<\/p>\n
BRIAN KENNY: Welcome to Cold Call, the podcast where we dive deep into the groundbreaking ideas and Harvard Business School case studies. Today\u2019s case drops us into the middle of a fast-growing cloud storage company that cracked a brutal market dominated by the likes of Google and Amazon. Revenues are climbing and the sales engine built almost entirely on direct relationships is humming. And yet there\u2019s a question weighing on the founder. Is this success actually limiting the company\u2019s future? It\u2019s a classic go-to-market dilemma. Should a company that prides itself on simplicity and tight customer relationships stick with the direct sales or should it embrace the messier world of channel partners, resellers, and alliances?<\/p>\n
This is a story about trade-offs, focus versus scale, simplicity versus leverage, and short-term momentum versus long-term ambition. It\u2019s also about leadership judgment, how a founder decides when to stay the course and when to rewrite the playbook, even when the numbers say, \u201cDon\u2019t touch a thing.\u201d Today on Cold Call, we\u2019ll spice things up with the case, \u201cWasabi Technologies\u201d with senior lecturer, Lou Shipley.<\/p>\n
I\u2019m your host, Brian Kenny, and you\u2019re listening to Cold Call on the HBR Podcast Network. Lou Shipley specializes in tech entrepreneurship, sales, go-to-market strategies, and building leadership teams for startups. His new book, Unlikely Entrepreneurs: Wins, Losses, and Crucial Advice in Building Great Companies<\/em>, dives deep into the key challenges that founders face, including many that surface in this very case. Welcome, Lou.<\/p>\n LOU SHIPLEY: Thank you very much. It\u2019s great to be here.<\/p>\n BRIAN KENNY: It\u2019s great to have you on the show. We will disclose right up front that you have a relationship with Wasabi, you\u2019re on the board.<\/p>\n LOU SHIPLEY: I\u2019m on the board. I\u2019ve been on the board for a number of years.<\/p>\n BRIAN KENNY: Okay. But what we\u2019re going to talk about here today, I think, is ideas that can relate back to the ideas in your new book. And when I asked you about what kind of case we might be able to use as a stepping off point to talk about the book, you didn\u2019t hesitate. You went right to this case.<\/p>\n LOU SHIPLEY: Oh, right to Wasabi.<\/p>\n BRIAN KENNY: Yeah. And I\u2019m wondering if you could tell us why that is. Why did you think that this would be a great case to sort of bring those ideas to the surface?<\/p>\n LOU SHIPLEY: Yeah. Well, so I spent my career in startups and most startups don\u2019t even get one go-to-market motion correct. They\u2019re lucky if they get one. And Wasabi, as this case describes, was really doing well selling direct. And yet the founder had this inclination that he was missing something, specifically access to certain markets and access to competing with certain competitors. And he came to me and said, \u201cWell, do you think we should go through channel sales?\u201d And so I just spent some time talking to the market and talking to experts in that area. And we decided to make the change and it\u2019s really a very well executed change, but it\u2019s still fraught with peril to change from one motion because if you\u2019re IBM, you\u2019ve got every route to market. But when you\u2019re a startup, you have one usually, and even that doesn\u2019t give you a right to exist.<\/p>\n BRIAN KENNY: Yeah. And we\u2019re going to talk about David Friend, who\u2019s a pretty interesting guy. He\u2019s the protagonist in the case. The case takes place in 2019. The company is just a little over a year old, but they have had an unbelievable launch. They are growing their customer base really quickly. Why is that often the time that you shouldn\u2019t make a change?<\/p>\n LOU SHIPLEY: Well, it\u2019s hard enough to just get moving in the right direction and beating all their numbers, beating all their revenue expectations ahead of what they\u2019d use to raise money from their investors. And it looked like everything was great. And by the way, walking around asking for money to say, \u201cI want to go compete with Amazon, Microsoft, and Google as a startup.\u201d Most people are like, \u201cHuh? Why do you think that\u2019s a good idea?\u201d But David\u2019s an amazing founder. He\u2019s sort of a national treasurer and he knew that through simplicity and the right sort of value proposition and really good marketing that there was a big market to have here.