 Live from the Moscone Center, it's theCUBE, covering AWS Summit San Francisco 2018. Brought to you by Amazon Web Services. Hello everyone, welcome back to theCUBE's exclusive coverage here in San Francisco. I'm John Furrier, Stu Miniman. This is Amazon Web Services AWS Summit 2018. And we've got two great guests, Dave McCann, the Vice President General Manager of AWS Marketplace and Service Catalog and Matthew Scully and is the CEO of Metlion, partner of Marketplace. Guys, thanks for coming on, good to see you again. Thank you. All right, so Dave, Marketplace is doing phenomenal. Well, we talked with Lou Cernay from New Relic at ReInvent. He was talking about how successful they've been on the Marketplace. So clearly it's working 170,000 active customers on stages, so the keynote today. What's going on with the Marketplace? Take a minute to explain how the Marketplace is set up now and how it's evolved to this point. Thank you. So great to be back. Can't believe it's four months since ReInvent. So Marketplace is a digital library of software. The cloud is helping our customers innovate faster, but you need to be able to innovate with the software, not just with the compute and the storage. And so our purpose is to stand up a digital library of software for our customers to subscribe and launch. And we're continuing to grow on multiple dimensions. We've deployed out to all the new standard regions. So we're now up in Korea. We're clearly in LHR. So in all the standard regions, we've put Marketplace. And then we continue to expand the library of software. So more and more companies like a Matillion publish into the library. We're over 1,300 software companies now and we're over 4,000 different software titles. And you know, our customers show up. They're typically a developer or a manager with a project, with a budget. And they're looking for the best tool that they can keep their project going on schedule. And just to make clarification, nuances, I know it's commercial and is there a public sector version or is it all one? That's a really good question. We actually launched Marketplace last August in our GovCloud region. So we do actually operate a GovCloud region for our US government customers. And we actually operate a separate Marketplace for the US intelligence agencies. So that's the library of what we're doing. And we continue to grow, and as Werner said this morning, a bunch of new stats. The business model, obviously, people see two things happening. I want to get your reaction to. One is Werner Vogels laid out how services are going to be laid out all over the place. And it's not monolithic, as he says. It's all a bunch of services. Scale is a huge factor in enabling that. And also the business model changes are going on. We're seeing people be successful. How are your customers and partners using Marketplace today? How does it work? Do they just call and say, hey, Dave, I want to get in the Marketplace? I mean, actually downloading services and enabling services makes sense. How is it working? What do they do? What's the model? So let's start from the customer and work backwards. Amazon talks about working backwards on the customer. So typically in a company, there'll be a set of developers who are building on us and there'll be a set of architects. Very often they have a few cloud architects. And across a set of software, networking, security, database, data analytics, BI, DevOps, all the way to business apps, there'll be a set of architects saying, what's the best software as we move to the cloud? Do we bring what we had or do we buy new? So the architects are recommending to the developers, hey, for your project, here's a good tool. So in the buyer, architects are recommending and then the developer gets told, you can use these vendors. On the seller side of things, software companies like Matillian have to decide how do we reach the AWS customer? And then they have to package up their software, put it in our library and make a bunch of decisions that he can talk about, and then they make it available. Yeah, Dave, it's been interesting to watch kind of the maturation of the marketplace. It's been large for a number of years, but how your partners have changed how they package software. Last year there was a discussion that changed how billing is done so that Amazon can help make it just seamless for customers, whether they buy service from AWS or beyond. Give us, you used to talk about the customer and the partner. Walk us through a little bit of that maturation and how that's gone. So we're a six year old service and so we're agile, we keep to releasing features. So last year in April at San Francisco with Splunk we launched something called SAS Contracts which was a new API for SAS vendors and now we have over 300 SAS companies in the last year that have developed to that API. So a software vendor can decide that I want to deliver as a software package or as an AMI. So it could be SAS or AMI, and we also provision APIs. So we're constantly introducing flexibility on how that vendor can price and package. And the more we innovate, the more software companies use our features. Yeah, I'm sure you get asked what's the concern, is there concern from some of the SAS players that, oh, I'm going to go in there, I'm going to price and package the way Amazon does. What's to stop them from just kind of duplicating what I'm doing and becoming a competitor? You know, that question comes