How does a reseller evaluate cybersecurity vendors - Ricky Martinez from DigitalEra

**Episode Summary: Ricky Martinez @ DigitalEra**

🤔 Are you a cybersecurity startup looking to accelerate your sales and revenue growth? How can you effectively evaluate new vendors and establish mutually beneficial partnerships? Are delighted customers and partners crucial for your success in the early stages? Tune in to this episode of the Cybersecurity Startup Revenue Podcast to gain practical insights from Ricky Martinez, the Chief Strategy Officer at Digital Era Group.

 In this conversation, we discuss:
👉 Evaluating new cybersecurity vendors and finding the right fit
👉 The importance of establishing delighted customers and partners in the early stages
👉 Building strong relationships and replicating success with new vendors

**About our guest:**
Ricky Martinez is the Chief Strategy Officer at Digital Era Group, a regional cybersecurity VAR. With decades of experience in the cybersecurity channel, Ricky has worked on both the vendor and partner sides. Digital Era Group works with about 60 vendors, including startups and established players, focusing on finding the right technology solutions for their customers.

**Summary:**
Discover how to evaluate new cybersecurity vendors, establish delighted customers and partners, and replicate success with new vendors. Join us as Ricky Martinez, the Chief Strategy Officer at Digital Era Group, shares valuable insights and strategies to accelerate sales and revenue growth in the cybersecurity industry. Don't miss out on this episode of the Cybersecurity Startup Revenue Podcast! 🔥

🔗 Connect with Ricky Martinez:
LinkedIn: Ricky Martinez on LinkedIn
Company Link: Digital Era Group

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Transcript

Andrew Monaghan [00:00:00]:

This week we're going to hear from a cybersecurity reseller about how they think about working with their vendors, and how they evaluate new vendors, especially startups. What makes a good program for them, what is good behavior from a vendor, and also what is bad behavior, with examples of each, joining me today is Ricky Martinez, the Chief Strategy Officer at Digital Era Group. Ricky has been working in the cybersecurity channel for decades, both on the vendor side and also on the partner side, where he's built up a couple of resellers. Digital Era itself is a regional cybersecurity VAR. It's got about 40 employees, works with 60 or so vendors, and works with startups and also some of the most established players in our industry. In other words, exactly the type of VAR a startup should be looking to work with. Don't go away. Welcome to the Cybersecurity Startup Revenue Podcast, where we help cybersecurity companies grow revenue faster. I am your host, Andrew Monaghan.

Andrew Monaghan [00:01:06]:

Our guest today is Ricky Martinez, chief strategy officer at Digital Era Group. Ricky, welcome to the podcast.

Ricky Martinez [00:01:14]:

Thank you, Andrew. Thank you for having me. Very excited about today.

Andrew Monaghan [00:01:17]:

Yeah, I'm looking forward to this conversation. This is the third or the fourth interviewer release in our series about working with partners at early-stage companies. How does the vendor make themselves attractive and build a great program that's relevant for partners? And in this series of conversations we're having talking to you, Ricky, and Digital to Era Group is the first time we've actually talked to a channel partner themselves and gotten your perspective on this. So we're trying to get the whole topic surrounded from different angles, and I'm looking forward to getting your perspective as someone who has a long track record of building resellers and building programs within resellers and working with cybersecurity companies both large and small. So this is a conversation that I think will be really useful for the audience.

Ricky Martinez [00:02:00]:

Excellent. Yeah, I'm looking forward to it. And I'm actually an avid listener of your podcast, so I'm very excited to be on here as a fan.

Andrew Monaghan [00:02:07]:

That's awesome.

Ricky Martinez [00:02:08]:

That's good to hear as a fan and also now get to participate. So this is now the next time I'm.

Andrew Monaghan [00:02:13]:

Going to have to send you some sales bluebird swag for the office there. So maybe that's what I'll do for an avid listener. But let's move on to the business side of this conversation. Ricky. So in previous conversations, we've introduced this company called Cyber Donut, completely made up, hopefully with a name like that. But Cyber Donut, let's say, has five to eight sellers, and 20 odd customers in place. They've got a round of funding in place from a reasonably well-known VC, and they're now at the point where they're thinking, okay, as we scale up into the end of this year into 2024, we need to really work out how we work with partners so they're in that kind of mode of trying to figure this out. So if Cyber Donut were to approach you and the Digital Era Group, what is the process that you go through to evaluate whether this is a company you want to do business with or it's not? Because there are 3400 vendors out there, you can't do them all.

Andrew Monaghan [00:03:05]:

So it's important for, I guess, for you guys to make sure you really align yourselves with the right new startup as well as the ones that are more established.