<\/p>\n BRIAN KENNY: I\u2019ve never thought \u2026 So I\u2019m a musician. Some of my listeners know that I\u2019ve talked about it before on the podcast. I never thought I would get to talk about Steely Dan in my podcast-<\/p>\n LOU SHIPLEY: Oh, there you go.<\/p>\n BRIAN KENNY: But we\u2019re going to talk about Steely Dan, which I\u2019m very excited about. Tell us a little bit about David\u2019s past and the way that he learned about sales and how that sort of affects the way that he thinks about this big decision that\u2019s in front of him.<\/p>\n LOU SHIPLEY: Yeah. And there\u2019s also kind of a link to the book, although I didn\u2019t profile him in my book. I thought it was sort of too close to since I\u2019m on the board. But he founded the world\u2019s first synthesizer company. So as you\u2019re saying-<\/p>\n BRIAN KENNY: He\u2019s so cool.<\/p>\n LOU SHIPLEY: So Steely Dan was an early customer of The Who, Led Zeppelin, all these rock bands.<\/p>\n BRIAN KENNY: The Rolling Stones, it was unbelievable.<\/p>\n LOU SHIPLEY: Rolling Stones were all early customers of his, and he\u2019s a Berklee school of music and he majored in music. And he\u2019s a real music aficionado. But he\u2019s done multiple startups. I think Wasabi is either his sixth or seventh, which he\u2019s partnered with his technical co-founders, a guy named Jeffrey Flowers, who\u2019s terrific technologist. And they always sort of go and look and see markets and say, \u201cI think there\u2019s an opening here if we positioned a product this way or priced it that way.\u201d And it\u2019s a big market. So cloud storage, object storage, it\u2019s a very, very large market. Each year it\u2019s growing by massive amounts. So it\u2019s not an issue of, is there a market here? Obviously there is one because there\u2019s not only the likes of Amazon, Google, and Microsoft in there, but there\u2019s EMC and NetApp and some of the traditional sort of bigger iron-on prem solutions as well.<\/p>\n BRIAN KENNY: I mean, David does talk about, back when he was selling amplifiers, sorry, synthesizers, it was important to him to have a direct relationship with those customers. He talks about getting a call at three o\u2019clock in the morning, I think, from Steely Dan. When they were unhappy.<\/p>\n LOU SHIPLEY: They were not happy.<\/p>\n BRIAN KENNY: They were not happy with the synthesizer. But I think that shapes a little bit the way that he went to market with Wasabi. And now he\u2019s thinking about embracing different channels, a different go-to market strategy. What should a founder be thinking about when they\u2019re faced with this kind of a choice? Something\u2019s been working really well. They\u2019ve grown the business significantly, but they\u2019ve got to think about whether this is the time to sort of go for more.<\/p>\n LOU SHIPLEY: Well, there\u2019s a couple of things, and you had mentioned sales at HBS. We have four sales classes at the school now for the MBA program. And we use Wasabi in the eSales 102, which is sort of scaling your venture. And the question is, \u201cDo you pivot to the channel or do you stay with what\u2019s working?\u201d But some of the challenges of doing this are understanding the economics of how much you have to pay a partner and how much the sales rep at the channel partner is going to make. And then how you communicate this change to your direct sales team, which is, by the way, doing very well in retiring quota. And they\u2019re like, \u201cWait, why do I have to go through a partner? I mean, don\u2019t you want me? I mean, I\u2019ve proven I can sell this and I\u2019ve got all these direct relationships.\u201d<\/p>\n So there\u2019s role plays we do in class of sort of, you\u2019re going to now tell your top sales rep that you\u2019re going to have to work through a partner. That always goes well.<\/p>\n BRIAN KENNY: And the case talks about some of the friction. So there\u2019s a lot of acronyms in the case. I might ask you to explain. So VAR is value added resellers.<\/p>\n LOU SHIPLEY: Value added reseller.<\/p>\n BRIAN KENNY: MSPs?<\/p>\n LOU SHIPLEY: Managed service providers. These are companies that provide IT as a service to smaller customers. So they will get used tools and then rent out basically functionality to help them manage their businesses.