up a lot. And you know, look, the software industry is $550 billion. It's growing at 6% a year, which is $30 billion. And AWS, like last year, did about $18 billion. So the software industry is growing by an AWS a year and the reality is there's so much innovation going on that whatever innovation we're doing, you know, there's lots of room for other software vendors to innovate on top of our stack. We live in an expanding universe. Stu and I always joke it's like so funny when you look at the, we watched all the cloud, your competition, you Google, Microsoft, and Oracle, IBM, whatever. And they all quote numbers. If you factored in the ecosystem in your number, the cloud revenues would be, I mean, trillions. So, you know, you guys, I know you don't include that in the numbers and Microsoft does put office in there. So it's kind of apples and oranges. And so, you know, Matthew, I want to ask you because you're a partner, you're doing business on that. So this is the formula that we've been seeing that's been working where the ecosystem grows, rising tide floats all boats. Clearly that's Amazon strategy and they're opening up their platform to partners. So talk about what you guys are doing. First, take a minute to explain your company and then talk about your relationship to the marketplace and how that's working and the relationship, how you make money and the business model behind it. Yeah, sure. And thanks for the question and for having me. So first of all, Matillion, we're a software company and ISV. We make cloud native data integration technology, purpose built for this new generation of cloud data warehouses. For us, that's Amazon Redshift, it's also Snowflake and we sell both of those products on the AWS marketplace. So customers are using it at any time when they want to compete with data to drive product development or service their customers better. Or in fact, become more efficient in the way they run their IT infrastructure, perhaps migrating an on-premise warehouse into the cloud. So we developed that product through 2014-15 and we were looking for a route to market. Been honest originally, we were going to set it up as a SaaS business and I saw a pitch from one of Dave's reports, a guy called Barry Russell, talking about AWS marketplace. And we're like, okay, here's a platform that's going to allow me to deliver my software anywhere in the world to any AWS customer pretty much instantly. More to the point, it's going to deliver my customer a really excellent experience around doing that. From a performance point of view, my software is going to go into their VPC, sat right next to their data sources in their Redshift cluster. From a security point of view, that question, very important in data integration just taken totally off the table. It's all inside their firewall, inside their VPC. And of course, super convenient and simple to buy. Just access AWS marketplace, pay with genuine cloud economics by the hour and stand it up, pay off your AWS bills. So a really compelling way to deliver the software. Was there a technical integration required on your end? I mean, like there's some clients that are born in the cloud of Amazon. Some have built their own stuff. Do you have to, when were you guys fit into that one? Are you using Amazon? If not, was there any integration piece that you had to do? And if so, what was the level of work required to integrate? Yeah, and to be honest, I think this is the key question on how to be successful selling in this kind of landscape of public cloud vendor marketplaces and the public cloud. So I mean, we're a born on AWS and in fact a born on AWS marketplace product. And that intersection of product engineering with the route to market. And it's not just the software, it's also the things you surrounded with like great quality content, online support portal videos, a really great launch experience. That means you're going to be clicked to running our software, commercial grade ETL tool in under five minutes, free for the first 14 days and then by the out billing, you know, there's a lot of different angles that go into that. And you've absolutely got to be thinking about it. Other people are being successful just kind of sticking their products on the marketplace and using it just as a billing mechanism. But I think for us, one of the reasons we've been able to drive great customer resonance and growth is having that intersection of engineering content and the marketplace together. Matthew, I want to have you talk to me a little bit about Matillion because when I think about kind of customer acquisition, you know, data warehousing market's been around for a long time, Redshift's been doing phenomenal. I mean, for a while it was the largest, you know, fastest growing product in the AWS portfolio. Being only through the marketplace, does that, you know, how does that help you get customers? How do they learn about you? Do you ever worry about like, oh, will they just think I'm in Amazon service? Maybe that's a good thing. You know, I'm just curious about kind of that whole go-to-market and relationship with the customers being, you know, super tight with AWS. You said Snowflakes in there too, so I'm just curious about that dynamic. Yeah, I mean, the AWS only service thing, that historically was a pro and a con. So back in the day, we were just Redshift. We're now a couple of other data warehouses as well. You mentioned Snowflake, that's quite