29 Apr Building your Business with Microsoft, Featuring General Manager One Commercial Partner, Brent Combest
In this episode of shoot the moon podcast, Revenue Rocket’s CEO Mike Harvath and EVP of Business Development Matt Lockhart sit down with Brent Combest, General Manager, One Commercial Partner at Microsoft. Hear what is in the works at Microsoft and how the partner network of Microsoft Managed Partners around the world will play a role. The dialog spans the past lessons learned, trends, and the momentum seen in cloud services and technology categories and how M&A plays a role in the construct of the Microsoft Partner Program.
Discover how the next 18 to 24 months are critical to IT service providers remaining relevant, as growth fueled by M&A combinations along with technology enablement advancements will see those not capitalizing on the strategic benefits fall short and eventually priced out of the industry. This episode is a must-listen!
Listen on Apple Podcasts or Spotify.
TRANSCRIPT
Mike Harvath 00:04
Hello, and welcome to this week’s Revenue Rocket Shoot the Moon podcast, today we have a special guest. I’m going to introduce first my partner, Matt Lockhart, who’s going to moderate today’s call. And we’re gonna jump right in, Matt?
Matt Lockhart 00:20
Yeah, Thanks, Mike. As Mike mentioned, we have a very special guest, Brent Combest, the General Manager of the One Commercial Partner Group at Microsoft. Brent’s got, an esteemed 15 year career at Microsoft. Brent, welcome.
Brent Combest 00:38
Hey, thanks for having me. I greatly appreciate it.
Matt Lockhart 00:41
And now Brent, you know, by way of introduction, tell us a little bit more about your history with Microsoft and what you’re doing today.
Brent Combest 00:49
Yeah, sure. So I actually started my journey straight out of college working in the channel. And then based on that experience, I was recruited to join Microsoft and have really spent the entirety of my journey here at the company, working with partners. And so I have that DNA kind of built intuitively, within myself. And I’ve really never left it, but because there’s just such a passion there. And, you know, I’ve had a chance to do not only roles here specific to the US, but also spent about half of my tenure, traveling around the world working with partners of every shape and size and focus area and learning a ton as we went. And, you know, today, my team, we manage about 400, of the top national and local services partner. So take the very best MSPs and SIs here in the US and everybody that’s not globally managed is easiest way to think for that.
Matt Lockhart 01:44
That’s exciting. And I know that you and Mike, you guys go back a little ways. Mike, you’ve been working with Brent in various capacities, you know, for a long time.
Mike Harvath 01:56
Yeah, absolutely. It’s been a great relationship. You know, I know that Brent and myself, as well as some of the work that we do here at Revenue Rocket are very well aligned. And, you know, certainly we’re going to get into some of that in this podcast.
Matt Lockhart 02:09
Yeah. Awesome. And me as the new guy to the team here, but, you know, having worked for 20 plus years in the Microsoft network, with my former firm Magenic, you know, who really was started in the Microsoft network, when it was it was just getting going to see what has happened with the Microsoft partner ecosystem over the last 20 years, and even the 15 years Brent that you’ve been there has been really incredible, right? Imagine the growth in that ecosystem in the last 15 years.
Brent Combest 02:49
It’s been a fun ride, the evolution of the business model, especially as we transitioned into the cloud, I can’t believe it’s already been a decade since Steve Ballmer stood on stage and said, Hey, we’re all in with cloud. And going through that journey with partners has been amazing. You know, there was definitely some times where it was a struggle as we thought through how are we going to survive the cash flow chasm? How do we think through monetization of this new world? How do we bring in new staffing complements to service these types of offerings around managed services that we hadn’t really done that much before? So it’s been amazing, you know, and you’re right, Mike, and I have a long history. And I think we started our journey together when the topic of mergers and acquisitions was just white hot, and it still is to be honest with you of that portfolio of 400 partners that we manage today, I see a transaction a week taking place inside of that. So it’s just amazing.
Matt Lockhart 03:41
Wow, that’s great. And I think, a great way to transition. There’s been a lot of change. You know, obviously, with Microsoft in the last five years, you talk about the transition to a cloud first organization, describe for our audience, how you would convey the Microsoft go to market today?
