What does the future have in store for cloud marketplaces and their essential role for hyperscalers? Matt Yanchyshyn, VP of Marketplace & Partner Services at AWS, joined host Dion Hinchcliffe on this episode of Six Five On The Road at AWS re:Invent to discuss the rapidly evolving world of cloud marketplaces.
Key topics covered:
- The unprecedented growth of cloud marketplaces and the forces shaping their trajectory
- AWS Marketplace’s strategic vision and its roadmap for the future
- The revolutionary “Buy with AWS” experience and its implications for commerce
- How GenAI is reshaping operations and creating new opportunities
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Transcript:
Dion Hinchcliffe: Hello and welcome to Six Five On The Road, and we’re at AWS re:Invent 2024 here in Las Vegas. My name is Dion Hinchcliffe. I’m VP of CIO Practice for The Futurum Group. And we have with us AWS’s Matt Yanchyshyn. Welcome, Matt.
Matt Yanchyshyn: Thanks for having me.
Dion Hinchcliffe: So you’re Mr. Marketplace. I’d love for you to tell us your role at AWS and walk us through what you’re doing right now.
Matt Yanchyshyn: Yeah, well, yeah, thanks for having me today. Matt Yanchyshyn. A lot of people call me Matt Y. I’m the Vice President of AWS Marketplace and Partner Services. And I like to say that that is a portfolio of, as we call them, services or products that allow customers to do business with AWS partners and that allow AWS partners to do business with with AWS.
Dion Hinchcliffe: Yeah. Well, it’s the digital channel of the future for enterprise software, software of any kind really. Right? When we’re talking about it. Yet it still seems like a lot of people aren’t fully aware of them. I mean, everyone knows about the Apple App store, but they don’t know about AWS marketplace as much as you might think, yet Marketplace is exploding. Cloud marketplaces in general are doing really well. Why do you think that is? Walk us through your front-row seat on that.
Matt Yanchyshyn: Yeah. Like you heard Ruba say in her keynote yesterday, “Over 99% of AWS’s top 1000 customers are using the AWS Marketplace.” So it may not be well-known enough. I of course want more customers using Marketplace, but when it comes to the big power users, all of them are using Marketplace almost without exception, and we’re seeing a lot of long-tail growth as well. So it’s definitely been exploding. I’ve been with AWS for 12 years, but I’ve been in this role for the last two years. And in those two years I’ve definitely seen it really, really take off across all customer segments. So you’re right, it could be more well-known, but it is exploding in all dimensions.
Dion Hinchcliffe: Well, and maybe bring it to life with some numbers so people understand what we’re talking about here. We’re talking billions in revenue going through Marketplace every year to ISVs who are putting their solutions in the Marketplace. And how many solutions are out there now in Marketplace?
Matt Yanchyshyn: So first of all, it’s not just software. Obviously, that’s powered us and that’s how we got our start. It’s software and data and services, what we call professional services, people services, and we sell all three through the Marketplace, which is differentiating and has been one of the key growth drivers for us. There’s about 20,000 public listings and almost all of our listings are public on the marketplace today from over 4,000 vendors. And what’s interesting when you think of the growth, some of those vendors, some of those sellers, the partners selling on Marketplace have now cleared over a billion dollars each individually. In fact, I just talked to a partner last night-
Dion Hinchcliffe: Individually.
Matt Yanchyshyn: Individually. What that means is total contract value transacted through the marketplace. I talked to a partner last night who’s now in the many multiples of billions and billion in year. So we have partners now doing hundreds of millions if not billion dollars of total contract value through the marketplace every year. And so that kind of gives you an idea of the size and scope that we’re seeing.
Dion Hinchcliffe: So that doesn’t sound just like small and medium size-businesses using marketplace because they don’t really have an IT department. That sounds like you’re doing real enterprise sales as well.
Matt Yanchyshyn: Yeah, absolutely. In fact, enterprise sales and more specifically SaaS private offers, so software-as-a-service, and what I mean by private offers is where there are custom terms, custom prices as enterprises like to buy-
Dion Hinchcliffe: Well, high-end enterprise software is sold that way. And unless you have that, you actually can’t sell to the Marketplace because you’re crafting a special deal with their special needs in it. Right?