right. So that's allowed us to kind of move up the value chain with our customers and give them some choice, which they wanted. Yeah, I think in terms of the go-to-market economics, I mean, we all say this, sometimes it's glib, here I think it's authentic, you want to start with what's best for the customer, right? And so we're delivering with genuine cloud economics. Our product starts at $1.37 an hour and yet it'll scale to the world's largest enterprises. And if they don't like it, they can turn it off. Typical SaaS products, you're actually signing up for 12 months. So you're not that focused on keeping your customer happy for 11 of those months. For me, I need to keep that customer happy 100% of the time because he can turn it off any time he likes. Yeah, yeah, I always wonder sometimes as an analyst, should it be called a SaaS product if I'm signed into a year or multi-year contract? Yeah, yeah. So a really interesting dynamic of our business is our entire revenue drops by 15% Saturday, Sunday. And it's cause people are turning off their instances, they come back on Monday morning. I was the CEO, I could worry about that and say, where's my 15% gone Saturday, Sunday? Actually, I'm delighted, because it means my customers are only paying for value they're getting out of the product. Yeah, and let's talk about the business model too. I want to drive into that. I want you to explain and give some color commentary to what your choice was, if you didn't have the marketplace. Hire a sales force, that's going to cost you some money. First, we'll find people, push it out to customers, run ad campaign. Did you guys do the analysis and say, whoa, this is like A, B? Well, so when we launched this product, we were a 12-man company, so I'm not going to say that we rolled in our management consultancy to work that stuff out for us, being honest. But we took a view. I think there'd have been two big things. First of all, in those very early days when you're trying to find some product market fit, you're trying to find some customers, that global reach instantly led by the marketplace is amazing. So I'm from Manchester, UK, apologies for the accent. That's where a good part of our business is still based, although we have offices now in New York and Denver and Seattle as well. You drill a vertical hole downwards from Manchester, UK. You pop out in Melbourne, Australia. That's the first customer we picked up on AWS Marketplace. Still a customer today. So in those early guerrilla days. No travel, instant global footprint. And they were spending money with us before we spoke to them for the first time as well. So now today we do have a sales force, of course. But it's not a sales force that's closing big deals. They're being value-added and additive. They are escorting customers through the buying journey. And we've got just as many pre-sales guys as we have sales guys just helping the customer, because that's what we want to do. They're going to use the products and consume it because it's easy to do that and to turn it off. So you focus the high-value activities with the high-value employees on the right customer mix while the rest is just kind of working through the cloud economics. Yeah, that's it. Hey, we have to do marketing, of course. We're here doing an event. It's going great. We were lucky enough to be mentioned in the keynote this morning. So our booth has been swamped. And now you're on theCUBE. You're a CUBE alumni. Exactly, exactly. The world's going to, going public next. One of the things we do on the marketing front is when you come into Marketplace and you talk about how we onboard a seller, we have a whole team who we call category managers. And so there's an expert over each subject area, such as data analytics or networking or security. And we not only give them the engineering advice on how to package and how to onboard. And by the way, we then curate and manage. So we publish Hisami and he tells us what regions he wants it to go to. And so he may say, clone to Korea, but I don't want it over here. So the seller could decide geography. But then we lay on a business go-to-market plan and we actually develop a joint go-to-market. And so we'll do co-marketing with our sellers. And they can choose whether it's by country, by territory, is it large enterprise, is it small business. So there's a set of business advice that we want. So you're probably some best practices in some market intelligence on the portfolio side. Exactly. In the sector. Yeah, and then we have all the data, right? So we provide these guys with a real-time API. They're pulling data off the API every day on what's happening. And so we're monitoring that data and everything's measured. So this is a digital channel. And then of course the ultimate thing we do when I run my last SaaS company, we provide a billing platform. And so the buyer comes in on the AWS account, uses the AWS account. So now we bill on behalf of, we do the collection from the buyer and then we disperse the funds back to the vendor. You're making the market for them. And they're still doing their blocking and tackling. The customer gets a really good experience on their bill. And then the customer spend actually becomes visible in cost explorer. So we've tagged everything. So we also tag it so that it's, this is Matillion. And so the customer knows, ah, I'm spending much on X amount of dollars on Matillion on that stack. So your sales channel and