Pax8 has launched into Australia and New Zealand armed with a cloud commerce marketplace, a strong executive line-up and an acquisitive commitment to overhaul traditional distribution practices for managed service providers (MSPs).
Created as a born-in-the-cloud distributor in 2012, the Denver-based business is ripping up the rule book in relation to cloud provisioning, support and billing, taking direct aim at traditional supply chain incumbents in the process.
Central to such expansion efforts locally will be an executive team housing Chris Sharp as senior vice president, James Bergl as vice president of Business Development and Tracy Lacewell as vice president of Sales.
This is in addition to an initial vendor line-up of Acronis, Check Point (email security), Bitdefender and CyberCNS, in addition to Dropsuite, Proofpoint and SentinelOne.
“As we continue to look for new ways to broaden our geographical reach, we are thrilled to announce that MSPs in A/NZ can now sign up to be a Pax8 partner,” said Nick Heddy, CRO at Pax8. “Pax8 makes it easy for partners to cloud-enable businesses and efficiently capitalise on the growth opportunities.”
With growth to be achieved both organically and by acquisition, ARN can confirm that more “best-of-breed” vendor additions are expected in the coming months, alongside market expansion beyond trans-Tasman borders into ASEAN.
“This team is highly regarded in the channel and well-positioned to expand Pax8 operations into Asia, starting with A/NZ,” Heddy added. “Cloud distribution is broken and this is an attractive launchpad and represents one of the largest total addressable markets in the world.
“A/NZ has been on our radar but also there was an element of opportunism once Chris and James became available -- our recipe is to find a great team of local leaders that we can invest in and we’ve been lucky enough to have been advised by both on the local nuances.”
At the heart of Pax8’s strategy is a commitment to modernising how partners “buy, sell and manage” cloud through a simplified buying journey delivered via the channel.
Motivated by a desire to “displace legacy distribution”, the company’s cloud marketplace allows enhanced billing, provisioning and automation, underpinned by pre- and post-sales support plus education and enablement programs.
From a personnel standpoint, Sharp will run company operations from a regional base in Brisbane, leading the overall team and managing corporate decision-making across Asia Pacific, with a remit spanning India to New Zealand.
Sharp joins the business with more than 30 years of industry experience in building subscription-based channel ecosystems, having most recently held the position of chief strategy officer at Rhipe for over six years.
Prior to this, Sharp spent more than decade in partner-facing roles at Microsoft across Asia Pacific, in addition to management positions at Red Hat, CITEC, OGen Pacific and SASTEK.
“Pax8 is bringing something special and unique to our market, and I am excited to lead our expansion into the Asian markets starting in A/NZ,” Sharp told ARN. “Our focus is on enabling our partners to create value-based offerings for their clients and we look forward to helping our partners to increase their opportunity in the market.”
In short, Sharp said his focus is centred around three core priorities -- helping partners “make money, save money and reduce risk”.
“We’re going to organically grow this business but at the same time, we’re going to acquire which we are currently working on,” he added. “The distribution channel has needed organisations to focus on enabling partners -- not just technology enablement but teaching them how to make money from selling products.
“We’re focused on helping our partners understand how to commercialise products and we’ve acquired companies internationally specifically around training MSPs on this issue.”
Meanwhile, Bergl is tasked with leading pre-sales and consulting teams alongside building out education programs for MSPs.
“I’ve been following Pax8 for a while now and one of the attractions was the partner-first mentality evident in the business,” Bergl told ARN. “Based on my background, this mentality is important because success comes not when you put yourself first, but when you place your partners first.
“When you can help partners transform their business to drive top-line revenue and take away some of the back-end headaches, then they have time to focus on their unique selling points and move to the next level.”
Bergl -- who took home Management Excellence honours at the ARN Innovation Awards in 2020 -- has been widely credited with building the Datto business from the ground-up in A/NZ, having first launched the brand locally in 2015.
During his time at the business, Bergl built a team housing over 100 employees, serving an expanding base of more than 1600 MSPs on both sides of the Tasman.