Brent Combest 04:06
Well, I think the first and foremost thing that I come to my team on that I think is so very true for our partners is you have to be comfortable with being uncomfortable, meaning what you had as a competitive advantage 18 or 24 months ago, probably isn’t now and it certainly won’t be as we go forward, you got to be always in the mindset of a healthy state of paranoia and looking for ways to adapt and change and alter your business model as customer needs change that elements of flexibility, adaptability, and a willingness to learn is, you know, that’s a core tenet of what has landed with us as a culture at Microsoft, and it’s made our way made its way out to our partners. And I can honestly tell you, the ones that have embraced it the most are the ones that are the most successful today. There’s a stat that speaks to 52% of the four 500 from 20 from the year 2000, are no longer in business, you can kind of mirror that inside of our channel, the ones that didn’t go through a purposeful transformation, and really have a desire to elevate and alter their business to stay with market demands, they really kind of followed behind.
Matt Lockhart 05:19
That is super interesting. Mike, I know that you’ve seen the same in Revenue Rocket’s leadership as growth strategy and M&A advisor that talk about how you advise our customers a bit around change.
Mike Harvath 05:34
Yeah, you know, we’re big proponents to embrace change, you need to be able to be nimble and flexible, and certainly open to optimizing the change in your business model to stay ahead of, you know, market demand, and for the companies that have done that, but have been effective at really implementing an on purpose change management initiative. And, you know, we’ll talk a little more here later in the program about our SVP program that certainly helps partners do that, are the ones that have you know, performed exceptionally well have grown their, you know, enterprise value at it just in some cases, just amazing levels. Those guys are, where the opportunity is, we certainly see companies in decline, you know, that have not embraced that change, and, you know, now oftentimes get rocked back on their heels, and they’re struggling to figure it out and trying to play catch up. So, you know, I echo certainly Brent’s comments about embracing the change and moving forward with the new and challenging yourself to be better.
Matt Lockhart 06:43
And Brent, I know that you know, your team, and this group of the top 400 partners, there’s a bit of a playbook. And a playbook that has worked. And that playbook obviously has evolved, you know, to to meet the cloud first expectations from Microsoft, could you touch a little bit upon that playbook? And what you see, you know, working with your best partners?
Brent Combest 07:10
Yeah, for sure. You know, it all starts with the genesis of the kernel of strategy. And that is all about differentiation with the partners. And for some, that means really going deep around a technology or a functional expertise. We see, for example, partners really thriving around expertise on the deep workload like artificial intelligence or data as an example, you have to be a little bit careful in the functional expertise as being a differentiator, especially with an understanding that over time that may become commoditized. For example, when I first started this cloud journey, yeah, that was all about, well, let’s just get customers there, let’s get them on to Office 365. And that quickly became commoditized, than the gross margins on the services around that trunk. And to be honest with you, I kind of see the same today happening with simple things like Azure migrations, right, that’s a giveaway or a loss leader for a lot of partners, as they move into more sophisticated workloads, we’ll get you to Azure, we’ll get your data there, because we’re going to monetize the really cool stuff. And so you’ve got to have that healthy state of paranoia I talked about earlier, if you’re doing something on a functional side, know that that may get commoditized as more partners come into it. So the other area of specialization we see a lot is around vertical expertise. And to me, this is where the real opportunity is and why, if I were to go back outside of Microsoft to get back on the channel, this would be the strategy I would deploy inside of my own company. Because it does a couple of things for you. One, when you set yourself apart based on tribal knowledge, vertical knowledge, it allows you to do things like connect with key influencers that can carry a brand on your behalf that allows you to drive immense amounts of efficiency and everything you do, whether it’s marketing, sales, or even delivery itself. And then repeatability also creates the opportunity to build packaged IP. And I don’t mean like, here’s a workflow for how we deliver something, I mean, real code base IP, and the more that you can drive that into the business, the more you can start to scale it out. And we’re even seeing some partners that are getting really sharp around this, so much so that they’re building up a large base of customers using the same IP that they built and now they’re starting to monetize the data that comes out of that to sell it back either as an anonymized service so that it’s benchmarking for customers to see where they stand against their peers, or they’re gaining optics into where customers have shortcomings into what they do and now they’re going out and starting to consult with them on real business model transformation and improvement. So that vertical piece is so big, but Matt the thing I’d say underneath that. That’s really also when you want to click down in from the why into the how is we think about the elements of how companies are creating winning formulas, right? What’s the consistent journey that you take a customer down from first interaction with them to full scale consumption. That secret is kind of where some of our top partners are at today, they’re saying, okay, when we first engage with you, we’re going to do a large scale of one to few kind of events, where we’re going to go through a lot of the why the benefits of making this journey with us or going on this journey with us, then we’re going to go into a situation where we build a business case, a proof of concept, first stage of consumption, and so on down the line. That consistency in the execution model is creating scale for partners. I got one partner in the state, local governments space and they may have, I don’t know, 50, or 60 employees, because of the repeatability there, they’re doing over 100 customer ads per quarter, right. So you think about how that started to come in. And we’re really hungry for that because, for us, our ambition is to empower every person and every organization on the planet to achieve more, when you read between the lines on that, that means we want to have 80-90 plus percent market share and the only way we’re going to do that with our channel is to create scale based methodologies for how we go and execute.