Ricky Martinez [00:03:12]:

Yeah, I think probably first we'd go on LinkedIn and see our connections. This industry is so mean, just you and I. You worked at McAfee at one point. I did. And we have a ton of connections together. So just to kind of validate that this is someone from the industry, kind of knows has been there, done that before, because there's a lot of new entrants that might not be in cybersecurity. Experts came from a software development company and they're just trying to position themselves. So that's one of the first things is who do I know that knows them and kind of establish that knowledge of this is an expert, this is someone that's actually going to be relevant in the industry and has the backing to support that.

Andrew Monaghan [00:03:51]:

So you're looking for Founder Fit at that point, right? Do we even know them already or do we know someone that knows them? They seem like they're really part of the ecosystem that we're in rather than a fresh entrance. And then you said at the end, there is investment, right? What's important to you there?

Ricky Martinez [00:04:09]:

Yeah. So who the backers are? I think it's also it's longevity. So, I mean, am I going to invest in this company and I kind of want to put my name associated with this that I'm not doing it not knowing about this company and their trajectory or their history? So you want to make sure that you have that established and there's going to be continuity because a lot of startups, I mean, businesses start and fail every day. So you want to make sure that when we're investing there are some long-term or even short-term winnings that we will get and have that continuity because that's key for us. Okay.

Andrew Monaghan [00:04:44]:

In your portfolio of companies you work with, give me the idea of the split between, I don't know, established and bigger ones and how many truly early-stage companies do you end up working with?

Ricky Martinez [00:04:56]:

So we get contacted by all the vendors all the time, probably established. We're probably around probably 60. The thing is, the industry is shifting so quickly right now. There are a lot of new entrants that are well established, like the Wiz example, and there are several others that have come like, abnormal. Now, Mike de Caesar is the CEO there, so there might be new entrants, but they have a whole history or the team that's been in the industry for a very long time. So I think our split is probably around 60% of the established ones, the larger ones, and then probably about 40% that are up-and-coming, but established. I mean, like wiz. Wiz just was founded in 2020, so it's not an old company, but they've established themselves in the market fairly well.

Andrew Monaghan [00:05:42]:

And just for you at Digital Ear Group, I mean, with Cyber Donut being that early, is that too early for you, do you think? Or do you like to just dabble with a couple like that?

Ricky Martinez [00:05:51]:

So we like to look at the tech and see what problems they're trying to solve if they're just another one of those that might be competing with a larger vendor and where we don't see that the customers are actually going to go for it. So we kind of want to see that first. So if the tech is relevant, it's something new, it's something innovative, we will absolutely look at it and we will try to position it because we're also the filter for our customers. The customers get pinged by all the vendors as well and they kind of come to us as a trusted advisor and say, hey, do you think this is a fit? Will this work? So we actually go through the rigorous process of testing this technology, making sure that it will work in our customer's environment, and then we will present it to them. So that's kind of the approach that we take. So we would not discard them just because they're new and small. We would definitely make sure that they are the right fit.

Andrew Monaghan [00:06:43]:

But I think you're right. I get to talk to a lot of companies through the podcast and through my business, and everyone's got their unique take on the market and what they're trying to do that's different. And it can be a little bit of a challenge sometimes trying to figure out if is this truly different or if is this just a slightly better way to do what's out there already. And it must be a challenge for you guys just having to go through that through the screens a little bit, right, to figure out what exactly is going on?

Ricky Martinez [00:07:08]:

Yeah, because there's a lot of established. Back in the early 2000s, there were very few cybersecurity companies and they were fairly large. So the McAfee's, the Symantecs, I guess, the Checkpoints, and those that have already a very big revenue and they just kept on acquiring these newer, newer companies like the Cyber Donuts. But now those Cyber Donuts actually have to expand and become their own thing for a long time. So that's relevant. I think the market is bright for change. So even if you look at those traditional security vendors, they aren't as relevant, they're not as exciting. So customers don't even want to engage with them.

Ricky Martinez [00:07:44]:

They don't feel that they're bringing something new. So they look at a Cyber Donut, they might say, hey, let's take a look at this, I think this could work. So I think that that mindset has changed and they're much more receptive to newer vendors. Back in the day, it was all about being established and it's kind of old thinking of if you're well established that you have that track record, you have your things put together. But I think now a lot of people are going for innovation and something relevant. There's so much market change and it makes sense to look at the yeah.

