Episode 74: No Timmies Allowed

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Erick and Rich discuss efforts by Kaseya and Syncro to eliminate the seams between “seamlessly integrated” products by fusing them all into one solution, as well as strategic, non-salesy ways to upsell your clients. Then they take you live to the panel session they co-moderated at this year’s IT Glue GlueXperience event in Las Vegas in which three MSPs shared their hard-earned growth and success tips. And finally, one last thing: Why Australians are better off eating sausages on election day than understanding how they’re made.

Discussed in this episode:

Death to Seams

How the democracy sausage, a polling day snack, became Australia’s election symbol

 

Transcript:

 

Rich: [00:00:00] And 3, 2, 1. Blast off. Ladies and gentlemen, welcome another episode of the MSP Chat podcast, your weekly visit with two talking heads, talking with you about the services, strategies, and success tips you need to make it big in managed services. My name is Rick Freeman. I’m chief analyst at Channel Master to the organization.

We’re responsible for the show. I am joined as I always am by our chief strategist at Channel Master, also your co-host, my friend Erick Simpson, who like me is back home after a very busy week on the road.

Erick: Yeah, rich. So the term that comes to mind for me is recovering from that very busy week we had on the road which ties into.

Part of our podcast today, so I don’t wanna give it away yet, but go ahead.

Rich: [00:01:00] I’ll go ahead and give it away. We are gonna share one of the many things Erick and I did together. Last week. We were both at the Kaseya Connect Conference in Las Vegas last week as we recorded this.

Here we went immediately from Kaseya Connect to San Francisco to attend the RSA conference. So a lot of running around, a lot of meeting with vendors, a lot of great stuff. But we moderated some sessions at the Kaseya Show and in fact, we are going to share one of those with you. For our our spotlight I’m calling it the Spotlight Panel segment for this show instead of an interview.

And it’s a panel discussion with some MSPs. We did it live at the it glue experience event, sort of an event within an event at Kase Connect that will be coming up. But first, let’s dive into our story of the week. And this does touch on something that came out of the Kaseya Connect event and something that was announced by an expo hall sponsor at that event during K Connect.

And I talked [00:02:00] about this in my most recent blog post at Channel Holic Erick in a post that I titled Get to Seams. Because we’ve been hearing about seamlessly integrated products forever. And in fact, integration. Let’s face it, you go back to the earliest days of managed services.

And as I say in the column there, there is nothing that vendors who work with MSPs agree on more than motherhood, apple pie and the value of cross application integrations. That is absolutely foundational stuff. In the world of managed services and managed services tool stacks. And yet last week, on the same exact day, April 29th, two products came out that are both in one way or another, designed to get MSPs past integrations in a sense.

And the thinking behind that was really flagged for me by another vendor, black Point Cyber, that also had a new product last week. And they were talking with me during the Kaseya Connect show about the fact that, look, we’ve spoken on the show [00:03:00] numerous times, Erick, about the fact that MSPs are looking to consolidate vendor relationships to simplify life for themselves.

That is the good thing. Fewer vendor relationships to juggle will save you time, but it doesn’t necessarily address a potentially even bigger issue, which is consolidating tools. Tool sprawl is arguably a bigger problem than vendor sprawl for for Ms. P. And so how do you fix tool sprawl?

Even inside a single vendor’s portfolio, if you think of a company like Kase that for many years has had very tightly integrated, they would say seamlessly integrated products. You’re still talking about separate integrated applications. Last week the folks at Kaseya introduced the third s skew in their Kase 365 family.

It’s called Kaseya 365 Ops. This one is focused at the back office, the operational function. Within an MSP. It combines PSA and documentation, the connect booster billing and accounts [00:04:00] receivable tool and some other stuff that folks on the ops team will be using. And it really, it’s not just that you are paying once at a disruptively low price for all of these different tools.

Kaseya 365 Ops really fuses these things into one product same day that comes out synchro. And we’ve had Michael George, their CEO on the show before and he hinted they had something coming. We now know what it is. It’s a product that they’re calling Synchro XMM as a, as an extended monitoring and management.

And this kind of. Fuses R-M-M-P-S-A and Microsoft 365 Management, and the Microsoft 365 management pieces of that are coming directly from Microsoft itself, but there’s no integration between the Microsoft tools and the Synchro tools. They have embedded fused to those Microsoft tools inside their own synchros own tool.

And so the idea here obviously [00:05:00] is to reduce tool sprawl to enable technicians as a result to be more productive, require less training be able to act faster on threats. Now there are, and this is where I’m gonna go with you right away, Erick here is just, there are gonna be some obvious questions and maybe objections from MSPs about this strategy.

Of of going deeper, not quite all in, putting more eggs in the one basket with these solutions. There are trade-offs of pros and cons that come with that, but it is something that multiple vendors, just two last week, I think. But I think, I feel like I’m seeing more and more vendors trying, thinking that we need to transition MSPs beyond the era the 20-year-old era of integrations and more into this tool that has one interface, multiple functions, and very few integrations.

Erick: Rich, I’m a fan of reducing sprawl, whether it’s tool [00:06:00] sprawl, whether it’s technology sprawl, whether it’s vendor sprawl, that’s a good thing. But you’re right, I think the question that a lot of MSPs that may feel that they would prefer. Picking best of breed solutions to deliver a different experience for their clients.

Maybe it’s a boutique experience, maybe it’s a much a higher a type of security or support experience. That’s the trade off is, I’m gonna continue offering the services that I’m gonna create from a bespoke fashion for each of my clients, or maybe my bespoke portfolio of services for my clients.

But knowing that there are some efficiency considerations and maybe some cost considerations and a little bit of sprawl, but we’re mature enough to charge for that. And we’re okay with that because we want to be unique and different, or we feel that this is what is best [00:07:00] for our clients. And then there are, the other MSPs that say, wow, make my life simpler.

I’m busy. Putting out fires and trying to build my business. If you give me something that I can just plug into that is very tightly integrated, that provides me efficiency and is very competitive from a cost perspective, and provides me even better integrated reporting at a high level, at a deeper level that I can then share with my clients, which will be a, will play a factor on my tip of the week for this episode, rich, then make my life simpler and easier.

I’m okay with that too. And that allows you to, scale rapidly. So there’s, there’s Coke and Pepsi for everybody, right? Rich.

