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Bespoke Cloud Contract Negotiation with Spencer Viernes
Episode Summary
Spencer Viernes is the founder and managing member of Viernes ESQ, which provides general counsel services on digital infrastructure issues. He’s also the Chief Operating Officer and Chief Legal Officer at Virtual Power Systems, which helps data center and cloud providers optimize power capacity, and a co-founder and partner of Salt Lake City Partners LLC, a growth firm specializing in e-commerce enterprises. Before these roles, Spencer was eBay’s chief counsel of mission-critical infrastructure and real estate.

Join Corey and Spencer as they discuss what it’s like to negotiate cloud contracts, how large organizations have much more leverage than startups in this arena, why numbers are the only thing that matter at the end of the day, how the cloud industry differs from the commercial real estate industry, how the cloud is pay-for-what-you-use but most people don’t turn things off, how COVID-19 has impacted cloud contract negotiation, Spencer’s advice on how to prepare for a cloud contract negotiation, signs it might be time to engage with an attorney during contract negotiations, and more.
Episode Show Notes and Transcript
About Spencer ViernesSpencer Viernes has been practicing law for over 15 years. His practice consists of local, national and international clients. He has advised clients regarding digital infrastructure, including cloud infrastructure, data centers and telecommunications infrastructure, technology transactions, energy and natural resources, and economic development initiatives. Spencer has provided strategic guidance, both legal and practical, related to diverse geographic business and legal issues.


With a practice that includes deals across almost most major continents, Spencer has a demonstrated track record of closing deals with a savvy business mind and a sharp legal perspective. He works side by side with business and project teams to drive results that benefit his clients in a meaningful way and allow room for mutual benefit that solidifies lasting successful business partnerships between otherwise opposing parties.



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Transcript

Announcer: Hello, and welcome to Screaming in the Cloud with your host, Cloud Economist Corey Quinn. This weekly show features conversations with people doing interesting work in the world of cloud, thoughtful commentary on the state of the technical world, and ridiculous titles for which Corey refuses to apologize. This is Screaming in the Cloud.



Corey: This episode is sponsored in part by Catchpoint. Look, 80 percent of performance and availability issues don’t occur within your application code in your data center itself. It occurs well outside those boundaries, so it’s difficult to understand what’s actually happening. What Catchpoint does is makes it easier for enterprises to detect, identify, and of course, validate how reachable their application is, and of course, how happy their users are. It helps you get visibility into reachability, availability, performance, reliability, and of course, absorbency, because we’ll throw that one in, too. And it’s used by a bunch of interesting companies you may have heard of, like, you know, Google, Verizon, Oracle—but don’t hold that against them—and many more. To learn more, visit www.catchpoint.com, and tell them Corey sent you; wait for the wince.



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Corey: Welcome to Screaming in the Cloud. I'm Corey Quinn. I'm joined this week by Spencer Viernes, who is an attorney; not typically the sort of profession that we see a lot of on this show, but one of the open secrets of working with large cloud providers is that a lot of companies have custom pricing deals and custom commitments with all of them. But because those contracts are themselves bound by NDA, people don't generally talk about them in public. Well, this is largely what Spencer does for a living. Spencer, welcome to the show.



Spencer: Hey, thanks for having me on. Corey, I really appreciate it.



Corey: The pleasure is mine. There's always been this sense of, if we talk at all about the fact that we have a custom deal with our cloud provider in place at all, they're going to come crashing through our windows and sue us to death. That is not matched, in my experience, of the reality of it, but there's definitely a chilling effect. Have you found that companies are generally reticent, in your experience, to talk about these things, or is this more of an engineering-side affliction?



Spencer: You know, I think it cuts both ways. Certainly, if you look across the lawyer spectrum—and as you said, it's a bit of an open secret. Lawyers are happy to discuss that they can get a deal. Certainly, the other side of that is, they're never going to tell you who their client is, and there are professional obligations that would limit them from doing so. So, it becomes practical, professional knowledge that you can get more customized deals, and you'll find folks who will make it a benchmark of their practice to identify that they are able to do those things, but the specifics are never things that they're going to be willing to share in public.



Corey: Exactly. Do you notice that there are major differences between the different cloud providers as far as when it makes sense to begin talking about custom deals when it makes sense to reach out, or just not even bother; get turned down flat, when companies get approached by their providers for these sorts of things?



