In our latest episode of The Platform Journey, Avanish sits down with Aaron McGarry, Executive Vice President and Chief Ecosystem Officer at Qualtrics.
In this episode, Avanish and Aaron talk about:
Guest: Aaron McGarry
Aaron McGarry, AMG, is a Go-To-Market operator with 17 years of leadership experience at industry giants such as VMware, Salesforce, and Qualtrics. He has a proven track record of building and scaling high-performing teams, driving strategic growth, and delivering operational excellence.
AMG is an empathetic leader and coach, with a deep passion for growing, mentoring, and developing talent, ensuring that his teams reach their fullest potential. Renowned for his Build - Buy - Partner approach and keen expertise in GTM strategy, he has architected and scaled premier Ecosystem and Sales Organizations.
He played a pivotal role during Salesforce’s meteoric rise from $6B to $26B in revenue, experiencing hyper-growth firsthand. His track record also includes notable milestones such as Rackspace's IPO, SoftLayer's acquisition by IBM, and Qualtrics' acquisition by SilverLake.
Recognized for championing strategic growth and for his operational acumen, AMG serves as a trusted advisor to CEOs and boards of directors across early, mid, and late stage companies. He is a sought-after speaker on topics encompassing GTM strategy, leadership, and team development.
Host: Avanish Sahai
Avanish Sahai is a Tidemark Fellow and has served as a Board Member of Hubspot since April 2018 and of Birdie.ai since April 2022. Previously, Avanish served as the vice president, ISV and Apps partner ecosystem of Google from 2019 until 2021. From 2016 to 2019, he served as the global vice president, ISV and Technology alliances at ServiceNow. From 2014 to 2015, he was the senior vice president and chief product officer at Demandbase. Prior to Demandbase, Avanish built and led the Appexchange platform ecosystem team at Salesforce, and was an executive at Oracle and McKinsey & Company, as well as various early-to-mid stage startups in Silicon Valley.
About Tidemark
Tidemark is a venture capital firm, foundation, and community built to serve category-leading technology companies as they scale. Tidemark was founded in 2021 by David Yuan, who has been investing, advising, and building technology companies for over 20 years. Learn more at www.tidemarkcap.com.
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Avanish: Hello, everybody, and welcome to another edition of The Platform Journey. Today, delighted to have Aaron McGarry. Aaron has got a pretty storied career. He’s been at some iconic companies. He’s also got the title I think a lot of us, or you, have aspired to, and I think it’s going to be more common in the future. So, Aaron, welcome to The Platform Journey.
Aaron: Avanish, thank you for having me. I appreciate it. It’s an honor.
Avanish: I gave a bit of the preview there, but talk a bit about your personal background, your own journey, because I think it’s a fascinating one.
Aaron: So it’s funny when I was graduating college, I had a decision to go do logistics for a trucking company – as exciting as that sounds – or an opportunity came up to go join Rackspace in the early days of managed services and hosting, and then later infrastructure as a service. Long story short, I chose to go with the Rackspace opportunity, and it changed the trajectory of my life and my career. And I’m very thankful for that.
I was an early employee there. I got to participate in the IPO and the growth. I was one of the first employees to help open the Austin office. It went from a very small office to a very big one in a short number of years, which was pretty exciting. And that one decision set me on a trajectory. I went to SoftLayer, which was later acquired by IBM, and I was at the back end of their platform infrastructure working for an ex-Racker. I went to HP and did a startup group inside of HP based on OpenStack, which is a motion that was done between Rackspace and NASA.
I got to do a very cool startup build in the IaaS space at VMWare, inside of the company, and built that up to a couple hundred million, and then I got to spend almost seven years at Salesforce, helping build up the AppExchange and specifically the industry side of the house there before becoming the chief ecosystem officer for Qualtrics, where I spent almost two years building all that out and dramatically scaling up the partner organization there.
