This article is based on a presentation given by Vishal Ganeriwala at #GTM23 in San Diego. As a GTM Blueprint member, you can catch up on this presentation and more with GTM OnDemand. 

Are you looking for new ways to accelerate revenue growth for your software company? 

You're probably familiar with the traditional routes to market, like direct sales, channel partners, OEMs, ecosystems, and alliances. But what if I told you there's a somewhat hidden route to market that could allow you to increase your revenue by five to 20%? 

As you might have guessed from the title, that route exists. I’m talking, of course, about cloud marketplaces. 

It’s a route few startups use, either because they lack the bandwidth or simply aren't aware of it. However, if your company is making around $25 million or more in annual recurring revenue (ARR), this is definitely something you should look into and invest in.

As Nvidia's Product and GTM leader, I've witnessed firsthand the immense opportunity that cloud marketplaces present – but effectively capitalizing on this channel isn’t easy.

In this article, I'll pull back the curtain to share our playbook for cloud marketplace success. You'll discover proven strategies for standout differentiation, structuring the right incentives, and nailing co-selling motions with marketplace giants like Google Cloud Platform (GCP), Microsoft Azure, and Amazon Web Services (AWS). 

More importantly, I'll reveal the blind spots and pitfalls we had to navigate – from legal entanglements to RevOps restructuring. Steering clear of these landmines is crucial as you venture into this lucrative but complex new realm of B2B commerce. This guide will help you avoid our mistakes and replicate the initiatives that drove our success.

The cloud marketplace ecosystem is growing fast. Let me show you how we successfully navigated it at Nvidia and went from zero to tens of millions in cloud marketplace ARR.

The evolution of cloud marketplaces

The top three cloud marketplaces are Google Cloud Platform (GCP), Microsoft Azure, and Amazon Web Services (AWS). There are others too, like Oracle Cloud Marketplace and Red Hat Marketplace, which are also pretty cool. But if you're brand new to this, start with those big three. 

That's what we did at Nvidia. We already had a huge software business that mostly sold through channel partners. Our goal was to build on that success through cloud marketplaces.

Here’s one key lesson we learned along the way: don't try to tackle all the marketplaces at once. Each one is different – billing, listings, payouts, and so on vary across providers. Pick one to start with – whichever aligns best with your business model. We began with Azure, and within one year, we were able to scale and drive tons of revenue across all three major marketplaces.

Let's look at how the cloud marketplaces have changed over time. When you browse the AWS, Google, and Azure marketplaces today, you'll see not just Nvidia's listings, but around 2,000 independent software vendors (ISVs) across all three platforms. 

If you're not listed yet, you're already behind. A case in point: of the top 100 cloud companies in Bessemer Venture Partners’ portfolio, 50% already have offers listed in the major marketplaces.

So how did we get here? About two years ago, things shifted in a major way for these marketplaces. Google dropped a bombshell, announcing they would only take a 3% fee. To put that into perspective, Amazon used to charge 20%! 

Think about traditional channel partner margins – they're typically 20-30% because you're compensating them for sales efforts. AWS looked at those prices and said, “We'll take a 20% cut and handle the selling through our marketplace.” Then Google came in at just 3%, completely disrupting that model. Of course, keeping 97% of your revenue was an insanely attractive proposition for ISVs.

Cloud marketplaces are already driving incredible amounts of revenue. According to Tackle.io, marketplace throughput was already as high as $15 billion at the end of 2023, and it’s set to reach $100 billion by 2026.

Here’s another stat that highlights the opportunity: according to Tackle.io, 26% of ISVs expect to transact over 10% of their revenue through cloud marketplaces this year. My discussions with peers at the likes of Palo Alto Networks, Databricks, and VMware back this up; the range seems to be 5-20% of net new revenue coming through these channels. It's a seriously lucrative additional route to market.

How does cloud marketplace spending work?

The best way to explain cloud marketplace spending is through the “gift card” concept pioneered by AWS.