Spencer: I wouldn't say that I recognize a ton of material differences in the way that cloud providers might approach a customer, or customers generally approach those individual cloud providers. I think one of the interesting things that—and I don't think this is a secret either, but one of the interesting things that I've recognized across my practice as a lawyer, working with mid-market or startup enterprises and even large multinational enterprises is, the most telling indicator of when you're going to be ready to approach or when somebody is going to be approaching you, whether it's a cloud provider or an enterprise approaching their service provider is going to be the economics. If you've got the specific bargaining leverage to go and approach your cloud provider and there's enough of a potential loss to them for having lost a customer as a result of not being able to engage in that level of flexibility, it certainly makes sense for them to come to the table. On the flip side if you're a startup and you're trying to get after a cloud provider and say, hey I'd really like a deal on this, it's going to be a lot tougher. 



The better or worse reality of business and contract negotiation is that as much as we lawyers like to think that we can rule the deal, and we're these expert negotiators, it's the numbers that really run businesses. And at the end of the day, those are the things that help guide whether a contract is going to be reasonable. And certainly when you have these large organizations that are cloud providers, very seldom are they going to engage in deals where they just do something that's economically unreasonable.



Corey: The business has to make sense, regardless of what provider you're working with, you're—



Spencer: Yeah.



Corey: —never going to see a scenario where one provider—for example, data transfer—is going to offer a phenomenally better discount than another provider for the same type of traffic. They all generally round to the same baseline level, which in some cases is sort of strange because their retail pricing in many cases is nowhere near the same number, even though after negotiating for a significant scale, that does become effectively the same thing. It almost feels like it's a marketing problem in some respects, more so than it is a, “Well, don't bother talking to them. They're not going to negotiate for anything.”



Spencer: Right. I think that's true. The way that companies—and I actually don't think cloud providers are that different from many other businesses in the way that they look at their economics. Certainly, there are complexities and the number of layers from varying service level agreements for differing services or the economics that go into how those individual services are rendered to a customer, and then the consequent or resulting potential flexibility and negotiating leverage that they might employ as they enter into some engagement or come to the table to renegotiate something, those things can become more layered but, at the end of the day, it's, “How do we make sure we maintain a specific margin?” 



And there are teams upon teams that try to identify what this is going to be, and whoever comes to the table has a spectrum within which they can negotiate and that's what they do. And that spectrum doesn't even open itself until you become level X so that they feel like you're a big enough player that it makes sense for them to want to hold on to you because then your customer lifetime value is exponentially greater than the initial startup that's just getting free services, right?



Corey: Absolutely. The strange way that I've seen this manifest in some of the negotiations I've been a part of is it's almost always positioned as, “Oh, well, the provider is investing in you.” And I love that term. “We're making an investment by deigning to give a discount.” Which feels like salesmanship and not particularly good salesmanship at that. 



But there is an element of, yeah, in order to get larger discounts, there has to be more of a commitment made, either in terms of dollar spent or spiritually if nothing else. None of these providers want to find themselves in an undifferentiated race to the bottom, but the realities of the market do in turn dictate that this is something that is going to have to be competitive, or there's no point in even having a conversation.



Spencer: Yeah, I think that's right. So, I'll provide what I think is—I don't know if I'd say it's exactly an analog because Cloud has moved forward into a place that colocation and wholesale data center leasing used to occupy. In many of those spaces, the wholesale folks, the colocation folks, that really has started to become a consolidated industry and a commoditized race to the bottom. And so many of those players, especially the bigger ones, are really looking at how they can develop regions either for large enterprises that have just such a large footprint that they don't really use Cloud in the same way that the general use case would apply, or they're trying to prep so that they can get one of these big cloud players to come in and say, “Oh, great, you built a building, you build all the infrastructure. We'll occupy it.” 



I think that same thing may become true for Cloud eventually. I don't know that it has hit that point exactly across every user type, given the various services and software, kind of, add-ons that cloud providers can provide to potential users, but I think you're absolutely right on how, potentially, goes because as you start to see services become more and more similar and offer similar use cases and similar performance metrics, you're right, it really does become kind of a race to the bottom, and then you're starting to look at—to your earlier point—is it the marketing that gets people? Because it can be really tough to get off of one cloud service and move on to another.