you're adding more value. Matthew, if someone asked you to say, I say, hey, Matthew, look, I got a great product and it's kicking ass. I want to get into marketplace. What do I do? Advice would you give me? What would you say? Ah, I'm skeptical of Amazon's marketplace or hey, I really want it. How would you talk to those two tubes of audiences? Yeah, so I think the first thing and we alluded to earlier is I think really hard about that 360 experience of packaging the product and how it's launched. That's engineering in the software itself. You need to think about how the customer is going to interact with it. But you also need to clothe that software with great quality content and support. Finally, the right type of go-to-market motion around that. And one of the big benefits for us in terms of the AWS marketplace has been the efficiency of the sales model. So we've got really efficient go-to-market economics and also the types of customers that we sell to. And we, for a company of our stage, you know, we're a post-series B high-growth software company, but for a company of that stage, we have a disproportionately high number of global 8,000, global 2,000 customers because marketplace takes away the barrier of selling into those guys. So as advice on how to be successful, I'd focus on that packaging side and advice as to why to do it. You've got instant worldwide reach into the traditional stomping ground of the startup of the tech vendors, but also into the world's biggest software users. A virtuous circle, faster to the customers at a lower cost structure. You still make money, everyone's happy. Sounds like the Amazon business model. It is, great customer experience, great selection and, you know, adoption by the customer. And then continued innovation. Another thing that we do is we have a portal where these guys are publishing new versions. So it's not a one and done model. So as these guys update their models, their engineers just publish into a seller portal and then that new version comes in and then we publish that new version out to the customer. So there's a refreshing of the AMI so the latest version is up there. And Werner's keynote today really highlighted, it's not just about developers anymore, it's what the business teams coming together, pushing stuff real time to the marketplace is now a business ops model. And it's really kind of coming together with entrepreneurial traction and the footprints, the gateway to the world, you have a world footprint. It's 21st century software distribution and really the buyer gets the ultimate choice. And you know, the buyer can go for an annual contract or for by the hour. So economically, lost a choice. All right, so I'll put you on the spot to end this segment. I'll be a naysayer. Dave, you got competition out there. What's in it for me? How do you compare vis-a-vis the competition? You're a software vendor? Yeah. As you're playing the persona of a software vendor. I'm a software guy, I'm looking at marketplaces. Why you guys? You have to go where the customer is. Ultimately you have to decide who your customer is. You know, Werner talked this morning about the tens of thousands of companies that are up on EWS. And so if I've got 170,000 buyers showing up at my marketplace and they're intentional on their budget and you're a software vendor, you get reach. And given what Gartner says on where we are on fulfilling share in cloud, it's where the customer is. And if you're a service too, a software service, APIs, it's even better goodness there. Yeah, we have thousands of consulting partners that also use Marketplace as a library. So if you're an SI and we have tens of thousands of SIs, those SIs also view Marketplace as a good place to find software for the project. You've been in this business for a while. I mean, we always talk about this in the queue, so I want to ask you real quick. I mean, more than ever now, ecosystems and communities are paramount priority, especially with this kind of dynamic. Because that ecosystem is that fabric to enable, you know, go to markets that are seamless with economic scale, visibility into the numbers. What's your reaction when someone says that comment to you about community and ecosystem? Well, you know, an ecosystem is a collection of software companies that interoperate. And the reality is that our customers are rewriting all the software. The world is rewriting its software portfolio. You know, a large customer I went to see recently has a thousand software applications. Now as they move them all to the cloud, they're either rewriting or they're modernizing, but as they rewrite them, they're going to use distributed services, they're going to use microservices, and so they're refreshing their entire stack. Yeah, so replatforming of the internet. Transformational. Dave McCann, who runs the Marketplace for AWS, really kicking butt out there. Congratulations on your success. And I know there's a lot more to do. We have more time. Love to do a follow up with you and find out what's going on in the Marketplace and Matthew and a partner. Congratulations. Hypergrowth hitting that trajectory. Congratulations, we'll come visit you in Manchester and then we'll drill a hole and go to Melbourne right down there. Appreciate it. Thanks for coming on theCUBE. Thanks. I'm John Furrier with Stu Miniman, more live coverage after this short break. We are in San Francisco, live for AWS Summit 2018. We'll be right back.