Rich: Yeah, and I think the scaling point you just made there is is an important one. And I think the MSP who just out of hand dismisses the idea of getting one of these sort of merged or fused tools should take a moment or two to calculate the trade-offs, [00:08:00] basically the efficiencies that you were alluding to there, and the potential impact of that on your business in terms of reducing overhead and increasing your ability to add customers and scale the business versus that ability to really create the customized fine tune kind of tool stack.

There, there is this sort of age old debate out there between the advantages of platform and the advantages of best of breed. And I think there’s a story to be told in either direction. I think both of those value propositions are worth considering ’cause there are trade-offs.

It’s not a, not an, it shouldn’t be an easy answer.

Erick: And you and I have had enough conversations with partners that have made the switch from a best of breed and gone to this fully integrated platform play because. The economics were just undeniable. I can drive, this much, a higher percentage to my bottom line.

My EBIT though will increase. So it’s this decision is [00:09:00] do I stand my ground and become this best of breed and then, and understand that it’s going to potentially impact my valuation, my, the equity value of my company when I go to sell it or exit? Or do I decide what dropping, greater profit to the bottom line.

Increasing my EBITDA definitely is an argument that I should consider when I’m at the point of time when I’m just deciding that I wanna exit or exploring, when’s a good time for me to exit?

Rich: Yeah, no, great point. And again, another illustration. Thi this is not an easy question with an easy answer, but you as an MSP, you’ve got some more options purely from a product standpoint to consider now.

Check out synchro XMM and Kase 365 ops and see what you think and see what the implications are for your business today and tomorrow. Now, if Synchro and or Kaseya reaches out to you and tries to interest you in their newest big product they would be wise not to [00:10:00] take a salesy approach to that conversation ’cause nobody really likes that and that Erick is a lead in to your tip of the week.

Erick: Thank you. Thank you Rich for that lead in. Yeah. So the tip of the week is really creating upsell opportunities with your existing clients without the hard sell. Three quick tips and we’ve talked about this before on the show. Rich is Not, is selling. Business outcomes, right?

Outcome-based solutions, not technical or technology based solutions or things like that. So when you are tying your proposal to a positive business impact for the end customer, then that’s going to be received in a much different way. So what is it that’s going to benefit that business in a positive way?

So is it, increasing efficiency, integrating, up, upgrading an old platform or software or application or [00:11:00] infrastructure upgrade or enhanced cybersecurity. Tie those proposals to the positive impact they will have on the business, not the speeds and feeds and all this other stuff.

So you’re having a different conversation and hopefully you’re jockeying. Budget in a much more strategic fashion. So how do we do that, rich? The second tip is really be good at delivering a QBR That isn’t just a report card meeting. You’re bringing your report card home to your parents and saying, oh, look we blocked all these threats.

We, we patch all these devices. No, we really want a, what I call a client solution roadmap. I want a technology roadmap, a three year plan that shows clients exactly where the gaps are in their technology and their business growth. And tying those again to what the positive business outcome is.

When are we going to make these changes? How are we going to get you from [00:12:00] where we are to where we need to be so that you can continue operating your business safely, profitably, and scalably and get the client to buy in that. So now you’re having your QBR and you’re talking about budgeting for the next quarter, so you’re not.

Surprising a client with a request because, oh, the server’s outta space, right? Remember those days when I had my MSP, oh, we’re monitoring it, but we’re getting down to 10%, and then all of a sudden, the client’s gotta write a check. No, we’re saying, look, we’re gonna be planning for this stuff in a much more strategic fashion.

You’re really reflecting your value as A-V-C-I-O or VCTO, or maybe even a vc. So when you’re having, not a QBR meeting, rich, but you’re having a cybersecurity meeting because there’s compliance now that’s really a leading opportunity for regulated clients and MSPs and MSS p supporting them.

Then ultimately, you wanna provide reporting to show clients where you are and how you’re progressing through this. [00:13:00] To justify the additional budget because we’re using the budget as we discussed, and now here’s the next phase in our three-year plan. And you’re having those strategic conversations just like you are in charge of the budget with your client as an internal full-time employee, you’re really that strategic CTO or CIO or CFO, and having discussions at that level.

Rich: Yeah. We, we talk often on the show about how an MSP who wants to avoid commoditization these days, needs to make sure they’re never really having a conversation with customers about, keeping the IT lights on. Basically you really got to be, if you’re not already turning yourself into that strategic consultant, the person who understands the business and knows how to apply technology to help the business be better.

And so in A QBR and more or less any interaction with a customer, what you wanna be talking with them about is where you can help them make more, spend less [00:14:00] eliminate bottlenecks, et cetera. It’s all about, their opportunities and their challenges and how technology can help with that.

And yeah you wanna be deep into that conversation before you get to the point where you say, okay, in order to help you realize these possibilities I’ve been telling you about, you need to buy. This product and upgrade that server or whatever. It’s, that’s gonna be part of the story but it should be the last part of the story.

What really cements your value with that customer is you understand their business. You are interacting with the people who run that business on a strategic level. You’re proposing things technology can do for them, they’d never come up with on their own. And then you’re putting together a, a spending and an implementation plan to actually bring that vision to life.

It’s, it, that’s not nothing about that should feel like a, an upsell. That’s just you being a great m Ms P.

Erick: Right. And I think the goal that we strive for with our clients as MSPs is to be [00:15:00] seen and valued as a profit center. I know it’s challenging sometimes when there’s just, a first time you onboard a client and you’ve got all this.

Infrastructure that you’ve gotta upgrade and to meet your minimum requirements for whatever your MSP requires a client to to look like and subscribe to, to be your client. But ultimately, this, we need to strive to be valued and seen as a critical component of that business operation.

And, the best way to do that is try to position yourself as a profit center tying those business outcomes to say, here’s what we need to do to scale, or to expand or, start another office in another location. How are you going to do that? And position that as a way to help that business grow being seen as a profit center.

So that’s the challenge Rich.

Rich: All right with that Erick and I are going to take a quick break. When we come back on the other side, we are gonna share with you a [00:16:00] recording of the panel discussion that he and I led at it Glue’s Glue Experience event. This took place nine days ago as we recorded this.

Right now, it’s a panel discussion with three MSPs who are doing very well. They’re in a very good place in their business right now, but they’re gonna share some thoughts with you about how they got, where they are, what they learned along the way, and what you can learn from their experience. That is all coming up momentarily, so please stick around.