Matt Lockhart 11:01
Yeah, you know, and having experienced it, Brent, I can’t compliment you and your team enough on enabling that formula, and having that vision that if your partners are successful, then you’re only going to be more successful. Well, there’s a bit to unpack there in what you talked about. And Mike, you know, you built this method that you talked about SVP, and SVP stands for specialization, verticalization, productization. And he built this method over 10 years ago. So you’ve seen a lot of what Brent just talked about, talk a little bit about what you’ve seen for specialization, and as Brent talked about, that, you can’t rest on your laurels?
Mike Harvath 11:50
Yeah, absolutely. You know, we’ve seen this model, you know, be successfully implemented hundreds of times, you know, with our clients and the Microsoft challenge, it’s been a fascinating journey. And it’s evolved over time. As you think about specialization, you have to really be open to change, you have to be open to thinking about how do we align our specialty around sort of our tech focus? And where does that meet that functional focus, the way we see it. Verticalization, really, from our perspective, is much more about, you know, the market and micro-markets to focus on. And in the end, you know, a lot of people ask us, verticalization is really hard, because, you know, hey, what if somebody calls us and says, I want to do something, they’re not in the vertical? Well, you know, certainly people will do that work, our partners will do that work, our clients will do that work in some cases. But I think what they find is that, if they’re well-aligned to the vertical, as Brent talks about, the system is so efficient, that they just go find everyone they can in that vertical and service the heck out of them. And there’s so much demand and opportunity within that vertical that there really isn’t the time and resources and distraction to do work outside of that market. Frankly, the value add, they bring to that vertical through the IP that they develop, which is where we talk about productization, is super valuable. And then they can monetize that, you know, in a services + product, you know, product + services kind of model to that market. And it’s been fascinating to see what happens to the top line growth rate, and certainly, and much more importantly, the bottom line profit percentage of the companies that align to the SVP model or to this to this model, over the time, we’ve seen companies wildly transform and become top quartile performers, if not, you know, Top 5, 6, you know, 7% performance in both of those areas, consistently, year after year. And I think if you’re building value into your partner business, you’re growing that business. But you also want to do it in a way where you really have true enterprise value, which gives you choices later as to how you might acquire other companies and ultimately, how you might exit the business is part of why we’re seeing the level of consolidation we are in the business right now.
Matt Lockhart 14:22
Yeah, interesting. Brent, I know that when we talk about verticalization, it’s easier said than done. Right? Many have tried. Many fail. Microsoft has had its own evolution and journey around verticalization and I know that you guys are doing great right now. It is super important to Microsoft’s ongoing go-to market today, talk a little bit about that. And then you know what you’ve seen with partners who are doing verticalization better than others?
Brent Combest 15:01
Yeah, for sure. And, you know, it is paramount to Microsoft, I would say that the announcements we’ve made recently related to the full industry tied solutions is as impactful, as meaningful,as substantial as Steve Ballmer standing on stage and saying, well, we’re all in the cloud, I take those announcements, those launches that have happened over the last 6 to 12 months to be, as you know, aligned to say, we’re all in on industry, so much so that when you look at our field sales organizations, we’ve already started to pivot them. When I look at our enterprise side, we’ve reoriented our teams around that even in the corporate side, the middle band of that pyramid, we have our folks here that have what’s called a major and a minor. Now, they may have accounts that span multiple industries. But at the end of the day, they’re all required to have one that they are deep subject matter experts in and another one, that they have at least enough cursory knowledge where they can carry a conversation to bring in experts behind that. So the dialogue is changing the BDMs are in control of the budget now. And if you really want to drive depth in the dollars that you get a customer to spend with you in terms of wallet share, you have to be able to go across their business, and the only way to really do that is to understand their business and so that industry angle, and that vertical angle is just it’s so important. Now, when I take partners down this journey, is a lot of times we go through an exercise together, and I kind of think of it as a Venn diagram. The first thing I like to do, as I say, you know, let’s look at your client roster. And so often when we do that, I’ll see that anywhere from 25 to 35%, is within the same four-digit SCI code, it’s kind of an accidental vertical that they have. Sometimes that’s just based on the geography that they’re in. Sometimes it’s based on referrals they have it just kind of organically happens. Then from there, we interview the sales teams, we interview the delivery teams, and the thesis there is we talk to them about what customer accounts were easiest for you to acquire and deliver, which ones did you enjoy more. And so often, there’s an overlap right between those two universes where you see enjoyment and success, where they’ve done a lot of work right, that repeatability breeds competency and that breeds longer term success. The third Venn diagram that we kind of bring our circle, that Venn diagram that we have with them is we said, hey, go get all the project books, or the delivery statement of work that you have for those customers. And let’s start to look for things that you find yourself doing over and over again, and my big thing is never invest human capital to do the same thing twice, if you can avoid it. So what we often find is IP that can be done everything from something as simple as a template that we layer over on something like CRM, maybe it’s a workflow or report or something more substantial, you know, that’s full on kind of a microized V type of a solution that can be built, and then resold that the last thing I’ll say, Matt, is, it’s a journey, I don’t expect for a partner to get on the phone with me today and tomorrow, I’ll be exclusively focused on chemical manufacturing. What I want them to do is slowly build that and build that one out over time. And once they start the second one, too, I’m looking for inverse correlation between those two verticals so that if one goes down, the other one doesn’t go with it. For example, I’m not doing home builders and mortgage companies I want two that are on opposite ends of the market, so that they can insulate themselves from risk around that.