<\/p>\n BRIAN KENNY: So they\u2019re talking about sort of dis-intermediating themselves from their customers by introducing this third party into the relationship. What are some of the things that can go wrong when you do that?<\/p>\n LOU SHIPLEY: Well, you lose your relationship with your customer because now you have an intermediary in between you. So the play has to be that I\u2019m sure I can get a multiplier effect of these partners that can bring me new customers and not ruin my relationship with my existing customers. So you have to be able to build trust and to know that they won\u2019t somehow ruin the relationship the customer has with you, like the experience the customer has with your technology. The minute you put somebody in the middle of that, you might be taking some risks. So that sort of needs to be addressed by what kind of partner program you put together. And Wasabi did a terrific job doing that, but there\u2019s things that can go wrong.<\/p>\n The other thing that\u2019s tricky is it\u2019s hard enough to teach your own sales team in a startup how to sell a new and emerging product. How do you teach somebody from a different company to do it and do it well?<\/p>\n BRIAN KENNY: Right. And they\u2019re not just selling your stuff necessarily. They might be selling other products from other firms and they need stuff, right? They need training materials, they need marketing materials, they need all kinds of tools and support to be able to do this. It sounds like it\u2019s a big added burden on Wasabi to be able to sort of build that whole infrastructure to support that.<\/p>\n LOU SHIPLEY: No, there is. And what\u2019s interesting about this, Brian, is that companies that grow up with a sort of a direct sales culture develop the sense of, we know how to sell it direct to our customers. And I went, I grew up through a number of different fast growth companies that would get to a certain point where we realized we can\u2019t just keep adding sales reps, we need to have partners. And the cultural shift in the sales organization is very, very difficult there because oftentimes the direct salespeople don\u2019t want to embrace this other route to market and they say, \u201cWell, am I going to make as much money as I used to or am I going to have to share my deals with other companies and that sort of thing?\u201d So you have to deal with those issues. And so it\u2019s sort of fraught with peril.<\/p>\n And on the flip side, the partners know if you\u2019re originally a direct company, they\u2019re always going to wonder if you\u2019re going to cut them out of the big deals when they happen and say, \u201cOh, you\u2019re just looking at me for getting new deals, but when a big one comes along, you\u2019re going to cut me out.\u201d And so that\u2019s a really important how you develop your program, how you communicate it to your partners, and how you execute that in the market.<\/p>\n BRIAN KENNY: So we know, because you wrote the B case, spoiler alert, we know that this worked out pretty well, but I\u2019m wondering if you can think about, reflecting back on the steps that David and the firm took, what did they do right? How did they make this happen in a way that worked out?<\/p>\n LOU SHIPLEY: So what they did well, they did a lot of things well. It\u2019s really a textbook case in building a channel program, but they did the things that most companies do wrong. They did them right. The first thing is they figured out how to avoid channel conflict. So they got their direct team to embrace working through partners. Now they had to raise their quotas because they\u2019re going to be taking on more companies that could help them sell. So the sales team sort of went along with it and was excited. And then they did a really good job of enabling the channel partners on learning how to sell. And what they found, which is really interesting is \u2026 I\u2019ve done this many, many times. And what I found is they discovered that the most important metric in seeing if they were successful was the, they called it the \u201cmean time to the second sale.\u201d<\/p>\n A lot of partners could sell the first time, but they wanted to see who could do it a second time relatively quickly because anybody can do one deal. But then if you get a second and third and a fourth, you realize now you\u2019ve really convinced that partner who has access to this big swath of market to bring you in and attach you to their core business. So understanding what it took to get to that second order and make sure they got paid properly, making sure they were recognized and compensated well was one of the big keys to showing that it could work.