All right, roll back part two of this episode of the MSP Chat podcast, ladies and gentlemen, our spotlight panel session this time, which as you can hear. Coming to you very much live from Glue Experience it glue’s annual event here in fabulous Las Vegas, Nevada. We are joined by three MSPs here.

These are very successful [00:17:00] MSPs. They did not get there overnight, though they have been on a growth journey for some time. They have learned a lot of lessons along the way and they have very generously agreed to share those lessons with you in our audience. Now I will say, before I make some introductions and they introduce themselves the reason the lights are on a little bit brighter than they were before is because we would love for this to be interactive.

So if you have a question for somebody up here raise your hand. I believe we’ve got somebody with a microphone running around and we would be happy to get you involved in the conversation, okay? With that. Let’s meet our panelists. Starting closest to me. Chris, tell folks a little bit about yourself and the company we’ll look for.

Nick: I’m Chris Swecker, I’m the tech manager at Appalachian Technologies. We are an MSP in cybersecurity company in Mechanicsburg, Pennsylvania. We’ve been in business for about 20 years and been MSP for about 15 or so of that. So I’ve been working for Appalachia for 10 years. Started as an onsite engineer for five years at a client full-time with Apple because it people do not [00:18:00] like Apple.

So that’s a good career path if you wanna do something no one else wants to do. So I then transitioned to a role managing our support in our NO teams.

Rich: All right, Tammy, tell folks about yourself and about your company.

Tammy: All right. Hi everyone. I am Tammy Baker. I am a founding partner of New Orleans and Southeast Information Technology Group.

We’re an MSP serving businesses in the metro New Orleans and Baton Rouge Markets of Louisiana.

Chris: And Nick. Hello, I’m Nick Rucker. I started an MSP in 2002 called Path Forward. It accidentally, which we’ll get into today at some point, I’m sure. Path Forward is a healthcare specific. MSPI ran that business and had the privilege of starting a few other businesses.

And then in 2021 I started a platform with some other MSP founders called PLU Alliance. And so we are a platform of MSPs. We have five operating brands today, and about three 50 team members serving folks all around the country.

Rich: Alright, let’s begin here. We’re talking about your growth journey.

Every journey begins [00:19:00] somewhere. So Chris, we’ll just start with you. Where did your journey in the world of managed services begin?

Nick: Sure. I was lucky that even though I’m older than some of my employees now we still, my dad was a hobbyist, so he had a computer growing up, so we had a 2 86 for anyone who knows what that is.

We worried about Y 2K kids. So I was introduced to it from an early age and always loved how computers worked and that kind of thing. And then we took it up as a hobby and then eventually got it into a career where I just love systems and the way computers work together and all the things you can do with them.

So I am, again, sorry, everybody an Apple nerd. But that was a great introduction with MDM and some of the Apple tools that the schools use. So I was doing that and then actually during 20 20, 22, 21 transition to a management role with a support team while everybody was remote. So since I was gonna manage the support team, I worked support for six or eight months before I took any kinda leadership role just to, so I knew exactly what the team did every day.

And then, and once we kinda had the support stuff under [00:20:00] control, then there was an opening for a knock manager and we just decided to combine the two teams. So now I oversee both the support and the noc and a couple engineers, kinda our traditional managed services. And then our company’s a little bit different, so we have security engineers and project engineers that are separate from that.

But I’m really fortunate that the app, the appalachia’s, been a great place for me to grow for 10 years. And so I started just on site, closing tickets and was fortunate enough to find a place that gave me a chance and and let me grow into a management role.

Rich: There are a lot of growth challenges in that story that I have a hunt will be getting into.

Tammy, tell us a little bit about where your growth journey begins. And I learned last night at dinner that your IT journey begins one place. Your managed services journey begins a little bit later on.

Tammy: Absolutely. It’s interesting the way you star down a path and I don’t know how many people own their own MSPs here.

Yeah, I think we’re very unemployable, right? It’s hard to work for someone once you [00:21:00] worked for yourself. And I think that is really what starts that, that thirst to continue to grow and have your own DNA on a project or a company. So as a serial entrepreneur, I think at this point growing is just a part of the day to day.

If you’re comfortable then you’re not in the right business, right? Technology is evolving at such a quick pace that you either stay current or future proof or you’re gonna be evolved out of the equation. So for us growing as an MSP means growing every day as a person, as a technician, as a business owner.

Rich: Alright, Nikki, and you have two growth journeys, basically your MSP journey and then the platform journey.

Chris: Yeah, the MSP journey it was 1999. I’m 46 now, so I would’ve been at 19 or 20. I was working in a call center, no shit, doing psychic hotline calls. So if any of you need some advice later, hit me up.[00:22:00]

Can I say shit live? Sorry. Absolutely didn’t say that. Yeah. I was in school. I was a terrible student. I got a job as a student technician at Xavier University, which is this very buttoned up Catholic school in Cincinnati, Ohio. And do you guys remember Norton Ghost? I thought I was Harry Potter man.

I’d walk into these professor’s offices and like ghost the machine. That was the first thing I ever did in tech. Then I started putting gateway computers together in people’s houses. All this led to some guy’s basement who was an orthopedic surgeon. He was just starting his practice and after two hours of helping this guy with PowerPoint, this was PowerPoint in like the year 2000.

By the way, you couldn’t do anything. I finally turned to him and I said, I cannot believe they let you cut people open. He and I became friends, and that was my first customer path forward. So it started accidentally, but once I realized how unique healthcare was that was the birth of Path Forward.

And then the Birth of Blue Alliance was really just out of recognition that as business owners it is very isolating. It’s very hard to solve all the problems together. And I was, my [00:23:00] MSP was pretty large, but even then, it was in a vacuum and I wanted to collaborate in a way that was, I didn’t see existed in the marketplace.

So

Rich: I, we won’t get into it, but I, as I mentioned to you before, I spoke, I interviewed your co-founder at Blue Lines earlier today. He told me the actual story that led to the Korea, where basically a customer was trying to get your two companies to compete and instead you decided to form one company and Yeah.

Yep. You fool them.

Chris: Hey, it worked out for everybody.

Erick: So panel, as MSPs we go through a lot of growth challenges, people challenges, process challenges, platform challenges, products and service challenges. I wanna ask you, what was one particularly difficult challenge that you faced and how you got through it?