Andrew Monaghan [00:08:15]:

I've seen that happen. Recently I was chatting to someone at Black Hat. He runs infrastructure for a company in Canada and he likes every year buying two or three early-stage products because in many ways it shakes up his team, it shakes up how they do things. It challenges them to think about doing things differently and better as opposed to getting stuck in their ways. So he likes that element of doing it. But speaking of kind disruption like that, I think if Cyber Donut comes to you, how do you handle the situation where you may already have an existing relationship and revenue stream from a more established vendor and you're trying to figure out, well, how do we handle that?

Ricky Martinez [00:08:53]:

Yeah, so that's something that we kind of go by the guidance of our customers a lot of times. Yeah, we do have an established presence with a vendor, but that vendor, since they are well-established in the market, they also have other partners. So we're not necessarily going to get that renewal or we're going to get that business. So that impact, we might want to hedge our bets. And if there is a new Entrant into the market that does something slightly different and could be beneficial for the customer, we will definitely entertain it. And that's kind of our approach we want to make sure that we're not missing the boat and we have existing revenue, but that's not guaranteed. And that's kind of the reality of today's marketplace a sales rep might change and the new sales rep comes in, has a different partner of choice, and they might just throw their business their way. So we kind of want to make sure that we have a relationship with the customer and also that the tech is right for the customer.

Ricky Martinez [00:09:45]:

So we would kind of have that opportunity of establishing the relationship with a new entrant into the market.

Andrew Monaghan [00:09:51]:

You mentioned a couple of times now how important it is for you to be aligned with what your customers want, which may or may not be the same as what the vendor thinks. That's important. Right. I think if I were sitting in your shoes and telling me if I've got this wrong, is that I think that long-term relationships with customers are where your value and your success come from and you want to have long-term relationships with vendors, but that's a much more rapidly changing space on the vendor side.

Ricky Martinez [00:10:18]:

Yeah. And actually, that's a shift in the whole approach of the market now since there are so many niche product technology companies. So there were over 4000 cybersecurity firms back in the day, like when we worked at established companies like McAfee, they had a large portfolio. So the relationship was a long-term relationship. I sold the endpoint today. Next year. It's an IPS intrusion prevention system. The following year I'm selling the A SIM.

Ricky Martinez [00:10:43]:

But now these Entrants or these new cybersecurity firms, only have one product to sell. So once that sale is done, they move on to the next. So that they're not necessarily in the space to establish a long-term relationship with a customer. They want to get the product in and kind of establish their growth. And that's the shift that's been happening. I mean, I worked at several cybersecurity firms before coming to Digital Air Group as a reseller and that was the norm. The norm was they had an enterprise sales team that focused on getting the sale. Then they have a Customer Success Manager that takes it for the renewals.

Ricky Martinez [00:11:13]:

So it's a different relationship. So that initial sales rep is really pushing to close the deal, making sure that they maximize their revenue on that deal, not necessarily giving or sharing the pie with the reseller. And once the deal is done, they move on. They don't have any kind of relationship with the customer where we do because we're not only selling them that one product that we sold them at that time, we're the whole portfolio, the whole security stack we're actually trying to fulfill. So if we get burned on one technology, then we're not going to get the next. And that's not necessarily the case for the sales rep of the cybersecurity firm.

Andrew Monaghan [00:11:47]:

Right. They got the full-back to work with and their mindset might be I've got a bunch of partners I can work with or even, I guess sometimes think they can take it directly, which is probably the worst thing they could do, right?

Ricky Martinez [00:11:58]:

Yeah. And there was a very recent story around that where new up-and-coming vendor, very well established in the market, we were very aligned with them, sold it to one of our top customers, Enterprise account. And then this year is a renewal and they've actually wanted to expand their footprint. So they had bought X amount of licenses and now they actually had to double that licensing. And we were the ones that brought them into the account sales rep. For some other reason. They actually lost a deal with another customer of ours and they took this deal directly, which for me is mind-blowing in this day and age. Burning the burning bridges.

Ricky Martinez [00:12:35]:

Because this is a very small market, they will be at a different vendor soon, and burning bridges is not a good approach. And also taking deals directly, where I think the market in general knows the value of the channel and establishes itself. And a lot of organizations obviously want to control their destiny. So they have a direct sales mentality, but they know that the fulfillment and the channel are very important in their ecosystem. So making that distinction and taking deals directly will hurt them in the market going forward because other opportunities, other partners are looking at it and they say, well, there's four or five of these similar companies. Am I going to go with the one that could potentially take this directly or should I align with one that's more channel-focused and is investing in the channel?

Andrew Monaghan [00:13:16]:

Yeah, I mean, it must be the most frustrating thing. When you've been working on something, you brought a vendor a deal, you're working together at the last minute, and you end up taking it directly. It's the probably number one cardinal sin at a tactical level, someone can do absolutely no.

