How does a reseller evaluate cybersecurity vendors - Ricky Martinez from DigitalEra

[00:00:00] Hey, it's Andrew here. Just quickly before we start the episode, I want to tell you about one of my favorite newsletters. It's called strategy of security. If you want to understand the company's ideas and trends shaping cybersecurity and its submarkets, you should take a look.

[00:00:16] Cole Gromos runs the newsletter and he has spent the last 20 years in cybersecurity, including stints at PWC and Mementon Cyber, the investment bank dedicated to cybersecurity. Recent articles I'd like include, how could platformization work in cybersecurity where he

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[00:00:50] numbers in all sorts of different ways. Now this is not a paid promotion. I just simply enjoy what Cole is publishing. Check it out at strategyofsecurity.com. Now on with this episode. This week, we're going

[00:01:03] to hear from a cybersecurity reseller about how they think about working with their vendors. How do they evaluate new vendors, especially startups? What makes a good program for them? What is good behavior from a vendor and also what is bad behavior with examples of each? Joining me

[00:01:21] today is Ricky Martinez, the chief strategy officer at Digital ERA Group. Ricky has been working in the cybersecurity channel for decades, both on the vendor side and also on the partner side where he's built up a couple of resellers. Digital ERA itself is a regional cybersecurity

[00:01:36] bar. It's got about 40 employees, works with 60 or so vendors, and they work with startups and also some of the most established players in our industry. In other words, exactly the type of bar a startup should be looking to work with. Don't go away.

[00:02:01] Welcome to the Cybersecurity Startup Revenue Podcast where we help cybersecurity companies grow revenue faster. I hear me a host, Andrew Monaghan. Our guest today is Ricky Martinez, chief strategy officer at Digital ERA Group. Ricky, welcome to the podcast.

[00:02:17] Thank you, Andrew. Thank you for having me. Very excited about today. Yeah, I'm looking forward to this conversation. This is the third or the fourth interviewer release in our series about working with partners at early stage companies. How does the vendor

[00:02:31] make themselves attractive and build a great program that's relevant for partners? In this series of conversations we're having, talking to you, Ricky, and Digital ERA Group is the first time we've actually taught to a channel partner themselves and get your

[00:02:44] perspective on this. We're trying to get the whole topic surrounded from different angles. I'm looking forward to getting your perspective as someone who has got a long track record of building resellers and building programs that the resellers are working with

[00:02:57] cybersecurity companies, both large and small. This is a conversation that I think will be really useful for the audience. Excellent. Yeah, I'm looking forward to it. I'm actually an avid listener of your podcast, so I'm very excited to be on there as a fan. That's awesome. That's

[00:03:11] good to hear. As a fan and also now get to participate. It's great. Next time, I'm going to have to send you some sales bluebird swag for the office there. Maybe that's what I'll do for an avid listener. Let's move on to the business side of this

[00:03:24] conversation, Ricky. In previous conversations, we've introduced this company called Cyber Donut, completely made up hopefully with a name like that. Cyber Donut, let's say, has five to eight sellers, 20-odd customers in place. They've got around a funding in place from a reasonably well

[00:03:42] known VC. Then out of the point where they're thinking, okay, as we scale up and to the end of this year into 2024, we need to really work out how we work with partners. They're in

[00:03:51] that mode of trying to figure this out. If Cyber Donut were to approach you and the digital era group, what is the process that you go through to evaluate whether this is a company you want to

[00:04:02] do business with or it's not? There's 3,400 vendors out there. You can't do them all. It's important for you guys to make sure you really align yourselves with the right new startups as well as the ones that are more established.

[00:04:15] Yeah, I think probably first we'd go LinkedIn and see our connections. This industry is so small. Just you and I, you worked at McAfee at one point. I did and we have a ton of connections together.

[00:04:26] Just to validate that this is someone from the industry who knows, has been there, done that before because there's a lot of new entrants that might not be in cybersecurity experts that came from a software development company and they're just trying to position

[00:04:40] themselves. That's one of the first things is, who do I know that knows them? And establish that knowledge of this is an expert. This is someone that's actually going to be relevant in the industry and has the backing to support that.

[00:04:54] So you're looking for founder fit at that point, right? Do we even know them already or do we know someone that knows them? They seem like they're really part of the ecosystem that we're in

[00:05:04] rather than a fresh entrance. And then you said at the end there, investment, right? So what's important to you there? Yeah, so who the backers are. I think it's also its longevity.