Corey: Oh, yeah, the idea of even if you approach this from a perspective of, oh, we're only going to use the common services between all of these providers so that we could migrate easily, it never works out that way. “Cool. How long is it going to take you to migrate those 18 petabytes of data from one provider to another? How long is it going to take you to repoint everything, and the basic assumptions of what provider you’re in that have been baked into your app?” In order to do that, there has to be a compelling story, and that's usually not going to make a pure economic argument or even close to it. So, there has to be a strategic win for it.



Spencer: Yeah, I think that's absolutely right. There's a lot that goes into cloud services, and once you start engaging in more than one service, as we talked about before, the complexity just increases over time. And unraveling that can be really difficult.



Corey: One thing that's on top of everyone's mind these days has been, when you sign one of these contracts, it is almost always tied to a certain level of committed spend over a period of time. Sometimes you pay upfront, in return for a small discount. Other times, it's just over the course of various time spans, and there are different ways to structure that. But they all distill down to you will pay us X dollars over Y time period. 



When people were making those projections during times that were not these uncertain times—I miss the more certain times we used to live in without realizing it—everything was up and to the right. Of course, we're going to build in a bunch of growth. Of course, we're going to be able to achieve those points. Now, it turns out that in pandemic times, when suddenly 80% of your user traffic has evaporated, you're not going to hit that commit anymore and people are basically panicking in order to have conversations with cloud providers about, “So, what are you going to do for us?” And the response, that I've seen at least, has been scattershot at best so far.



Spencer: Right. So, I'll give an interesting example, especially during the pandemic time. I spent a lot of time as a young lawyer in the great financial crisis between 2008 and 2012. And there were properties being foreclosed on, there were tenants that couldn't make their rent payments—and these were commercial tenants—and so they were going back to their landlords and saying, “Hey, we're not going to be able to do this. We need some forbearance.” 



You're right, I have not seen a significant amount of flexibility that would be similar to this concept of forbearance in a real estate industry, across the cloud industry. I think even before you get to that, many of the IT professionals that I've done engagements with, a lot of them think, “My IT spend is here, and my expectation with Cloud is that there’s—” I don't know, “Less than 5% of wasted expense.” I actually think that's underestimated to a significant degree, generally, and then you add the pandemic in, and the delta there becomes really extreme.



Corey: That's part of the challenge, too, is that a lot of these providers have approached building things out from an original perspective of, “Okay, this is the Cloud. It's going to be on-demand. Use exactly what you're going to need and no more, and then turn it off when you're done—” Spoiler; no one ever turns anything off. But when dealing with custom enterprise-scale negotiations, that is a much more bespoke, hands-on process. And some companies—[cough] Google—tend to have challenges in reaching out at the human level and negotiating these deals, whereas others have gotten much better at speaking to enterprises, or in the case of Microsoft have 40 years experience of doing exactly that. 



But now that suddenly the same thing as hitting globally—everyone all at the same time—it feels like whatever processes and systems all of the large providers have put in place for handling these enterprise deals are getting oversaturated enormously because it's not part of the normal negotiation cadence. It's everyone all at once, all asking the same thing. And they can't deal with the sheer volume. Is that something that you're seeing signs of yourself, or is your practice a little bit more removed from that?



Spencer: I would say on the one hand, I think my practice is maybe a little bit more removed from that sheer volume. So, I have a small boutique practice that specializes in the digital infrastructure side. Everything from the construction negotiations for developing an actual white box data center that might have cloud deployments in it, to helping people understand what their cloud agreements are actually saying and what that's going to mean to them as they move forward, and trying to translate that into what actual business people refer to as ‘real numbers.’ And so I probably haven't seen the same volume that some folks have, but I would say from my experience with my own clients, I do know that there is a significantly increased volume of folks, even at the bespoke level saying, “Hey, we need to go back and talk about this.” And generally the in-house legal teams for these types of businesses, they're not really staffed to handle people coming back and renegotiating really frequently. They're really staffed to handle longer-term agreements and have templatized agreements on the sales side, which is why you see so many clickthroughs. 