And I wanna start with you, Tammy, because yours involves a hurricane.

Tammy: Yes. So we were founded in 1999 and we were on a very good trajectory. We [00:24:00] did our first acquisition of another business. So it’s like buying customers, buying employees. It was a really good fit for us at the time. About a year later, or maybe not quite a year later hurricane Katrina breezed into the Gulf Coast after I think visiting Florida for at first.

And really reorganized our lives. A lot of our clients, moved out of the area New Orleans area, a lot of them to Texas and never came back. So our business, we were at a turning point where we needed to decide whether we were gonna grow again or take a step back and reorganize ourselves.

And that’s the path that we chose. So I guess it was about for the next four to five years, I opened another business serving a community need. When I went to renew my driver’s license and had to wait in the DMV line for many hours because all of the DMVs were also shut down and it didn’t stop commerce.

People needed to buy and sell cars, which they couldn’t get their new license plates. So I opened another business. We. [00:25:00] That in 2014 as that need subsided. And then I got refocused on the MSP. And that’s when really we transitioned from manage, I’m sorry, from break fix to managed services. And now we’re back on that same trajectory of growth.

Erick: Thanks Tammy. Now Chris, I wanna ask you, you got hit with kind of a double whammy. One whammy was covid and then you had another challenge with some tools. Can you share what was going on there?

Nick: One natural disaster just isn’t enough, apparently. So during Covid toward the end of shutdown is when I was just starting to learn how to do help desk at RMSP.

I went from knowing one network very well to knowing 70, almost not at all. And I realized hey, how important documentation is, especially when you’re isolated, right? I can’t look over to the next cubicle and ask somebody for help. I have to make a phone call if they’re not already on a phone call or it’s teams chats and that kinda stuff, which there’s just more friction there than than during normal humanity that would’ve been.

But then as we came outta that, we started to get people back in the office. [00:26:00] We had 2021, which was a lot of vendors increasing their prices with very little notice, and sometimes it was just double, triple the price. Then we had one tool that we were using as our RMM that just completely broke.

And so we had to change essentially every tool we had except for our backups on the fly within the course of about eight months. Which then leaves us with no documentation. So if documentation wasn’t great before, it was now non-existent. So that’s when we really leaned in with it Glue. We had a, one of the tools we had to switch was our old password manager because they would just go down for days.

And we can’t not have access to passwords for days. It just doesn’t work that way. So once we got all those tools switched out, we kinda got a baseline. We roughly knew what we were doing, and then we spent just the next year documenting. We told all our technicians, we are not buying a single new tool in the next 12 months.

I don’t care how good it is. We are gonna build documentation on what we have now. We’re gonna build out our SOPs. Any documentation we had that’s now obsolete, we’re gonna change it and update it. And just tightening that ship, no additional [00:27:00] tools. Just that focus on documentation. We were able to reduce our response and resolution times by over 60% in the first year.

And then over the next year, we kept two. We made one or two, two tool tool changes. Then we saw our numbers going down 70, 80%. Just from, not something shiny and new. Just giving every technician the time and the expectation when you work this ticket and the documentation’s outta date, we expect you to fix it.

You’re not gonna be penalized for it. You’re gonna be rewarded for it. And one of the great things we were able to do there is it gave a lot of opportunity for people who were not maybe technically senior resources yet, but wanted to be in leadership. This is the perfect thing for them to lead.

They can lead the charge on documentation. If you don’t know the answer, that’s fine. Go find it and then write it down, put it in it glue. So that really helped us tighten up our ship and we were having some service delivery issues, obviously because of all the tool changes and the lack of documentation and it all just completely went away once we spent a year or two just really focused on documenting and using it glue as much as we possibly could.

We’re still finding some things that we could do better, [00:28:00] but we’ve gotten to that 80, 90% completion rate that our clients are seeing the difference because when you call a technician, they actually know how to fix the issue. Now they’re not asking 10 people because we’ve taught everyone that they need to document it.

Rich: With perfect 2020 hindsight everybody looks back on any journey and wishes they’d done some things differently. Let’s zero in on some things that, in retrospect, early on in, in your journey through managed services, you maybe wish you’d done a little bit differently. And I wanna start with you, Nick, because when we talked about this before, you brought up something that I think is a sort of neglected, underappreciated function within a fast growing highly profitable MSP, which is finance.

Chris: Rich, I suck at math. And that was something I wish I’d have admitted a lot earlier in the process. Yeah, we, I was lucky that the business grew very quickly, but it’s, we did not emphasize on building any real finance infrastructure. And I know as MSPs, sometimes it feels like a non-value add costs.

So we [00:29:00] have people that focus on invoicing and often we’ll use third parties fractionally for finance. And an fp and a function, like a financial planning analysis function. We often don’t have, and we don’t have very well. That’s something that when we’ve reached the scale we are now where we’ve got a team of people that are doing that work, I look back and I just, I realize how much money we left on the table and not understanding our margins and not having the analysis we needed to make decisions and the tyranny of the urgent and an MSP, there’s always so much that we’re responding to and our technicians and our team that you get up to a big client renewal and you haven’t been studying the data.

So often the client’s better equipped for the negotiations than you are, and you end up having to take a compromise position and not getting the increase that you might rightfully deserve. So I guess my encouragement would be, regardless of what size you are, I would challenge yourself if you’re an owner or a team member, are you getting actionable data?

Financially about your business, and actionable in the sense that [00:30:00] if you can’t name three or four things you changed in the last quarter that were in response to data that you received, that doesn’t mean you were perfect. It just means you’re not getting the data. And so I would say, really trying to understand how to add that, that financial acumen and insight to your business at whatever scale you are, it can be done is something I wish I’d have done sooner.

Rich: I talk fairly regularly to private equity investors who are buying MSPs. And every last one of them says, after we make an acquisition, the first thing we do is name A CFO. Why not do that yourself now? And they do that because the efficiencies and the growth. Do that yourself now.

Instead of waiting for, to sell the company and waiting for a private equity investor to tell you that’s what you should be doing. Tammy when we talked about this before, what you brought up is a pretty universal challenge I think for for MSPs, which is this whole question of firing clients.

When do you do that? Why do you do that? Tell us what you learned there.

