The Evolution of Tech Ecosystems and AI’s Impact on Business, with Christine Li [Episode 1158]

In this week’s podcast, hosts Alastair Woolcock and Howard Brown are joined by Christine Li, VP of Global Partnerships at G2, to explore the transformative role of AI and ecosystems in today’s businesses. They delve into how companies are increasingly becoming tech-centric, driven by consumer behavior and the demand for efficient, personalized experiences. Christine brings to the table her vast experience from G2 and LinkedIn, emphasizing the necessity for businesses to adapt to technological advancements while preserving the integrity of customer data. The trio discusses the impact of AI on valuations, the shift towards ecosystem marketplaces, and how these trends empower businesses to deliver more personalized and efficient services.

Podcast Transcript:

0:00-0:26

Speaker

Welcome back, everybody, to this week’s Sales Strategy Enablement Podcast. I’m Alastair Woolcock, joined by Howard Brown, my co-host, pioneer, recognized authority in all things revenue, science, behavioral change. Howard, how are you doing today? I’m doing great. It’s great to be here. Good to see you again, Christine. Great to see you too. 

0:27-0:59

Speaker

Christine, we are so excited to have you back as a guest. We had you on before talking about value exchange, the growth of partner networks. But it is wonderful to see you back. For the audience, Christine Lee is the vice president of global partnerships at G2, also has a wonderful history prior to G2 at big firms like LinkedIn and elsewhere, and is just a wealth of knowledge in the space of partnership sales and marketing. Christine, good to see you. Good to see you. 

1:00-2:29

Speaker

All right. Now, like last time, we always have to start off with a little bit of insider news and this one, Christine, I want to dive a little bit into starting with a question for you and Howard to consider here. No doubt one of the top board initiatives this past year has been AI, everybody wants the AI approach, doesn’t matter what the industry, where you are in the world, everything AI, but the question I actually have for you is going to be more related to.

Ecosystems today, not just AI, I don’t want to actually pose this to you as a thought for both of you to consider when our respective customers across any industry today become tech companies, because they’re all pursuing AI. So when your customers become tech companies, what’s the value of a tech company going to be?

And. I give you a kind of a news bite that goes with this, and this actually comes from my time when I was at Gartner that we saw over this past decade, ecosystems have now increased consecutively year on year at 13 times in annual reports with boards of directors. So this is an ongoing continual build.

Before AI, every company was going, how do I be a bit more tech like? And. I’m not sure that many tech companies have a good answer of what’s their value going to be and what’s my ecosystem going to be, but my customer is more of a tech company. What’s your thoughts? 

2:30-6:33

Speaker

I think starting just on a philosophical level technology follows society.

It follows our behavior and our changes in our movement. And so when I look at, for example the rise of fintech and how that’s over the years disrupted the traditional banking and investor communities. It’s not like every bank is now a technology company.

Is that their consumers, their customers use tech and it’s much more efficient and effective if they can mirror that behavior in how they service them. So I think that’s the kind of the underpinning rule that I look at. When we think about how companies evolve into tech, it’s not necessarily that, someone woke up and said, I dream to be a tech company.

It’s really just following the trends and behavior and demands of their customers and how we as consumers. operate and prefer where, what we want to use and how we want to do it, the methods of how we want to do it. So I really think that’s the driving force behind why we’re seeing that insurgence of in that growth in, in company transforming into tech.

It’s funny, I keep reflecting on the early days when I was at LinkedIn and, we had all these different verticals, we had healthcare, we had FinServ, we had tech, EDU, education, et cetera, right? But when you pull the curtains back and you look across all these companies, They all have some type of tech company, tech element.

So we’re like, they’re actually all just tech companies. When we think about financial services and tech, a lot of increase in that fintech side or. Traditional banks that want to do Fintech same thing in the education sector. You’re looking at, online learning modules in systems those are having the highest growth and in traditional universities and and in colleges trying to promote and ramp up the technology side of what they offer.

I think all of that is driven through the user behavior, their customer behaviors. And with that expectation, it has been evolving toward yeah, I also want to touch on the growth of ecosystems cause I think that’s a really interesting one. And when I think about ecosystems there’s the partner ecosystems and then there’s like just like marketplaces, right?

Which is really your virtual ecosystem where you go to find, how different products and such are connected. When I got to give credit to Salesforce as being really the pioneer in marketplaces at least in the B2B. Digital world when they created AppExchange, it was groundbreaking.