And so this is proving pretty difficult for them, and my understanding is that many of them are having to look at their outside counsel—which gets really expensive really quick—and try to see if there are other efficiencies, like using outsourced talent or some type of automated process to look at how you would check this box, or check that box—give in on this or, hold firm on that. And I mean, that's a tough process to implement really quickly, especially within a matter of months. My suspicion is that most of them are still struggling just to figure out what their policies are going to be, even now, after folks are already starting to bombard them with things.



Corey: It doesn't, also, help that the way that you deal with some vendors does not work with others. For example, I've heard multiple stories now of purchasing departments reaching out to their top five largest IT vendors or working down the list of we—during these uncertain times. Once again, pining for certain times—we'd like to get a 20% discount off of what we're paying you, and none of the cloud providers are budging on anything remotely approaching that. Instead, it's, “Oh, just turn things off and then talk to us.” And people, there's always a giant pile of waste in various accounts. During better times, it was always amusing to me watching people negotiate for months over 2 or 3% difference, whereas they can save 15 to 20% just by turning a few things off that are no longer in use. I digress. It always seems like there's this weird misunderstanding and misalignment between engineering and the rest of the business in these conversations.



Spencer: Yeah large enterprises also struggle with this. They're certainly not immune to the disconnect between engineering, and ops folks, and other strategy or, say, sales folks. And I use my own experience having been in-house counsel for years with one of the large tech enterprises in the Bay Area. One of the things that we had guys complain about all the time were, you'd have folks who were talking about hardware, and nobody was talking about connectivity. 



You'd have folks speaking about operations and execution, and then you'd have other folks on the coding or developer side saying, “Well, you can't do what you're doing.” But they were talking at the same time, and I don't think that's something that is specific to, or unique to any one enterprise. I think many enterprise clients that I've dealt with deal with those same challenges, and it certainly rears its ugly head as you start to look at implementing some type of renegotiation, or trying to get to addressing some of the issues that this unique, kind of, time in our history is certainly create.



Corey: One of the strangest things is that no one seems to know what this is going to do longer term for their business, what the, even, mid-to short-term is, is this something that they should start planning for recovery in three months, six months, one year, two years, ten years? And one of the big challenges is that in some cases, it seems that companies don't even know the questions to ask of their providers. Is that something that you have noticed increasing, or is it always, frankly, been a little bit of a, the two companies tend to speak past each other and not often going in the right direction?



Spencer: So, with respect to some enterprises, certainly, so some of your large enterprise clients that are really used to having bespoke agreements, right, because they had bespoke agreements with the colocation guys, and they would come back to the table, and they'd renegotiate every, I would say, at most every 36 months because they’d probably end up seeing a new deployment as they were growing in capacity if their business was moving along a very typical trajectory. And so those companies are kind of used to this and used to going back to their providers and saying, “Hey, we need this. Hey, we need that.” And they would do that with lots of different vendors. And it's not to say that they were always fantastic at it, as we talked about before, but they have some experience in doing this. 



What I found even before the pandemic timeframe, and certainly now, is that there are so many—and I would say mid-market companies that it's hit or miss as to whether they really fall economically in that zone where they were getting bespoke agreements or they were getting a lot of flexibility from their providers. The larger category of folks that are really struggling with this, were the folks that they heard the phrase ‘digital transformation’ but they didn't have the in-house expertise with which to create a strategy and a plan for execution, and they also didn't really have the in-house expertise to know, “Who do I talk to? Do I talk to Corey Quinn? Do I talk to KPMG? Do I talk to Deloitte? Can I even afford Deloitte and the expense of their reports?” And not to say that they’re poor reports, but certainly, they have a lot of resources that they can throw at things. And so I think there's been a lot of confusion around this that isn't necessarily specific to the pandemic but is really indicative of a more significant desire for executives to move into a more digital existence, but a lack of knowledge around how specifically they should do that, and whether they're actually choosing the right way to do that once they've made a decision.



Corey: That's increasingly something that I'm finding is less understood—at least in my experience—with the smaller, more nimble, shall we say, startup companies that didn't exist five or ten years ago, versus the enterprise blue-chip style companies that have been around for a century or so. The ladder has certain expectations of how an enterprise sales process is going to go and that, on some level, has been something that providers have all had to scramble to catch up to. Whereas startups are basically making this up as we all collectively go along to some extent, where it's, “Oh, this is the contract you're going to give us? It's fine. You want me to sign now?” “Uh, maybe you might want to read it first, just as a thought.” There's a maturity difference on some level.