Matt Yanchyshyn: So yeah. Enterprises like to say, “Nobody buys list.” What’s interesting is people do buy list and what we see is very healthy self-service or people buying the list price business complementing a really strong private offer business. And that’s been one of the nicest things for me discovering about reInvent is yes, on the high end, these enterprises buying primarily SaaS private offers is the growth driver from a revenue perspective, but from a volume perspective, number of customers, number of deals, the self-service and the smaller private offers is actually the bulk of the volume, the overwhelming bulk of the volume. And even large enterprise buyers… You mentioned app stores. And you have this whole generation of people who are now CIOs, CISOs, chief procurement officers who are the app store generation, they were millennials, et cetera. And they’re used to this, go on my phone, get an app and immediate availability, and they’ve taken that same-
Dion Hinchcliffe: It’s a consumption model they understand.
Matt Yanchyshyn: Yeah. Yeah. And they’ve taken that same buyer behavior and brought it to their role now as senior executive line of business buyer and sometimes all the way up to the C-suite. And I think we’re seeing that now reflected in even enterprise buying motions.
Dion Hinchcliffe: Yeah. Well, you said that private offer I think was a really sign of maturity for solutions like AWS marketplace. This allows you to tackle the high end of the enterprise market, but you’re saying actually the bulk of the market period are those deals. And I’m seeing the… I was talking at one of your partner dinners, a small little SaaS company, though they have grown into a fifty-person company by using AWS Marketplace as the channel. That’s their only growth channel. And then growing in leaps and bounds entirely to the fire hose that gives. And I think these are good proof points for AWS Marketplace. But where next? I mean in terms of what are the trends right now you guys are trying to tap into at the Marketplace, going beyond this kind of private offer?
Matt Yanchyshyn: Yeah. Well, the trends are being driven by some of those startups, these sort of incumbents, these insurgents that you’re seeing sort start to grow rapidly, like Archerra or Drata. Like Drata has over 40% of all of their business. They’re a relatively small startup. They’re still getting started. 40% of the business driven through the Marketplace. Companies like Archerra and even Pinecone. If you look on the AWS marketplace website today, and you see the top-four sellers, we have what’s working well, top four just public and Pinecone is sitting there alongside Snowflake and Databricks. But what they’re driving and I think is a really interesting phenomenon, kind goes back to what you were saying before around private offer versus self-service, is the most successful partners, large and small are having a product-led growth motion on the front end. It could be self-service, but like a SaaS-free trial or request a demo or some type of a thing that is on their public listing that actually fuels at the top of the funnel for a private offer motion on the back end.
And they’re doing what I call like a hybrid sales motion, PLG plus sort of enterprise private offer. And all without exception of the top sellers are using that motion to drive new business through a PLG motion and then capture or transact the bigger deals through private offers. And to be successful it’s an and. You have to do both. So that’s one trend. The second trend is kind of old is new again. We started the marketplace as self-service software transactions and we then added private offers, and then we added channel and channel partner private offers, and then we added distribution partner. So we’re almost working in reverse. We’re now adopting more traditional sales channels.
Dion Hinchcliffe: Back into the old world.
Matt Yanchyshyn: Yeah. And resell is growing faster than direct in all reasons globally now for us when it comes to channel partner private offers through Marketplace. And increasingly distribution partners like Ingram Micro are doing totally innovative stuff like integrating with buy with AWS as part of this week’s announcement. So we’re seeing the channel embrace Marketplace and we’re embracing the channel in a way that is, like I said, eclipsing direct sales in all regions.
Dion Hinchcliffe: How does that, just for those that might be using those more traditional channels, how does that kind of relationship work between you guys and the traditional channel? Are you kind of frenemies or are you finding out that you’re actually just tremendously able to collaborate and cooperate there in a way that you couldn’t before?
Matt Yanchyshyn: I mean, channel partners like Presidio has been really successful with us or CDW and their amazing recent acquisition of Mission Cloud and Ingram Micro. A few years ago, we didn’t have as deep relationships with those partners, especially the disties, but also the one-tier, the resellers. It’s really come around because I think we see that we need them and they need us and we can be more successful together for customers. Customers want choice. I was just meeting with a very successful security partner just a few minutes ago before I sprinted over here, and they are a classic example. In some countries, they have a direct motion. In some countries, they have a one-tier, like a classic resell motion. And in other countries like Japan, they have a two-tier motion through the big distribution partners and their associated channel partners. And that’s the reality for global companies.
And this is a four-year-old startup and they’re going to motion direct one-tier, end-tier. And so in order for us to serve our joint customers, their customers effectively, we need to do all three as well. I need to support distribution partners. I need to support a resell motion and I need to support a direct motion in different parts all over the world. So I think it’s the reality of the growth of our partners and of marketplace, the maturity of the market, where our buyers are internationally, how they’re buying, and we’re adjusting to the customer need, I guess.
