Transcript
Hi there. Welcome to our Channel Futures webcast, Why Alienated VMware Partners Need to Know About Scale Computing, sponsored by Scale Computing. If you have any technical difficulties during the session today, please press the help widget on your console to get assistance in solving common issues. And then if at any time you're having audio difficulties or problems with advancing the slides, please hit your F5 key to refresh the webcast console. I'm Kelly Teal, Principal of Creative Energy, LLC, and Contributing Editor to Channel Futures. And today I am joined by Jeff Reedy, CEO and Co-Founder of Scale Computing. Hi, Jeff. Thanks so much for being here. Hey, Kelly. Thank you for having me. Absolutely. Let's get into some good discussion here. We're gathering because Broadcom is moving VMware partners' cheese, for lack of a better way of putting it. So Scale Computing wants to talk about how it's here to help those alienated partners. And so before we get into the details around the channel program and your company's partnering ethos, let's start with some conversation on the company itself and the technology. So first, I'd like to understand how long has Scale Computing been in business and with what goals that are pertinent for channel partners to understand? Sure. So Scale is working on its 16th year in business. I am the founder as well as the CEO. So 16 years ago, Scale was in my basement. Now it's gotten a little bit bigger than that. I think one of the things about Scale that is important for the channel to understand and frankly, for those that many channel partners obviously have interoperated with startups over the years. And one of the things that made Scale different, even as a startup, is that I did structure the company to be channel first and channel always. So we always sell through the channel. And the reason that's unusual for a small company is that the channel is a huge investment. Building that channel, building that reputation, right? I mean, a partnership is more than just saying, hey, here's a product which I can go out there and sell. It's, you know, do I trust the company? You know, is this relationship going to work? And believe me, over the years, I had more than one investor or board member look at me funny when I would explain why we were, you know, quote unquote, giving such a big percentage of the margin to partners. But that has paid off, right? I mean, Scale is here today. We have a robust channel program and I'm very proud of that partnership. So that's always been the key to us. I think that probably at no time has that approach been more apparent than now with the Broadcom VMware news. I'm excited to get into some more details around the partner program and the channel philosophy at Scale, because that's critical to what VMware partners are experiencing right now. So in a little bit of a different twist here, let's start with the technology aspect and talk more about which part of the VMware stack does Scale computing replace? Yeah, so going all the way back, even when I started the company, I started the company sort of generically as a VMware alternative, but really what I viewed as a VMware upgrade. And the idea behind Scale was that it does replace, you know, the majority of the core of the VMware stack, right? So it is Scale, our product's called SC Platform. It is a platform for running applications in whatever form those applications may come. What makes Scale unique is that the entire solution is built on an AI ops model. I like to say I was doing AI before it was cool. And so that model is designed to augment or even replace the need for on-site IT personnel at the end customer site. And so the system is looking for the patterns that indicate something is wrong or going wrong with the underlying infrastructure. And then we'll take the asynchronous actions that an IT administrator might take to try and correct those problems. All in the name of delivering high availability to the applications, right? So that's the part of Scale that's unique. Now, what's built on top of that is virtualization, containerization, hyper-converged storage, you know, all of these sort of core components. So when you think of the VMware terms, ESX as the virtualization, you know, stack as well as vCenter and all of that, all that's effectively, you know, some equivalent of that is built in to Scale, but this AI model to, you know, really make high availability automatic and to create this very robust system, that's what is unique to us. Okay. That was really thorough. And I think that probably a lot of attendees are going to be excited about what they just heard. What end user size does Scale Computing target? So we really target users of all sizes. I think that one of the things that was maybe, again, more unique to Scale early on is that we openly embraced mid-sized companies right from the get-go. And this is an area that for one reason or another, I often see companies either not focused on or they are, but they won't talk about it, maybe because they only like to talk about the big enterprise customers. And believe me, I love talking about big enterprise customers. I mean, we can go all the way to, you know, I have a customer in Las Vegas with 12 petabytes of storage, just that's a way to size it, right, running on Scale. We have a number of major airports in the US that run on Scale, right? These kinds of environments are common for us, but at the same time, you know, I've got your local school district or a lumber mill or a machine shop runs on Scale. And, you know, again, what's maybe different about our approach is that the product offering is identical across all of these customer segments, right? So it isn't that, you know, that lumber mill is getting a lesser version than, you know, the major US airport is getting. That's not the case, right? They're getting identical solutions, just effectively running at a different scale, right, hence the name of the company, right? So we do Scale down as well as up. I mean, I'll hold up to the camera. We, you know, this is an Intel NUC device. We can run on one of these, right? So that'd be the smallest deployment we have is somebody who runs one of these all the way through big, you know, multi-rack, you know, data center-esque deployments. And that's important for the channel because, you know, many channel partners do serve a wide variety of customer sizes. And this is something that sort of can apply across the board, right? Am I expecting Scale to be the best solution in every single use case? Of course not, right? But to know that you've got that flexibility to go small, to go big, and everything in Okay, that was really important. I'm so glad we covered that. You're right about the mid-market. How does licensing work? So we generally license in one of two ways, either on a core basis in terms of the number of cores in the server or on a site license basis. So one of the interesting things that we've seen is that depending on the nature of either the customer or the partner, one of those two options might make more sense than the other. So as an example, if an end customer was looking at