Spencer: Yeah, I think that's right. So, I would say a classic example of your typical enterprise customer that's been around for a while—think insurance companies, hospitals, those guys, they have internal departments that have been doing this—you know, banks—for a long time. And as they move into something, they tend to have what we would consider a traditional enterprise cycle, which means not fast, usually. And then to your other point, you've got the startups and they've got a lot of really smart folks that have learned to develop amazing software or build a really interesting product, and now they need cloud services. And these guys haven't spent their time, or I doubt haven’t spent their time as engineers back in the old AT&T days, right? 



They're not the folks that came out and were grunts having to think about what a mechanical system does, or a water loop is in a big data center, or even how to physically configure servers, or figure out how to route switches from your garage to wherever you wanted to connect to. And so they're used to having things on the fly, and they are looking at that, kind of, upper right quadrant all the time and thinking, “Yeah, that's how we're going to grow and so we just need to make sure we've got everything on-demand to get there because what's most important is our growth rather than this type of management and trying to, kind of, be Peter Prudent with his pocket protector, and pencil, and thick-rimmed glasses looking over contract provisions.” What you realize when you go from that small startup to raising your round at $150 million—and say you're a FinTech company—is that you might be overspending by millions of dollars every year and you don't really know that. Or really know if you know how to decipher that, or what you can turn off to make sure that you can save that.



Corey: In what you might be forgiven for mistaking for a blast from the past, today I want to talk about New Relic. They seem to be a relatively legacy monitoring company, and I would have agreed with that assessment up until relatively recently. But they did something a little out there: they reworked everything. They went open source, they made it so you can monitor your whole stack in one place and, most notably from my perspective, they simplified their pricing into something that is much more affordable for almost everyone. There's even a free tier with one user and 100 gigs per month, totally free. Check it out at newrelic.com.



Corey: One thing, that’s always struck me as odd in the latest consumer space has been when people will call and complain, or try and negotiate, and they enter into it with the same what feels like very amateur-hour mistakes, specifically, that they go into the conversation without having any clear idea in their own mind of what it is that they're asking for. Now, that does manifest differently in the context of a conversation like this. Usually, it's, “Oh, I want to get a bigger discount on that one service.” “Yeah, but you don't use that service, so even if you were to get it as a talking point, does it move the needle on anything?” No, it lets you feel like you've got one over on the cloud provider, but that's not really the way to success.



Spencer: Yeah, I think that's right. I don't want to say—it's certainly not rocket science. And I'm definitely not trying to put myself out there as being someone who is ahead of the curve as far as intellect because I'm certainly not. What I do think and what I have learned over my experience—and this doesn't just apply to cloud agreement negotiations or other Software as a Service negotiations, but negotiations generally—there has to be—and you talked about the disconnect, sometimes, between engineering and other groups, there has to be a connection between the real business objectives and why you're trying to commence—or why you're trying to get into that negotiation, and then how you approach that negotiation. If there's a disconnect between those two things, and we talked about this before, numbers run the business, and so understanding what your objectives are from a numbers basis and having had the discussion beforehand, or before you start to focus on negotiation around why you want to have that negotiation? 



What your objectives are? What things can you do internally that are levers that will help you either save money, or be more efficient, or drive more revenue, it is really best to have an understanding of things. I'm not saying it's always possible, but it's best to have that understanding because it means that you go into a negotiation better prepared to both ask for things and be able to have your own flexibility on your side to say, “Okay, look, I can live with that because I know I can turn this lever over here if I can do that thing over there.” And it's hard to do that if you haven't done some time, kind of, researching how do you make the most efficient use of whatever it is that you're already paying for, or identify those things that you should be willing to turn off.