[00:05:15] So I mean, am I going to invest in this company and I kind of want to put my name associated with this that I'm not doing it, not knowing about this company and their trajectory or their history.

[00:05:27] So you want to make sure that you have that established and there's going to be continuity because a lot of startups, I mean businesses start and fail every day. So you want to make sure that when we're investing that there's some long-term or

[00:05:40] even short-term winnings that we will get and have that continuity because that's key for us. Okay. And in your portfolio of companies you work with, give me the idea of a split between, I don't know, established and bigger ones and how many truly early stage companies do

[00:05:58] you end up working with? So we get contacted by all the vendors all the time. Probably established, we're probably around probably 60. The thing is the industry is shifting so quickly right now. There's a lot of new entrants that are well-established like the

[00:06:12] Wiz example and there's several others that have come like abnormal. Now Mike DeCesar is the CEO there. So there might be new entrants but they have a whole history or the team that's been

[00:06:25] in the industry for a very long time. So I think our split is probably around 60% of the established ones, the larger ones and then probably about 40% that are up and coming but established. I mean like Wiz was just founded in 2020 so it's not an old company but they've

[00:06:42] established themselves in the market fairly well. And just for you a digital year group, I mean with cyber donut being that early, is that too early for you do you think or

[00:06:51] do you like to just dabble with a couple like that? So we'd like to look at the tech and see what problems are trying to solve. They're just another one of those that might be competing with

[00:07:02] a larger vendor and where we don't see that the customers are actually going to go for it. So we kind of want them to see that first. So if the tech is relevant, it's something new,

[00:07:12] it's something innovative, we will absolutely look at it and we will try to position it because we're also the filter for our customers. The customers get pinged by all the vendors as well and they kind of come to us as a trusted advisor and say, hey,

[00:07:24] do you think this is a fit and will this work? So we actually go through the rigorous process of testing this technology making sure that it will work in our customers environment and then we will present it to them. So that's kind of the approach that we take.

[00:07:38] So we would not discard them just because they're new and small, we would definitely make sure that they are the right fit. But I think you're right. I mean, I get to talk to a lot of companies through the podcast and through my business. And everyone's got their

[00:07:54] unique take on the market and what they're trying to do that's different. And it can be a little bit challenging sometimes trying to figure out, is this truly different or is this just

[00:08:02] a slightly better way to do what's out there already? And it must be a challenge for you guys just trying to go through the screens a little bit, right, to figure out what exactly is going on.

[00:08:11] Yeah, because there's a lot of established in me back in the early 2000s, there was very few cyber security companies and they were fairly large. So the McAfee's, the semantics, I guess the checkpoints and those that have already had very big presence and they just kept on acquiring

[00:08:27] these newer companies like the cyber donuts. But now those cyber donuts actually have to expand and become their own thing for a long time. So that's relevant. I think the market is right for change. So even you look at those traditional security vendors,

[00:08:42] they aren't as relevant. They're not as exciting. So customers don't even want to necessarily engage with them. They don't feel that they're bringing something new. So they look at a cyber donut, they might say, Hey, let's take a look at this. I think this is,

[00:08:53] this could work. So I think that that mindset has changed and they're much more receptive to newer vendors back in the day was all about being established. And it's kind of old thinking of if you're well established that you have that track

[00:09:07] record, you have your things put together. But I think now a lot of people are going for innovation and something relevant. There's so much market change and it makes sense to look at the new. Yeah, I've seen that happen recently. I was trying to someone at

[00:09:21] a black hat. He runs infrastructure for a company in Canada and he likes every year buying two or three early stage products because in many ways it shakes up his team. It shakes up how they do things. It challenges them to think about doing things differently

[00:09:35] and better as opposed to getting stuck in their ways. So he likes that element of doing it. But speaking of the disruption like that, I think if cyber donut comes to you, how do you handle the situation where you may already have an existing relationship and revenue

[00:09:50] stream from a more established vendor and they're trying to figure out, well, how do we handle that? Yeah. So that's something that we kind of go by the guidance of our customers. A lot of times, yeah, we do have established presence with a vendor,

[00:10:03] but that vendor, since they are well established in the market, they also have other partners. So we're not necessarily going to get that renewal or we're going to get that business.

