A New Idea for the Direct Sales Channel

Axel Schultze is a serial entrepreneur based in Silicon Valley. Perhaps that is not a very useful description since the valley seems to be littered with them, but Axel is, in my mind, an interesting case.

His area of interest is the indirect sales channel, and he was the founder and first CEO of BlueRoads, a San Mateo, Calif.-based company that focuses its efforts on improving life in the sales channel. This week Axel announced a new venture called Xeequa. I’ll get to that in a moment, but first the channel.

Getting the Job Done

You don’t have to be blind to miss the importance of the channel these days, but it would help. In the last few years the channel has been responsible for moving more technology of all kinds than its direct counterpart.

Not surprising, you say? Well, it is at least remarkable because of what it says about the technology market in general. Early in the high tech cycle, and any product cycle for that matter, when product categories are new, definitions are loose, and customers don’t have a clue about why they need the latest gizmo, companies rely heavily on direct sales forces to carry the missionary message home.

Direct sales has its place, but it also has an underside — it’s expensive to put all those feet on the street, and it’s a risky proposition because it burns a lot of venture capital. Often, however, it’s the only way to get the job done. Later on, when more people “get it,” the sales effort and some of the marketing can be given to partners in the sales channel, but that has an underside too — for lots of reasons, there is an uneasy alliance between the OEM and the partners as well as among the partners.

Long story short, Axel had some insights about how you can improve the relationships up and down the hierarchy and improve overall channel throughput. That’s what went into BlueRoads.

A Grass Roots Campaign

The story of technology, or at least the story I am writing, is about transforming hierarchies into a network. It’s a slow process, and this kind of transformation is as old as the Enlightenment — think about the move from monarchy to democracy and you’ll get what I am saying.

So, Axel’s new idea for the channel is to treat it more like a network than a hierarchy. I for one don’t think that we will see a wholesale change in business models any time soon — there’s very little danger of this new paradigm upsetting well established channels, but shifts like this start at the grass roots and grow up.

Axel comes along at an interesting time. He is enabling channels to arrange themselves differently — as networks instead of hierarchies — at precisely the same time that platform technology, spearheaded by companies like Salesforce.com, is providing the means to flatten out the software market. Just this week Salesforce.com released its application programming language, Apex, which clears the last hurdle for developers to build completely new applications on top of its service.

Salesforce’s AppExchange makes it possible for developers in its ecosystem to build and sell custom applications to the world, but it also puts every member in the interesting position of, at least potentially, being both OEM and partner.

I expect this will result in webs of companies developing and selling solutions for complex business processes — what we used to call vertical solutions. These consortia of providers will potentially each be empowered to sell an integrated solution, and that’s where I think Axel comes in.

Bridging the Gap

Xeequa doesn’t look to me to be a replacement for SFA and traditional CRM, but it does look like a much needed traffic cop that can bridge the divide between hierarchical CRM, where you have well defined vendors and customers, and the emerging realities of networked selling, where a company can be both, depending on the circumstances.

It won’t drive the emergence of vertical solutions based on platforms — at the end of the day, that’s a technology issue. Xeequa (or something like it) will, however, help provide the business underpinnings that will reduce the friction caused whenever multiple companies try to work together to deliver a standardized solution.

A lot of things need to go right before this idea can take hold. Xeequa is just starting out and the product needs to be hardened. The same can be said for the idea that ecosystem vendors can come together to symbiotically help each other and help customers.

I am seeing enough on both sides to make me think that this direction is valid, but we will need more data points in the coming months before anyone breaks out the French champagne and Cuban cigars.