Avanish: Fantastic. Rackspace was a de facto standard back when—I won’t say when, but a long time ago. e didn’t overlap at Salesforce, but I think you did an amazing job there, and everybody says how much they miss you there. And obviously, Qualtrics is another amazing name brand.
So, Aaron, you’ve seen this journey. You’ve been on it. Because you’ve got this perspective from different places – how do you define the platform journey? As you’ve been in these organizations, you look at certain signals, you look at certain capabilities, etc., and you say we could either build it or scale it, etc. What are some of your takeaways from that process?
Aaron: Yeah, it’s a good question. And I’ve had the experience on both sides of the equation I’m about to go through. I think that companies that deeply understand the full view of build/buy/partner linked back to their corporate strategy, as they stand these platforms up, those companies set themselves on a different trajectory than ones that do not. Because when you’re really thinking very thoughtfully about what you’re building, what you’re buying to round out your offerings, and who you are partnering with to either bring technology to bear to your customers, make sure you’re delivering your customers successful, expanding your capabilities, all that fun stuff, when you take that holistic view, and you deeply understand it and stay committed to that cause, the scale you can drive off of that is substantial.
And having a very sophisticated view on how you bring these things to market… I mean, Salesforce is a great example; obviously, you were key in this motion there. The AppExchange at Salesforce isn’t just about a bunch of partners building on top of the platform. When you create a category, like Salesforce did – they created a CRM category – it’s very difficult to go alone, number one. So, as you bring more capabilities and companies to your platform, you get the scale you want.
But you get all these amazing benefits that you wouldn’t have gotten otherwise. How do you round out your product offering or expand it into areas you may not go into now or in the future? You can do that via partners building on top of the AppExchange. When you have a bunch of partners that start working alongside your customers, you create an ecosystem effect around those customers, where they’re getting so much value, so much innovation, that it’s difficult for them to leave.
And you can kind of see the numbers that back that. You get a few apps installed, and attrition goes to almost zero. Customer satisfaction goes up dramatically, and then that outlying revenue stream, 12-24 months out from that, looks pretty impressive and drives a pretty serious hockey-stick curve.
It was a fascinating journey to watch and see that at Salesforce and be part of its scaling. And that’s grown to a billion-dollar business, not including the halo around it, which is tens of billions of dollars worth of impact that’s come from that.
Avanish: Yeah. It’s fascinating to see that network effect, or the flywheel, whichever metaphor. It’s somewhat mind-blowing, right?
You said something I think is critical, and I’d love to build more on that. You talked a bit about the sophistication of the thinking around build/buy/partner. And one thing I’ve seen reasonably often is that this ecosystem, channel, or partnership framework sometimes starts as a bit of a silo. And there’s a bit of “go get me leads.” And I’m exaggerating to make a point, but not by much, right? And I think what you’re describing is a more thorough, more cross-functional approach. I think that’s one of the key things of when it really does scale, and when that magic happens, it’s because there’s a lot of people who are involved in it, who are bought into it, who are providing input into it. So, just talk a bit about what your experiences have been, whether in the industry play or even at Qualtrics and how that process comes about.
Aaron: That’s a great question. And I think the timing of this question is very unique for where we’re at in the evolution of things. And I’ll unpack what I mean by that in just a second.
We were very fortunate because we got to spend time at a company that takes pretty sophisticated views on how you tackle some of these things. We had the benefit of seeing the impact that, if you really think about build/buy/partner, and you spend the time to understand what you’re building and what you’re not, what is critical for you to buy and must-have functionality to shore up the business that you’re running, and then where your partners play in that game, regardless of if it’s a technology partner or a delivery partner, a reseller—you can kind of go down the list. Having that sophisticated view has you take a completely different approach to how you execute partnerships and ecosystems in general and the associated value you get from that.
I don’t think you were exaggerating too much, by the way, on the leads comment. I’ve lived in that world. And the least sophisticated view of ecosystems and partnerships is to source new revenue partners all day long. And I’ve spoken about this a lot, pretty publicly, around this stuff. If you run a business, you’re never going to do anything that’s not good for your business and is not going to help your business scale. So why would a partner bring you business if you’re not going to bring them business? You have to create this two-way street.