Ricky Martinez [00:13:31]:

And I was just saying that there's also building within the program and it doesn't necessarily the formality of a channel program because that's also where a lot of new entrants get caught up in this firm since they are so new, they didn't have a very formalized channel program. And having those nuances of having your rules of engagement where I will never take an account directly is kind of part of that. Also not having a solid channel team that can actually protect the partner in these instances and have someone that we can go to and voice our frustrations is also key. Yeah.

Andrew Monaghan [00:14:09]:

It seems to me it's a very transparent way to understand the dynamics inside the vendor because I've been on the Rs side of this, it's been inside the vendor. I've seen these things happen and the reason they usually happen is for very short-term thinking reasons. Right. If I take this directly, I get a little bit, I don't lose the ten points of margin, therefore I might make my number. And usually, it's very tactical, things like that, as opposed to someone in a senior position making some sort of big call that it's okay to take certain deals directly at the last minute. And in that kind of internal dynamics about who's running what and who's really in charge, it often kind of gives away a little bit that maybe the channel team isn't as powerful in sight as you hope they would be.

Ricky Martinez [00:14:53]:

Yeah. And that's been the history, I think, in this industry a lot of times since there is such pressure on the sales rep to bring in the deal and these quarterly cadences of the end of the quarter, the deal needs to come in. You committed it to your forecast, so you'll do anything you can to ensure that that gets done. Even if I burn this partner. And that's kind of not the best approach and we kind of get dinged on those things every once in a while.

Andrew Monaghan [00:15:20]:

Yeah, I think what some people don't realize is that rep sitting there, if it's a rep and their manager saying, let's take this Direct is word spreads. Right. This company, whoever they are, word spreads very quickly. Oh, they took two, or three deals Directly at the last minute last quarter. And suddenly in the channel community, everyone seems to understand that and has heard about it and gets very weary of working with them. Right. It's almost the number one cardinal sin, as I said.

Ricky Martinez [00:15:46]:

Yeah. And I think that having good rules of engagement, and we know because as channel partners we know what value we're bringing to the customer, and we know if we have been involved and we haven't been involved. So if it's a deal that the sales rep is working, we actually have an opportunity. We're working now in Peru where the vendors built a relationship. They found the account, they obviously need to fulfill it. So they're looking to partner up with us. So we're not necessarily looking to get all the margin and control that opportunity. We kind of let the sales rep at the vendor take care of that and handle it.

Ricky Martinez [00:16:20]:

We will try to do all our part. And I think that having that kind of a teaming agreement or teaming plan where you establish what you're going to do on this deal and what we are going to do, and we kind of have the clarity. And that way at the end of the day, it's not, oh, I did it all, and I can take this Direct or I'm going to give it to a different partner because you're not getting value. So those are the things that we like, established from the get-go so we don't get burned and there are any conflicts with these opportunities.

Andrew Monaghan [00:16:52]:

Ricky, let's learn a little bit more about you. And personally, I've got a list of questions here, one to 35. Why don't you give me three numbers and I'll read out the questions.

Ricky Martinez [00:17:00]:

All right, let's start with number seven.

Andrew Monaghan [00:17:02]:

Number seven, what is your favorite fall pastime?

Ricky Martinez [00:17:05]:

Fall pastime? Well, I love sitting out in the yard, nice weather, pumpkin spice latte, my favorite drink. And actually, one of my friends, he's like, Why do you go with the pumpkin spice? You're so cliche. But I love pumpkin, and I love pumpkin pie. That's my favorite food.

Andrew Monaghan [00:17:21]:

Something about that in the fall. You're right. It'll look kind of cliched, and I know there are memes out there about it, but there's something comforting about that whole thing, right?

Ricky Martinez [00:17:29]:

Yeah. The way you look forward to this time of the year.

Andrew Monaghan [00:17:32]:

And you're based in Texas, right? So it's warm down there still this time of year. It's a pleasant time of year to be there.

Ricky Martinez [00:17:37]:

Actually, last week it was in the hundreds, and this week it's been in the 80s. So I think it's a phenomenal transition. Yeah.

Andrew Monaghan [00:17:44]:

Finally, that breaks a little bit and gives you a break from the relentless heat of the summer, right?

Ricky Martinez [00:17:48]:

Absolutely.

Andrew Monaghan [00:17:49]:

All right, one more number between one and 35.

Ricky Martinez [00:17:52]:

Go with 30.

Andrew Monaghan [00:17:53]:

30. Dive bar or cocktail bar?

Ricky Martinez [00:17:56]:

Cocktail bar. Like my cocktails, like my bourbons, my old fashions Manhattans. So, yeah, that's how we roll. Actually going to Vegas next week, so I'll probably look forward to getting some of those cocktails.