Tammy: Not [00:31:00] every client is a good fit for every MSP obviously for, and for us personally, clients who don’t adapt, especially to the security challenges that are out there, become a personal point of liability for you. So we’ve made, what feels like really easy decisions in retrospect to decide to invest our time and resources and clients who want to make, use of the best tools that are out there in the best application and not interested in quibbling over a few pennies here and there. We do great work. We’re not ever gonna come in and pitch ourselves as the least expensive or the most expensive solution. But it is a very inclusive solution.

And if they don’t agree to go a full boat or full footprint with us, then they’re not a good fit for us and we’re not a good fit for them. We are struggling as we were talking about last night with being able to have a slight variance in that for people who maybe have an internal solution. So we’re.

Kind of testing the waters on that. But by and [00:32:00] large, you, if you are constantly looking at your book of business and you’re getting rid of the bottom third of your clients while you’re continuing to grow, I think some of the overlooked opportunities that we have are not upselling every single customer that we have.

That is the EAs easiest customer to acquire because they’re already yours. Making sure that you’re maximizing that relationship and continuing to push it forward, I think is just something that we truly undervalue.

Erick: Tammy, when we were building our MSP practice, it was in the before four times.

We had to learn that difficult lesson that you just talked about is you’ve got a clients, you’ve got B clients, and you’ve got C, e, D, and F customers. How many of you in the audience have c, D and F customers today? Raise your hands up high. Don’t worry. We’re not recording this. So we had to learn that.

And we got to a point where we said, oh, if they’re quiet and they’re not a lot of work, then they’re okay if we keep them. But then later as we matured, we discovered, wait a minute. [00:33:00] They’re actually taking the spot of an A client that is in growth mode. And these are the folks that don’t have a lot of money, but they’re pay their bills all the time.

So there was a very, it was a tough decision, but doing what you said every year, reviewing your client list and getting rid of those smaller clients to allow you to grow. And sometimes when you get rid of a an F client, you might be able to take on two A clients. Exactly. And so we learned that because we had to go through the school of hard knocks and we did not have a documentation platform back then.

So we were keeping things on Excel spreadsheets and. Sticky notes and whatnot, right? We, we didn’t have that value, so we weren’t able to leverage a platform like that. So how did it glue help you in your journey? And I know Chris, we’ve heard from you, so I’ll ask Nick to start us off and then Tammy, you can jump in.[00:34:00]

Chris: Sure. I think you probably all experienced this. As if you’re an entrepreneur led business, the every degree you get from the entrepreneur or the core team, you have a loss in knowledge often a loss in culture. And so documentation’s no different. The further you get from the core people that work on an account, it becomes really challenging to support an account.

For us prior to IT Glue, we had systems like SharePoint. We tried to use the knowledge repositories that was native in the ticketing system we were using at the time, and none of them really worked. And so the net effect of the customer was what Chris was describing. It’s just, it’s not a pleasant experience.

The, there are so many good MSPs out there. Like you, it’s simply table stakes today. If you can’t answer the call and already know who’s on the phone you’re at a competitive disadvantage. And so for us, IT Glue has enabled us, especially from implementation to now where we can commit to a VIP service where when customers are calling in, we’re greeting the user by name, we’re loading cell phone numbers in our system, [00:35:00] we’re linking that with automatically popping up the information.

It Glue has so many native features that solve for some of those issues. If you combine that with some of the multi-channel communication that’s available today, I. You can start to differentiate. It’s just so hard to tell a customer you’re more 24 7 than the guy at the table next to you. Or your engineers are smarter than the guy sitting next to you.

So I think it glue used well, gave us such a stable base for all of the team members to operate at that we could start layering on more VIP experiences.

Erick: Yeah. When we started working with MSPs coaching and training them after we sold our practice and launched Ms. P University, we said to be an MS B, you have to have an RMM tool and you have to have a PSA solution.

And then later when we started surveying MSPs, they were saying here’s the third thing that we need. And I was like, that makes a lot of sense. A documentation platform is, and then we started calling out like the three-legged stool. I think they’re calling it the trifecta these days. So to have those [00:36:00] three integrated solutions to really help you be more efficient and effective, tell me what’s your take?

Tammy: It Glue was our first experience in working with Kaseya and a lot of our clients. I would say that they’re small to midsize, so 30 seats or so. You go in to have a conversation with them. They may be working with a break fix team or maybe they have an MSP and you ask for documentation about their current setup.

And if you’re lucky, they give you a folder with some random invoices and and some best wishes kind of things, not a lot of information to go on. Once we start working with them and we set up their IT glue and we start conglomerating the data using the integrations that really pull across multiple platforms from cloud to infrastructure to vendors and.

Then have that first meeting with them and you’re like, here’s your, here’s a runbook. This is what your IT environment looks like. The look on their face is really something that I just, we should start [00:37:00] recording because for the first time, they have something they can hold in their hand that says, oh, this is what I’ve been investing in.

This is what that this computer approaches and that infrastructure investment look like in, in black and white. And if have a financial planner, do you just stop by and say, how am I doing? And he is you’re doing great. Yeah. Things look great. No, you wanna see proof of that. You wanna log in, you wanna know what your balance is, wanna know what your returns are.

When you’re able to give that same level of comfort to your customer, your client, that’s not something they, they forget. And so I think that makes it glue invaluable for us.

Rich: Okay. Now we have been talking about the beginning of the growth journey, which you would know if I had displayed this slide earlier, which I did not.

But now let’s move on to talking about scaling the team and your business. As you guys progressed along your growth journey, eventually you get to a point where you’ve gotta figure out some new ways to scale the service delivery, the operational processes to keep up with growth to maintain your [00:38:00] profitability.

I’m gonna go back to you, Nick, because you ran into these issues both at the MSP level and at the platform level. So talk a little bit about the scalability challenges that you ran into and how you’ve addressed ’em.

Chris: Yeah. Real quick, raise your hand if you think you work for a technical business in this room.

You don’t. You work for a relationship business. And I think that realization, if you’ve made that realization that’s 90% of what you have to understand about the MSP world and it has not changed. It’s not changing. Fundamentally, these are relationship businesses. Our subject matter is technical and the scaling challenges that we experienced and the ones we are constantly trying to manage and prevent from being realized are related to people understanding how to treat customers.

If, the guy before us was talking about ice cream businesses. To scale an ice cream business, theoretically you just need like more milk, sugar and whatever goes into ice cream. As long as it’s the same quality, it’s gonna taste the same. How do you scale a service business? You have to have employees that treat the [00:39:00] customer just like the other person did before them, and the person before them.