It was something that, no one else was really doing yet. They really created that sense of community for different technologies and applications that ride with Salesforce and then creating that systems integrator community, et cetera. And that was our whole concept. We go to some kind of started there. And then over the years, we saw an increase in large enterprises creating these large, massive marketplaces like Microsoft Azure, SAP, so forth. And I think it was only within probably the last five or six years where you’re seeing the strong adoption of of marketplaces become accessible.

To smaller organizations like the SMBs, the smaller businesses that don’t necessarily have the robust infrastructure in place to, to build and develop and grow that ecosystem. And I think technology platforms like. Partner fleet has really risen to make this the marketplace a plug and play and make it accessible for smaller organizations that don’t need to invest in building their own infrastructure and only focus on creating the partnerships.

And then having the administrative or the technology side really be managed by an outside company that can turn it on and off and scale up and down as you go. That is, one of the reasons why we’re seeing a really big boom in the ecosystem marketplaces. 

6:34-8:57

Speaker

I just want to weigh in and maybe to the earlier point, Which was about, are all companies becoming tech companies? This last week, I participated in a private equity round table around generative AI and valuations and how generative AI is impacting company’s valuations. And some of the interesting things that came out of it was a lot of privately held companies. Have not seen the impact of valuations on having a technology component to their organization Because you’re either a tech company or you’re a consumer company or something like that Large companies like BMW that are now truly tech companies and are growing their valuations so much around being a tech company, that’s happened for a while now.

And what was interesting was the conversation was about the fact that a lot of the larger companies have already seen the multiple growth from their technology. And the concern is that they’ve been given too much of a multiple on that technology spend, where now with generative, it’s leveling the playing field generative is making launching new technologies so easy that there’s talk about discounting some of the technology component and actually not necessarily adding value to the generative piece, but it’s really about the data that the organizations have.

That is where the increase in value and multiple is going to go because everybody typically has either outsourced technology through partners or built their own. And a lot of companies that built their own, they’re not able to plug into that rich data set that some of the. The generative AI now requires.

So it’s an interesting time to be talking about the impact of ecosystems. The fact that there’s been a lot of multiple put on technology parts of large organizations. But now it’s being revisited. Do you actually own a unique data set that will power the technology that will improve the performance of your organization? And great questions, Alastair. 

8:58-10:19

Speaker

And Howard I actually, I just want to keep on the thread with you here and pick off what Christine was saying around the consumer behavior driving how the companies are making these decisions and exactly what you just said. So when I think of a lot of. Let’s pick on financial services as a space. Okay. And financial services, they have a lot of data, but they don’t have is a way of actioning the data. They don’t have a way of how can I make that data more meaningful? So I can do more hyper personalization to the end consumer. The end consumer wants that. They may not literally use those words.

But they’re biased towards that, right? That’s just what they’re looking for. Capital One took off at long as millennials is of the hyper personalized approach that it took in terms of loan adoptions, but the wealth transfer market, all these other things in financial services it’s all about the application of that.

So when I think of an ecosystem now, I think it’s the, how do you cast the vision to, a company that doesn’t maybe realize what you’re just saying, they don’t realize what they’re actually sitting on or. They don’t know actually how to build or should they even build that’s probably the big thing. Should they build it or should they just partner and go? And that’s again, not a revolutionary question, but it’s one that’s now really accelerating because of what you just said what’s your thoughts? 

10:20-11:21

Speaker

Yeah and it’s interesting, right? Because typically you have a CIO. Who really loves building projects, right? They want to, or CTO, even more so they wanted to build large projects. Now it’s really about examining the assets you have in those assets, maybe data, and if your data like financial institutions is so rich because everything about your customer, about their portfolios, about their buying habits.

How do you then empower your front end reps, your wealth managers to provide a better experience, a higher touch customer service to those wealth clients. Based on that data, should you be building all the tooling? Probably not. You should be focused on your core business and utilize that data, that gold to apply a better experience so you can retain those customers and deliver a better experience for them. That’s how you keep customers. That’s how you grow your customer base. 

11:22-12:28

Speaker

I think it’s bang on. And Christine, you brought a really interesting point here around Salesforce and its pioneering. But also the world’s, everyone’s caught up on that at this point, right? There’s, everybody’s got a similar flavor to it.

