The question "should we go direct or use partners?" gets asked in the abstract constantly. It should almost never be asked in the abstract.

The right question is: which markets justify direct investment, which require a channel partner, which require a distributor, and how do you structure the economics so partners actually sell your product instead of just VARing it? These are four different questions with four different answers, and conflating them is the source of most international distribution failures.

The Real Question Is Incentive Alignment

The failure mode that dominates international channel relationships: the partner that signs up, takes a discount, lists you in their catalog, and generates almost no revenue.

This is not a partner selection failure, mostly. It is an economics and expectation failure. The company signed a partner agreement without defining what success looks like, without building minimum commitment requirements into the contract, and without establishing a joint go-to-market plan with specific activities and timelines. The partner had low cost to sign and no obligation to perform. The result was predictable.

The fix is not better partner vetting (though that's useful). The fix is structural: designing the partner relationship so that the partner's financial interest aligns with actually selling your product.

A few specific mechanisms that help:

Minimum commitment requirements. If the partner wants tiered pricing or exclusivity, they commit to minimum quarterly revenue. This converts passive partners into active ones or reveals that they were never actually motivated to sell.

Co-sell requirements for better margins. Better margin tiers require co-selling activities — joint account planning, joint marketing, pipeline reporting. This rewards activity, not just registration.

Joint go-to-market plans. Every partner agreement should include a defined joint GTM plan within 60 days of signing — specific target accounts, specific activities, specific owners. If you can't agree on a plan, you shouldn't have signed the agreement.

Performance review cadence. Quarterly business reviews with pipeline and revenue data. Not to manage the partner — to identify whether the relationship is working and where to invest more or less.

A useful partner scorecard is simple and operational:

  • Minimum quarterly revenue committed versus delivered
  • Registered pipeline by stage, age, and next action
  • Enablement completed: certified sellers, trained SEs, support handoff tested
  • Sourced revenue versus influenced revenue, so referrals do not get confused with real selling
  • QBR cadence met, with named owners for joint actions
  • Discount and margin behavior: did the partner protect price or train the market to expect concessions?

If the partner cannot report against those fields, the relationship is not managed. It is hoped for.

The Evolution Question

Every market evolves. The organizational model that makes sense at $500K ARR in Germany is not the model that makes sense at $5M ARR.

The typical progression: start with a channel or distributor model to learn the market, build initial reference customers, and generate revenue without heavy fixed cost. As the market matures and you have proof points, convert to a hybrid model — a small direct team covering strategic accounts while the channel continues to cover the long tail. Eventually, in large enough markets, move to direct or near-direct.

The companies that get this wrong: they stay in the channel model too long in markets where direct control is required to compete, or they jump to direct investment too early in markets without sufficient proof. Both mistakes are expensive.

The key is having explicit criteria for when to evolve — not feelings, not just revenue thresholds, but the specific competitive and operational conditions that make the next model the right one.