[00:10:12] So that impact, we might want to hedge our bets and if there is a new entrant into the market that does something slightly different and could be beneficial for the customer, we will definitely entertain it. And that's kind of our approach is we want to

[00:10:26] make sure that we're not missing the boat and we are, well, we have existing revenue, but that's not guaranteed. And that's kind of the reality of today's marketplace is a sales rep might change and then you sales rep comes in has a different partner of choice

[00:10:40] and they might just throw the business their way. So we kind of want to make sure that we have the relationship with the customer and also that the tech is right for the customer. So we would

[00:10:48] kind of have that opportunity of establishing the relationship with a new entrant into the market. Yeah, you mentioned a couple of times now how important it is for you to be aligned to what

[00:10:59] your customers want, which may or may not be the same as what the vendor thinks is important, right? I think if I was sitting in your shoes and telling me if I've got this wrong is that

[00:11:09] I'm thinking that long term relations with customers is where your value and your success comes from. And you want to have long term relations with vendors, but that's a much more rapidly changing space on the vendor side. Yeah. And actually that's a shift in the whole

[00:11:24] approach of the market now since there are so many niche product technology companies. So there's over 4,000 cybersecurity firms back in the day, like when we worked at and established companies like McAfee, they had a large portfolio. So the relationship was a

[00:11:37] long term relationship. I sold them at point today. Next year it's an IPS, an intrusion prevention system. The following year I'm selling them a SIM, but now these entrants or these new cybersecurity firms, they only have one product to sell. The ones that sale is done,

[00:11:51] they move on to the next so that they're not necessarily in the space to establish a long term relationship with a customer. They want to get their product in and kind of establish their growth. And that's the shift that's been happening. I mean,

[00:12:04] I worked at several cybersecurity firms before coming to a digital area as a reseller. And that was the norm. The norm was they had an enterprise sales team that focuses on getting the sale, then they have a customer success manager that takes it for the renewals. So

[00:12:16] it's a different relationship. So that initial sales rep is really pushing to close the deal, making sure that they maximize their revenue on that deal, not necessarily giving or sharing the pie with a reseller. And once the deal is done, they move on. They don't have any

[00:12:31] kind of relationship with the customer where we do. So we have to, because we're not only selling them that one product that we sold them at that time, we're the whole portfolio, the whole security stack, we're actually trying to fulfill. So if we get burned on one technology,

[00:12:44] then we're not going to get the next. And that's not necessarily the case for the sales rep of the cybersecurity firm. Right. They're going to go the full back to work with and

[00:12:54] their mindset might be I've got a bunch of partners I can work with, or even I guess sometimes they can take it direct, which is probably the worst thing they could do, right? Yeah. And there's a very recent story around that where new up-and-coming vendor are very well

[00:13:07] established in the market. We actually were very aligned with them, sold it to one of our top customers enterprise account. And then this year is a renewal and they've actually wanted to expand their footprint. So they had bought X amount of licenses and now they actually

[00:13:20] had to double that licensing. And we were the ones that brought them into the account. Sales rep for some other reason, they actually lost a deal at another customer of ours and

[00:13:32] they took this deal direct, which for me is mind blowing in this day and age, burning bridges because this is a very small market. They will be edited from vendor soon. And that burning

[00:13:44] bridges is not a good approach and also taking deals direct where I think the market in general knows the value of the channel and establish themselves. And a lot of organizations obviously want to control their destiny. So they have direct sales mentality, but they know that the

[00:13:58] fulfillment and the channel is very important in their ecosystem. So making that distinction and taking deals direct will hurt them in the market and going forward because other opportunities, other partners are looking at it and they say, well, there's four or five of

[00:14:11] these similar companies. Am I going to go with the one that could potentially take this direct or should I align with one that's more channel focused and is investing in the channel? Yeah. I mean, it must be the most frustrating thing when you've been working in something,

[00:14:23] you brought a vendor, a deal, you're working together in the last minute, they end up taking it direct. It's like the D, probably number one cardinal sin at a tactical level someone can do. Absolutely. No, and I was just saying that there's also

[00:14:36] building within the program. So when you have a, and it doesn't necessarily the formality of a channel program is because that's also where a lot of new entrants get caught up is in this firm is since they are so new,

[00:14:47] they didn't have a very formalized channel program and having those nuances of having your rules of engagement where I will never take an account direct is kind of part of that. And I think that and also not having necessarily a solid channel team that can actually protect

[00:15:05] the partner in these instances and have someone that we can go to and voice our frustrations is also key. Yeah, seems to me it's a very transparent way to understand the dynamics inside the vendor because I've been on the other side of this, being inside the vendor.