But I think looking myopically at just sourcing deals, you’re completely missing the boat of the reality of what you can get. And I was lucky to run a few projects at a few companies, looking across massive data sets, 10,000-plus customers, 10-plus years of data. And let’s just play with funny math for a second. Let’s say you’ve got a hundred dollars in sourced revenue that a partner brought you. What’s funny is, if you actually look downstream and go out from that equation, and you have the right technology partners plugged in, you use the right delivery partners, and you had the right sales approach going into it, that hundred dollars becomes a thousand. Over and over and over and over again.
And the data is basically, you can’t argue with it anymore. And if you don’t believe me or any of the other partner leaders who think very similarly on this front, just look at what the biggest players in the industry are doing. Why is Google going to 100% attach? Why is AWS pushing their marketplace so hard and investing so dramatically in that motion? Why is Microsoft doing the same thing? Why does Salesforce continue to push into partnerships so hard-core? Because they know these data sets. And they know the outlying value that they get from it.
And I’ll round it back to my point that I think it’s an interesting point in history. The traditional direct go-to-market model, the heavy SDR, inside sales to generate your top-of-funnel, to then get down to your AE model, is starting to break. And it’s starting to become very expensive. And when no one cared about profitability and Rule of 40 and all that fun stuff, and it was all about market share, those sins were fine. If your cost of sale was high, it was okay as long as you were capturing market share. Well, unfortunately, 18-24 months ago, that completely evaporated. And now it’s all about profitability. So everyone’s switching to figure out how do I bring down my cost of sales? How do I make my field model more profitable? And how do I win in a different environment that makes me more profitable?
And you’ve got a lot of companies leaning in to “I need partnerships, and I need them now, and I need them to source for me.” While that may be a great 12-month Band-Aid to help you drive up your revenue, what it doesn’t do is actually solve the longer-term problem you’re trying to drive, which is creating a scalable machine that can generate substantial value for you and your customers.
So I think there’s a good opportunity for us all in this space to think about that. And think about how you talk to your leadership, your executive team, and your board to get them to deeply understand. Because when you do this in our world, you know this stuff because you live and breathe it every day. It’s not safe to make the assumption that everyone has the same pedigree that you do in this specific space. You’ve got to help them along the journey.
Avanish: Yeah. That’s brilliantly put. And I think, just in that answer, you also described why you’ve earned the title of chief ecosystem officer. I think just the way you think about it and the way you frame it is super important. I think you’ve demonstrated earning the right. The data part is one that I think those of us who have been at this for a while have realized. Often the data piece – and you mentioned 10,000 customers and 10 years of data and so on – often that’s one of the biggest challenges. The quality of that, the availability of that, the trust in that, is challenging.
You’ve done it multiple times, and we’ve spoken about this privately before. Without disclosing any confidential information, how do you set that process up? Because I think that is one of the key elements of this next phase. Talk a bit about that data gathering, data analysis, and messaging process.
Aaron: Yeah. Well, I think if people want to evolve from just doing partnerships to running truly scalable businesses and being operators, they need to deeply understand the data and make it their best friend. And fortunately or unfortunately – it depends on how you want to look at it – when you get that first round of the data, every time I’ve done this, it’s taken six-plus months. To get the data, to clean the data, to scrub the data, to make sure it’s accurate, to take out outliers, to check on quality. There’s just a lot of work that goes into it.
And step one is that your finance teams need to trust you I mean, you’re asking for the keys to the kingdom, basically, to take a look at this. Because you’re looking at your customer sales data, you’re looking at retention data, you’re looking at when your partnerships got involved.