So it is much more difficult, in my view, to scale a service business. Now. So what does that mean as it relates to this group? Things like it glue, the tool sets we get from Kaseya, those create that stable base. So you can focus your training time not on constantly teaching technical things, which are important, but you have to teach relationship things.

It’s like you have to be coaching them. What is the experience you want customers to have and how much time are you investing in training your engineers that experience part of the equation? So all that to say, rich, if you really, I love that exercise to ask five why’s, if something goes wrong.

We started doing that when we would have customer service issues and usually at the third, why? Why is this customer angle? This ticket went bad. Why’d the ticket go bad? Eventually you get to somebody who didn’t care or didn’t understand the customer and there was a breakdown in the relationship.

So I would just say continue to focus on the tech stuff. Use tools like this to [00:40:00] create space for your leadership teams to focus on engaging your people and how to really serve customers well.

Rich: There are all these giant managed services roll-ups coming into being right now, and they’re gonna have some competitive advantages relative to smaller companies, but only if they figure out how to scale the people, the relationship part of the business.

Otherwise, it’s gonna feel to the customer like, I’m getting my managed services from the phone company.

Chris: Totally agree. I think a lot of small MSPs are not threatened when they hear their competitor got bought because usually it means there’s gonna be a bunch of churn. That’s, and so I, I would say the root cause of that is shitty relationships and the integration, and it creates that waste.

It’s not a necessary byproduct it’s just part of what happens through the way it’s done.

Rich: Chris, if there is anyone at Appalachia responsible for scaling service delivery, that would be you. So what kinds of issues have you run into and what have you found to be effective?

Nick: Yeah, like I said before, I started during Covid.

So that was an immediate issue of, I have no idea what we do here. When you’re starting and you’re isolated and [00:41:00] realizing how important that documentation is for employee onboarding and how much money you’re wasting, if it takes you six months to get a tech up to speed, you’ve wasted half their salary.

If we’re able to get them going in four or five, six weeks instead of six months how much does that save the business? How much better does that make the client relationship? And we even have one of my new favorite things in it Glue is a quick note section for each client. So we have notes in there as this client prefers onsite visits.

Those things that make clients different from each other. Like generally our clients want us to be remote, but we have a couple clients who very much prefer the personal touch. They want you to just come out and fix it. There’s one company we serve, it’s one person. And when I first met her, I met her dog.

So I have a note in there. Ask Cal dog name is doing and it’s a completely different feel. It doesn’t matter how, she doesn’t care how big our company is, but when someone cares that much, she knows that we have a personal relationship with her. And so it’s not just documenting your IT stuff, it’s not gonna be that relationship, make set what’s important to this client?

What would they prefer us do that may [00:42:00] be different from our other clients? So they get, they feel like they’re getting a very personalized white glove service. It’s not just one size fits all. It’s tailored to what they need.

Erick: So I remember the struggle that I had trying to change the type of person I was, the type of leader that I was for my team when we were building our MSP practice, the most challenging hurdle that I had across was figuring out the processes and the platforms.

S and train the team and be a different leader so that I wasn’t working so much in the business all the time so that I could work on the business doing the things that only that I could do, and making sure that I was okay with giving my team what they needed to do that. So let’s talk a little bit about [00:43:00] the changes that you’ve made, the things that you’ve thought about, maybe the platforms that you’ve brought into play and how you manage growth as you’re trying to, move hats off of your head to other members of the team to make sure that they’re successful so that you can work on the business more rather than in the business.

I’ll start with you, Tammy.

Tammy: Let’s see. I think I’m still learning this as we go. What are the challenges? For me, I, we were on one RMM and PSA did fine on it. And I was an, an early adopter of the IT complete idea the ability to stay in, to log in once and have access to everything.

And so I was all down for throwing away the years of work we had into that PSA and RMM and, go full on with Gaza. I don’t regret it, but I did not appreciate the time away that it would take for our technicians. So I was not a very [00:44:00] popular person in our organization because of that.

But I think for the people who are here they’ve already made the right decision. I think visiting with other MSPs, learning from them hearing how they’ve implemented that same methodology in their own businesses and lives has always been rewarding for me personally. Worklife balance. I don’t know that we, if you’re an MSP, don’t know that you have that.

So you really have to love what you do. And always realizing that we got into this business because we wanna help the help desk, the, the help methodology is something that is very important and ingrained in what we do. And so it’s, as an owner, it’s really hard to step back away from that because that’s a dopamine hit, when you’ve been able to get in there and solve something for someone.

So just trying to exchange that with watching your team members do it has been pretty integral for me.

Erick: Anyone else

Nick: care to add? I’d say whatever. You can’t, you, whatever you feel like you can’t hand off, you need to hand off. My wife also works in it and she [00:45:00] got a great job. We thought but she was working with someone who would not hand anything off to her.

The idea of I’m the only person who knows how to do this, so this is my value. And if I give that to other people, then I’m replaceable. I tell my team, if you’re not replaceable, you’re not promotable. You will never get to the next job unless someone else can do the one you have now. Why? How can we do that?

And showing them that there, there’s gonna be a career path for you if you’re able to hand stuff off and teach somebody that’s management material. If you want to go to the next goal in your career, it’s not by hoarding information it’s by teaching other people how to do what you do and teaching them why you do it well.

That’s what’s gonna keep you going in your career and take you to the next level and not just be stuck someplace you’re mildly okay with for a long time.

Tammy: I love that. I absolutely love that. If you’re, say that again. If you’re not,

Nick: if you’re not replaceable, you’re not promote

Chris: Love that. It’s a new t-shirt coming.

Yes. Say it.

Tammy: Yes indeed.

Chris: I, the only thing I would add is that, look guys I’ve worked with hundreds of [00:46:00] engineers and I’ve met thou hundreds of entrepreneurs. We’re our own worst enemy, and if we can’t be honest about that, you’re not gonna grow. Your business isn’t gonna grow. You’ll find a hundred excuses why.

Here’s a good exercise that kind of ties into what you said, and I do this every quarter. Go back in your calendar one year ago. Just flip back. If you are in the same meetings now that you were a year ago, you’re failing. You have to find a way. It’s just a litmus test. But fundamentally, if you’re not replicating, just like everybody’s saying, if you’re not replicating the people beneath you and equipping them, that you’re either holding onto decision making, whether that’s technical decision making, right?