[00:15:21] I've seen these things happen and the reason they usually happen is for very short-term thinking reasons. If I take this direct, I get a little bit, I don't lose the 10 points of margin. Therefore, I might make my number. And usually it's very tactical things like that

[00:15:37] as opposed to someone in a senior position making some sort of big call that it's okay to take certain deals direct to the last minute. And in that kind of internal dynamics about

[00:15:48] who's running what and who's really in charge, it often kind of gives away a little bit that maybe the channel team isn't as powerful inside as you hoped they would be. Yeah, and that's been the history I think in this industry is a lot of times

[00:15:59] since there is such pressure on the sales rep to bring in the deal and these quarterly cadences of at the end of the quarter with the deal needs to come in, you committed it to your forecast. So you'll do anything you can and ensure that they get done

[00:16:14] even if I burn this partner. And that's kind of a not the best approach and we kind of get things done, those things every once in a while. Yeah, yeah. And I think what some people don't

[00:16:25] realize that rep sitting there, if it's a rep and their manager saying let's take this direct is word spreads, right? This company, whoever they are, word spreads very quickly. Oh, they took two, three deals direct to the last minute, last quarter. And suddenly in the channel

[00:16:40] community, everyone seems to understand that and has heard about it and gets very weary of working with them, right? It's almost the number one cardinal sin, as I said. Yeah, and I think that having good rules of engagement having and we know because

[00:16:54] as channel partners and we know what value we're bringing to the customer and we know if we have been involved then we haven't been involved. So if it's a deal that the sales rep is working, we actually have an opportunity we're working now in Peru

[00:17:08] where the vendors built a relationship. They found the account. They obviously need to fulfill it. So they're looking to partner up with us. So we're not necessarily looking to get all the margin and control that opportunity. We kind of let the sales rep at the vendor

[00:17:22] and take care of that and handle it. We will try to do all our part. And I think that having that kind of a teaming agreement or teaming plan where you establish what you're

[00:17:31] going to do on this deal and what we are going to do. And we kind of have the clarity. And that way at the end of the day, it's not, oh, I did it all and I'm going to,

[00:17:39] I can take this direct or I'm going to give it to a different partner because you're not adding value. So those are the things that we like established from the get go so we don't get burned and there are no any conflicts with these opportunities.

[00:17:55] Ricky, let's learn a little bit more about you and personally. I've got a list of questions here, one to 35. Why don't you give me three numbers and I'll read out the questions. Let's start with number seven. Number seven. What is your favorite fall past time?

[00:18:08] All past time. Oh, I love sitting down in the yard, nice weather, pumpkin spice latte, my favorite drink. So actually one of my friends is like, why do you go with a pumpkin spice?

[00:18:18] You're so cliche but I love pumpkin. So I love pumpkin pie. That's my favorite food. Something about that in the fall, you know, it is, you're right. It is a little kind of cliche and I know there's memes out there about it but you know, there's something comforting

[00:18:30] about that whole thing, right? Yep. It's a way to look forward to this time of the year. And you're based in Texas, right? So it's warmed on there still this time of year.

[00:18:39] It's a pleasant time of year to be there actually. Actually last week it was in the hundreds and this week it's been in the 80s so I think it's a phenomenal transition. Yeah, finally that breaks a little bit and gives you a break from the relentless heat

[00:18:50] of the summer, right? Absolutely. All right, one more number between one and 35. Go with 30. 30, dive bar or cocktail bar? Cocktail bar. Like my cocktails, like my bourbons, my old fashions, the Manhattan's. But yeah, that's how we were actually going

[00:19:07] to Vegas next week so I'll probably look forward to getting some of those cocktails. What's your bourbon of choice? Basil Hayden. Okay. I love her. I think I caught Basil Hayden and something else in the bar downstairs

[00:19:20] and being in Colorado, the big thing that we're always excited about is the Breckenridge bourbon which is drawn out of nowhere in the last kind of eight years and done so well and it's got great reputation. So both Basil Hayden and Breck bourbon are on my shelf,

[00:19:33] I think there's also something else. I think Buffalo Trace is up there as well. All right, last number, team one and 35. Let's go with 33. 33. This would be interesting one. Which cybersecurity startup do you really admire