<\/p>\n BRIAN KENNY: Yeah. The case also gets into some of the complications of doing this on a global scale, but the cloud storage market is a global market. They\u2019re up against global organizations, so they kind of have no choice but to go there. But it is a little more complicated because these global markets have different requirements and regulations where it comes to data storage. Can you talk a little bit about how they manage sort of the channel sales in those markets?<\/p>\n LOU SHIPLEY: Yeah. I mean, I think traditionally a lot of US tech companies will assume we\u2019re going to start overseas with partners and maybe even exclusive partners. And so with a US sort of direct mindset, early on it\u2019s like, I\u2019m pretty sure we\u2019re going to go channels internationally, but one of the things Wasabi did well is they did it very well domestically, so that worked. On the international front, they were able to close a couple of anchor tenants into key markets. So you get NTT in Japan. So you go and you work with like the biggest company that, by the way, is competing with Amazon and wants to see a way to grow their business. So they closed a couple of really big partnerships in really big markets that helped them get a footing in those international markets and then expanded to multiple resellers after those original exclusive relationships.<\/p>\n BRIAN KENNY: Yeah. And then the case also talks about how they started to think about OEMs to maybe working with OEMs, which seems like quite a different set of challenges than you might encounter just through channel sales. Can you talk about that?<\/p>\n LOU SHIPLEY: Yes, absolutely. And I think one of the key learnings in the class, and this is how we sort of teach it in the MBA class is, if you\u2019re a founder of a company, it\u2019s incumbent upon you to make your first sales because a channel partner\u2019s not going to believe you if you don\u2019t have any of your own customers. So once you get some of your own and the channels start to realize, \u201cOh, there is something here. Maybe I need to get involved.\u201d You have to build your own credibility, then you build the credibility with them. And once you can do that, then it can maybe be a next step to an OEM deal where you have really large providers like an IBM or a Dell or companies like that, that then want to embed your product into their own. So it\u2019s a real trade off both in terms of scale that you get and margin that you get, but it gives you wide distribution and it gives you access to multiple market segments.<\/p>\n BRIAN KENNY: This is a little bit like the Intel inside idea-<\/p>\n LOU SHIPLEY: Yeah, exactly.<\/p>\n BRIAN KENNY: Where they\u2019re sort of powered by \u2026 It\u2019s a great transition though, if we want to switch now to talking a little bit about the ideas in your book, congratulations on that-<\/p>\n LOU SHIPLEY: Thank you.<\/p>\n BRIAN KENNY: By the way, huge accomplishment to get a book published.<\/p>\n LOU SHIPLEY: Thank you.<\/p>\n BRIAN KENNY: You do talk about in the book how the founder has to be the company\u2019s chief salesperson. They\u2019re sort of setting the example out there. Talk about David Friend and his sales acumen and how he exemplified that at Wasabi.<\/p>\n LOU SHIPLEY: Well, one of the things we teach in our sales 101 class, which is founder selling is we teach, we sort of basically try and have the students unlearn what they think sales is and we teach-<\/p>\n BRIAN KENNY: What do they think it is?<\/p>\n LOU SHIPLEY: They think it\u2019s presentation. We call it \u201cshow up and throw up.\u201d You\u2019re just pitching. You\u2019re just pitching. It\u2019s like get the pitch, present. Sales may even be like coercion or if I\u2019m really good, I can convince you. And what we teach is, no, it\u2019s active listening. And so David was seeing that he was having trouble getting to certain markets. So he went to a trade show and he talked to a sales representative from a value added reseller. And that sales representative said, \u201cI can see why Wasabi makes a lot of sense for my customers, but I don\u2019t get paid the same way if I sell some cloud storage as I do if I sell an EMC piece of iron. Can you solve that for me?