If you’re an engineer and you’re part of your change advisory board and you’re in the same position you were a year ago and you’ve not grown other engineers to step up into that space so you can do something new. If you’re an entrepreneur and you’re running the same meetings with the same people you were a year ago, I would respectfully argue that’s part of why you might not be growing as fast as you want.

Rich: So no matter how good any business is or gets [00:47:00] at scaling in the manner that we’re talking about, quite often it will run into a growth ceiling at some point, a bottleneck that is putting a limit on further growth. Let’s talk a little bit about that and the one you ran into, Nick is gonna be a very familiar one to a lot of folks in the audience here because it has to do with hiring and retention staffing.

Basically that was a bottleneck for you both I think at the MSP and the platform level. And you came up with a very creative solution for getting your team involved in breaking out and beyond that bottleneck.

Chris: Yeah. There, there’s a couple different things. First of all where is Tatum in here, Tatum?

Tatum is our our recruiter. So like part of it is invest when you get to a certain scale, invest in your own recruiting team because again, it’s a relationship business. How do you find talent through relationships? The engineers you all want aren’t on indeed looking around, like they’re happily employed probably for somebody sitting at a table next to you.

So you’ve gotta be really deliberate about trying to help under explain to people why you [00:48:00] are unique and how that can drive success. The other thing is we kept finding ourselves, relying on external recruiters, and that was very challenging. Again, if you’re, if you have a family member that’s in a recruiting business, I’m not trying, it’s just, it’s such a, it’s like a, it’s very challenging to use external recruiters because the, there, it’s such a transactional relationship and it’s so expensive.

So we implemented a program where we just started paying our employees instead of external recruiters. And depending on, so we have a bonus program internally if they can find talent through their own personal networks. We’ll happily pay them. It’s not it’s a cost of doing business in a competitive labor market often to have a recruiting cost.

But why send that outside of your organization when you can send it to your team members? So that’s something that we’ve done that has been really successful and I think gotten us to a scale where we can start to have a specialized team that does recruiting for our brands. Are you comfortable telling folks what you pay?

Sure. It’s Uber surge pricing. So the minimum we play, I think is $500 at times in [00:49:00] our history. For specialized role, we’ll pay thousands of dollars. In some cases I think the highest we paid is in the multiple thousands. So it’s, I think that when you get your team engaged in finding talent, like it becomes everyone’s challenge.

And if you have a team that’s healthy, like they want to help welcome people to the family, it doesn’t feel offensive to, to put them on that put them on that front line with you

Erick: and Nick. Perfect question. How does that impact retention when you’re having folks. That knowing other folks come into the business.

Chris: So we’re in evolve. And so we see data from Evolv and we have, best in class, re retention numbers. I don’t think that’s in one dimension of it. Like, when you get someone in the door and you’re not taking great care of them and you’re not providing them opportunities it’s not gonna work.

So I, I think, I don’t wanna overindex on one thing, but I think when, I’ll tell you what it does fix. If a coworker brings somebody in and for whatever reason they’re not getting the training they need, the support they need, you’ve got a built in advocate and the friend that brought them in.

So I think what we experience [00:50:00] is there’s more group advocacy to make sure a new team member’s getting what they need to be successful versus if you bring somebody in from a recruiting firm, everybody’s just let’s see if this works out. It’s just not, you don’t feel bought into it.

Rich: Let’s talk a little bit about navigating change. Now Chris was talking about some tools, challenges that he had to work through. In terms of a particularly difficult change you had to navigate Tammy, there was a tools related story there as well. So tell folks a little bit about why you had to change what you changed and how you dealt with it.

Tammy: I think navigating changes as far as technology is concerned is it’s something that we’re all gonna be faced with es especially with related to ai. Staying current and really appreciating what it can do both internally and then for your customers. I think it is gonna be extremely important.

For us as far as a technical failure of tools, any type of integration that fails is [00:51:00] particularly challenging and for us leaving one side of RMM and PSA and moving to another was very difficult. All in all, I think it’s been a very positive experience. But with ai, I don’t know.

I I feel like I’m very conflicted as far as using it internally. I think it’s gonna be fine. I think helping us navigate our clients through that challenge is gonna be a different story, though.

Rich: Very complex topic. I, by the way, I’m moderating a session about that tomorrow yeah. Yeah. Interesting stuff.

You spoke Chris a little bit before about the double whammy, part of which was tools related. Tell folks a little bit about how you reached the realization that you needed to make a tools change, and then how you got through that.

Nick: Yeah. Some of it, the vendors made the decision for us by saying, Hey, this product is no better than it used to be, but now it’s more expensive.

So that was an easy conversation. The transition is the difficult part. In most cases, we had time to do, your tool testing, but once it with RMM just completely broke, we didn’t have time to bring in six vendors and see what we [00:52:00] liked the best. It was like we’re saying it was a relationship play.

We used Datto backup, so we went to Datto, RMM and a big, we got a big efficiency gain from the integrations. When I started as a tech, we had a different r Our, our RM was one vendor, our password management was another vendor. So you’re tab switching and so if I need to go from the ticket. To the client computer, to a password.

That’s three different tools. Being able to just hop into RMM, that RMM, all my IT glue, assets, passwords, and documents are on the right side. We have texts come us from other MSPs and they go, oh my gosh I can fix a ticket in half the time now. They absolutely love it. And being really focused on not just Hey team, we’re changing this tool because the company’s saving money.

Aren’t you happy for us? Is not a good message. When they can see a payoff, it makes your life easier. It’s less mental load on you, it’s less context switching. That can be anywhere between 20 60% of your productivity is just wasted on that kind of mental overhead of, oh crap. Where’s this [00:53:00] password again?

Oh, sorry, Timmy. Didn’t document it. Now I gotta go ask Timmy. In the last Yeah, everybody hates Timmy. So just be very mindful of the effect it’s having on your technicians. They’re the ones doing the work. I really believe if you want your technicians to take care of your client, you need to take care of your technicians the same way.

So forming it as this is what we’re doing and this is how it makes your life easier and involving them in the decision really helps get that buy-in. And they feel like they are part of the process. They’re part of what’s driving our company forward. They’re not just faceless cogs in a big machine.