Dion Hinchcliffe: Well, and it really strikes me when you say all these things that this is how customers work, but I also assume that you mean that AWS Marketplace works in all three of those different ways.
Matt Yanchyshyn: Yeah, that’s exactly what I mean. So we have channel partner private offers for the one-tier motion resellers. We have something called the Designated Seller Record program for distribution motion and end-tier motion where you have multiple layers, distribution partners, channel partners, resellers. And the customer, we support always. It’s really about this whole customer choice, like, “Hey, you tell us how you want to buy, customer. Partner, you tell us how you want to go to market in X country for this segment. And we’ll do it.” So we support all of those too.
Dion Hinchcliffe: Well, I want to get to the “Buy AWS” news, and we’ll have you walk us through that. But you really highlighted a key point and something that came up in my conversations here at reInvent this week. And that is as you’ve been moving into the more traditional space, you have salespeople, channel partners, and a bunch of people who don’t know how to actually work with the digital marketplace. Do you have any challenges there of providing education and training? Are they coming to you saying, “Look, I need you to get my sales teams over on this because this is much faster and easier way of working.”?
Matt Yanchyshyn: Yeah. Well, there’s two things. Yes, there’s definitely a training and enablement that needs to happen, but there’s also some realities about, you just mentioned this, meeting customers where they are. A line of business buyer and say what we would call an SMB small customer buying their video conferencing software and their desks, they’re buying from a distributor. They probably don’t have an AWS account. It’s not their job. They’re not the one provisioning cloud workloads. And so I think that persona, we need to meet them where they are and sell through, in this case, the distribution channel.
And similarly, the person buying like their ERP in the cloud, or I was talking to healthcare, their healthcare system for their hospital, that persona, again, is not necessarily the same person buying S3 on AWS. And so we need to meet them in the right way as well. So as different new personas arrive at AWS to come by through the marketplace, we need to meet them where they are in the right channel and in the right venue. And so that’s a big part of why we came out with Buy With AWS because it’s sort of unrealistic. We’re going to hinder our growth if we limit the buying and discovery experience to the walls of AWS and more specifically like the AWS Marketplace website. So we wanted to bring the products in marketplace to more people, more personas through more channels. And that was the whole sort of nexus or the genesis rather of Buy With AWS.
Dion Hinchcliffe: Well, yeah, it’s all about, I think the vision from Marketplace was all about removing the friction on how do you work with AWS and its partners. So it leads us right to probably the biggest marketplace news of the week, which is Buy With AWS. Can you walk us through it, unpack it for us? Why is that so important?
Matt Yanchyshyn: Yeah, yeah. So when I took this role a couple of years ago, and our marketing and analysts people here in the room will laugh as I say this, I was testing soundbites and one vision I had was, hey, I want to be everywhere internationally. I want to be everywhere in terms of meeting customers where they are in different segments, different buyers. And so it sort of led me to start saying, “Hey, let’s put Marketplace everywhere.” And we were doing this to a degree for years. We’ve had Red Hat Enterprise Linux and SUSE Linux in the EC-II console, for example, and we launched EKS add-ons. So in our Kubernetes service, you can now discover and deploy and buy Kubernetes-adjacent technologies to deploy to your Kubernetes console. And this was meeting the Kubernetes admin where they are in the Kubernetes console. So we said, “Hey, there’s something this, exposing marketplace, both the discovery and the buy motion outside of the AWS marketplace website itself.” And in parallel, we were building all these APIs because historically Marketplace didn’t have APIs, it was a website. And what we’re doing now is turning marketplace into more of an API-driven platform that can power a number of customer experiences in different places.
Dion Hinchcliffe: Oh, yeah. Enterprises want to put all that stuff that’s in marketplace in their service catalogs and things like ServiceNow, right?
Matt Yanchyshyn: Well, exactly, exactly. So whether it’s putting it in ServiceNow or in your punch-out, a rebuild Kuba system or whatever the case may be, how can we use our APIs to expose Marketplace, the discovery, the trying, the buying, the configuration, wherever it needs to be? So that’s what Buy With AWS is. It’s not just a button. It’s a set of capabilities. It’s all of Marketplace’s capabilities actually exposed through our APIs and then in turn, exposed anywhere. So ISVs like Databricks have done in-app upgrades using Buy With AWS. So you can try it and then say, “Hey, do you want to buy this with AWS?” Without ever leaving Databricks like the product, you can buy it there.
