>> Announcer: From Miami Beach, Florida, it's theCUBE. Covering Acronis Global Cyber Summit 2019. Brought to you by Acronis. >> Welcome back to theCUBE's coverage. Two days here in Miami Beach at the Fontainebleau Hotel for Acronis' Global Cyber Summit 2019. I'm John Furrier, host of theCUBE. We are breaking it all down, our next guest, Ryan Walsh, co-founder and chief channel officer at Pax8. Just talking, riffing about the change in the channels. Welcome to theCUBE. >> Thank you so much, John, happy to be here. >> Thanks for coming on. >> Yeah, that's great. >> We have multiple ways of innovation now more than ever. Cloud computing, and digital products. The game is still the same but the equation changes. I've got to get a product in the hands of the customer through a channel of distribution, aka system intergraters, ISVs, VABS, VARS, resellers. Whatever the hell the word is, it's a channel. >> Ryan: That's right. >> And they want to have their customers pay them for services and have turnkey products. Okay, that old world has shifted, so now software. >> Ryan: That's right. >> You got hardware that you could buy from Acronis and others. Edge devices that can be deployed, managed over the cloud. So the cloud has kind of changed the game. >> Yes. >> You guys that started a company that's essentially born in the cloud distributor, which is interesting. So I want you to take a minute to explain Pax8, born in the cloud distributor, what does it mean? How did you get there? >> Yeah, why do we do it? >> What's the story? >> Yeah, that makes sense, the traditional distribution game was on-premise technology. Hardware, printers, software to install, ship it, right? Pick, pack, and ship. Now fast forward to a cloud game, and you'd say, well, do you need distribution? There was a thought at a time that said, well, the channel's going to get disintermediated 'cause all we're going to do is we're just going to go online and we're just going to download it. Customer's going to buy it. I don't need a channel, I don't a distributor. I'm just going to go get what I need. What we learned is that's not the case, because there are some products that you can certainly go and download an app on your phone and know how to do that. But when you're talking about small and medium-sized businesses that might not have in-house IT, it's not so easy as downloading a product. And this was a problem that we wanted to solve as Pax8. Reason we got in the game we actually, many of us came from a born-in-the-cloud software company. And we learned how powerful the channel was. In fact, we started selling direct and realized we just can't scale fast enough, so we committed to the channel. Once we did, we started selling to those partners and you might have thought, yeah, we didn't need distribution. Some of our partners said, yeah, go onto the traditional distributors line card. And when we did that we said, well, they're great at pick, pack, and ship, but as it pertains to a cloud world, it's broken. And so after we sold that company, the CEO of our company, John Street, and another co-founder, we said, well, hey let's go fix a problem, what's out there? And we said, well, distribution is broken for the cloud and that's how Pax8 came to be. >> It's interesting as a student of competitive strategy business, being an entrepreneur myself and having some experience in the channel like you guys have. It's interesting that the same mean comes around the trope, or whatever you want to call it is, oh, the middleman are going to be desegregated and it's direct-to-consumer. Now, I would argue that's true in a lot of cases, it's a bit more efficient to go direct to the consumer. Technology enables that, so downloading basic apps, media's now going direct. Yeah, middleman gets cut out, but that's undifferentiated value. And I think when you look at middlemen, people get confused between a middleman role and a supply chain. So I think what you guys are doing is cracking the code on this value and the supply chain of distribution of software to an edge or channel partner that has a relationship with customers. They don't just change over night. >> This is why we actually, I've been in meetings where we had a born-in-the cloud SaaS company show up at a channel event and at this particular event, we thought this guy was going to come in here and say, "Tell me about how great you are and why I need you." He sat in the chair and said, "Why do I need you?" I wasn't even thinking about this, right, as a channel. A year later he came back and he says, "I understand why I need you. "One, I need partners to help deliver that last mile," because the trust was already there. But more importantly, customers want solutions. And now with, you see what's happening with cloud products, Acronis being one of them, they can pull together multiple things to create a solution. And you really need to have somebody guide that tool. It is not as simple as just downloading an app and making sure that it all work for a business. It just isn't. >> High volume, low margin businesses tend to get disintermediated quickly. >> Right. >> But when there's value creation, you talk about relationship to customers, great channel players have that. And they have costs around servicing that customer. The challenge is when the cost becomes so high (laughs) to provision and serve the customer, gross margin gets hit. >> Ryan: Well this is where-- >> And if so they can eliminate that risk, why wouldn't I look at new supply chain partner or a new partner? >> This is where Pax8 comes into play, which is most partners don't have the in-house technology to build a platform, to shift if they didn't support a recurring subscription revenue model. That's not easy, because when you've shipped a box, you created a bill at that time, but now if you're selling cloud products, you've got to turn it on quickly, you've got to allow somebody to order one, two, three more seats, or gigabytes of something and you've got to make sure that the bill is accurate. That becomes very complex. Just to know what to price things at. >> We've been doing a lot of coverage and reporting on modernization of the Enterprise, cloud computing, of course, Cloud 1.0, Amazon model, Cloud 2.0 is Enterprise, and these nuances that are operationally challenging. But for CureMint, whether it's government, public sector, man, it's 1994! For CureMint, there's no modernization, you're kind of teasing out what I