\u201d So that\u2019s when David came to me and said, \u201cHow should we think about this?\u201d<\/p>\n And David had found out after having closed the original first customers directly that this route to market, there was a problem here. So we had to figure out, how do you make sure that that sales rep at a value added reseller gets paid at least as much to sell you as the easier product to sell? So what\u2019s interesting about this is that when you go to a new market motion, it affects everything in your company, including pricing. They came up with a whole new pricing SKU, shelf keeping unit, to address this called reserve capacity storage. So instead of having customers buy it as they used it, which was sort of the brilliance of the cloud, you pay for what you use.<\/p>\n They basically said, \u201cWell, you can sell it to a customer and if they get a terabyte of storage, if they don\u2019t use it, they still have to pay for that.\u201d So reserve capacity storage was this new product they came out with and the value added reseller could make as much or more selling that than they could selling EMC or NetApp. And so they switched over because it was cloud, it was where the customers wanted to go. So the whole concept of active listening was what David realized there\u2019s a problem here. How should I think about this? How do I listen to my customers or my customer\u2019s customer or my customer\u2019s partner and come up with a solution to solve that?<\/p>\n BRIAN KENNY: Is that the whole idea of secondhand knowledge as you talk about it in the book?<\/p>\n LOU SHIPLEY: Secondhand knowledge is also, if you don\u2019t have direct experience with a problem, the first chapter of the book\u2019s called The Problem with the Problem<\/em>. And so oftentimes I profile Bill Warner, the founder of Avid Technology. I noticed you guys have an Emmy here. Congratulations.<\/p>\n BRIAN KENNY: Yes, thank you.<\/p>\n LOU SHIPLEY: Avid had Emmys, but Bill really viscerally understood the problem of linear film-based editing and invented the digital non-linear editing system. So he really knew that problem. If you don\u2019t have that visceral understanding of the pain, the secondhand knowledge is that you need to make a lot of calls and build objective questioning to sort of figure out if your problem is really worthy of starting a company. And too often I\u2019d seen, as I created a new course at HBS for this, I\u2019d seen students come up with an idea, kind of fall in love with it, build a minimum viable product, get venture capital, and then try and figure out how to sell it. And I said, \u201cWhy don\u2019t we do this the other way? Why don\u2019t you figure out if this idea could sell, then we build an MVP, then you get financing. And by the way, once you\u2019ve done that, you know how to sell.\u201d So it\u2019s a sales playbook class that helps the students learn, figure out if this problem really is a problem worthy of your career.<\/p>\n BRIAN KENNY: Yeah. I mean, that sounds like a logical approach, but I\u2019m not surprised that most people come up with the idea first and they think, \u201cWow, this would be awesome,\u201d and then they want to pursue it.<\/p>\n LOU SHIPLEY: Not only that, because I\u2019ve done a lot of startups and writing a book is actually a little startup. It was an idea and now it\u2019s a book, but a lot of authors complain that the publisher didn\u2019t sell my book. Well, that\u2019s not your job. The publisher\u2019s job is to make the book, manufacture the book. Your job is to sell it. And it\u2019s just like a tech startup, like you might think you have the best product in the world and the world will beat a path to your door, but no, you have to develop a really good sales and go-to market motion as the founder. So that\u2019s why we really do teach that you\u2019ve got to learn this skill. People are uncomfortable with it, but so many times with students, once they learn what sort of modern sales is, they love it and they just want to spend all their time selling.<\/p>\n BRIAN KENNY: So who is an unlikely entrepreneur by definition?<\/p>\n LOU SHIPLEY: Well, I mean, in our book, and my co-author, Trish Favreau and I, kind of came up with a number of different people. You can be unlikely because of your background, you can be unlikely because of your business model. I\u2019ll give you an unlikely business model. One of the people we profile in the book in the marketing chapter is a guy named Scott Ginsberg, the founder of Titan Casket, which is the number one online casket.