Andrew Monaghan [00:18:07]:

What's your bourbon of choice?

Ricky Martinez [00:18:09]:

Basil Hayden. Okay, love that.

Andrew Monaghan [00:18:11]:

Yeah, I think I got Basil Hayden and something else in the bar downstairs. And being Colorado, the big thing that we're always excited about is the Breckenridge bourbon, which has grown out of nowhere in the last kind of eight years and done so well. And it's got a great reputation. So both Basil Hayden and Brack Bourbon are on my shelf, I think. And there's also something else. I think Buffalo Trace is up there as well. All right, last number. Team one in 35.

Ricky Martinez [00:18:36]:

Let's go with 33.

Andrew Monaghan [00:18:37]:

33. That's an interesting one. Which cybersecurity startup do you really admire right now?

Ricky Martinez [00:18:44]:

Let's see. It's a good one. I've seen the Wiz transition. I was very excited about that. We actually positioned it with several of our customers. It was just a phenomenal story. I just think the fastest-growing software company, had great technology, we had a great relationship. But yeah, I think Wiz is probably up there.

Ricky Martinez [00:19:05]:

I mean, that's one of the top of my mind right now. But in the past, I know silence kind of made an impact, but obviously, that story has gone through. But they had a great story, a great run, and great marketing. Kind of sets the stage for next-generation technology companies around AI. Yeah.

Andrew Monaghan [00:19:24]:

Are any of the AI companies that stand out for you right now? Or is it just too early to try and pick one?

Ricky Martinez [00:19:28]:

An AI cyber. I think it's too early. I think AI has just been thrown away, thrown out as just everybody has it, but everybody actually leveraging it. That's the question right there.

Andrew Monaghan [00:19:41]:

Yeah. A lot of promise and I see people starting to release features, and then you got the companies. The one that sticks out in my mind is Hidden Lair, who is thinking about securing AI. So all different angles to the whole AI thing right now. So in a previous conversation, we talked about the idea of deal registration. You've introduced a new idea, teaming agreement, or teaming plan, let's call it rather than agreement. Teaming plan. Give us a bit more detail about what the teaming plan is, what's designed to do, and how Cyber Donut might use it.

Ricky Martinez [00:20:12]:

Yeah. So deal registration is typically just if you found the opportunity and you kind of have protection or additional margin as opposed to any other partner that would come in. Teaming plan is more if there is already an established relationship because a lot of the vendors and we know this from the industry, the vendors doing their marketing, customers go to the conferences, the same ones we go to. They go to RSA and Black Hat, so they're aware of the customer or the vendor, and they might do some inquiries on the website and that's the first route. They'll put their download data sheet to their email address. So the vendor already knows about this customer. And so when you go to deal rigid, they say, well, it's already in our database. I'm not going to give it to you.

Ricky Martinez [00:20:49]:

The team plan would allow for that partner to establish their role within this business. So this opportunity is already known by the vendor. They could say, well, I'm not giving you the full deal reg percentage, but if you ensure that we do the POC, you sign the NDA and you take us through the process of getting this deal closed, then I can protect you with X part of the margin, and I'm responsible for X part of this deal. So if the sales engineer on the vendor side is going to do the POC, or if it's our sales engineer, so that's kind of the establishing of I'll do the POC with my sales engineer that's trained and ready to do this and that way I can earn extra margin for the different activities that I do within this opportunity. Yeah.

Andrew Monaghan [00:21:37]:

What I love about those is it removes all misunderstandings and gray areas about who's doing what for what reason.

Ricky Martinez [00:21:44]:

Right.

Andrew Monaghan [00:21:45]:

The way I've seen it before is almost line by line. If a partner leaves the POC, you get, I don't know, I'm making numbers up eight points. If you also run the contract and put it on your paper, there are not three points. All these sorts of things kind of come into play so you know exactly how you can maximize your money on that one deal. And it's something at the start, right? When you're trying to build relationships with people, these sorts of agreements keep you friends and avoid you falling apart and becoming enemies. But maybe after doing business for five years with a rep or a team, these things come a little bit looser because you just know how you work together, right?

Ricky Martinez [00:22:16]:

Yeah. It also lets the management know because at the time, let's say we need to scale this, or another partner comes in and says, oh, I have the best relationship with this customer, you should give the deal to me. Well, if there's an existing teaming plan, we can see and the executives can see, oh, no, we've already engaged with Digital Era. They did the POC, they did this so they get protected. I'm not just going to hand it over to you because you took the CISO out for drinks last night and he talked about that opportunity. So that's kind of what the team plan also allows and get clarity and visibility from the executives because the rep already knows. But we want to make sure that the rest of the organization knows as well.