Dion Hinchcliffe: You have an experience, a viable AWS experience that you can put anywhere. Is that what I’m hearing?
Matt Yanchyshyn: That’s exactly right. So we’re basically opening the walls. We’re federating the Marketplace experience. And so someone like a distribution partner, we were talking about Ingram Micro, they have their X-Vantage Cloud Marketplace. They can now expose a subset of our catalog that corresponds to their channel partners and the software that they sell.
Dion Hinchcliffe: Directing in what they have.
Matt Yanchyshyn: In their catalog. Because that’s where those buyers, I mentioned those line of business asset buyers, they’re showing up there so let’s meet them there. And I think it’s sort of a… Anyone who knows me will know I’m a very pragmatic Canadian, and it’s pragmatic. Hey, where are your customers? Where can we help best sell with them? Where can we help enable them? Let’s use our APIs to expose Marketplace there. Is it another AWS service console? Great. Is it a third-party website? Awesome, let’s do that.
Dion Hinchcliffe: Yeah. So it sounds like AWS marketplace partners can use this, put this experience in other places where they might only just had buying content before, they can actually put the buying experience. Is that right?
Matt Yanchyshyn: They can create their own customer experiences. And not just buying. Discovering, trying, buying, and also-
Dion Hinchcliffe: It’s most of the purchasing journey then. So it’s discovery to-
Matt Yanchyshyn: Yeah. Like what we launched with Databricks this week. There’s the post-purchase configuration, which is so important because a huge percentage of customers buy something and then never use it. It sits on the shelf. So how can we help customers derive value out of what they bought? So that too.
Dion Hinchcliffe: Customer success, in other words.
Matt Yanchyshyn: Exactly. Exactly.
Dion Hinchcliffe: Very, very interesting. Well, congratulations on that news.
Matt Yanchyshyn: Thank you.
Dion Hinchcliffe: I think that all of this shows that the amazing journey and the maturity and proof points that AWS Marketplace has gone through over the last, I’ve been tracking you guys for 10 years now. Can it have been that long?
Matt Yanchyshyn: Yeah, it has. Yeah. 12, I think. Yeah.
Dion Hinchcliffe: But we’d be remiss without talking about the hottest topic of the year, of the show, and that is generative AI. And so I was wondering, what does generative AI mean for AWS Marketplace? Is it creating opportunities for you? What should we know about it?
Matt Yanchyshyn: Yeah. I guess there’s two sides to this. There’s how can we help through our own services, other services, AWS services get generative AI into the hands of customers in a useful way? So Bedrock Marketplace launched this week, and that’s powered by AWS Marketplace.
Dion Hinchcliffe: Oh, I saw that. Yeah. I said, “That is probably one of the biggest news.” People don’t understand how big that is.
Matt Yanchyshyn: Totally. Yeah. There’s like over a hundred foundation models now, expanding the existing third-party foundation models in Bedrock, now in the Bedrock console. But what’s cool about that is that’s powered by Marketplace. That’s part of the Marketplace everywhere strategy.
Dion Hinchcliffe: Yeah, I didn’t know that. So it really is part of all… Okay.
Matt Yanchyshyn: Yeah. Those are SageMaker Jumpstart models, which are… We have a machine-learning model marketplace. It’s a subset of that in Bedrock. So that’s actually a manifestation of Marketplace everywhere. Let’s bring more third-party partner software, in this case models, to customers in the right place, the Bedrock console. So that’s a great collaboration with that team.
Dion Hinchcliffe: Yeah. That’s right.
Matt Yanchyshyn: So that’s how we’re bringing machine learning to more people and AI, ML in general, including but not limited to gen AI, but there’s also how we use it. So for example, I use generative AI to scan my entire product catalog to look for exaggerated claims and product listings automatically.
Dion Hinchcliffe: Oh, interesting.
Matt Yanchyshyn: Does it do what it says in the box? So we do that now. We use it for case triage and answering 100, 200 level questions for Marketplace support. We just launched Partner Connections, which is a new multi-party collaboration feature in Partner Central, one of the other services I lead. And we use AI in that case, powered by Bedrock, to auto-recommend partners for other partners to work with. So hey ISV, here’s a services partner that might help you in this customer opportunity. We make those sort of matchmaking. We automate that. So we’re using, actually we’re eating… What do you say? Drinking your own champagne.