And you have to be very thoughtful in the methodology you use. I need a huge data set, so 10,000 customers. I need a long enough time period that you can pull the trends out of. And you can make it say anything you want, right? It’s what’s the methodology behind what’s driving those numbers. You need to deeply understand and unpack your business and look at the levers that can drive it. So I’ve looked at it for what happens when one application or technology ISV partner is installed, what happens with two, what happens with three, four, five; what happens across these different time frames; what happens when they’re delivered by certain partners. And then looking at all the different variables. What happens to the revenue stream over different time frames? What milestones are you picking to go into that? To drive it?
And it’s unique for every company. Unfortunately, it’s not the same everywhere you go because there are different drivers and different levers, and companies are set up differently. But you need to deeply unpack how your organization operates. Not [just] partnerships. The entire company. Understand how your customer success teams work, how your sales teams work, how your… You have to understand all of that before you go get this type of data and ask for it. And then understand the inputs that are going to be in it.
I’ll warn you now: when you go down this path and start having the results that come out of it, they will be questioned. And they will be questioned deeply. That is fortunate and unfortunate. Unfortunately, you’re going to get a ton of questions. Fortunately, it lets you showcase your deep understanding of the business, ground yourself in credibility with the executive team you work with, and show that you’re a true operator looking at the holistic success of the entire business, not just your slice of the pie.
And that’s how you start elevating yourself in the conversations you have. Anecdotal data does not help you solve anything. It has to be concrete, and it has to be defensible. Once you take that data and you’re implementing the changes that you want to drive, to drive up scale, you’re now incredibly accountable for the results that come off of those. And make sure you have the right team, the right structure, the right operations, all that stuff, to make sure you capitalize on the opportunity you just drove for yourself. But get ready for a lot of work. But I promise you it’s worth it at the end of the journey there.
Avanish: I think that’s a great summary of what scale looks like. Because having that data implies you’ve done it for some time, you’ve got some lessons learned, etc. This is about scaling.
Let’s dive into the ecosystem piece. Because I think that is another important piece. Which is, often, again, without making too much fun of it, people are like, “Hey, go get some leads, give me a channel.” Well, a channel is a piece of a much broader, let’s call it a reseller, perhaps. That’s one piece. But you’ve got managed service providers. You’ve got ISV and tech partners. You’ve got delivery partners at the global level, the regional level, the boutique level. How do you think about those things?
And as you’ve built these ecosystems, do you have a framework? Do you have a way of prioritizing? Because really, as you were describing it, you can have one or two technology partners. You may have some delivery partners that are specialized in that industry, perhaps, in that location. Talk a bit about how you frame that from an execution perspective.
Aaron: Yeah, that’s a really good question. I had the choice: did I want a chief partner officer title, or if I want chief ecosystem officer? And I chose the ecosystem for a reason. Your ecosystem is all of your third-party relationships that help your business become successful. And they’re weighted differently depending on the overall corporate strategy.
So, to answer your specific question, no company is the same. There’s no single ecosystem strategy you can implement everywhere you go. It’s linked to the corporate strategy of the company. So, what’s the technology you’re bringing to market? Whether it’s build, buy, or partner. What customers are you going after? What TAM are you going after? What regions are you going after? All that kind of fun stuff.
And then you start unpacking it. For this product to be successful in this market for these customers, what must be true for you to succeed? And the lens I’m taking it from is, okay, I know that we’re building these products. I know we’re going to go into the Japanese market, for example, with them. What do I need? Well, the Japanese market is very reseller-focused, and it’s very relationship-focused. That goes back decades, sometimes generations. So you’re not going to enter that market successfully unless you have a robust resell program. That tackles Japan. It also tackles markets like Latin America.
But if I’m coming into North America, and I’m trying to create a category, and I need to be successful around that, my strategy is going to be very heavy on the ISV front and rounding out our technology solutions. And then it’s going to be very heavy on the delivery side to make sure that those customers are implemented, successful, and using the technology. My delivery partners are going to be the ones that I push tons of business to that I ask to source for me in return.