think is like a really big wave coming, which is the modernization of products, marketplaces, and delivery value. >> Yeah, you're right. >> Do you see it the same way? >> 100%. And what's interesting about what you're talking about, even when we started and what we're doing right now, the nuance around what you're saying has, we built things in our platform that we didn't envision in the beginning because the market said this is a problem and we need to fix this. How do you make it easy? And one example of that is, whether you're an Enterprise customer, or you're a partner, a man and service provider, providing multiple cloud solutions to a customer. What they want is, pull it all together, turn it on quickly, and make sure that I can support this technology stack. Look at what Acronis is doing, they've put together data protection and security. This is a very unique combination. Well, a lot of these customers are not just buying that, they are also buying Microsoft products. And so as they grow their stack of technology, they still want to get it as fast as they can, they don't want to pay for things that they don't use. This is the new nuance that we had to solve for this problem with our marketplace is, nobody wants inventory in a virtual world. Pay for what you use, nothing more, nothing less. And you really needed advance automation and integration to make that happen, and that's where Pax8 came in. >> Well, I think that Pax8, Acronis story is interesting because if you think about the demands of the dealer, owner, manager, or the guy who's an entrepreneur or owner of the channel or whatever that partner it is, they have to hire people. The a human resource side of the equation is super efficient, but it's also a razor edge too, right? You overdrive on human labor that has to be a trained out security, right? Why not bring in Acronis in there and Pax8, and I'm up and running with a full-blown security suite cyber protection, new category, I can bring that to market through my channel. >> That's right. >> Trust relationship is there, everything's kind of end-to-end. >> Well, what you think about, what you're saying, it's a part of our model, which is what's sexy that you talk about at first is you've got a cloud marketplace, our partners can use this thing to order multiple cloud products. That's pretty cool because they typically, they wouldn't have the capability to do that themselves. But a part of our model is Pax8 provides Tier 1 support to these partners. To your point, you have to bring on a technician, you may not know whether you're going to sell something new right in the beginning, so the fact that Pax8 can provide sales support and Tier 1 support on that product, allows a partner to figure out whether they're going to sell it, how they're going to sell it, without incurring that cost, because you have a partner like us. >> So what's your positioning relative to the competition? What do you guys offer that's different? How are you guys positioned to the channel versus some other big player? >> What we talk about, and a lot of people say, well, why would you come into this game when you have such big names, big brand recognition? They've got more money, they've got more engineers, they have some tech. But what they didn't have was cloud in your DNA. That's what we represented, so we were untethered by legacy processes, we didn't go through a pick, pack, and ship world. We were built from the ground up to be in the cloud. >> John: DevOps. >> Yeah, DevOps and high automation, this blend. The message we've taken to the street and our focus is, we're blowing up traditional distribution because you needed to think and operate differently to take advantage of the cloud. And so this is our message, our differentiation is solely around this focus on enabling a partner. And if you look at what we are, we're very selective on the cloud products, we a have cloud marketplace, but a lot of people do. The big difference is really we create a partner experience, where we're there by their side. We're not telling them what to do, we're there to make sure that they can grow their cloud footprint. >> You act as fulfillment. >> That's right, we are not-- >> John: You're a full service. >> Yeah, and there's a big difference between saying, I know you want this, can I, I'm going to place the order to, how do you introduce a new technology like Acronis to a partner who's never heard of it? They typically aren't coming in saying, well, I want Acronis and I want to buy it. It's how do you teach them? How do you show they how it works and then how do you support it? >> Channels are very efficient, as well. If you're good, you're gone, you're golden. You'll double down on it. If you suck, you're out, right? They don't tolerate dogma, so I've got to ask you, when you go into the channel, one of the things that they have, and just my observation is, they have a bar about value creation. They want partners that are going to create value. >> Ryan: That's right. >> What's your pitch to them when you're saying, what value do I bring for you, channel partner? >> So is this to Pax8? To the channel partner? >> Pax8 to the channel partner, what value are you bringing? Value creation, bring me value, I'm buying all day long. >> Yeah, Pax8 value, it's two-fold. What we're trying to do is, there's a revenue side of that value and there's a cost-efficiency side to that value. I'll start with the cost efficiency. Partners don't embrace cloud because there's friction in the cloud-buying process. It's difficult to get. The bills are difficult to consolidate, it's difficult to aggregate all of that in one place, and then ultimately make sure that that flows through their business systems. So, the value that Pax8's creating on the simplification of buying cloud, we have a technology that allows them to quickly provision, aggregate the bill, but we don't stop there. Marketplaces that stop there aren't doing enough because we hear about the buyer's journey with customers, and this is where that journey for a partner doesn't start and stop with our marketplace, they actually have tools, like professional service automation tools, where they want what we do with our marketplace to integrate into those tools. So we simplify that whole buying process. That's one huge value add that we have. On the revenue side, most of the partners that we deal with don't have time to go check out cloud products. We do all that vetting and