By the time I co-founded Crossbeam in 2018, I had built up a list of several dozen startup ideas to choose from. To make the final decision, I boiled my framework down to two factors: Will this be fun to build and is now the best possible time to build it? Crossbeam smoked the competition.
I’ve talked about this “why now?” question at length in the past, but my excitement is renewed every time we get our hands on new data about the how, when, and why behind successful partner ecosystems. Something is happening out there that’s pushing companies into deep ecosystem investments, and the momentum is clearly building.
In addition to industry trends, however, we also find it fascinating to observe the lifecycle of partnership development inside any given company. When do partnerships start to come into focus and in which ways do companies invest?
Ecosystem Adolescence: The Rule of 99
Here’s what we see: When it comes to partner ecosystems, it seems that something magical happens around the 100 employee mark for SaaS companies: a growth spurt. The number of partners and the number of partner-focused employees starts to explode. We call it the “Rule of 99.”
Here’s the data from our State of the Partnership Ecosystem survey that breaks down how partnership teams grow as total headcount grows:
As you can see, while some companies make a hire or two early on, the 100 employee mark is when things really kick into high gear and partnership teams become a real presence.
The other side of this dynamic shows up in our data from Partnerbase, which automatically sweeps tens of thousands of public data points from company partner pages. (More on that at the end of this post.) Here’s the breakdown of partners by company size for companies in the SaaS 1,000:
There, again, is an undeniable inflection point that hits around the 100 employee mark. At 100, the number of partners of a company seems to grow by an order of magnitude. The rule of 99 prevails again! The reason we see some alignment and efficiency issues is because it’s when the size of the partner ecosystem leaps forward.
After 99, the rate of growth stabilizes at a more modest rate, although employee size does continue to be a good proxy for ecosystem size. Why does this matter? Because this jump in partners and team corresponds with a jump in potential — and risk — that comes with your partnership strategy.
But, as with most adolescents, things also get a little awkward during this time. 100 isn’t just a magic number for partner programs. It has been observed by leaders like former Evernote CEO Phil Libin and Rakuten founder Hiroshi Mikitani that 100 employees is one of the key moments when “everything breaks” at a startup.
Partner orgs experience this pain too, as the expansion in partnership teams and ecosystems create a strain on these teams’ ability to integrate and work well with sales and marketing. The size range that includes that 100 employee threshold is lower than any other band of size when it comes to the partnerships function being well integrated:
Additionally, the 100 employee mark shows a spike in partner professionals saying they start having trouble getting buy-in from leadership.
And the 100 employee mark is when we see dips in partner professionals having impact on revenue, churn, and press.
Why this matters and what to do next
Here’s the good news: If you’re in that sub-100 employee range, you can know the storm is coming and you can work to soften these messy but inevitable growing pains. Planning ahead and setting expectations is important: We’ve heard anecdotally from many customers that your first partner manager can take 9-12 months to be cost-neutral, let alone ROI positive, and that requires a lot of patience in a high-growth environment where success is measured in weeks, not quarters.
The best way to figure it out — without risking capital or time — is to map out and quantify the potential that’s bottled up in your partner ecosystem.
Start with the value. What are your use cases for driving revenue through partners? How many leads can you generate through account mapping? How many deals can partners influence through co-selling? How much stickier can you make your product by building the most relevant integrations? Crossbeam was built to answer these questions securely and scalably, even if you start with just a single partner.
Then think about the scale. This doesn’t just involve the partners that you have today, but the future partners that are attainable if you traverse the partner graph that connects complementary technology, the partners of your competitors, and strategic allies in your field.
Partnerbase was built to help you draw this map for your own company and keep it up-to-date over time.
In combination, these two powerful tools can give you the data and the conviction you need to survive your company’s awkward partner adolescence and build a thriving ecosystem at 100 employees and far, far beyond.
More About the Partnerbase Data
You’re still here? Awesome. If you’re interested in this section, you’re my kind of reader! A lot of the data powering this analysis comes from a huge project that we’ve been incubating for the past year. It’s called Partnerbase.
The frontend of Partnerbase is still in the proverbial “skunkworks” stage, but the data is not. It contains data on over 50,000 companies and the partnerships in their ecosystems. These interconnections make up a map of the global partner ecosystem, and can be sliced into verticals, partnership types, and more.
For the employee-to-partner comparison in this post, we identified a universe of 157 companies that appeared in the 2019 SaaS 1000 list and also existed with full partner maps in Partnerbase. By joining these two data sets, we ended up with the ability to compare employee count to partner count quite easily, and rolled up the data into buckets to form our analysis.
This is just a one-off example of the kinds of questions we can answer with Partnerbase, and there is an iceberg-sized amount of data beneath the surface and coming soon. For now, make sure you're on our newsletter to make sure you’re the first to get insights from the Partnerbase data as they are released!