Marketplace monetisation the wrong way

Lessons learned from a change in team mission that went wrong.

Case study participant
Sidney Maestre
VP Developer Relations, APIMatic.io
As the VP of Developer Relation at APIMatic, Sid Maestre works with companies to automate how they build developer experiences and drive adoption of their APIs through SDKs, interactive documentation, guides and code samples. When Sid isn’t helping developers, you’ll find him training for his next Spartan obstacle course race.

The background

In 2013, Sidney Maestre joined the globally distributed DevRel team for a SaaS product. As part of the Platform team, the developer evangelist’s job was to help onboard new developers into the company’s app marketplace. And while there were a couple of rough edges in the developer experience, partners were happy, the app marketplace was delivering value to customers, and the DevRel team made a strategically important contribution.

The tone for interactions with partners had been established and embraced by the DevRel team. Rather than seeking to monetise partnerships, they saw the functionality and integrations that partners delivered as a key driver of customer retention.

“We found that even small scrappy app ideas could really take off. The team was there to offer advice and not pick winners, we left that to our customers. Our approach was to treat every partner as the next potential Facebook.”

From value-add to revenue generation

However, that approach changed with the arrival of a new executive who saw the app marketplace as a missed revenue opportunity.

“A new Head of Business Development came along with a plan for a transactional marketplace that would generate revenue directly. He also shifted the team’s focus towards marquee brands to act as strategic partners, which left less time for the smaller startups.”

Not only did that change the relationship between the company and its app partners but it also altered the DevRel team’s mandate. While they continued to field new partner enquiries, the developer evangelists also found themselves being asked to offer white-glove support to partners that the new leadership deemed strategic.

“We were often pulled into exploratory meetings in case any technical questions were asked. Typically, we were early in partnership discussions, so no commitment had been made by the partner to build an integration. The questions that did come up were fairly basic and available in our documentation. These meetings consumed a lot of DevRel time, but did not result in many integrations.”

Similarly, the DevRel team was moved from Platform into the Business Development department. Their new mandate was to support efforts to turn the marketplace into a source of revenue.

Upsetting partners

However, the biggest fall-out was in how the app partners themselves responded to the change.

Up to that point, partners were welcomed to the marketplace for the value that they could bring to the SaaS provider’s customers. But now the company was asking established partners to pay for each customer connection enabled via the API.

“The approach was to tell top partners that API access and placement in the marketplace would require sharing revenue based on the total number of active customer connections.”

Partners who’d previously been seen as delivering the most value to the vendor would now receive the largest usage bills. And how this was communicated only served to make things worse.

“We in DevRel had good relationships with partners and suspected our approach would not be well received. We shared our concerns but plans were in motion and the business development team took the lead in telling partners about the new regime.”

The result was a partner revolt.

“Partners called everybody they knew in the company. They felt they were being treated unfairly. From their perspective, it looked like they were being punished for having contributed to the company’s success.”

The plan to monetise at that time was withdrawn and, soon after, the business development leadership left the company. Eventually, the developer relations team moved back to the Platform team.

Later, partners expressed a willingness to share revenue but paying per customer connection had two major flaws. Customers on a free trial often wanted to test the integration which would cost the partner money even though it generated no revenue. Secondly, partners felt they should only pay for customers referred from the marketplace and not those that they had acquired on their own.

Picking up the pieces

 

Sidney recalls that period as a traumatic time.

“There were still people in the company who believed in the original mission of welcoming all app partners equally in the knowledge that they helped us deliver a richer product. I still believed in the company and product so I raised my hand to step up and lead our DevRel efforts.”

Before Sidney took over the team, one of his colleagues resigned to pursue other opportunities. And another resigned during their first one-on-one, for similar reasons.

“It was a pretty tough leadership position to step into because the team was shorthanded and we had fences to mend with existing partners, while clearing our backlog of new partners who had been deprioritised. There were a lot of unknowns to work through.”

During this transition, the global Business Development team was replaced by regional teams who focused on goals that made sense for their territories. However, the job of repairing the company’s relationship with developers and app partners was a global one.

Despite the challenges, the DevRel team’s reputation remained intact and they joined in the effort to pick up the pieces.

“Everyone pitched in all the way up to senior leadership and our CEO. The company as a whole did a lot of listening and took on a lot of the feedback.”

Reflecting on what went wrong

Sidney says it wasn’t so much that the idea of monetisation was wrong but how the plan had been developed.

“One of the biggest problems was that they announced the change would happen in the coming weeks. In the partnership world, that is very little notice. Developers had built successful apps that delivered useful functionality to our shared customers. The short notice made them feel unappreciated for their contribution towards our growth.”

Looking back, Sidney feels it’s hard to explain why the plans had to roll out so quickly. There’s a sense that some in the company might have seen each passing day as a lost opportunity to capitalize on the marketplace. Perhaps others had grown to see the partners as extracting value, without giving anything back. But, crucially, there was a disconnect between how the company discussed the change internally and how they communicated it externally.

“If the language you’re using within the company frames things in an adversarial way, then that can leak into the decisions made and also into relationships with the developer community. So it’s essential to have DevRel at the table advocating for the developer viewpoint. Otherwise, people who don’t understand the relationship between the company and developers may end up making poor decisions.”

Value exchange, not value extraction

Today, the company does have a transactional app marketplace but this time around the change was handled very differently.

“The company

eventually moved back towards a transactional marketplace but now it’s all about value exchange. So, the marketplace sends business to partners and in exchange there’s a revenue share.”

That shared revenue model incentivises the SaaS company to invest in the marketplace and to actively promote partner apps to their customers.

“Now it’s about value exchange rather than value extraction.”

Looking at what went well

On a personal level, Sidney is glad that he stuck with the company even though he didn’t agree with all the decisions.

“I exercised a lot of patience during a tough period because I believed in the product and I liked my team a lot. My conflict was with the overall strategy at the time. But I was patient and as a result I was able to achieve something I really wanted, which was to lead a team of DevRel people that I really respected and really liked on a personal level.

“Early in my career I’d get frustrated with a job and decide the grass was greener, so I’d jump ship. But unless there’s an existential reason why you have to leave, unless the situation is untenable, there is something to be said for exercising some patience. If there are other things of value in your role and in the company and the product then you might be missing an opportunity if you leave too soon.”

Not only did Sidney and his team repair those damaged developer relationships but they also improved the systems the DevRel team had in place.

Previously, the program’s data was spread across various systems and it was hard to know for sure how many potential and current partners were in contact with the company. After an intense period of manual data validation, they consolidated everything in one system and began working through a backlog of 2,000 potential developer partners who were yet to be verified.

At the time, the change both in department and partner strategy was a misstep that ended up impacting every level of the company. However, the company learned from the mistakes and repaired the damage. For Sidney, it gave him the chance to prove himself as a leader during a difficult time.