So I unpack it based on the overall corporate strategy, understanding the build/buy/partner, and then going literally product by product, region by region, and having a cohesive plan. Now, that plan is going to be big at that point. Then it comes down to prioritization. What can you achieve in certain time frames that are going to drive the biggest impact on the overall business?
Most importantly, I see many partner teams fail because they’re not putting up the boundaries on what will have to wait. Or what cannot be accomplished in a certain time frame, and staying hyper-focused. The disease of it all, and the disease of ecosystems you have to be very careful of, is scope creep Getting pulled in a million different directions can pull your focus away from your core mission, which again is to drive the biggest impact for your organization, your partners, and your customers. And if you do that last component of the stuff you can’t get to, you will. People will invest in it as things scale and grow.
Avanish: So you’re saying it’s not just throwing leads over the fence, is that right? [Laughs]
Aaron: That’s a hundred percent correct, yeah. [Laughter] I love sourcing, by the way. I love it. I think it’s a great thing. I spent time in direct [sales]. I love direct sales. If you want a partner to source you a hundred dollars, then you’d better be prepared to source your partner a hundred dollars. And if you’re not, don’t bother. There are scalable ways and sophisticated ways that you can solve for sourcing. And you can create that two-way street. And, spoiler alert, partner attach as a metric is one of the things that can really drive that if you do it right. But yeah, no, it’s not all about sources.
Avanish: Well, I guess it’s called partnership for a reason, right? So, let’s leave it at that.
So you just touched on the next point that I was going to cover: metrics. We’ve talked about the data, we’ve talked about the analysis. For those of us who are operators, who really execute on this, there are a set of metrics that really show the state of the business. And I, again, only half-jokingly, often say the number of partners may be a metric, but it’s not a metric of the success of your program. So talk a bit about how you’ve thought about that, again looking at the ecosystem as a whole, and perhaps if you want to pick one or two specific areas that you say, hey, [here’s] something we’ve built, and here’s one or two or three metrics that really give you a sense for how well things are going.
Aaron: I think there are vanity metrics, and then there are serious business operator metrics. So the vanity metrics are, I have a thousand partners. And externally, that looks awesome. And it helps validate. And you hear about it all the time on calls to Wall Street, earnings reports, and all that fun stuff. Those are great.
But the reality is, the metrics that matter to me, I’m looking at the top line: the amount of revenue we’re impacting. I break down that to understand what’s coming from sourcing to us and what we’re sourcing to partners. I look at the overall CSAT scores across the customers that our partners are looking at, both from a technology standpoint and a delivery standpoint. And I also look at the CSAT of the deliveries themselves. I’m looking at the long-term revenue trajectory across these accounts. I’m looking at the reverse of 12, 24, 36, and 48 months. So I’m looking at stuff so I can start understanding and modeling out for the future.
I look at deal close times, and I do this on a quarterly basis. So, how quickly are our deals closing where we have our ecosystem involved versus when we do not? I look at the deal sizes. How much larger are the deals that are coming forth via our ecosystem versus our traditional way of bringing them in, which is direct? I’m unpacking those.
What I’ve always found fascinating about the ecosystem business—and again, I’ve spent time in direct sales, too—is I fundamentally believe that ecosystem selling at scale is the best, most efficient, most cost-effective way to do it. And the type of deals and how strategic you are in your customer, regardless of size, is just different. So, all the data I’ve ever seen at all the companies I’ve worked at are very close to each other. The deals are four to five times bigger. They generally close somewhere between 20% to 40% faster. The CSAT scores are higher. The attrition levels generally drop pretty dramatically or go to almost zero as you go through that.
So, I’m looking at the overall business metrics and health that our board is going to care about. And that our senior executive team is going to care about. That helps us decide the overall health of the business, but it also helps decide what businesses or routes we invest in as companies in order to be successful. And if I’m sitting on this treasure trove of all these metrics that I’m deeply looking at and know that can dramatically change a company's go-to-market model. That’s your gift to give back to your leadership team to help them become more successful.
So I look across all those metrics and look at them in real-time, basically daily at this point.