[00:19:46] right now? Let's see. It's a good one. I've seen the Wizz transition. I was very excited about that and we actually positioned it with several of our customers. It was just a phenomenal story. I just think the fastest growing software company, they had great technology,

[00:20:04] great relationship. But yeah, I think Wizz is probably up there. I mean, that's one of the top of mind right now. But in the past, I know SignLine's kind of made an impact. But obviously, that story has gone through but they had a great story,

[00:20:18] great run, great marketing kind of set the stage for this next generation technology companies on around AI. Yeah. Any of the AI companies that stand out for you right now or is it just

[00:20:29] too early to try and pick one? On the AI cyber, I think it's too early. I think just AI has just been thrown away, thrown out as just everybody has it. But everybody actually

[00:20:41] leveraging it, that's the question right there. Yeah. Yeah. A lot of promise and I see people starting to release features and then you got the companies, the one that sticks out in my mind

[00:20:50] is Hidden Lair who are thinking about securing AI, so all different angles to the whole AI thing right now. Yeah. So in a previous conversation, we talked about the idea of deal registration. Do you have an interest in new idea, teaming agreement or teaming plan? Let's call it

[00:21:08] rather an agreement. Teaming plan, give us more detail about what teaming plan is, what's designed to do and how cyber donut might use it. Yeah. So deal registration is typically just if you found the opportunity and you kind of have protection or additional margin as opposed

[00:21:23] to any other partner that would come in. Teaming plan is more if there is already an established relationship because a lot of the vendors, and we know this from the industry, the vendors do their marketing, customers go to the conferences, the same ones we go to,

[00:21:35] they go to RSA and Black Hat. So they're aware of the customer or the vendor, and they might do some inquiries on the website and that's the first route and they'll put their download data sheet to put their email address. So the vendor already know about this customer.

[00:21:48] And so when you go to deal registration, they say, well, it's already in our database, I'm not going to give it to you. The teaming plan would allow for that partner to establish their role within this business. So this opportunity is already known by the

[00:22:01] vendor. They could say, well, I'm not giving you the full deal, Reg, percentage, but if you ensure that we do the POC, you signed the NDA and you take us through the process of getting

[00:22:12] this deal closed, then I can protect you with the X part of the margin. And I'm responsible for X part of this deal. So if the sales engineer on the vendor side is going to do

[00:22:24] the POC or if it's our sales engineer. So that's kind of the establishing of I'm going to, I'll do the POC with my sales engineer that's trained and ready to do this. That way I can earn extra margin for the different activities that I do within this opportunity.

[00:22:40] Yeah, what I love about those is it removes all misunderstandings and gray areas about who's doing what for a reason, right? But the way I've seen it before is almost line by line, right? If you, if a partner leaves the POC, you get, I don't know,

[00:22:53] making numbers up eight points. If you also run the contract and put it on your paper, there's not a three points. If you, all these sorts of things could come into play. So you know exactly how you can maximize your money on that one deal. And it's something

[00:23:05] at the start, right? When you're trying to build relationships with people, you know, these sorts of agreements keep you friends and avoid you falling apart and become enemies. But maybe after doing business for five years with, with a rep or a team,

[00:23:16] you know, these things come a little bit looser. You just know how you work together, right? Yeah. And it also lets the management know because at the time, and let's say we need to scale this or another partner comes in says, oh, I have the best relationship with

[00:23:27] this customer. You should give the dealer to me. Well, if there's an existing teaming plan, we can see and the executives can see, oh no, we've already engaged with Digital Era.

[00:23:35] They did the POC. They did this. So they get protected. I'm not just going to hand it over to you because you're, you took your, the CISO out for drinks last night. And he talked about

[00:23:45] that, that opportunity. So that, that's kind of what the team plan also allows and get clarity and visibility from the executives. Cause the rep already knows, but we want to make sure

[00:23:55] that the rest of the organization knows as well. Now we're getting into the area about how do we do business together? And, you know, I think about that. I think about a proper channel program

[00:24:03] that the cyber donut team should be thinking about, you know, given their early stage though, and they don't want to try and boil the ocean on this. What would you look to to say, yes, these are good components of a solid channel program from an early stage company.

[00:24:16] Yeah. I think protection is ideal. Having a very solid deal, Rich. Now, not make it overly complex. A lot of times you come from a maybe more established vendor that has very detailed and complex terms for deal, reg and for all these incumbency advantage, things like that.