And the partnering that Howard just described to me. And when I put like a G2 lens on where you currently are, it’s much more about how do I either create something together with partners? Or how do I match partners together to do what Howard just said? If you’ve got a big bank, a financial services problem, there’s something there.

I’m dealing with wealth management. It’s going to require potentially a few different pieces to come together. And that isn’t just us rushing in or somebody else rushing in and saying I’ll do my piece without, the rest of the groceries, isn’t going to make a great dinner. So bringing together and matching and creating this creation style ecosystem, as opposed to simply I’ll say cooperative ones, which are where it all started. I’m certainly seeing a big surge of that. I think there’s more of that. I, are you seeing that from G2 as well?

12:29-14:58

Speaker

Yeah, absolutely. And I think just going back to, the previous episode where we talk about the consolidation of of tech and budget and, fiscal responsibility being a factor. I think when I think about Howard, you’re, you bring up such a great point around, advising your businesses into, do they want to build or partner? And a CIO often just wants to build on their own, right? And I think in the heydays of tech, in where VC money was plenty, everything was going up and up building your own was a real possibility for a lot of organizations. In more recent times, that spend, it’s like, it’s no longer growth at all cost, right?

Really have to actually be mindful of, does this detract, does this distract from our purpose and why we’re here and what we’re supposed to actually do? And does building something on our own really actually accelerate and get us there versus could we get there faster with a partner and maintain our focus?

Bell Canada and we ran the thing. So Alastair, you mentioned that you’re at you were out west in, in Canada. We were the premier sponsor for the 2010 Olympic games and built up all the the infrastructure to support. All the video casts, all the cellular towers, et cetera, out in the West Coast. And I remember one of the the VP of operations there Justin Webb had shared something with me that was just so profound and stayed with me for the rest of my career, which is, if we do our job right, then nobody will notice us.

We will just be there and technology would just work as they should. And then everyone else can focus on doing what they do best. A news broadcaster can focus on reporting the news. Journalists can focus on Reporting and predicting character articles, the sports fans are there to enjoy and be entertained and, watch the sports and be in that moment.

Nobody would notice that the cellular network went down or the scoreboard isn’t working or the video stream cut out because we will be doing that. And so that, that was really helpful in how I think about partnerships today too. Is, building it will actually distract from what our core purpose is and how can I lean on partners and how can I provide that invisible support so that, they can do the best that they are doing in and we can all focus in our respective areas.

14:59-16:02

Speaker

And sharing is so important in that. And I would just say it’s just for the audience’s context. When Christine references Bell, that was a big telecommunications company in Canada, the computer games. Tell us for those that don’t know but in terms of the sharing construct here, and that idea of being seamless and integrated, that you’re just referencing Christine, Howard, One of the, I believe fundamental questions that enterprises and tech companies, when considering coming together to solve a market problem should be asking is, are you prepared and willing to participate in sharing consumer and buyer data together and with others. And now that you put the, just the private equity group you were just in about AI and the data being so important there, that’s an important thing because that’s, is a thing that drives valuation.

It’s a really important piece, but making the leap of actually opening it up so it actually can coexist and be shared. That’s a huge monumental mental shift for most people.

16:03-16:58

Speaker

Not only is it a monumental shift for businesses, we have to also think about who owns that data because it’s the consumer. That is their personal data, right? So before we just go and share it, we need to make sure that they give us permission to share that data as well. And so with GDPR and all these other regulations that are passing, we cannot just easily share that data. And we need to be incredibly careful of sharing that with the open AIs of the world, the anthropics, using that data to train generative is also a real issue. 

So we’re at this incredible inflection point, but there are still a lot of decisions to be made by the courts. There are still a lot of laws that will be created. So we’re, it’s exciting. It’s a movement, but we have to be cautious at the same time.

16:59-17:38

Speaker

If I can just add here a hundred percent agree both G2 and LinkedIn are double sided marketplaces, right? You’ve got your core buyers or members who are there for a very specific purpose, and you want to be delivering that value to them and protecting their experience on the site.

And then at the same time, there is the sellers or the brands that are represented and giving them just the right amount of data. To help them, to help connect them to where the buyers are in their journey without ever exposing or violating the trust that you have built with your buyers and your members in the platform.

17:39-18:20

Speaker

Quickest way to lose. Yeah. It’s the quickest way to lose customers. It’s so if you lose trust, it’s over. That’s it. So can we both just expand on that a little bit, Christine explain for the audience a little bit more double sided marketplaces. And to Hara’s point, how are you keeping the integrity there?