deploying something that we would now categorize as edge computing. So perhaps they're a retail chain or a factory, and they're going to have lots of small deployments that make up their environment. It can very often make more sense to do a site license because perhaps at each of those deployments, they're only running one or two or three workloads, right? So you wouldn't want to pay for a whole bunch of cores that weren't really being used. So we can go on a site license. On the partner side, many of our partners are MSPs. And those MSPs themselves may be using Scale for their own systems, deploying Scale at their customer sites. And in that case as well, going on a site license versus a core license can make more sense. In the what I would call traditional use case, I have a data center, I have a server room, whatever it may be. I'm one or two locations. Probably the core-based licensing makes more sense. So we're fairly flexible there. The last thing I'll say is that for MSPs specifically, we also have consumption-based licensing available that's billed monthly. And we did that entirely to match the business model of the MSP. And we just effectively changed the way that we bill to match the way that they bill to align ourselves with the channel. Again, that channel-first mentality. Mm-hmm. Yeah, that's exactly what I'm picking up and also hearing just a breadth of flexibility here and ability to accommodate different needs, which is always welcome. Let's talk about what it takes to migrate from VMware to scale computing because partners really need to understand what challenges they might encounter with their customers and so they can plan around those issues and also just in general what it takes. Yeah, so this is always the second thing that we get asked, right? The very first thing is, okay, what is scale? Does it work? Will it work in my environment? Can it replace my VMware infrastructure? So the answer to that is yes. And then the second question is, okay, how do I get from A to B? Because it can feel like a heavy lift. And we have a number of different options. There are features built into the product where you can actually direct import a virtual machine or a virtual disk from a VMware or other environment into scale and have it converted into that format. We also have a tool called SCMove that allows you to actually in effect live migrate workload. So if you had an application which could not have downtime, and this is often the big challenge, right? They think I've got just 20 applications, 19 of them I can shut down and import and that's easy, but I've got this one that I can't turn off for one reason or another. So what we do with the SCMove product allows us to do is effectively set up the scale environment as a replication target for your VMware environment. You replicate like you were doing disaster recovery over to scale. And then when it's all caught up, you fail over and you just never fail back. So we've got that option as well. The third option, and this is something that we train partners how to do or for those partners that this just isn't their cup of tea, we can do it on behalf of the partner, which is we can actually do a white glove service where we or our trained partner can do the migration for the customer. So there's lots of different ways, right? There's a do it yourself, there's use a tool or there's have us or our partners do it. And again, for those partners that make a business in these kinds of services, we have advanced training for them so they can become experts in how to migrate workloads. We migrate from VMware to scale. We migrate on the order of 20,000 plus workloads a year on behalf of our customers. So we've seen that you can never in IT, you can never say you've seen it all because there's always something else, but we've seen most of it, right? We've seen most of it. And so you've got all those different options to make it easy. And did you want to talk about the new partner, the promo that you're offering? Sure thing. So one of our new promo is our VMware rip and replace program. So for partners who are bringing customers to us who are currently on VMware, we're giving an additional 25% off to the partner. Now the partner can use that obviously to pass savings along to the customer, increase their own margins. It's designed to really, it's not just to incent the partner as a way to get that customer over. But I understand that a partner who's not currently a scale partner has some learning to do, right? They have to invest in the partnership. They need to spend time. And so this is a way to offset some of those sunk costs that they have when they onboard any new vendor like us. Excellent. Okay. Let's talk a bit about how scales platform might offer a more future-proof solution compared to others on the market, including VMware. Yeah. And this is where I kind of go with this theme of, it's more than a VMware alternative. It's a VMware upgrade, right? So part of that is this AI foundation, which we already talked about. But one of the things that's happening, and for anyone who may have followed scale over the last, say, four years, is the rise of what we now call edge computing, right? And edge computing simply means computing outside the data center. So just like the cloud means somebody else's data center, edge is a fancy marketing way of saying not in the data center. And effectively, you're going to run applications closer to where data and so forth is being generated. This is a big trend, right? Folks like Gartner say that by 2027, I think that 75% of workloads are going to be run at the edge. So the move from the data center to the edge is faster than the move was from data center to the cloud. And that is a major, major opportunity for channel partners, right? Because it kind of makes your local value-added consultative partner cool again, right? It's not just that they're a front end for Azure or for AWS, right? Like, this is hands-on stuff. And so, you know, and one of the things that customers are scared about is, well, I don't want to go back to, you know, 1998 and, you know, managing all this on-prem infrastructure. And that's where solutions like scale really shine. That AI ops model that I talked about, the self-healing nature of it, other features. other features like we call zero-touch provisioning where systems will set themselves up. You know, you just plug them in and magically all the apps are, you know, installed and so forth, right? That takes all that complexity out of that on-prem infrastructure and creates, in effect, a private cloud. And the other thing about this, right? There's, besides the trends that are driving the rise of edge computing, this is a way for customers to get on a track that will take them there, right? Not all customers need edge computing today. And customers are thinking, okay, you know, maybe now that this VMware isn't for me anymore, I should be thinking about edge computing. I should be thinking about, you know, what workloads am I going to move from virtual machines to container-based platforms and so forth. And scale can do it all. So we can catch the workloads you have today that