[00:24:34] So the case that I talked about earlier, that would have been incumbency because we brought the deal originally, we closed the deal. So this is the renewal and upgrade. There should be some kind of incumbency in there. So things that would protect us going forward because

[00:24:48] that's one of the things I'm bringing into one of my accounts and establishing the presence that now it's up to renewal. Now it's not the sales rep, it's the customer success manager. And they're

[00:24:58] doing, they have to kind of know where digital era stands with this relationship. So give me a quote, not just give it to one of the large national accounts and have them quote it, which happens a lot. So incumbency protection and protection in general is good. What else

[00:25:13] do you want to see as part of the program? I think margin, establishing just fairly clear margin because I know everything gets discounted. MSRP is just a number. No vendor really goes by established managed the SRP numbers. So we want to make sure that there's flexibility,

[00:25:32] I think in pricing and then there's kind of established guarantee of margin. There's a lot of times when you introduce large national accounts that they're in the business, they're a bank. So they're winning deals at 1%, 2%. For a smaller bar like ourselves, that won't fly.

[00:25:51] Like sometimes customers spend 90 days to pay us and we're only making two points and it's not a viable business for us. And that's kind of what we want to establish is we have enough margin that makes it relevant for us. And then we're also not going to be

[00:26:06] undercut by a national account. I feel like that's one area that in this case, cyber doughnut should think through. Because I think the temptation there as well we could go to

[00:26:15] and pick the company. It could be a cybersecurity reseller, a big one like Optiv or it could be a bigger kind of license play like like CW, something like that. And they think they got

[00:26:25] a lot of coverage there. We'll get access to their team of whatever it is, 500 salespeople and look at the coverage we're going to get. In reality, you won't get that coverage. You'll get a very, very few number of those will even pay attention to you because it all

[00:26:40] matters what happens with the rep level, not what the company says to do. And then secondly, you're going to devalue yourself a little bit because you're suddenly in the game of a bunch of these companies fighting over cost plus 1%, cost plus 2% and discounting things left,

[00:26:53] right and center. Whereas they work with someone like you guys, you're a specialist far, right? So you've devalue there and you're used to working in a way of solving problems for customers, not just giving them better margin or better pricing.

[00:27:05] Exactly. Yeah. And that's kind of the catch 22. So a lot of vendors when they come in, they're like, yeah, I can sign a large national account because I now have global coverage. But that's not as you mentioned, it's not necessarily the case. You don't be,

[00:27:21] you're not as relevant when you have Cisco's of the world and there's only billions through these large national accounts. Is it going to be relevant in the local market? And I think

[00:27:31] that's kind of the value of us. We're established in South Florida, we have a great presence in the Caribbean. So partnering with us and we kind of know the market, we know the players, the

[00:27:40] CISOs, we have the relationship. If you go to a national, it's usually a large call center in Chicago or in Austin and then they're calling everywhere. But you're not relevant to them.

[00:27:51] So you want to make sure, and also when you go through training, you might go and spend a lot of money to train up the sales team. But they're going to go in, they're going to have your breakfast,

[00:28:01] drink your drinks. But then at the end of the day, they're just going to push what's the easiest for them. And that's usually the bigger brands that have an established market. Yeah, their behavior is the path of least resistance to make as much money as possible.

[00:28:13] Right? And let's top of mind for them, what the program of the day is, they do get influenced a lot by things like that. But let's go back to the discussion about margin or discount. So two different topics there, margin and discount. What do you prefer to see

[00:28:27] in terms of a structure that someone works with you on? I think the flexibility, that's key for us. A lot of times, especially when you're competing, you're in a competitive environment where if we're competing with a different vendor, they will discount and have that flexibility.

[00:28:45] And that's what we expect from the partners that we're engaging with. A lot of times, you, in your business plan and in your mind, you're, well, this is my price, this is the margin I'm

[00:28:54] going to make, this is how I'm going to go to market. And I worked for one of those vendors that had a very strong federal business. And in federal, it's a contract. The contract vehicle is established pricing, there's established margin. And that's it. They didn't move from

[00:29:08] that. So they wanted to go into the commercial side, and they didn't want to offer flexibility. They said no discounts. They said no discounts on renewals, which was kind of absurd. Now, if you

[00:29:18] have your very tight positioning in the market and you're one of the few that does that, you can get away with it. But if you're at new entrance like a cyber donut, you want to make sure that

[00:29:27] first year you establish your presence, but you have to have logos, you have to get into accounts. You might sacrifice in one with having that flexibility and discount, but there might be the next customer that doesn't necessarily require it, and they

