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Startup tech companies seek savvy channel partners

Early-stage companies participating in the 2016 MIT Sloan CIO Symposium's Innovation Showcase are pursuing relations with channel partners that can incorporate their products into broader offerings.

Startup tech companies are looking for channel partners with a taste for the novel and some specialized skills.

Early-stage companies in a range of fields -- from application deployment to IT security -- see channel companies as an important go-to-market strategy. Entrepreneurs see value in the customer relationships that technology-gatekeeper status resellers, systems integrators and other IT service providers enjoy. Channel partners, for their part, can team up with emerging companies that offer more differentiation than established vendors with armies of indirect sales allies.

At least half of the 10 startups highlighted at the 2016 MIT Sloan CIO Symposium's Innovation Showcase are pursuing ties with channel partners. Those firms continue a trend noted at last year's showcase event: Technology companies are tapping the channel early on in their evolution.

Tracy Pallas, vice president of channel sales and strategyTracy Pallas

Tracy Pallas, vice president of channel sales and strategy, illusive networks, said the company has decided to focus on the channel early in its history because of the partner's role as trusted advisor in helping customers define and implement their security strategies. The company, which officially launched in June 2015 and has its U.S. headquarters in New York, offers deception-based security technology that the company says thwarts an attacker's ability to collect reliable data about an organization's network.

"The partners we are targeting already have strong relationships with key decision makers -- CSOs and CISOs -- across the financial, healthcare, energy, legal and retail verticals," Pallas said. Because of those relationships, partners "will play a critical role" in accelerating adoption.

The story is similar at Menlo Security Inc., a Menlo Park, Calif. company that offers cloud-based isolation technology that resides between a user's device and the Internet and proxies Web requests. The company emerged from stealth in June 2015.

Greg Maudsley, senior director of product marketing at Menlo SecurityGreg Maudsley

"The channel is absolutely mission-critical to our success," said Greg Maudsley, senior director of product marketing at Menlo Security. "It's the only way we are going to reach the target market."

That market includes large enterprises and financial services institutions. Maudsley said the company's channel companies include systems integrators, distributors and managed service providers. At the moment, Menlo Security works with companies such as Trace3, WWT, iVision and Cloud Harmonics.

The channel is absolutely mission-critical to our success.
Greg Maudsleysenior director of product marketing, Menlo Security

Maudsley said working with a startup like Menlo Security offers partners the ability to compete on value rather than price. He said the company's isolation technology offers a disruptive approach that gets partners "out of the price game" surrounding legacy security technology.

"We're looking for channel partners who are willing to look at startups," he said.

Partner wish list

A willingness to look beyond the usual suspects isn't the only quality startup tech companies are looking for in a channel partner.

Burzin Patel, vice president of products at HashiCorpBurzin Patel

HashiCorp, for example, is looking for partners with the skills to help customers deploy its application deployment software. Burzin Patel, vice president of products at HashiCorp, based in San Francisco, said the company's product is flexible, allowing customers to adopt its software in parts and then integrate those parts with third-party products.

"This model requires deeply technology -savvy partners who are proficient with DevOps practices, application delivery, infrastructure and security," Patel explained.

He said the company's main geographic focus has been North America and Europe, noting that partners have been selected to align with that approach.

Pallas at illusive networks said the company's partner recruitment profile calls for partners that have a "strong existing security practice" and represent key firewall, malware, detection, advanced persistent threat and security information and event management vendors.

In addition, the company is looking for partners that can point to large enterprise and midmarket customers in the financial, healthcare, energy, legal and retail verticals. The company also seeks out allies with dedicated pre- and post-sales engineering talent.

The ability to thoroughly understand a customer's challenges is another sought- after quality. A customer unfamiliar with a new product will lack insight into how it might address its needs. Startup tech companies hope to cultivate relations with channel partners willing and able to identify deployment opportunities among their customers.

Omer Trajman, CEO, Rocana Omer Trajman

"The easiest opportunity for a partner is to give customers what they're asking for," said Omer Trajman, co-founder and CEO of Rocana Inc., a San Francisco company that provides IT monitoring software. "Since we're new to the market, customers don't know when to ask for us yet, so a partner has to understand customer problems in enough detail to know when [to] recommend us."

Rocana's software aims to help enterprise IT teams gain complete visibility across their environment and that mission inherently involves "a wide range of data sources and integration with existing vendors," Trajman said. "Channel partners that have vendor relationships and expertise can provide integration services to complete the solution and broader access to the market to accelerate customer adoption."

From referrals to reselling

Startup tech companies work with channel partners in a number of ways. In some cases, the focus is on having the partner refer customers to the startup's technology. In other cases, the alliance will focus on reselling products. And some early-stage companies envision a trajectory that spans the spectrum of relationships, over time.

Brian Otis, vice president of sales and business developmentBrian Otis

"We recognize we're early stage and take a crawl-walk-run approach toward establishing a partnership," said Brian Otis, vice president of sales and business development at Tesora, which provides a database as a service (DBaaS) platform.

In the crawl stage, a partner refers Tesora to its customers or prospects, with Tesora doing most of the selling, Otis noted. As the partner comes up the learning curve, it enters the walk stage and sells together with Tesora. At the run stage, the partner possesses all of the selling capabilities and elects to resell the company's DBaaS offering.

Tesora's DBaaS platform, according to the company, is an enterprise-hardened version of OpenStack Trove, which is OpenStack's native database service. Accordingly, Tesora looks for OpenStack-oriented partners able to incorporate the DBaaS platform into their offerings.

Otis cited a few examples: Cloud service providers integrating Tesora's DBaaS platform into their public or private hosted cloud; OpenStack distribution providers bundling the platform into their OpenStack distribution; and systems integrators or resellers including the platform in any offering they may provide that involves OpenStack.

At illusive networks, Pallas said she expects the company's channel partners to not only resell its technology, Deceptions Everywhere, but also to provide managed security, professional services and incident response to help customers mitigate threats after a security breach.

Pallas said partners such as small security boutiques, large national partners and managed security services providers will be a good fit for the illusive network's technology. The company will also work with smaller consultancies and service-only partners that focus on incident response and risk mediation.

Trajman said Rocana works with resellers that typically package the company's software with other components customers need, and also teams with technology partners that offer complementary technologies. In addition, the company enters alliances in which partners provide referrals or co-sell the company's software, but are not directly selling the product.

Rocana, at this point, is nearly 100% direct. The company "will be largely direct for the foreseeable future as we invest in building our channel relationships."

As it builds those relationships, Rocana has found the perfect channel partner is one looking for technologies to complete offerings in specific practices and differentiate itself in target markets.

"When you see a confluence of eager partner ecosystems and customers looking to those partners for new technologies, it can add leverage and scale," Trajman said.

Next Steps

Find out how startup culture is reshaping old-school financial services firms

Learn about startups in the Internet of Things sector

Read about IT security startups at the 2016 RSA Conference

This was last published in May 2016

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