Corey: You'd sure like to hope so anyway, otherwise it just seems like it's going round and round in circles to some extent. One thing that I've always found that is just bizarre to me has been that this, I guess, almost ridiculous idea that you're going to yell at a vendor when you're trying to negotiate a deal with them and at the end of it things are going to be fine. Well, it's not like buying a car. You don't get to walk away at the end of having squeezed every penny of margin out of the deal, and it doesn't matter—in the car context—because you're not going to have an ongoing relationship with the dealership in many cases. Whereas when a cloud provider runs your entire infrastructure, they're your partner, whether you like that fact or not, and effectively salting the earth during your ham-fisted attempts at negotiation, usually has consequences or how much we try to hope otherwise that just doesn't make it worth pursuing.



Spencer: Yeah, I think that's absolutely right. I'll tell you two things that I feel like, over the course of my career have been really significant when I think about negotiations. The first one that I think is really important is, it doesn't matter if you feel like you were able to get more off the table than the person on the other side. It doesn't matter what agreement your lawyer puts in place on paper. If you negotiate a deal that's really bad for one party, the greater likelihood is that somebody is going to break it. 



It's just a reality because economically—or it's not economic, but it's some other thing that just so hamstrings the other party and makes it completely unreasonable for them, they're going to break it because the economic consequences are probably less than the consequences of complying with that agreement. On the other side, I know a guy who, we were sitting in a negotiation and he leaned over to me—and he was a senior lawyer and he said, “I’m going to stand up, I'm going to throw my pen against the wall, and I’m going to walk out of the room. I'm going to come back in five minutes, and I want you to tell me what they said.” And I just don't even understand the logic behind that because, in my mind, it's looking for some type of win that doesn't really have any value. So, I've always kind of negotiated from the place of, “Look, I can tell you where we stand here, I can tell you what's actually going to work for us. And if we can't get to a place of it being reasonable, we may end up just having to break the contract anyway.” 



I think that is more of an economic threat to the provider to know that at this place, it becomes a deal killer without having to get up and make any shows of yelling or screaming, or irrationality. And I also think, to your point, if you're going to be in these relationships longer term, which you necessarily are because of how these types of services actually work within your enterprise, it doesn't make sense to create animosity across the table. I just don't see the benefit in doing that.



Corey: So, here's the question that is the other side of what I always say, which is, “I am not an attorney; consult your own when you're having the legal discussions around terms, conditions, et cetera.” But from your perspective, when is it time for someone to engage with an attorney during a cloud provider or other vendor negotiation?



Spencer: So, I think there are probably multiple answers to that. That's probably the attorney answer that everyone was expecting. But I think it's time to consult an attorney when you really know that you're going to be spending consistently on something. If you've got this free service and you have no idea whether your company is going to make it, you're just struggling to find time to work on your project. Usually, when you get your first real round of capital, it’s a good idea to take a review and say, “Hey, here's what we're doing.” 



And it doesn't have to be your guy that just does your securities, and you probably won't even have a general counsel by that time. But it does make sense just to sit down with somebody and get them to help you understand what you're actually signing on for so that you can incorporate that into your longer-term strategy. For your enterprise clients that have agreements in place, if they're really starting to struggle. So, a great example is [unintelligible], a midmarket hospitality entity that is seeing a significant reduction in revenues right now, it might be a good time to look at what you've been spending on Cloud and understand whether you can go back and make that request. And it's not to say that it's always going to be in the agreement, but it might be time to get counsel and go and talk to your account manager and say, “Look, we need to have a talk about this.” 



Because otherwise you're just going to see less money on the provider side, and there are bound to be a wave of insolvencies, and that's also no good for the providers. The cloud providers don't want to just see a huge vacuum of revenue going out the door, so if they can do things, and partner as well, it may be in their interest. Now, there are varying degrees of flexibility among cloud providers, given the way their enterprises operate outside of even the pandemic, but it certainly doesn't hurt to ask and I think it's worth it to do so if you can find someone who understands the Cloud and digital infrastructure space, and can actually speak to those provisions or to those agreements intelligently.



Corey: What winds up creating an opportunity for a boutique law practice such as yours to step into this space, as opposed to a company going through their typical law firm they use for more traditional general counsel style activities or in-house general counsel for that matter?