<\/p>\n BRIAN KENNY: Did not know that.<\/p>\n LOU SHIPLEY: Doing like over $10 million in sales online. He understood how casket sales work through funeral homes. He was in that business and one day he wondered, he had busted up his knee skiing. He was home on his couch and he\u2019s like, \u201cI wonder if I can sell one of these things online.\u201d And he did and then he was off and running. So unlikely business model. Most people wouldn\u2019t think. You could have an unlikely background. Another person we profile is a fellow named Marvin Pierre. This is in the fundraising section. And this is not a for profit. He runs a nonprofit and he understood the problems in the Houston education system that were really not helping people of color get through high school and college. So he opened a startup like school to help students get through high school and into college, but you have to do the same thing.<\/p>\n You have to come up with your idea, you have to get financing, you have to build your team, you have to deliver on the product, you have to get the students successful. So we wanted to highlight not just for-profit entrepreneurs, but nonprofit entrepreneurs as well.<\/p>\n BRIAN KENNY: And we know what it just takes. We know so many of these things are well-intentioned and people get started with it and they have a lot of enthusiasm and energy and most of them don\u2019t succeed for a lot of different reasons, right?<\/p>\n LOU SHIPLEY: Yeah.<\/p>\n BRIAN KENNY: So Unlikely Entrepreneurs<\/em>, I guess everybody\u2019s kind of an unlikely entrepreneur.<\/p>\n LOU SHIPLEY: Well, you know what\u2019s been really fun about this book is you read these stories and the way I position it is it\u2019s 17 different entrepreneurs we profile and it\u2019s not really highlighting sort of Silicon Valley AI billionaires. Not that I have any problem with them.<\/p>\n BRIAN KENNY: Sure.<\/p>\n LOU SHIPLEY: It\u2019s just that that\u2019s not what we\u2019re talking about here. This is like a woman who runs a tire store in the town next to me and her story. And when you tell those stories, what it does is it gets them inspired to think, \u201cMaybe I can do this. Maybe I can run a cake business or something that is my passion.\u201d One of the other people we profiled was a guy named Dave Picarillo who had a very successful career as a consultant and an expert, but he loved beer and he wanted to start a brewery. So he started Twin Barns Breweries up in Meredith, New Hampshire when he was in his 50\u2019s. So it\u2019s like entrepreneurship as a second act, as your passion. It\u2019s a very successful business. And a lot of people \u2026 There\u2019s research out of MIT that shows the best age to start a business is about 44.<\/p>\n The common approach is, \u201cOh, you got to drop out of Harvard and start your company.\u201d Well, actually people that are a little older have networks, they\u2019ve seen what doesn\u2019t work, they might have a little bit of money saved up. So the chances of success are a little bit higher, the older you are.<\/p>\n BRIAN KENNY: Yeah. I know the book talks also about being able to pivot. I don\u2019t know if what Wasabi was doing was considered a pivot or if that was more of a natural part of the evolution of the firm, but what does a pivot mean in the context of entrepreneurship to you?<\/p>\n LOU SHIPLEY: Yeah. And I would say Wasabi was not a hard pivot. When we say it\u2019s sort of a euphemism in tech, a hard pivot, it\u2019s like, you got to change your business model, you\u2019re going to fail, which is the group we profiled there was a company called Spoiler Alert. Two students of mine, when I used to teach at MIT, Ricky Ashenfelter and Emily Malina started and they had an idea for how to solve food waste as a problem using a software product. And they got a first customer, a really big one. It was a food wholesaler. And the problem was everyone was excited because it was a huge order. They couldn\u2019t get their second customer and they waited and waited and waited and waited. And finally they realized we\u2019re failing. We have to pivot hard.<\/p>\n So they changed who they were selling to, change the value proposition for the customer, still use the same product, it\u2019s still a software product that helped with food waste, but they aimed it at a different market segment. They went to consumer packaged goods companies and now they\u2019re growing like crazy, but they had to pivot hard. They had to make some hard decisions on employees and they had to reset the expectations from the investors and now they\u2019re very successful.