is hard. You really have to find product market fit. Most companies aren’t platforms. Not everyone can be the center of the wheel. Many of us are actually spokes and that’s a good place to be. If you want to figure out whether you have a real viable platform opportunity, do a little bit of the upfront work to find product market fit for it first. For Slack building those first 80 integrations ourselves and seeing the demand for the platform come out of that. Build that product market fit to start.
Ceci Stallsmith: I think that we will be ending with one minute to spare, but I also don’t want to get sung off the stage. Does that sound okay?
Vicki Lin: That sounds great. Thank you.
Niall Wall: Sounds good.
Ceci Stallsmith: Great.
Niall Wall: Alright.
Ceci Stallsmith: Thank you all.
Niall Wall: Thank you very much.