are VMware and then also give you that path to a containerized edge computing future. Yeah, that's a really interesting roadmap right there. What am I not asking you about it that partners will want to know? You know, I think that the, you know, sometimes if partners haven't been involved in any of these kind of edge computing use cases, they might be a little skeptical, right? Many customers don't understand why they won't run everything in the cloud. And I can give you a simple, kind of a personal, silly example, but it's illustrative, right? So I, when I'm not CEOing, my, you know, my unproductive hobby is I have a big video game player and always have been. So in my basement, I've got a PlayStation 5. A PlayStation 5 is an AMD computer. It's an AMD CPU and an AMD GPU. And if I play any of the latest games, the latest Harry Potter game, that GPU will be maxed out the entire time I'm playing the game. Now, if I wanted to say, okay, imagine that kind of a workload, not that it's, you're going to play Harry Potter, but you get the idea, that kind of a workload. So an AI workload, a computer vision workload, these are the kinds of things that use GPUs. And if I want to run that same GPU and equivalent of it in the cloud, 24 hours a day, seven days a week, it'll cost me around 3,000 to $4,000 a month, right? So effectively, my choices for playing Harry Potter are spend $30,000 a year in the cloud or buy a $500 PlayStation, right? And it's like, okay, like what the heck? But those economics are exactly what the difference is between cloud and edge, right? And so these workloads are coming, everyone knows it. Everyone knows more AI workloads are coming. In retail, there's computer vision to detect shoplifting. In manufacturing, I've seen cameras being used to detect anomalies with parts or optimize how staff is deployed across their environment. And the cloud isn't a great solution for many of those kinds of workloads, and that's driving things out there. And then for those partners who really kind of pride themselves on, okay, here's the latest technology and giving their customers that future roadmap, think about if you have a larger customer, let's say it's a, I don't know, it's a retailer and they have 500 locations or 1,000 locations, and they are going to deploy four, five, six servers, maybe even just these little things, right? Four, five, six servers at each of those locations, right? All of a sudden, I have a private cloud that has 5,000 servers, right? So what other applications are you currently running in the cloud that could run just as well, if not better, on your own private cloud that has the resources of 5,000 servers, right? There are applications there, and you can really pull customers into the future, which is where it's all going, is true hybrid. The applications run wherever they make the most sense, and you've got, that could be the cloud, public cloud, that could be the data center, that could be the edge, wherever it may be, and that's what scale with our partners kind of can bring to the customers. So it's not just that I think scale has a great alternative to VMware, that we're a partner first and have this great program, but together with the partners, we really do pave the way for customers to go from where they are today into the next 20 years of computing. I appreciate that. That was a really great explanation. Before we move on to talking more about the partner side, is there anything I haven't asked you about scale computing or the platform itself that you want partners to know? Yeah, I think that it's easy for those partners that are doing some research, or they're not familiar with scale and they look, one of the things is that the AI model that's underneath does make the product very easy to use. And you'll see this referenced all over our customer reviews this can manifest itself in the products easy to use, that the product is easy to support, and this is all true, but don't confuse that with a lack of deep technical abilities and customization. I see this mistake made a lot. It's so easy to use, but they think they can't get in and do fancy things. And there are APIs and there's things underneath the hood that partners can do and help configure for their customers. All that said, when a partner is working with their end user and thinking about value, of course we need to be sensitive to pricing on the upfront purchase, but do your research on scale. What you will find is that the average customer on scale will report between a 75 and 85% cost savings in terms of time spent managing the system. I mean, if you look on online, you'll find people that say they went from five hours a week of VMware administration to less than one hour a month on scale. And that's a big deal, right? Is the CFO at that end user company going to be fully appreciative of that? Probably not, right? They won't quite get it. But the CIO or the IT administrators who have to touch that thing every day, absolutely they will see that value. And again, with the edge, as my example earlier, making the channel cool again, right? What better way to build a relationship than to take 85% of the time spent in mundane administration and automate that for your customers and let them focus on something more value to add to the business. Exactly, yeah, exactly. And even at some point, I think the CFO will appreciate that because then you start to see tangible results of having spent more time doing something valuable. So- Yeah, that usually comes after the procurement phase, but yes, they will see the value. Yeah, it's delayed. All right, let's get into scale's approach to the channel. We've already touched on this a little bit, but we have a lot to explore in more depth. So let's start with this. Partners are rightfully skeptical right now about choosing a VMware replacement vendor, and they need to know that they're not gonna find themselves in another Broadcom situation. So with that in mind, we've already said that scale positions itself as channel first. Tell us more about why you started with that particular approach and why you believe partners have a long-term future with the company. Yeah, I mean, part of the reason we started with that approach is really as much personal as anything else. I mean, I in the past have been a partner. I've, you know, going all the way back to, I mean, funny story, my current chief revenue officer didn't know this at the time, but I was one of his resellers. So he was with a company called Artisoft, which was early networking. And I was one of his resellers when I was 15 years old. So it's a thing. So I'm super familiar with the channel and, you know, I believe in building the business together, right? And that's a thing. And I think that, you know, I'm not throwing VMware under the bus. I think that VMware in its earlier days was very much channel focused, right? And the channel helped build it. And it kind of, I mean, not kind of, it really pains me on a personal level to see kind of some of the stuff that's happened. Not that Broadcom isn't, you know, creating a good business for themselves and optimizing the profits and all that kind of stuff. I