then half our company is sales. So our internal reps help our partners get introduced, and sell-- >> You're driving revenue. >> Yeah, we're driving revenue. I'll give you an example of this value add. It's not a matter of saying, and this is what a lot of marketplaces do, they put up a bunch of tiles and say, well, go pick what you want. You're still faced with the same challenge, well, I don't know about that, I don't recognize the Acronis logo, or maybe I do but I don't know what's in that product." It's really about sales enabling, how do you do that? Well, the one way that we do this is, we go talk to partners about how to grow a cloud practice. We actually go into the field and introduce these cloud products and have partners talk to other partners about how they grew their stack of technology. And then again, we'll demonstrate it, we'll show them, we'll run through the whole thing to sell on their behalf. This is what we find is value add, so a partner doesn't have to do that. It can build a cloud practice, and they can do cost effectively. >> As a disrupter coming into the marketplace, with the cloud mindset, DevOps, you've got a lot of advantages, you can automate, you're driving revenue. Come on, it's a winning formula, you pulled that off, you're going to do well. So I wanted to get your perspective. Looking at this industry, what's the modern channel look like? I've heard all the, oh, the channel's dead, it's changing. Certainly changing. What's the new picture of the channel in your mind? >> Oh, man, I tell you, this is a great question. And one that I'm really excited about because we deal with a lot of partners that had an on-prem practice, where they would drive out and service an account. The new definition of the channel now is one that's untethered by a GEO, because they're taking advantage of cloud services and can get turned on anywhere, and can get supported anywhere. So what we're saying is, man and service providers that are showing up, and they're acting as an outsourced IT and a virtual CIO to a small business. Now to do that, what they're doing is, they're building a stack of technology, saying, when you sign with me, this is how I interact with you, I have a stack of technologies, I'll deliver it, configure it, I'll answer questions for you. And they're going even further then that. These guys are also partnering with other partners who have specialty, because what they realize is, to be a generalist it's hard to win. Now you got to be niche razor focused, because what we see is customers are now educating themselves before they call a partner, right? 70% of the research is done before they even call, so you'd better know what you're doing. And so what we're seeing is that the channel of the future is one that's focused on their specialty, they're not afraid to partner with other partners who have a specialty that their customers may want. And everyone is dealing with automation and integration. So it has to happen at the speed of light. >> John: Time to value. >> Time to value, speed to market. This is a progressive partner today, and they're growing. They're growing rapidly and they're buying each other. There's a huge M and A activity now because they recognize there's a fragmented market. So if you're really good at your focus, you really can take advantage of that. >> So speed, agility, profitability, customer satisfaction? >> Core drivers, core drivers. But then, what you need though is, there's no reason to go it alone. This is where at Pax8 you would say, well, okay, that's value for the service provider, why do you need Tier II? Well, you need to aggregate these solutions and bring it into one place for that partner. You need somebody to help them out to be by their side. This is something that we're finding, this is a part of the value chain. >> Well, I think, you know certainly directive consumer is happening, but there's still value creation opportunities out there in the new shift. Acronis is doing a good job with you guys, you think? Acronis good for you guys? >> I tell you what, Acronis is blowing up with us. We were just talking to Serguei about this, like why, why is this happening? Well, one of the things that they've done, that's really adapting to what the market wants is one, they put multiple solutions together in a single place and made that easy. Two, they made an upgrade to their user interface, so it's really easy to interact with. And so you can have a great technology, but if it's not easy to work with, customers are moving on, that's the state of reality today in the market. They put those things together at a great price, and they're maniacal about support, and so they're built to make sure that partners and their customers sort of get up and running with their product quickly. And add to that, then we've got integration with that platform and ours, now it's like it's a perfect opportunity, because now we can all move quickly, automated. This is why it's a great union. >> Ryan, thanks for coming on and sharing your insight. Take a minute to give a quick plug for Pax8. What are you guys working on? What are you guys looking to do, hire, take new territory? What's the plug? >> Pax8 is blowing up distribution and we're growing rapidly. One of the things we're focused on right now is that with the focus on the customer experience, and digitizing operations, what we're focused on now is thinking differently about how you target your customers and what they need. If you take a page of the Amazon marketplace playbook, and I'm talking about consumer products, they're really taking advantage of understanding the characteristics of each buyer. This is what Pax8's focused on for the future, so that you can really have a more targeted conversation, and focus and marketing campaign with your customers. And we're going to deliver that with our platform. >> And being cloud guys, I'm sure data's a big part of it? >> Data's a big, this is the future. We're hiring data scientists to really be prescriptive about how to target and what comes next. >> Ryan, thank you so much for sharing that insight. Good stuff, congratulations. Looking forward to tracking your progress in the industry. Thanks for coming on. >> Thank you so much, John, I appreciate it and, yeah, I look forward to talking to you in the future. >> Okay, it's theCUBE coverage from Miami Beach for Acronis' Global Cyber Summit 2019, I'm John Furrier, thanks for watching. (upbeat music)