Andrew Monaghan [00:22:54]:

Now we're getting into the area of how we do business together. And when I think about that, I think about a proper channel program that the Cyber Donut team should be thinking about, given their early stage, though, and they don't want to try and boil the ocean on this. What would you look to to say, yes, these are good components of a solid channel program from an early-stage company?

Ricky Martinez [00:23:13]:

Yeah, I think protection is ideal. Having a very solid deal reg now does not make it overly complex. A lot of times you come from a maybe more established vendor that has very detailed and complex terms for dealing and for all these incumbency advantage things like that. So the case that I talked about earlier, would have been incumbency because we brought the deal originally, we closed the deal. So this is the renewal and upgrade. There should be some kind of incumbency in there. So things that would protect us going forward, because that's one of the things I'm bringing you into one of our accounts and establishing the presence that now it's up to renewal. Now it's not the sales rep, it's the customer success manager, and they have to kind of know where Digital Error stands with this relationship.

Ricky Martinez [00:24:01]:

So give me a quote, not just give it to one of the large national accounts and have them quote it, which happens a lot.

Andrew Monaghan [00:24:07]:

So incumbency protection and protection in general is good. What else would you want to see as part of the program?

Ricky Martinez [00:24:12]:

I think margin establishing is just a fairly clear margin because I know everything gets discounted. MSRP is just a number. No vendor really goes by established SRP numbers. So we want to make sure that there's flexibility, I think, in pricing. And then there's Karen's kind of established guarantee of margin. There are a lot of times when you introduce large national accounts that they're in the business, they're a bank, so they're winning deals at 1% 2% for a smaller bar like ourselves, that won't fly. Sometimes a customer spends 90 days to pay us, and we're only making two points, and it's not a viable business for us. And that's kind of what we want to establish we have enough margin that makes it relevant for us, and then we're also not going to be undercut by a national account.

Andrew Monaghan [00:25:05]:

Yeah, I feel like that's one area that in this case, Cyber Donuts should think through, right? Because I think the temptation is, well, we could go to and pick the company. It could be a Cybersecurity Reseller, a big one like Optive, or it could be a bigger kind of licensed play like CW, something like that. And they think they got a lot of coverage there, right? We'll get access to their team of whatever it is, 500 salespeople, and look at the coverage we're going to get. In reality, you won't get that coverage, right? You'll get a very. Very few numbers of those will even pay attention to you because it all matters what happens at the rep level, not what the company says to do. And then secondly, you're going to devalue yourself a little bit because you're suddenly in the game of a bunch of these companies fighting over Cost plus 1%, cost plus 2%, and discounting things left, right, and center, whereas they work with someone like you guys.

Andrew Monaghan [00:25:53]:

You're a specialist far right. So you've got value there and you're used to working in a way of solving problems for customers, not just giving them better margin or better pricing.

Ricky Martinez [00:26:02]:

Exactly. Yeah. And that's kind of the catch-22. So a lot of vendors, when they come in the like, yeah, I can sign a large national account because I now have global coverage. But that's not as you mentioned, it's not necessarily the case. You're not as relevant when you have Cisco's of the world and they're selling billions through these large national accounts, is it going to be relevant in the local market? And I think that's kind of the value of us. We're established in South Florida. We have a great presence in the Caribbean, so partnering with us and we kind of know the market, we know the players, the Cecils.

Ricky Martinez [00:26:38]:

We have a relationship. If you go to a national, it's usually a large call center in Chicago or in Austin, and then they're calling everywhere, but you're not relevant to them. So you want to make sure and also, when you go through training, you might go and spend a lot of money to train up the sales team. But they're going to go in, they're going to have your breakfast, drink your drinks, but then at the end of the day, they're just going to push. What's the easiest for them? And that's usually the bigger brands that have an established market. Yeah.

Andrew Monaghan [00:27:07]:

Their behavior is the path of least resistance to make as much money as possible.

Ricky Martinez [00:27:11]:

Right.

Andrew Monaghan [00:27:11]:

And what's top of mind for them, what the program of the day is. They do get influenced a lot by it, by things like that. But let's go back to the discussion about margin or discount. So two different topics margin and discount. What do you prefer to see in terms of a structure that someone works with you on?

Ricky Martinez [00:27:28]:

I think flexibility is key for us a lot of times, especially if you're competing, you're in a competitive environment where if you're competing with a different vendor, they will discount and have that flexibility. And that's kind of what we expect from the partners that we're engaging with. A lot of times in your business plan and in your mind, well, this is my price, this is the margin I'm going to make, this is how I'm going to go to market. And I worked for one of those vendors that had a very strong federal business. And in federal it's a contract. The contract vehicle is established pricing, there's an established margin and that's it. They didn't move from that. So they wanted to go into the commercial side and they didn't want to offer flexibility.