mean, this is what they do. I'm sure it works, right? But to know that, you know, so many channel partners themselves are small and mid-sized businesses, right? I mean, there's big ones and we work with them too, but many of them are, you know, smaller organizations and to put all their eggs in that basket and have it kind of ripped away is hard to watch, right? So I would expect, you know, I would love for partners to say, okay, we're just going into scale lock, stock and barrel. They're the new one. You know, God bless you. If that's what you decide to do, we will embrace you with open arms. However, right, I would expect they're going to look at other alternatives besides scale and very likely work with more than one of us at a time, right, so that they don't get themselves backed in to this situation. You know, I think there was some complacency perhaps because, you know, VMware was so dominant for so long and, you know, here at scale, we've always been that alternative. We've always been swimming upstream a little bit, right? Until recently. So, so dominant for so long. That also though makes it difficult to differentiate one partner from another, right? You could, you know, again, we would joke, you could, you know, throw a football and hit the next VMware reseller, but, you know, the scale resellers are a little bit, you know, further apart. So, so we've got, you know, we've got all that. Again, it's a personal philosophy and why we embrace the channel, but I have built scale from the beginning with a very long-term approach to the business here. Again, perhaps different than your average tech software startup. And that's why the investment in the channel, building, you know, a relationship that pays off over 10 years, even though the first two years, maybe it was not, right? And it's all about, it's all a matter of time, right? It doesn't have to be built immediately, but the dedication and the commitment to the channel is what matters. And obviously you're going to grow as you get more partner buy-in. And so with that in mind, which types of partners are best suited to work with scale and why? Well, you know, I would think partners of all sizes, right? We have partners that range again from, you know, your small regional partners to the vertical specific partners that might do, you know, industrial customers or medical customers or, you know, schools, those kinds of things. They're all big verticals for us. You know, we do work with the large, the CDWs and the SHIs and these kinds, as well as system integrators, the Accentures of the world and so forth, right? So we run the gamut, right? And often, sometimes we see customers who use multiple at one time. They might use an Accenture, but then also there's somebody else working, you know, kind of locally with them. One of the things about our approach is I try to keep everything about the company as simple as possible. We're very transparent with pricing to the end users, as well as to our partners. I also try to provide a very straightforward means of working with the partner in terms of how their channel discounts and things work, right? I, as again, coming a bit from that world myself, you know, the backend rebates and, you know, this kind of incentive and that, I find, you know, very, they can be very frustrating, particularly for smaller partners, right? That may never reach the certain volume levels where those things kick in. On the other hand, you know, every partner can appreciate having, you know, an extra 10, 15, 20 points of margin that they can use to invest and grow their business. And so we tend to take that approach, right? We go bigger on the individual sort of deal discount that they're going to get. So they've got that margin to work with, you know, sometimes maybe to be competitive and bring that customer in, sometimes to, you know, provide again, that offset for training and onboarding and so forth. So we do, you know, we do all of those things. We do have a multi-tier program. So, you know, certain things like additional marketing funds are available to partners who've been transacting with us more. But I think the important thing is we will look at each partner individually. So we have a channel team here at scale, which is responsible for onboarding, training, and just relationship, long-term relationship building with our partners. And then I have my sales team, which will work with partners and individual reps at partners on individual deals. And again, we're not taking those deals ourselves, right? We will do, we'll do all the heavy lifting for a brand new partner. They can basically shadow along with us and see and literally learn by watching and then learn by doing. And eventually partners, you know, can handle this on their own. And whether it's the sales side, the technical side, or even some of these backend services, we structure it so that, you know, those are all available to the partners, but if they need our help and want our help, we're there to provide it. Wow, that was a really good overview. And you've answered some of the questions that we had planned, but I want to take what you just said and see if we can go even deeper. So first of all, let's back up a little and talk about the partner types that you work with. MSPs, integrators, I'm assuming VARs. What about like agents and consultants and the less IT-focused side, and the less... but those people who have quite a pipeline of customers who need this kind of service? Yes, absolutely, those two. So we can go from as simple as a referral program and that referral program, even it can come in different flavors. I have some partners that themselves, view themselves effectively more as sales and relationship building. And so they refer maybe a deal to us, but they even work with MSPs or something on the backend on their own. And so that's all fine. If you just want to refer things to us or even parts of deals to us, like I said, you want to get the deal, get the margin and so forth, but the services you wanna offload on scale, we can do that or we can connect you to another partner in your region that does that. Because again, like you just said, some partners are very technical and that's what they pride themselves on, providing those services. Other partners are more marketing and relationship and sales focused, and we'll work with kind of all ends or anything in between, right? So on a referral basis, that's the kind of the simplest view you can work with us. And then we have bronze, silver, gold, and platinum partner levels. The discounts, you get the same discount, right? Again, the main thrust of where partners can make their dollars is through that deal discount. But other things will be available to the higher end partners, such as additional marketing funds and so forth. But even if you're a brand new partner, right? If you wanna work with us and do a webinar, a lunch and learn, and these kinds of blocking and tackling sort of events, we're all in, right? If you wanna know, hey, tell us what kind of lead generation programs have worked for you and work for other partners, we have all that set up. So through our partner