Dion Hinchcliffe: That’s right.
Matt Yanchyshyn: We’re using Q and Bedrock. In Partner Assistant, we use Q for business, the chatbot. We have a number of features, like chat, recommendations powered by our own AI services in addition to what we’re doing to help our own AI services get to more customers with partners.
Dion Hinchcliffe: So it sounds like you’re improving not only the AWS marketplace capabilities themselves and increasing quality and things like that, but you’re actually using it to service customers as well.
Matt Yanchyshyn: Exactly. Yeah. And so everyone always asks me, “How are people using generative AI in production?” And I have real examples in my team. At this stage, we have five or six significant features and initiatives in ways we’re meaningfully using gen AI in production in my own services.
Dion Hinchcliffe: And hopefully you can answer this question, but I think it’s an important distinction. And that is if a model gets into Bedrock, that means it meets some certain minimum requirements to do that, and it should be there. And you guys will indicate that. It’s a safer way of more consistently consuming enterprise AI models, I think, than just going grabbing things out there and putting them in your enterprise. Bedrock gives this kind of quality assurance and this safety and maybe some guardrails. Is that a true statement?
Matt Yanchyshyn: Yeah. Well, in fact, you use the exact perfect name of the feature, which is Bedrock guardrails. So there’s the features of the service itself with guardrails. But you’re right, one of the nice things about Marketplace everywhere and how we’re exposing partner products, in this case, foundation models through other AWS services, is they can curate. So in Bedrock’s case, there are over a hundred foundation models, but it’s a curated set. There are a hundred foundation models that they have tested, that they have tried, that work-
Dion Hinchcliffe: You’re not just letting anyone list there. You are deliberately curating them one by one in the Marketplace.
Matt Yanchyshyn: Yeah, because customers want choice. But we also hear customers say like, “Hey, there are a lot of small and large language models out there. Which one should I use?” And it’s like, “Well, here’s a set to start with. There are thousands. Here’s just over a hundred that we know work really well with Bedrock. You can use Bedrock for the inference with these and they’ll work well.” And so finding that right balance between customer choice and helping customers make the right decisions for their business, that’s what we’re trying to do there.
Dion Hinchcliffe: Well, and particularly since I work primarily with chief information officers, they’re aware that AI is an extremely powerful tool, and it has loaded with all kinds of concerns around touching PII, hallucinations, accuracy, and yet they’re trying to put it in the core of their business. So what really strikes me is AWS Marketplace is now empowering, through the Bedrock Marketplace, the ability to adopt AI and more consistently and safely, can go faster without worrying about blowing your leg off type of thing. Right?
Matt Yanchyshyn: Yeah. I hope that doesn’t happen, both in Bedrock and let’s not forget SageMaker. SageMaker Jumpstart as well. So both on the training and the fine-tuning side of it with SageMaker, and then on the inference side with Bedrock, I think providing partner third-party solutions in both of those places for customers, in addition, directly through Marketplace, you can discover the SageMaker models directly in the Marketplace. Again, you’re meeting different personas in each place for different use cases, whether it’s training or inference or other things.
So helping customers find the right thing for the right purpose is really important. And again, it’s a rapidly changing environment, a lot of different technologies. So the ability to quickly find and try the new thing. Like myself, we were using a previous version of Anthropic Cloud, experimented with Llama from Meta using 3.5 Cloud and some of the latest features. Again, we’re drinking our own champagne there. We’re actually leveraging that choice as well for our own services to find the right tool for the particular task we’re trying to solve.
Dion Hinchcliffe: All right. Well, thanks Matt for stopping by and sharing all the news with AWS Marketplace. We appreciate you stopping by.
Matt Yanchyshyn: Yeah, thanks for your time. Great questions.
Author Information
Dion Hinchcliffe is a distinguished thought leader, IT expert, and enterprise architect, celebrated for his strategic advisory with Fortune 500 and Global 2000 companies. With over 25 years of experience, Dion works with the leadership teams of top enterprises, as well as leading tech companies, in bridging the gap between business and technology, focusing on enterprise AI, IT management, cloud computing, and digital business. He is a sought-after keynote speaker, industry analyst, and author, known for his insightful and in-depth contributions to digital strategy, IT topics, and digital transformation. Dion’s influence is particularly notable in the CIO community, where he engages actively with CIO roundtables and has been ranked numerous times as one of the top global influencers of Chief Information Officers. He also serves as an executive fellow at the SDA Bocconi Center for Digital Strategies.