<\/p>\n BRIAN KENNY: But back to your earlier point, that sort of requires an open-mindedness of vulnerability, I think, of saying, \u201cOkay, I wasn\u2019t quite right about this.\u201d And being able to kind of read the signals that you\u2019re getting from who you think your customers are, right?<\/p>\n LOU SHIPLEY: And it\u2019s exactly right. So it\u2019s this balance of people think entrepreneurs must just be the ultimate optimists. And I learned as a CEO, sometimes I was a little too optimistic and my board would say, \u201cI don\u2019t think so.\u201d So what you really have to be is the chief realist and you have to be optimistic enough to attract people to want to join your mission with you, but not so optimistic that you can\u2019t hit the numbers or can\u2019t prove that you\u2019re actually winning, you\u2019re on a track to have a right to exist and you earn your right to exist by getting customers, not by getting venture capital. That doesn\u2019t mean you have right to exist because you\u2019re out of the money if you don\u2019t learn how to close customers. But that was kind of what Ricky and Emily figured out and they needed to change and they needed to convince people in their company that you have to change.<\/p>\n BRIAN KENNY: How do you know when you\u2019re trying to grow too fast? Because you\u2019ve got investors and they\u2019re saying, \u201cHey, come on, we got to make sales. We want to get our investment back.\u201d At the same time, you\u2019ve got to kind of manage the growth and I\u2019m just wondering, how do you sort of gauge that?<\/p>\n LOU SHIPLEY: Yeah. Oh, it\u2019s a really interesting question. It\u2019s really hard. I mean, one of the things that you have to do is in the planning process annually is be as realistic as possible, but not too conservative. And it\u2019s a delicate balancing act because if you set a plan that\u2019s too high and then only say 10% of your salespeople make quota, you\u2019re going to have sales turnover and that\u2019s expensive. But if you don\u2019t make it aggressive enough, then investors aren\u2019t going to be interested because you\u2019re not growing fast enough. So it\u2019s a sort of a delicate balance. You have to learn how to figure that out. And it\u2019s not easy. I think it\u2019s sort of more art than science.<\/p>\n BRIAN KENNY: Yeah. So if you were advising somebody going through the same kind of decision that Wasabi was going through, because this was really a choice about, do we continue to grow at a managed pace? Do we continue to maintain those direct relationships that are so important to us with our customers or do we kind of go for broke? Do we try to blow this thing up?<\/p>\n LOU SHIPLEY: Yeah. So this is where I teach the founder selling class with my colleague, Mark Roberge and we talk a lot about some of what people think selling is, is we call it, selling from the inside out. So selling is about how a buyer wants to buy. In the case of Wasabi, it was really interesting. David ended up asking a lot of people, a lot of big customers, \u201cHow do you want to buy cloud storage?\u201d And a lot of them, not just little companies, but big, big companies said, \u201cOh, I buy through a partner.\u201d I\u2019d rather buy through a partner. So how does your customer want to buy?<\/p>\n BRIAN KENNY: Interesting.<\/p>\n LOU SHIPLEY: It sounds so simple, but oftentimes we miss it. It\u2019s in plain sight. You just have to ask your customer, \u201cHow would you like to do this?\u201d And they\u2019ll tell you. And so the vast majority of customers buy storage through a partner. You can sell it direct, but there\u2019s a much bigger market and a much way to get to multiple segments and use cases by going through partners.<\/p>\n BRIAN KENNY: And do you think that maybe\u2013speculate a little bit\u2013is that because we feel more comfortable telling a partner that we\u2019re not happy with something than we do telling the maker of the product?<\/p>\n LOU SHIPLEY: I don\u2019t think it\u2019s necessarily that. I think you were hinting at it before Wasabi figured out that they sell an ingredient. Like you can go to a grocery store and buy a cake, you can buy the cake all made, or you can go buy flour and sugar and baking soda, whatever it is to make the ingredients. So customers will go to partner and say, \u201cI have this problem. What do you recommend?