Spencer: Yeah. So, I think the way that I'm going to interpret your question is when is it ideal—or when does it make more sense for an enterprise that may have in-house counsel, and even if they don't have a large group of in-house counsel, may have their own general counsel to use someone like me who really does specialize on the digital infrastructure space rather than their typical group? And I would say what is increasingly necessary for businesses in today's economy—certainly the pandemic is starting to really raise that flag for many enterprises—is a transformation or a strategy around how to move into the digital realm. Not just, “Hey, we've got an app or we use some software,” but, “We're efficient, we understand what our IT operations look like and how they coordinate with our revenue-generating services, but we may not have the folks in-house that are experts on cloud agreements or specific digital infrastructure nuances.” SaaS is one thing, real estate is another thing, Cloud and digital infrastructure and data centers are this amalgamation of IT, SaaS, real estate, and managed services provider relationships. And so it can be helpful to have folks in that space. I often would say it's the digital transformation that if you find yourself or feel like you're kind of lagging behind in that, that's where you start to seek out a person or a boutique firm like mine, primarily because we've just been in this space, and there's no need to reinvent the wheel on that.



Corey: Yeah, it's your first time seeing one of these contracts, whereas it's your third time this week.



Spencer: Right. I mean, you go to Google Cloud, or you go to AWS, or you go to Azure, and, you know, you've got these clickthrough agreements, which they seem—I don't know if they do, or not, because I'm a lawyer, and I probably read things differently than everybody else in the world, but they don't necessarily seem like they are particularly onerous.



Corey: No, in fact, the enterprise agreements are almost always nearly identical, just with more generous terms around things like shutting off for non-payment or whatnot. The termination provisions are slightly different. But yeah, there's remarkably little that shifts meaningfully. Sometimes it's a whole bunch of nonsense around indemnity, but that's basically people bring you in for.



Spencer: What you may not be seeing is the 50 different links to SLAs or CCPA terms—which are the new California Privacy Act—or the global data protection regulation, the GDPR terms, or the different terms that apply to this particular service versus that particular service. And so some of those things are nuances that you just wouldn't catch. Most agreements are going to have, even if they’re Software as a Service agreements, they're going to have one service level agreement. They're going to, in most cases, have one product that they're offering you. The very interesting thing about cloud services suites is it really is a suite: it's an entire platform upon which you can build an architecture. 



And so there are so many different products that have different terms, it can be really tough to navigate that. And it really is something where you have to have the knowledge to bring in—because let's say you're an early stage, or let's say you're even past early stage and you've gotten to your B round, your CTO may still be a developer. And that, I don't know, is always going to be the expansive knowledge set to really understand how you deal with the economics on the vendor side. Because that's, I think, really where you get to the ‘yes’ or the best negotiation is being able to understand where the other side is coming from and how you can reach a reasonable agreement with them.



Corey: Thank you so much for taking the time to speak with me, especially around something that is not often spoken about. If people want to learn more, where can they find you?



Spencer: Yeah, so I maintain my law firm’s website www.viernesesq.com, and happy to have people reach out to me. They can also just shoot me an email at sviernes@viernesesq.com.



Thanks for having me on. Corey, this has been great. And it's interesting because it's not often that folks on the business side really want to hear much of what the lawyers say, and so this has been a great opportunity.



Corey: Well, if they don't listen early, they're going to definitely have to hear about it later. So, [laughs]—



Spencer: [laughs]. Right, right.



Corey: It's one of those, if you have to have these conversations, maybe do it when you still have the option to do something productive about it. It just seems to make the most sense.



Spencer: Yeah, that's absolutely right. And hopefully, the folks that do a really good job on the legal side, understand that as well. They want to provide you with an ounce and prevention for that pound of cure, as opposed to trying to front-load all the stuff because, again, for the best lawyers, it's all about having partners as well, as opposed to just calling them clients.



Corey: Absolutely. And that's the key takeaway here, above all else. So, thank you once again for taking the time. I appreciate it.



Spencer: Thanks, Corey. I appreciate it.



Corey: Spencer Viernes, managing member of viernesesq.com. I am Cloud Economist Corey Quinn, and this is Screaming in the Cloud. If you've enjoyed this podcast, please leave a five-star review on Apple Podcasts, whereas if you've hated this podcast, please leave a five-star review on Apple Podcasts anyway, after clicking through the shrinkwrap agreement.



Announcer: This has been this week’s episode of Screaming in the Cloud. You can also find more Corey at ScreamingintheCloud.com, or wherever fine snark is sold.



This has been a HumblePod production. Stay humble.





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