Ricky Martinez [00:28:10]:

They said no discounts. They said no discounts on renewals, which was kind of absurd. Now, if you have your very tight positioning in the market and you're one of the few that does that, you can get away with it. But if you're a new entrant, like a cyber donut, you want to make sure that first you establish your presence. But you have to have logos, you have to get into accounts. You might sacrifice one with having that flexibility and discount, but there might be the next customer that doesn't necessarily require it and they are going to go directly with you. So that's one of the key things that we like from our vendors and newer vendors typically have that flexibility, but we want to market sure that they're not delusional and like, well, this is my price, I'm not going to budge because we might not win the deal if we don't have the flexibility.

Andrew Monaghan [00:28:54]:

Yeah, and someone in the early stage of cyber donut, they don't have a review team that's going to control these things. Right. So they have the flexibility. I guess it's having the confidence in their partners to say, let's just agree on how we're going to have those discussions about each deal and the pricing and things like that. I guess the good thing is they're likely not to be you're not going to be doing ten deals a month with them right at the gate. Right. So they're just going to start with one or two maybe as you get going, and then you build up some trust and see how they work together and then you'll know where boundaries exist or what they get upset about and what you expect as well, they'll learn from you as well.

Ricky Martinez [00:29:28]:

Yeah. And I think also if we are in a long-term relationship and we're trying to position this with multiple customers, having the flexibility and knowing that when we close that first deal together and that had a great taste in our mouth, then we will do on our behalf. If we need to protect your margin and for you to make your number. If you say my annual goal is a million dollars and that first one we had to discount it heavily, maybe the second one we won't. And we will work with you. So understanding also, and that's one of the first things that we try to establish is what is your quota? How am I going to be able to contribute to that? Am I going to be 10% of that or am I going to be 80% of it? And if I'm 80, let's work very closely together and make sure that we help you to get to your number and that obviously we get compensated for helping you with that.

Andrew Monaghan [00:30:15]:

I interviewed Tim EADS, who's one of the, I think, general partners at Cyber Mentor Fund interviewed him a couple of months back. And one of the things that he said was the early stage for a company like Cyber Donut, the thing to focus on is having delighted customers, right? Because delighted customers, word spreads, they renew, you learn from them, you collaborate, things like that. And it struck me just what you're saying there is that also what you want is delighted partners. You don't want to just have a partner that you do business with. But if I was the leader at Cyber Donut, I'd be saying, okay, we only need, I don't know, three to five partners, let's say, for the whole of 2024. Let's make sure that in every interaction we have with them and every deal that we win together, they are delighted to have done business with us and want to keep doing more because that's a drug internally at a company like yours. Right.

Andrew Monaghan [00:31:04]:

Word spread, I got this deal, and we closed it in 45 days. They did exactly what they said they were going to do. The product just worked. Customers delighted. That kind of nirvana doesn't happen all the time, right? There are things along the way. So every time that happens, you want to have someone like Digital Era Group just delighted to want to do business with you.

Ricky Martinez [00:31:23]:

Yeah, absolutely. And we have those, and that's kind of the track record, is that we establish that because also providing that value and being delighted in the way that we approach these deals, it also helps the customer on their end. They feel that we actually supported them, we provided them value, and then they'll want to repeat business with us. So that's the kind of engagement that we want with our vendors. We don't want to have a vendor that was such a hard deal and have to go through contracts and discounting and back and forth. We want to make sure that our customers are excited about when we close these opportunities and deals and that can replicate and we can continue to do this. And then as soon as that happens, we're like, oh, I know these five other accounts, that we can position this, and if we can repeat this kind of interaction, we will do it. But if the first one was bad, it's very unlikely that we're going to be able to spread that to others.

Andrew Monaghan [00:32:14]:

Yeah, yeah. One of the things I tell people, Ricky, you may agree or disagree with this is know it's important. Know the Cyber Donut leadership, know, sign up with you as the chief strategy officer at your company, right? And you have a relationship and you set it up. But in the day, what actually matters is the rep-to-rep conversations and relationships because nothing happens unless something happens down at that level. How do you like to see that work together? What would you expect the Cyberdonut sales team to want to do with your sales was there?