Matt Lockhart 18:27
Wow. Now you talk about a formula. You guys have thought about this once or twice and, trending towards productization. And, you know, we think about it a lot in terms of how do you make it easier for your clients to buy your value. Right. I know that, you know, you Brent are investing a lot in the marketplace. Yeah, which is all about this idea of be seen for your expertise for your superpower. And make it easy for the market to identify you. Talk to us a little bit about the gains that you’re making through the marketplace.
Brent Combest 19:16
Yeah, it’s all about exposure there. And we’re slowly and steadily making enhancements to the platform and what it’s capable of doing. And really, you’ve got the Azure Marketplace, which is the toolset for your developers and your technical side to be able to go in and get the assets they need to to build things. Right. The other side of that equation is the app source. This is more of the finished products targeted at the BDMs. And really, as a partner, you’ve got to think about what kind of solution offerings do I have? Is it a toolset to enable others to build or is it something that’s more of a finished product, but at the end of the day, that vision is Microsoft’s website is one of those traffic’s in the world. And we’re a company that derives 95% of our revenue from a channel and there’s about 17 million people that are out there in the channel today. And if we do this, right, and we build this giant supermarket of technology the right way, we’re going to expose our partners to such a massive amount of buying opportunity from the customers out there, that we simply can’t sit on the sidelines and not be fully invested in that. And so, so many of our partners are now inside of those marketplaces today, and I’d say if you’re not, they’re already probably out to jump on that. And as time goes along, we’ll continue to invest more and more than marketing from our side that drives eyeballs and activities and our activity into those two marketplaces. And it’ll be something that partners really get to capitalize on. It’s building rapidly.
Matt Lockhart 20:46
Wow, that’s awesome. You know, Mike, one of the things that I know that we advocate a lot, is how to start with productization. And the idea of a wedge play, and as a means to starting that journey towards building repeatability, as well as making it easier for your customers to buy from you. Talk to us a little bit about how that works in real life.
Mike Harvath 21:14
Yeah, absolutely, you know, a wedge and what we call a full lifecycle of services all the way to productization is critically important. And I know that brand new alluded to some of this earlier in the podcast about, you know, how partners are sort of, you know, mapping the buyer journey with the client. And in our vernacular lifecycle of services is how that’s done right how, ultimately, you start with a very defined engagement. Oftentimes, it’s a scoping engagement, as a wedge, that’s a branded, offering, one that’s easy to buy, that typically has a fixed price. And it’s much easier to do that within the domain of a very tight specialization and verticalization approach. And ultimately, that leads to follow on services as you map to that buyer journey, and ultimately, all the way to a productize solution generally, because as you know, if you’re focused on a set of customers that are very similar in their needs, and sort of their industry and all that stuff, it’s very much like an assembly line, where you can ultimately get efficiency. And the key there is the ability to optimize that buyer journey and make it easy and frictionless for the client to buy. We’ve seen companies do that and really transform their close rates and ultimately transform the relationships that they have with their customers. Many of them sell those products at IP that they build, that IP oftentimes starts with a set of processes, it doesn’t have to necessarily be code in the beginning. So it makes it easier for a services company to, you know, follow a very defined process, that is their intellectual property. And it ultimately moves towards, you know, adding technology around that process and wrapping it. So it does become a product, and in the end a very valuable component of their overall value exchange with that client.