\u201d And then the VAR, the value added reseller, creates a solution and sells, and Wasabi is an ingredient that\u2019s a part of an entire system and solution. That\u2019s kind of more, I think the reason there are basically trusted advisors out there that they work with, they have a long-term relationship with. And you as a startup, you can come along and get those, but it\u2019s just harder for you to go really wide and broad, especially with something like cloud storage, without those relationships that are already out there.<\/p>\n BRIAN KENNY: So in your experience, you studied everything from \u2026 Wasabi\u2019s a pretty big firm. I don\u2019t know how many employees they have-<\/p>\n LOU SHIPLEY: It is now, yeah.<\/p>\n BRIAN KENNY: But they\u2019ve grown fast and they\u2019re probably on the higher end in terms of size and scale, all the way down to these sort of independent entrepreneurs like the casket seller. I mean, that\u2019s a tremendous breadth to be looking at as you\u2019re thinking about what you want people to take away from both the Wasabi case, but also the book. What are some of the ideas that you want people to really grasp?<\/p>\n LOU SHIPLEY: Yeah. So back to why I created that class that was called, I called it the \u201csales playbook class\u201d where let\u2019s figure out if you can sell it before you start the company. I don\u2019t care what you\u2019re selling. I don\u2019t care whether it\u2019s beer, sausages, caskets, software.<\/p>\n BRIAN KENNY: Beer and sausages could lead to caskets.<\/p>\n LOU SHIPLEY: There\u2019s a \u2026<\/p>\n BRIAN KENNY: There\u2019s a loop there.<\/p>\n LOU SHIPLEY: There\u2019s a connection in these businesses, but what happens is whenever you have an idea for a product, there is somebody that has a relationship with your core buyers that has influence and a trusted relationship. You have to find those people out and then sort of learn from them about what they think the ultimate user is going to be. So if you\u2019re selling to a consumer product good that has to sell through a retailer, you\u2019ve got to go sell Whole Foods because Whole Foods has the customer. So in every one of these, somebody has the customers, and in the case of Twin Barns Brewing, the grocery stores have it, the bars have it. So figuring out who has the access to the customers that you want is what this is all about. And it\u2019s so interesting because company\u2019s go-to market strategies morph and change as they grow. So Wasabi started direct and now it\u2019s got multiple routes to market and larger companies have that.<\/p>\n I guess one thing I would add is that I think there still is, especially in tech, a prevalence to think if I build something really creative, I work on the product and product and get the right product, that there will be demand for my product. And that may be the case that there will be some, but I\u2019ve worked in a lot of companies. The best companies have like the best technology and the best salespeople\u2019s best go-to market strategy. So it\u2019s working those together that I think is one of the reasons that the sales classes have gotten very popular here is a lot of the students here are now founding their own companies and they realize they have to learn how to sellThere\u2019s a misunderstanding of what sales is out there. And so we teach them a skill and then we teach them how to scale and move it to the next level as well.<\/p>\n BRIAN KENNY: Yeah. And I would say salespeople don\u2019t get the best representation in modern culture.<\/p>\n LOU SHIPLEY: Exactly.<\/p>\n BRIAN KENNY: If you look at the way salespeople portrayed in movies and things like that, they\u2019re usually not portrayed in the most positive light. So you\u2019re helping to put a new face on sales and the book is called Unlikely Entrepreneurs<\/em> available now.<\/p>\n LOU SHIPLEY: It\u2019s live now. Yeah.<\/p>\n BRIAN KENNY: Awesome. Lou, thanks for joining me.<\/p>\n LOU SHIPLEY: Yep. Thank you very much.<\/p>\n BRIAN KENNY: If you enjoy Cold Call, you might like our other podcasts: Climate Rising<\/a>, Coaching Real Leaders<\/a>, IdeaCast<\/a>, Managing the Future of Work<\/a>, Skydeck<\/a>, \u0438 Think Big, Buy Small.<\/a> Find them wherever you get your podcasts.<\/p>\n