Because any company is going to have pressure, right? So you’re going to have pressure of certain people paying you and you’ve got pay pieces coming from both sides of the equation. When there’s a revenue target not being hit how you deal, how are you dealing with that? Because that’s where the rubber hits the road. We all generally agree, but once targets are set, people are staring at. Man I’m awed. How do you make the double sided plays work? 

18:21-21:17

Speaker

Yeah. Yeah. And actually through a lot of this is where partnerships comes into play. Yeah. Let me take a step back and explain first about how the double sided marketplace works. G2 is the largest B2B software and services marketplace. We’ve got over 250,000 products represented over 2 million reviews collected over the years. And we host over 90 million buyers every year who comes to our marketplace to research for a solution that’s right for their business.

Our duty is to be where you go for software. We have a fundamental role in holding the buyer’s trust and helping them guide to a very important software purchase decisions that, oftentimes like their reputation in the companies on the line. And I think that’s our first mission is really being in there for the buyers. So on the seller side, which are the vendors are represented on our platform we also have a duty to them to give them the opportunity. To represent themselves and to meet the buyers and be helpful for the buyers. So one of our products that we offer as an example of this is Buyer Tech.

So going back to I love Howard, how you were saying, like the, at the crux of all of this technology is really the data, right? That’s what’s the most valuable piece. Our buyer intent, our signals generated through the buyer traffic into the different parts of our marketplace to then demonstrate what stage of the journey are they so that we can help our vendors.

Be more helpful in meeting those buyers where they are. Now, what we don’t do is share any personal data. We do not release any PII on our buyers. And that is a non negotiable for us in protecting the privacy of our buyers. What we do share would be account level data. So what company is it coming from?

How often, how many are coming from those companies? And then but all that data that sits in G2. It’s valuable for us, sure, but it’s value less for our customers, unless if they can take action off it. And that is where the sharing piece comes in. Our ecosystem of partners enable our customers to take that, those highly valuable buyer intent signals, and then actually take action off them.

In the workflows and systems and tools that they’re using every day just thinking about LinkedIn as an example, thinking from there, we have a good integration with LinkedIn and where our buyer intent signals gets plugged into their campaign manager, which then turns into advertising campaigns that they can target with at the account levels. So there’s something that they can action. Off that data, right? And so that’s how does that help answer the question around how we think about privacy and managing, balancing that experience, while also creating value for our vendors.

21:18-22:40

Speaker

I, I think I’ve always said humans and buying behavior is all about reducing friction and the lazier you can make somebody the better. And and so when I think of good partnerships, it’s often about how do I take friction out of the process? At the end of the day. You have a buyer and a seller that they want to get married.

You just don’t know quite how to do it. And there’s a lot of noise in the market and, Howard, back to you, I just think it’s all, the transparency is so important in all of that and given the very quick and ever growing rise need to use AI tools, data sets that are to meet those. This is going to have companies really focus on their integrity, but also their transparency of how they’re building these partnerships with these vertical industries that are there. And I will, Howard, final word to you. And I will just say this, that as the audience listens here, remember that of top performing companies today in both tech and non tech.

So industry 79 percent of them now. are either participating or building ecosystems, 79%. Howard final thoughts?

22:41-23:08

Speaker

It was just a delight to have you, Christine and learn more about ecosystems, how they work and why it’s so important today for companies to think about who to partner with why to partner and ultimately it’s in the service of the buyers. It’s really great to hear about you and G2 and thank you for enlightening all of us. Thank you both for having me. This is a lot of fun and I learned a lot from our conversation. So thank you. 

23:09-23:38

Speaker

Thank you, Christine. And you’re almost done, we don’t like you off the hook without a quick trivia thing. Our audience seems to love these. So here it is. You ready for your quick question? Multiple choice. What percentage of companies attribute at least a quarter, 25%, Of their total revenue to partners and indirect sales, A 10%, B 20%, C 30%, D 50%. 

23:39-24:30

Speaker

I got you a little high again, 50%. Going high. You are two for two in two episodes, according to recent Forbes and HubSpot report, 50 percent of companies attribute at least 26 percent more of their revenue coming through partners now.

It’s continuing to grow. It’s there. Christine Li. Vice president, global partnerships at G2. Thank you so much for joining us here today. Howard, always a pleasure and for everybody listening in, please remember to like, and subscribe and hit us up on a future episode. Thanks everyone.