portal, you can access that information, but it's more than just, hey, access it and good luck to you on your own, right? Work with us directly, and we will assist you in executing those programs. Even as a, again, a personal example, right? I could be on a webinar with an Accenture, a very large partner at 10 a.m. in the morning. And then at noon, I'm on with a two-man operation from South Dakota. Totally fine, right? And even access to me, everybody at scale is dedicated to making the channel work. And I didn't say this earlier, but one of the statements that I have for the company as a whole, and it's in our handbook and every new employee knows this, is that my objective is to be the, what I call the best ever partner that our customers or our channel partners will work with in their entire career, no matter what. Meaning, when you retire, if somebody holds a microphone up to you and says, who was the best partner you ever worked with? Your answer is going to be scale. That's a tall order, right? Now, we've been in business long enough that I've actually have had some people retire and tell me we did it, right? So I'm thrilled about that. But this kind of stems from personal experience. My father was a, it was called Information Systems back then, but he was effectively an IT guy in the mainframe days, in the 70s, 60s, 70s, and 80s. And as a kid, I would go into the office with him and see these things. And he absolutely trusted IBM, right? The people, the product. If the salesperson from IBM called and said, you need this, he would instinctively say, that's probably true, right? That trust was extremely important. And that's exactly what I'm trying to build with our customers and our partners, is that scale is that trusted source. We're there every step of the way, and we can grow with you over the next 20 years. I'm really glad that you brought that up. I mean, that was not part of our question, pre-planned questions or anything. And I'm so glad you inserted it because it really speaks to the DNA of the company and the whole point about dedication to the channel for the future, which is what partners are concerned with right now. And situations like Broadcom VMware are highlighting how they need to source their suppliers with a lot of care and attention. And so to actually embed it into your handbook, into the company philosophy, says a lot, everything. So thank you for pointing that out. Let's talk about the support, more about the support. We've already touched on it a bit, but from the pre-sale to the post-sale, I really want to understand what scale is providing. Did I say sale or scale? I meant sale. That scale is providing to your partners. And if the details vary by partner type, if an MSP gets something different from an integrator, go into that. Yeah. I mean, so again, all these tools are available to partners of all kinds, right? The main thing that I find where there's differentiation in how partners engage with us is primarily first based on their maturity of their relationship with us, right? And that's where I mean, in those early days, I know exactly how partners approach it. We're a new vendor. Are they going to bring us their best customer that they have? No, right? I wish they would, but they won't, right? They want to see how it goes. They want to work with us. You know, we get leads that come to us and we take those leads back out to our partners. And so, you know, we'll work with them on a deal. And again, just sort of let us do the selling if you want. Let us do the technical overview with the customer if you want. Or, you know, we have training. We have video based training you can do yourself. We have advanced training that is available to our partners. One of the things we are offering right now as part of that VMware rip and replace promotion is complimentary advanced training for both partners and customers. You know, normally that's something that you pay for, but we're again, we're trying to be extremely open so that partners can get over those hurdles that normally exist with onboarding that new customer or that new vendor rather. And so, you know, in some cases, right, if you're an MSP, you know, often we may be sort of shielded from who those end customers are, right? It's more, we work with you directly, the MSP, because you manage all of those relationships. On the other hand, if it's the referral partner that we were talking about earlier, I mean, we're probably front and center with those customers along the way. And, you know, everything in between. You know, the average tenure for the folks on my channel team and my sales team around scale is probably in excess of six or seven years. I mean, most of my staff, except for those that have been added due to growth, my staff tends to be here a long time. So we're all kind of on board with this vision, right? And our approach is admittedly a bit different than what others may see. And I think that if there's one message I could kind of get through to the channel, it's that if you, you know, when you're weighing, okay, what are my options? What partners am I going to work with and everything? And of course the economics of any relationship is important, right? How do the discounts work? What kind of margin can I make? And the technical aspects matter. Will the product work for my customers and so forth? But if you get beyond those two things, and it's more like what is this relationship going to look like over time? I think that you will find scale excels well beyond anybody else that you're working with, right? I mean, inevitably, despite the disruptions and things, I mean, Broadcom will, you know, invite some partners back into the program and so forth, and there'll be discounts. The thing that they won't be able to do that I guarantee scale does is have that channel first, that relationship that's intended to last for a long time. The economics are going to be what they are, right? But, you know, we're going to be there. You know, we have this roadmap. One of the things I think that maybe caused VMware to lose a bit of its sizzle that it had, you know, 15 years ago is that, in my opinion, I think the roadmap kind of stagnated, right? The core VMware product is the same. They added virtual desktop, they added this, they added these kinds of things on, but it was kind of the same thing. And what you'll find with scale, as we talked about earlier, is a roadmap that I think excites the customer, right? And again, gives the partner a reason to reach out to that customer. Like, hey, it's more than just, you know, your VMware pricing radically changed, or you just don't trust them anymore, or what have you. Yes, we can solve that problem, but also, look, this is taking you forward. And, you know, that's what we're dedicated to here, is taking both the customer and the partner forward. Exactly, that discussion we were having earlier about future-proofing and planning, and there's so much coming down the pike that partners need to be working with vendors who are looking forward and not trying to play catch up in a lot of ways. Something you said piqued my interest, and I'd like to have you go in depth a