Ricky Martinez [00:32:46]:

The first thing that we do is we have Direct, that direct engagement and they kind of go through their accounts, their targets. So Cyberdona will have a list of accounts that they want to kind of pitch to and penetrate that have the market fit for them. And if they align with the accounts that we're already managing or that that rep handles that's kind of the alignment, the first thing that we want to do then obviously build that personal relationship. And one of our successes and the reason that we also have a large portfolio of vendors that we represent is that those relationships have been built rep to rep. So our sales rep has built a great relationship with a rep at a vendor. He goes and moves on to a new vendor. And since that relationship and that camaraderie and the work together was so good, we'll replicate that in the new vendor. And that's been one of the keys to success is we sold a lot of X technology at X, a company with this rep.

Ricky Martinez [00:33:40]:

Now he's at a new vendor and up-and-coming next gen. Well, let's replicate us doing the same thing because it's really the people aspect of this. The technology is great and it's obviously got to be relevant for the customer. But if the relationship is there, you know that and we get that all the time. Whenever a rep transitions company, the first time they'll reach out to us and say, I worked with Digital Era in the past, they were great to work with and I want to do the same thing in this new business.

Andrew Monaghan [00:34:04]:

And except for the bad behavior now, taking deals directly, what's the kind of big cardinal sin that cyberdonut could commit that would cause you to back off from not wanting to do business with them again?

Ricky Martinez [00:34:16]:

I guess dictating terms with the customer a lot of times if we understand the budget of the customer, we understand how much we can make with this. Obviously, we won't necessarily want to hurt the vendor. But a lot of times we've actually recently at RSA, we took one of our top customers to meet the chief revenue officer at one of these new security vendors. We have already gone down the path. It was practically a done deal. The chief revenue officer of that vendor offered the 25% discount right away so basically affected our margin. It's like, you know, no, if we got to close this at the end of this month and I'll give it to you at this price and the CISO came up to us like, wait a minute, I can get this at 30% lower than what you had already given me. And they were already down in procurement.

Ricky Martinez [00:35:02]:

So having those dictating terms, kind of trying to control the dynamic with the end user because that's part of our value is we understand the budget, and also it's helping us. So if we can close the deal and you're making whole on your part and we can get extra margin because we understand this, let's leave it at that. Let's let us dictate the terms and kind of build the relationship because that's what we do. We're putting the pricing in front of the customer. When the vendor tries to do that, it kind of cuts us out and we don't have control. And that's one of the cardinal sins that I see and happens a lot, especially with more established vendors. Then they start having direct conversations and provide pricing, and then we have no control at the end of the day with that. Yeah.

Andrew Monaghan [00:35:47]:

So let's not do that. Right? Let's not discount deals that are pretty much done already. Yeah, that's not good. Right. I think it probably betrays a little bit of mindset where we're the king here and you're just the I don't know what. Right. It's part of the cog. And you'll do what we say when in reality, I think honestly, you may see this.

Andrew Monaghan [00:36:07]:

In the last 20 years, I think it's flipped around where in many cases, it's the partner that's really the one that holds a lot of cards in the relationship because you have the longevity, you got the track record, you got the access that a lot of these other companies are striving for. And they should probably recognize that and treat companies like yours as if you're a much more valuable partner than perhaps.

Ricky Martinez [00:36:26]:

They're doing it right now. Yeah, absolutely. And that goes to the rules of engagement. I think one of the rules of engagement, with one of the previous vendors I worked with was we only provide MSRP pricing, no discounts, and no other going to negotiate under the pricing. So if we can establish that in the rules of engagement, then we will be fine.

Andrew Monaghan [00:36:45]:

Yeah, I think we had that at McAfee eventually. At one point it was pretty much as if it was a fireball fence, but it wasn't far off. It if you as a seller gave pricing to a customer that wasn't MSRP. And I think it changed dynamics quite a lot internally about how people would go about talking about pricing and all the rest of it.

Ricky Martinez [00:37:05]:

So that's good.

Andrew Monaghan [00:37:05]:

Well, listen, I've enjoyed the conversation, Ricky. I hope the audience has learned from your perspective as a reseller out there in the cybersecurity world, building your business and the things that you look for, for companies such as Cyber Donuts. If someone wants to get in touch and talk about a partnership or even talk more about any advice you can give them about getting their program going, what's the best way to get hold?

Ricky Martinez [00:37:25]:

You through LinkedIn is a great way of communicating. I'm also an avid WhatsApp user, so my phone number and just reach out through LinkedIn. I'll share my mobile number with you. Also digitalairgroup.com. There's information on how to contact us there.

Andrew Monaghan [00:37:40]:

Great. I'll put the website and your LinkedIn profile in the show notes. Anyone can just look down in their app and see that there and get in touch with Ricky. So, Ricky, as always, great to chat, and wish you all the best.

Ricky Martinez [00:37:52]:

Same here. Thank you so much, Andrew.