Avanish: Perfect way to synthesize what it takes. You’ve got to have the systems, the processes, the metrics. Because without that, it really is a little bit of highfalutin talk. And I think you have to bring that trust into that.
One more leading question. I have seen and think you probably have seen places where they commit to a partnership or ecosystem strategy. They bring in the leadership. And typically, six months later, they’re like, nothing’s happened. And you, as the ecosystem, say, hey, this is a long game. How do you address that? How do you tackle that? How do you process that, and how do you set those expectations that this is not a switch that you can flip overnight?
Aaron: I think that if you’re the new ecosystem leader coming into a company, everyone will try to sell you when you join a company. So they’re going to pitch you on coming in. They’re going to tell you all the right things you want to hear. It’s critical for you to unpack that to understand their level of commitment and share the realities of this game on the front end. And the realities of this game are you’re not going to see results in six months. You might see minor ones. We used to say this all the time at Salesforce – the numbers you see right now are because of the work we did 12 months ago. That’s kind of the way it goes in this business.
So you really need to have a strong stance, set those boundaries, be clear on the strategy, and get the commitment on the front end. And then you should really focus on where you can get some quick wins while building the scale machine so you can feed the machine. And get people to see wins.
My methodology has always been to take down some really big enterprise-style partnerships and customers. Because I can go do five deals that generate a lot of revenue, gain a lot of traction, get a lot of eyes on them, and get the fanfare you want to start building up the narrative of what you need to succeed.
I doubled the partner revenue at Qualtrics in 12 months. That was not easy to do. And I shouldn’t even say “I.” It was “we.” The team killed themselves to do it. They put in 80-hour weeks every week to shift the way we were doing business and really bought into the strategy and were execution machines. So you can put up serious wins. And the Qualtrics partner business is not small, so 2x’ing it is serious. It’s not a small number. We don’t disclose it, but it’s not small. It’s pretty substantial. That then allows a whole series of things to come after it.
I set the appropriate expectations, and then I try to find some very visible wins that feed the machine so people will give you more time to build the stuff out. I’ll come back to a point you made, Avanish. This is not about signing up partners. If you want to lead these organizations and do them, you’re no longer the person who is signing up partnerships and executing one or two. You’re a business operator. And it is a different game. Your job fundamentally changes.
And if you do your job correctly and you build the scale machine, once it starts picking up and taking off, you’re everyone’s hero. All of a sudden, no one expected 2x revenue. You get all the cheers, high-fives, and fun stuff as it starts scaling. But if you do it right, and you nail the systems, processes, all of that stuff that makes your partners successful, and you do right by them, once the snowball effect occurs, I mean, the train’s left the station. You’re not going to stop it. It just keeps going up, up, up, up, up. And then your job becomes making sure you continue to scale that.
Avanish: Scale, exactly.
Aaron: So you can ride that rocket.
Avanish: Yeah. My old teams would cringe when I often said, " hey, getting the signed contract from a partner is the easy part. [Laughs] That’s when the work starts.
Aaron: Yeah, that’s true.
Avanish: So, hey, we could talk for hours. But it’s been a delightful conversation. Any final thoughts, Aaron, before we wrap here?
Aaron: I would encourage everyone to look holistically at the industry right now. And if you’re a person in partnerships, and you love the space, and you’re passionate about it, the next 10 years are going to be really interesting for you if you put in the work and you deeply understand how to evolve into being a hardcore operator. People are figuring out that the traditional go-to-market model is starting to slow down. And it’s not as effective as it could be. The really front-leading companies have figured out that ecosystem is a very serious route to market in the new world that they need to invest in. There’s tons of opportunity for everybody out there. And I am super excited to see what happens over the next 10 years. So I hope everyone else is as well.
Avanish: Love that. And that’s a great way to wrap. Aaron, great to see you. Thank you for making the time. And we’ll be in touch.
Aaron: Thanks, Avanish. Appreciate you having me on. Good to see you.
Avanish: Take care.