little bit more on it, was, as part of Rip and Replace, the partners who join that will be able to get access to more of the advanced training that's typically not available. What is entailed in that advanced training that they should know? Sure, so some of the things that I was referencing earlier that might be a little bit under the hood, right? I mean, one of the great benefits of scale is that the SC Platform product really is intended to be usable right out of the box with no training at all, which I know seems crazy in the world of IT, but much in the same way that when you first got a smartphone, you didn't read a manual, it probably didn't even come with one, right? You just turned it on and you started using it and it worked, and that's how the product with scale works. And again, it can be misconstrued as like, well, it's just basic, right? Because all those basics are so intuitive that it just works for you. You literally should be, not only you plug it in, you give it an IP address, you will deploy your first application in three minutes, right? I mean, it's trivially easy to do. Now, and many partners, that's all they ever need, right? That's the kinds of customers they serve, that's exactly their use case and so forth. But that advanced training is going to tie you back into the APIs, and if I'm an MSP, how do I do multi-tenancy on scale, for example? How do I integrate it with various backup systems, whether it's a host-based backup or agent-based backup or a third-party device, or there's lots of backup that gets involved in these kinds of deployments. How do I set up and test disaster recovery, which is built into the product, but between sites, how can I do these sorts of things? We have a feature with our fleet management. So our fleet management product, you can sort of think of as vCenter for VMware, except that you don't need it, right? The systems can run autonomously without this feature. What this feature is, is a central portal where you can see your entire environment. Very handy for MSPs, by the way, they just use it internally, but customers, small and large, can use this. And this is where you can do things like infrastructure as code. I want to just write a little script that's going to deploy applications, update things, change things around and have it, press one button and have it just work with everything. You know, one of the natures of this AI model, and again, some of the advanced training sort of is just education-based. So you can explain to your customers how these things work, is that the scale solution really is integrated all the way to the core of the hardware that it's running on, the BIOS and the firmware and so forth, and being able to say, oh, when there's a BIOS update, scale handles that, right? And so it really, you know, getting into the depths of how some of that works, how some of the backend, our HCI stack, for example, which is called Scribe, works completely differently than all of the remaining HCI stacks out there, to the extent that even on a tiny device like this, you have the full HCI capability, you know, should you choose to use it, which, you know, most HCI wouldn't even install on something that small. And so getting into that kind of detail, that's what's there in the advanced training, as well as, you know, sales training modules and things like this, and not just the technical side, a lot of it's technical, but it doesn't have to be exclusively technical. What's the training, what's the marketing and so forth look like? Excellent, so really comprehensive, okay. And then as a follow-up, you were talking about the, you know, the tenure of your channel people, which is huge, right? That's something that a lot of partners look for and should. What about the support model? Is it a dedicated support model? Am I assigned a channel manager, et cetera, et cetera, and a whole team, or is it general? Yeah, so each, you will have a channel manager who's assigned, so you have a primary point of contact. It is set up, of course, you know, sometimes people go on vacation, they're not available, and so you can roll over to other folks as needed. In addition, you know, the support organization, the technical support organization, is deeply integrated with all aspects of scale. This is, again, a different philosophy, perhaps, that I had from the beginning, which is, and I tell all my partners this, right? At scale, we view tech support to be just as much a part of the product as is the software and the silicon that it's running on, right? It's not an afterthought, it's not something that's like, oh, you know, we've got the greatest product and our support's as good as anybody else's. No, I mean, our support should be the best ever, right? Every aspect should be the best ever. And so, you know, our support team can work with partners just as much as they work with end users. So you're an MSP, or you're a partner who's providing technical services to your customer, and you have a technical question. You can get on, you know, you can call, you can do the live chat, you can do email, whatever floats your boat in terms In terms of the most effective way to, you know, excuse me, to handle that. of the most effective way. And my support team will work with the partner just like we would work with with an end user. So you've got all of these things kind of working cohesively together at scale where, again, the channel, you know, a channel manager, be your primary point of contact from just the general you to scale overview. But then I have an individual deal. Well, they can help facilitate and you'll have a relationship with an individual scale rep who's either geography based or vertical based. Right. So you might be, hey, this is a large enterprise customer. You know, I have people that work with those large enterprise customers with the channel partner. If it's a you know, I have a midsize company in New England. I have a rep who works with companies in New England with the channel partner. Right. Always hand in hand with the with the channel partner. Also, you know, channel partner has an opportunity where, you know, we need to go on site with them to help. Fine. They have an opportunity where they feel it would be better that scale kind of lay low in the background. Fine, too. Right. I mean, we can we can sort of work with with all of those those different aspects. And again, our goal right now is to make it easy for the partners to onboard themselves with scale. Hence, the additional discounting in the RIP and Replace program, an extra twenty five points of margin they'll have to use. In addition, and I didn't talk about this earlier. We do have a promotion running for end users, which is if an end user has X months remaining in their current VMware licensing, we will basically buy that out. Right. You can come over to scale and we will extend your scale license by the same amount of time you have left on that VMware license. Now, the important thing is combine these two things together. Right. So if I'm a partner, I have an incentive from scale that says, OK, the heavy lift that it is for me to do my first deal with any new