[00:29:40] are going to go directly with you. So that's one of the key things that we like from our vendors, and newer vendors typically have that flexibility. But we want to make sure that they're not delusional

[00:29:50] and like, well, this is my price. I'm not going to budge. And because we might not win the deal if we don't have the flexibility. Yeah. In some of those early stages of cyber donut, they don't have a rev-reck team that's going to control these things. So

[00:30:03] they have the flexibility, I guess, is having the confidence in their partners to say, let's just agree how we're going to have those discussions about each deal and the pricing and things like that. I mean, I guess the good thing is they're likely not to be,

[00:30:16] you're not going to be doing 10 deals a month with them right at the gate, right? So they're just going to start with one or two maybe as you get going and then you build up some trust

[00:30:23] and see how they work together. And then you'll know where boundaries exist or what they get upset about. And what you expect as well, they'll learn from you as well. Yeah. And I think also we have, if we are in a long-term relationship and we're

[00:30:36] trying to position this with multiple customers, having the flexibility and knowing that when we close that first deal together and that it had a great taste in our mouth, then we will do on our

[00:30:46] behalf if we need to protect your margin and for you to make your number. If you say my annual goal is a million dollars and that first one, we had to discount it heavily, maybe the second

[00:30:56] one, we won't. And we will work with you. So understanding also, and that's one of the first things that we try to establish is what is your goal? What is your quota? And how

[00:31:04] am I going to be able to contribute to that? Am I going to be 10% of that or am I going to be 80% of it? And if I'm 80, let's work very closely together and make sure that we help you to get to

[00:31:13] your number. And then obviously that we get compensated for helping you with that. I interviewed Tim Eats who's one of the, I think general partners at Cyber Mentor Fund. I interviewed him a couple of months back. And one of the things that he said was early

[00:31:28] stage for a company like Cyber Donut, the thing to focus on is having delighted customers, right? Because delighted customers, word spreads, they renew, you learn from them, you collaborate, things like that. And it struck me just what you're saying there is that

[00:31:43] also you want as delighted partners. You don't want to just have a partner that you do business with, but if I was the leadership at Cyber Donut, I'd be saying, okay, we only need, I don't know,

[00:31:51] three to five partners let's say for the whole of 2024. Let's make sure that in every interaction we have with them and every deal that we went together, that they are delighted to have done business with us and want to keep doing more. Because that's a drug internally

[00:32:05] at the company like yours, right? Word spreads. I got this deal, we closed it in 45 days. They did exactly what they said they were going to do. The product just worked, customers delighted. That kind of nirvana, it doesn't happen all the time, right? There's things along

[00:32:20] the way. So every time that happens, you want to have someone like a digital era group just delighted to want to do business with. Yeah, absolutely. And we have those and that's kind of

[00:32:29] the track record is that we established that because also that providing that value and then being delighted in the way that we approach these deals, it also helps the customer on their end. They feel that we actually supported them. We provided them value and then they'll want to

[00:32:46] repeat business with us. So that's the kind of engagement that we want with their vendors. We don't want to have a vendor that was such a hard deal and have to go through contracts and

[00:32:54] discounting. And back and forth, we're going to make sure that our customers are excited about when we close these opportunities and deals and that can replicate and we can continue to do this.

[00:33:04] And then as soon as that happens, they're like, oh, I know these five other accounts that we can position this and that we can repeat this kind of interaction, we will do it. But if the first

[00:33:12] one was bad, it's very unlikely that we're going to be able to spread that to other accounts. Yeah. One of the things I tell people, Ricky, you may agree or disagree with this is that

[00:33:22] it's important that the Cyber Donut leadership team sign up with you as the Chief Strategy Officer at your company and you have a relationship and you set it up. But in the day, what actually matters is the rep to rep conversations and relationship because nothing happens unless

[00:33:38] something happens down at that level. How do you like to see that work together? What would you expect the Cyber Donut sales team to want to do with your sales team? There's a first thing that we do is we have direct, direct engagement and they go through

[00:33:54] their accounts, their targets. So Cyber Donut won't have a list of accounts that they want to pitch to and penetrate that have the market fit for them. And if they align with the accounts that we're already managing or that rep handles, that's kind of the alignment,

[00:34:07] the first thing that we want to do. Then obviously build that personal relationship. One of our successes and the reason that we also have the large portfolio of vendors that we represent is because those relationships have been built rep to rep. So our sales rep has built a

[00:34:22] great relationship with the ex-rep at a vendor. He goes and moves on to a new vendor. And since that relationship and that camaraderie and the work together was so good, we'll replicate

[00:34:33] that in the new vendor. That's been one of the keys to success is we sold a lot of ex-technology at an ex-accompany with this rep. Now he's at a new vendor and up and coming next gen.