“By joining at the ground level, we’re committed to building a team focused on raising the bar for partners,” he added. “A lot of people talk the talk but very few are capable of achieving that. We have that mentality at Pax8 and we are supported by our platform and tools.”
Furthermore, Lacewell is tasked with leading sales in A/NZ, as well as strategic expansion into the regions. With almost five years experience at Pax8, Lacewell was most recently responsible for heading up sales operations in the US.
Despite early beginnings in A/NZ, Pax8 is no small fish on the global scale following recognition as one of the fastest-growing private companies in the US.
To support such rapid expansion, US$185 million in new equity capital was raised from new investor SoftBank Vision Fund 2 in early April, increasing the company’s valuation to US$1.7 billion.
The business was co-founded by serial entrepreneur John Street as CEO, alongside Klaus Dimmler as chief strategy officer and Ryan Walsh as chief operating officer.
“We first went to market talking about distribution because the channel understood that term,” acknowledged Street, when talking to ARN. “But we’ve never thought of ourselves as a distributor, rather a cloud commerce marketplace since day one because there's nothing to distribute anymore -- distribution is a misnomer.”
Street is highly regarded as an award-winning entrepreneur who has built five businesses from the ground up, notably cloud-based email and web security vendor MX Logic which was acquired by McAfee for US$140 million in 2009.
“When I ran MX Logic I was the poster child for Ingram Micro but they didn’t do anything for me in my capacity as a vendor,” Street noted. “Yes, they accelerated my ability to sign up service providers but I couldn’t understand the value model. It was like having a sales person introduce you to someone at dinner, then six months later after you’ve worked 100 hours to close a deal, they jump back in and ask, ‘where’s my commission?’
“After we sold to McAfee I figured that we needed to fix distribution for the cloud era. Myself, Klaus and Ryan carried out a lot of advanced research seeking a real macro opportunity and this stood out because distribution didn’t work.”
In a way, Street was motivated by a desire to build an “iTunes for cloud apps” aligned to the simple notion of “signing up and grabbing it”.
“Klaus told me that’s impossible but we agreed that if we didn’t do it, somebody else would,” he recalled. “But there’s so much more to this than an idea, it was about orchestrating the whole API layer that's being built to make all these cloud products interactive. That was the democratisation of small business which was the place to start.”
Despite accepting that Pax8 is not limited to the small and mid-sized business (SMB) space, Street said the company is “killing it” in this area and will continue to penetrate this specific sector in all new markets across the world.
“We needed to go after this ecosystem because MSPs predominantly service SMBs given that larger organisations have in-house IT departments,” he said. “Early on, we knew that MSPs require sales and marketing support but the really easy part which distribution has overlooked is tier-1 support.”
With software-as-a-service (SaaS) affording MSPs increased margin opportunities, Street said tier-1 support isn’t necessarily centred on providing technical product expertise given this is often an area of strength in the channel. Rather, the “little things” such as automated billing and provisioning for multiple vendors.
“The maths and the supply chain actually works because of the marginal profitability of SaaS products so we knew we didn’t have to build a big infrastructure footprint and could run this virtually," he stated. "And this is how we have adopted a wingman and wingwoman position in the channel.”
In servicing an ecosystem housing more than 20,000 MSPs -- which works with over 200,000 businesses -- Pax8 recently acquired TVG, a cloud services and software distributor in northeastern Europe.
From a local perspective, end-user spending on public cloud services in Australia is set to skyrocket to $18.7 billion in 2022, up 31.8 per cent from last year, according to Gartner. In New Zealand, investment is set to reach $2.58 billion, representing a 26.3 per cent increase from last year.
On both sides of the Tasman, SaaS accounts for almost half of the total cloud market locally, but the fastest growing segments are platform as-a-service (PaaS) and infrastructure as-a-service (IaaS).
“We sit at the hub of the transaction but the real star of the show is the total addressable market -- this is in the billions and trillions,” Street explained.