vendor. They're basically giving me extra margin to cover that off. In addition, not only can I go to my end user who's worried about VMware and say, not only do I have an alternative, but I have an upgrade. And also that upgrade is not going to really cost you any money. Right. Like you can move over to scale without losing money, which is intended. I mean, I know, again, I've been a partner, so I know what happens is I'm working with the CIO. I'm working with the director of IT. But at some point, that director of IT has to go have an uncomfortable conversation with the CFO or the owner, which says, hey, yeah, we bought this five year VMware contract, but we really got to get out of it. And we still have a year left. Never mind. Like, OK, like we can get out of it and you won't lose that year. Right. You'll you'll get that on top of scale. So those, again, very sad. And these are these programs often originate from ideas that my partners have. They're like, this is the problem that we're facing. Bring that to us. Bring that to that channel manager. That stuff bubbles up. I mean, I get messages from my channel managers all day long with different things. What are they hearing from partners? How can we make our relationship with partners better again? And we use Slack just like many partners do, or they use Teams. Same thing. You know, there is a Slack channel, which is called Best Ever Channel. Right. Meaning our channel partners should be the best ever. Right. So as you know, not all the feedback we get is positive. This is life. Right. Sometimes things don't go according to plan. How can we make that better? How can we work with the partners to make it better? And really, again, it's it's arm and arm. It's meant to be a cooperative relationship that we're building, building over time. Yeah, that's excellent. Crowdsourced problem solving. That's right. Before we move on to some big picture questions, I'd love for you to summarize and give us kind of a cohesive look at what you believe differentiates scale from its peers and especially when it comes to the channel. Yeah, I think that when you look at the difference between scale and others, I mean, we've talked a lot about VMware. Of course, there are others out there besides just VMware. You know, first and foremost. I am not shy about talking about those mid-market customers. Right. Do I mean, I, you know, I talked about the casino and the the airport and, you know, we have an educational group internationally, which is probably one of the biggest IT deployments in the world. Yes. Great enterprise customers. But again, I'm all about all the customers. Right. So so just just last week, we had a I happened to be it was late in the evening, about 11 o'clock at night. I was trying to catch up on the day's email. I saw an email came in to the generic. I don't even know how they got this address, the generic sales email address that sort of goes to all the salespeople. I saw it come in and it was a it was a machine shop in Wisconsin. And you could tell it was tiny. Right. I mean, it was a guy. And I I responded because I was looking right at it. And I just said, hey, I'm the CEO. Surprise. He wasn't expecting that email, but I'm the CEO. What can I answer for you? And he came back and he said, well, he's like, just to be clear, like we're looking for a VMware replacement. But, you know, we have three hosts. We run 15 virtual machines. He's like, it's really tiny. I'm like, that's fine. I'm like, I'll give you a call. I talked to him for two hours about it. I mean, it's basically a kid, right? He's probably his first IT job out of college. And that's fine. Right. I can make them successful just like I can. I can make somebody else successful. And we're all about that. So the product, yes, it can scale up to the largest deployments. We have with thousands of reference customers that can deal with all of these things. Certainly, I am not oblivious to the fact that the biggest objection that a partner of ours finds when they go talk to a customer is who the heck is scale computing? Like if they don't, I don't have a Super Bowl commercial, right? I'm not the size of Dell. Like I get these things. Despite that I have thousands and thousands of customers globally and all these references, you know, we're still, you know, much smaller than others. But, right. Also understand that that gives us this advantage that we're much closer to those customers and to those partners and can grow with them. I think that the philosophy we have around the channel as well as around support is largely unique, right? Not that you don't have other great channel partners, but it's something that I, again, take very personally when I think of, you know, I reference IBM, sort of the IBM of the 70s, right, at one point. The other sort of channel that I admire, right, was the really the 1990s and 2000s view of Cisco, right, where Cisco was, you know, very much channel focused. And this is, you know, under the Chamber's administration of Cisco. And I just thought that was great, right? And I know partners, you know, loved it. And that was not, I mean, different than scale. Cisco was not the easiest product to use, right? It was fairly complex and so forth. But they were all about the channel. They were always bringing new products, new features through that channel and empowering the channel to run with it. And that's the kind of philosophy that we're embracing here. So much like Cisco, partners of all sizes, right? You need one little switch. You need some top of rack monster thing. We've got you covered on the equivalent of what we do, as well as having that channel first mentality. You know, you can give me residuals for this, but as you were talking, I was thinking, you know, starting the new golden age of the channel. You're welcome. There you go. I love it, right? I love it. Again, I think that the, you know, I think that the rise of cloud computing was actually somewhat, not damaging isn't the right word, but it's challenging for the channel, right? Because the channel partners, you know, yes, they can onboard somebody to AWS and then get paid. But effectively, right, at any point AWS could, I'm not saying they're going to do this, but they could just cut you out, right? I mean, the customer's data is all on them. They're working with the customers and it could be, you know, as bad as what we've seen, some of what has happened with Broadcom or Broadcom, just, you know, they make this deal happen and they just declare that thousands of customers are now direct, right? I mean, it just blows my mind that you would have that approach. Again, I get the economics of why you might make that decision, but just like, it just seems so wrong, right? And so, you know, but again, now with, you know, the rise of, I use the term edge computing again, it's on-premises computing, right? Moving out of the cloud. There is a bigger role for the channel and a more sticky role for the channel, right? Where maybe they're less sticky in a cloud world. And so that's where, yeah, I think this golden age for the channel kind of comes back. And if I can be the, you know, the IBM of the 70s