[00:34:46] Well, let's replicate us to the same thing because it's really the people aspect of this. The technology is great and it's obviously got to be relevant for the customer. But if the relationship is there, you know that and we get that all the time. Whenever rep

[00:34:59] transitions come in the first time and they'll reach out to us and say, I worked with Digital Air in the past, they were great to work with and I want to do the same thing in this new business. And except for the bad behavior run,

[00:35:10] you know, taking deals direct, what's the kind of big cardinal sin that Cyber Donut could commit that would cause you to back off from not wanting to do business with them again? I guess dictating terms with the customer. A lot of times if we understand the budget

[00:35:24] of the customer, we understand how much we can make with this. Obviously, we won't necessarily want to hurt the vendor. But a lot of times we've actually recently at RSA, we took one of our top customers to meet the Chief Revenue Officer at one of these new security

[00:35:38] vendors. We have already gone down the path. It was pretty practically a done deal. The Chief Revenue Officer, that vendor offered them a 25% discount right away. And so basically affected

[00:35:49] our margin is like, you know, no, if we got to close this at the end of this month and I'll give it to you at this price. And the CSO came up to us like, wait a minute, I can get this

[00:36:01] 30% lower than what you had already given me. And they were already down in procurement. So having that dictating terms, kind of trying to control the dynamic with the end user, because I mean, that's part of our value is we understand the budget. And also it's helping us.

[00:36:15] So if we can close the deal and you're making a hole on your part, and we can get extra margin because we understand this, let's leave it at that. Let's let us dictate the terms

[00:36:26] and kind of build the relationship because that's what we do is we're putting the pricing in front of the customer. When the vendor tries to do that, it kind of cuts us out and we don't

[00:36:35] have control. And that's one of the cardinal sense that I see happens a lot, especially more established vendors, than they start having direct conversations, provide pricing, and then we have no control at the end of the day then with that.

[00:36:49] Yeah. So let's not do that, right? Let's not discount deals are pretty much done already. Yeah, that's not good. I think it probably betrays a little bit of mindset where we're

[00:37:02] the king here and you're just the, I don't know what, right? As part of the cog and you'll do what we say. But in reality, I think honestly, you may see this in the last 20 years, I think

[00:37:11] it's flipped around where in many cases, it's the partner that's really the one that has the holds a lot of cards in the relationship because you have the longevity. You got the track record, you got the access, and a lot of these other companies are striving for.

[00:37:23] And they should probably recognize that and treat companies like yours as if you're a much more valuable partner than perhaps they're doing right now. Yeah, absolutely. And that goes to rules of engagement. I think one of the rules of engagement,

[00:37:35] one of the previous vendors I worked with was we only provide MSRP pricing. No discounted, no other, don't negotiate under the pricing. So if we can establish that in the rules of engagement, then we will be fine.

[00:37:48] Yeah, I think we had that at McAfee eventually at one point where it was pretty much, you know, I don't know if it was a fireball offense, but it wasn't fire off it.

[00:37:55] If you as a seller gave pricing to a customer that wasn't MSRP. And I think it changed dynamics quite a lot internally about how people would go about talking about pricing and all the rest of

[00:38:07] it. So that's good. Well, listen, I've enjoyed the conversation, Ricky. I hope the audience have learned from your perspective as a reseller right there in the cybersecurity world, building your business and things that you look for for companies such as Cyber Donut.

[00:38:21] If someone wants to get in touch and talk about a partnership or even talk more about advice you can give them about getting their program going, what's the best way to get hold of

[00:38:28] you? Through LinkedIn is a great way of communicating. I'm also an avid WhatsApp user. So my phone number and just reach out through LinkedIn. I'll share my mobile number with you. Also, digitalairgroup.com. There's information on how to contact us there.

[00:38:43] Great. I'll put the website and your LinkedIn profile in the show notes. Anyone can just look down in their app and see that there and get in touch with Ricky. So Ricky, as always, great to chat and wish you all the best. Same here. Thanks so much, Andrew.

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