Matt Lockhart 23:18
Yeah, and, you know, Brent, we know that the marketplace is continuing to grow. And it’s because of this idea with productization. And, you know, the idea that you can put a price and a value and package that around IP, whether that IP has hard code or not, right, and it’s really exciting for me to have lived this journey and been a customer of both Microsoft, as well as Revenue Rocket, and now to be on the inside and seeing it happen day in and day out with customers. But then also to listen to Brent, talk about it at a national if not global scale. And so Brent, I know that you work with the top 400. But you’d love to see all partners follow this mentality to help grow their business.
Brent Combest 24:14
I would and I think this is a formula for success. And I think that the only thing that I would, I would add to you know, that formula that we haven’t covered today is how we think about long term adding capacity to our channel. And this is something that I see a lot of our partners struggle with. But you know, the reality is once you build this model around a specialization that Mike was going through, there’s this great detail. It also opens up the door for you to hire people that potentially you didn’t think of in the past. You know, that’s a thematic that we see a lot now is some of the people that are coming into these partner ecosystems, these partner companies, are from the verticals or industries that they represent. I see former school teachers, people I used to sell cars, people that keep the healthcare space, recovering attorneys, that are now in these offices, in these partner companies now, and we love that ourselves. Because, you know, I mentioned before, you know, our mission, and the fact that there’s 17 million people on our channel, if you do the math on that, you know, if all the Microsoft employees were to go out and try to live our mission to empower every person, every organization, that would mean that each one of us individually would have to interact with 46,000 people. But when you bring in that channel of 17 million, that number goes down to about 400 or so. And the more that we bring new people into the table that have the experience and the knowledge of these verticals, not only does it help your business go faster, but it increases our capacity. And that’s where, Matt, not just the 400 partners that I manage, I want for everybody to do that. And I think we’re going to need that kind of capacity to deliver our ambition.
Matt Lockhart 25:54
Yeah, well, that’s it’s exciting, I think a bright future ahead for all of us in this space. And you know, the last thing Brent and just touch on this, I think it’s sort of obvious to us a little bit, but may not be for everybody is how important in following this formula, specialization, verticalization, productization is to enabling yourself to co-sell with Microsoft, because that is obviously something that is more and more important to, you know, winning with Microsoft.
Brent Combest 26:34
Yeah, it is. It’s, it’s pivotal. And if you think about the two sides of what both sides need to the partner, you know, we’re looking for there from them as, as somebody that can be aligned to our strategy, our approach and that approaches. Now, we want to go as deep as we can, technology-wise, you think about the offerings that Microsoft has a cost are three clouds and beyond the surface and other elements like that. The wallet share we’re after with customers and the desire to help them digitally transform as it’s massive, right? The only way though, that we’re going to get there is by being able to show our relevance to these customers based on our industry skill or industry knowledge. And so to co-sell with Microsoft is to be able to speak that language to be able to show the value of your offering your solution into those industries and stay relevant there. So it’s a it’s a critical component of how we’re going to co-sell together. And you know, when I think about probably the last six to nine months of co-sell requests that I get from the field. It’s not, Hey, bring somebody in that understands, you know, security and arc. It’s somebody that has an arc, it’s bringing in somebody that understands how to secure this compliance challenge within a financial services firm. Wow, okay, got it. Now I need to go out and find partners that have those types of skills, because that’s what what we’re after. And we’re seeing competitors that are there as well, right? That kind of industry lens and industry focus. So if we want to win, we’ve got to be focused.
Matt Lockhart 28:06
That’s awesome. Hey, Brent, you know, we can’t thank you enough for jumping on the Shoot the Moon podcast with us here today. You know, I think simplifying it, if you will, a little bit, is find your superpower and continue to build upon your superpower. Know your customers better than anybody else. And make it easy for your customers to buy from you. Because you’re building repeatability. And you’re increasing the value that you’re playing with those customers. Brent, it has been just awesome to have you on the podcast today. We’re super excited for everything that you’ve done in building the network up and know, that there’s a lot of work to be done. But you know, our partners are in good hands with you and your team.
Brent Combest 28:57
Well, likewise, thank you both very much for having me. I think the world of revenue rocket, you guys provide just a ton of value into our ecosystem today. And I’m excited to see where we’re gonna go together down the road.
Mike Harvath 29:09
Thanks, Brent. And with that, we are gonna tie a ribbon on it. For this week’s Shoo the Moon Podcast from Revenue Rocket. As you all know, hopefully, if you’re a regular listener to this podcast revenue rocket is the premier strategic growth advisor and m&a brokerage for the partner ecosystem. And we continue to live our mission to help as many of you as possible reach your goals and ultimately do everything that you have dreamt about with your Microsoft partner business. With that take care and we’ll be talking to you next week.