or the Cisco of the 90s, I mean, that's exactly what I want to be. I love that we got into that. Before we take some attendee questions, because we've only got a few minutes left, I'd love for you to wrap up with a statement from you to prospective VMware channel partners. What do you want to make sure they take away, if nothing else, from this webinar today? Yeah, so number one, for most of your customers who are running VMware, we have an equivalent and better solution, right? Maybe you weren't familiar with us before, but we can very quickly get you up to speed. You won't have to spend a huge amount of time to understand how to get from A to B. There's a lot of advanced training like we talked about, but you don't have to go there right now. It can be a very lightweight lift initially. Have us help you, have us talk to those customers, have me talk to the customer, right? If that's what it takes. And we can make that work. You know, second thing I think they should take away is, again, it's a simple channel program designed to give you margin on every deal. Not all the back-end rebate, how do you get this? And do I calculate a certain spiff by the end of the year? I mean, not that these things aren't useful tools, but when you're onboarding a new partner, those things are sort of meaningless. And I understand it, right? How do I predict the volume I'm going to do in scale if I've never done a scale deal, right? So we can get through that with these discounts, with empowering the channel. Channel partners can also make a lot of services dollars with scaled. Again, don't confuse the fact that the product is easy to use with a lack of services abilities. I mean, yes, maybe it installs much faster and you're not going to build five hours for an installation like you might've before, but we all know that's not what your customer wanted to pay for anyway, right? I mean, they want the value add stuff. They want the integrations. They want to know how can you make their applications run better using scale. And that's what's available. And that, you know, building business value, using the customer dollars to deliver something that's more important to them, that's part of what makes the channel cool again. I could not have said it any better. That's great. All right. Let's move to a couple of attendee questions in our remaining few minutes here. So the first one, and I think this is a really important one to address. Why should I choose scale over a vendor like Nutanix? So I don't think you necessarily need to choose one of us, right? I think you can choose both. There's, you know, the Nutanix product is good. And there's, you know, there's use cases where that might be an excellent solution, but it's probably not the solution all the time, right? And one thing you don't want to do, I mean, if the opportunity here is to deliver real value to your customers, because VMware is so disruptive and you've got these new trends, right? Don't pigeonhole a customer into the wrong vendor solution, right? Look at all the solutions that are available. I do think that scale, you know, casts a bit of a wider net as it comes to that mid-market customer. I know, obviously, Nutanix has mid-market customers. We may talk about ours a little more openly, but that's a thing. But I have those small customers. I got the kid in Wisconsin, right? I mean, we'll do all of these things. So, you know, openly embrace the mid-market. And so that means I got a VMware user that spends, you know, a couple thousand dollars a year. That could be a fine scale customer, right? That's totally okay. And I think that, you know, there are solutions that people are looking at. You know, there's open source solutions. There's toolkits like Proxmox and things like this. And again, there are use cases for all of these things. But if you have a customer that they need a turnkey solution, right? They want a solution that's, you know, fully supported and they know that they have, you know, thousands of references they can talk to and probably some right down the street. That's not the right thing for them, right? Scale would probably be a better fit. If they want to tinker and build their own thing and whatever, that's fine. That may not be the greatest customer for the channel either, if a customer is just doing a do-it-yourselfer, right? So scale is going to fit differently. It's going to feel different than some of those other solutions. And again, knowing that when you're working with scale, right, you're also sort of reinvesting in yourself because of our channel first mentality. Hmm. That leads beautifully into our last question that we have time to address. And that is, this attendee says, I'm overwhelmed by all the VMware alternatives suddenly flooding the market. What can you tell me that cuts through the noise What can you tell me? and the hype? I think, again, I think the main thing is addressing, hey, how do I need to move from VMware, right? I mean, that's something I have to address with their customers at all, right? And say, maybe VMware Broadcom sort of forces this issue because of pricing or what have you, and they look at that, right? But at the end of the day, the very first thing you've got to look at is, okay, technically, will this solution meet my needs, right? So take a look at scale, right? Again, you can look at the website and there's a database, you can search through case studies. Customers want to know, has any other customer run ApplicationX on scale? Do I have other customers in my city that run on scale, right? You know, the answer is going to be yes. Are there backup products and ecosystem partners that work with scale? The answer is yes. Again, I'm not as big as VMware, right? And, but all those things exist. You know, the final thing is, you know, when you look at the robustness of scale, knowing that it may be the first time that you've heard of us. You know, we have our, you know, we have a great product. We have this channel and this support kind of mentality that's a little bit different, but we also have that ecosystem, as I just mentioned. We have our own, you know, we call it platform, platform 2024 is in April. That's our VM world, right? And partners and customers come and they interact with each other and they can meet ecosystem partners and see the roadmap. And so, you know, so these things exist, right? And these tools are there to say, okay, I'm not just left out, left hung out to dry, right? I have a partner here who can work with me, whether I'm a customer or a channel partner. What a great way to, a great note to wrap up on, Jeff. Thank you for that. Thank you also. I mean, we're out of time, but I want to thank you for taking this time to go so in depth with us and give our attendees some really good information here. Thank you for that. And thank you, thank you to scale for sponsoring today's event. This was a great conversation. And so as a reminder to attendees, this webcast will continue to be available on demand. Please feel free to come back and review it anytime you like and have a wonderful day. Thank you for attending. And again, thank you so much, Jeff. Thank you. insanely