They have a say in how we do things and what works best for them. They’re the ones who have to live in that tool 90% of their day. And so we let them pick essentially what tools they like, and all of a sudden all that, that whatever bumps in the road there might have been from switching tools it’s not a morale problem anymore because they know why we picked this tool.

They were part of the process. And they’re excited that they’re getting something they want that’ll help them do their job better.

Rich: There was a bonus tip in there, which is that if you’ve got somebody named [00:54:00] Timmy on your tech team, fire him. ’cause he doesn’t document anything.

Nick: A lot of people don’t know that it’s a hidden secret in it.

Erick: Navigating change, it’s such a huge topic, right? There are so many components that, that, go into that from decision making to the people that are involved to managing all of it. Zooming out for a second, just, I want you to zoom out with me and share with us one lesson that you learned that stood out for you at some point that you wish you had known earlier.

Anybody. Oh,

Chris: the fellow you’re looking at me. Feel like you are.

Erick: I’m looking at all

Chris: of you. Go ahead Nick. I’ll go first. I mean if you’re talking zoom out. I would say, I think we can just look guys, at the end of the day, it, the customer doesn’t care. They care, but they don’t care. They don’t care about your tool problems.

They don’t care about how overloaded your engineers are. A good [00:55:00] customer partnership. Like I understand that there’s give and take and there’s awareness of the service load. So I’m not trying to describe customers as dispassionate about you, but what I wish I would’ve realized years ago is that what I did yesterday does not count for tomorrow.

And I think sometimes when you have a good customer relationship and you feel like you’re really delivering, you have this sense of safety that, I don’t know, I don’t know that’s real. And so I would encourage myself back in the day, which is something we do regularly now, is you have to constantly be figuring out what additional value you can add to even a very healthy, productive customer relationship.

So again, this whole navigating change idea, like these are all extremely valuable points. And we transitioned from ConnectWise to Autotask was a huge shift. Tons of the same principles. Chris was talking about bringing your team along with you and making sure there was good justification for it.

But the bottom line is, as it relates to what you’re saying, is at no point did we ever tell the customer that we’re or set an expectation that they should accept or [00:56:00] expect anything different. Like they, they don’t, they want you to be successful, but you have to be constantly innovating for them or you’re gonna lose value.

Nick: Chris it was a book I read by Daniel Pink called Drive and he said three things we need to be fulfilled in our careers are mastery, autonomy, and purpose. And that changed how I approached my team because at first I was kinda just going on vibes, right? I just want everybody to be happy. Okay.

But Timmy, again, we’ll pick on Timmy ’cause he doesn’t exist. Luckily for my team Timmy sucks and the whole team would be happier if we all fired Timmy. And so I will have a couple conversations with Timmy about getting on board and that but eventually the best thing to do is to let Timmy go for the rest of the team.

And that’s not gonna make Timmy happy. So happiness is not the be all end all, but when my team feels like Timmy’s undermining them and they’re having, they have to carry more weight because somebody else isn’t carrying theirs. They don’t feel that sense of autonomy because they’re having to check on somebody else’s work.

But when we started having, we actually did like emotional intelligence trainings on how to communicate better with each other. That solved a lot [00:57:00] of saying, of just being upfront with an employee. One of the, one of the best things I ever said to one of my team members is, the way I’m managing you isn’t working.

What do you need? We both knew it. Neither one of us was under the illusion that what we’ve been trying was good or working. So I said, listen, I’m new at this is clearly bad. What do you need me to change? And just being open with them know. And then when I do make a mistake, they’re much more willing to accept the explanation.

Because I’m trying to make sure that they feel like they are empowered at work to do the best work they can. That’s exciting for, we’re all nerds here, right? You’re at a, you’re at a conference talking about it, documentation. We’re all nerds. I love that kind of person who’s really driven.

I don’t have to convince my IT team to do a good job for the client. They really want to do a good job for the client. And if I can get everything else outta their way and make sure they feel the sense of mastery, autonomy, and purpose, they will deliver for our clients exactly how we need ’em to.

I’d love to hear yours, Tammy.

Tammy: So for me it is a clean sheet of paper. I like to [00:58:00] at least once a month sit down. Instead, if I were gonna open a business today, if I were gonna open an MSP today, what would I have? What would I do? And then I. It’s kept me from dragging along more technical debt.

So many, especially if you’ve worked with a client a long time, they have stuff in their environment that shouldn’t be there anymore. It’s outlived its usefulness, but no one has taken the ownership to say this, this data is 72 years old. We can let this one go, but we don’t force them forward because we all get in that same routine of comfort.

And I think that’s a very bad thing. ’cause if a new MSP comes in behind you, they’re gonna be like, why do you still have this? My old guy didn’t tell me to get rid of it, right? So just run your business like you’re starting it today and stop dragging along. Technical debt. Two, look for talent everywhere.

If you go to a restaurant and your server is phenomenal with customer service, they might be great in it too. If you’re good in the help business, you’re gonna be good in the help business. You can teach for skill, but you hire for personality. And [00:59:00] then three, take it easy on yourself, right? There wasn’t an instruction book.

There’s some great books out there, like you said, but there isn’t an instruction book for this. We’re doing this while managing a business while having a whole personal life, hopefully. But to just give yourself some grace.

Rich: Let’s move on here in our final minutes and talk about what they’ve been talking about all day.

Next door two, two can play at that. We’ll give you a little m and a as well. One of the really delicate questions for any MSP in their growth journey is when do I start thinking about selling? When do I start thinking about buying? You’re more in the acquisition mode. Nick, so when and why did you start thinking about acquiring and what kind of a strategy did you adopt?

Chris: Yeah, I before I answer that, I wanna just, for the owners in the room, just let me give you a quick piece of advice that I got from a mentor who helped me over the years as I grew my business. He pointed out that everybody who owns a business you’re functionally serving two roles. You’re serving the role of a shareholder and a CEO, and those are not the same job.

A shareholder [01:00:00] owns an asset. If you own stocks, you expect that stock to return an investment every year, and you’re dispassionate about it. You’re looking at when’s the best time to sell the stock? Is there a change in the market? If you’re an owner, your job or a CEO rather, your job is to run the business to produce a return every year.

When you mix those roles together, it can get very confusing. So I would encourage you that when you’re thinking about if you’re gonna sell or buy, wear the shareholder hat, not the CEO hat. Try to decide like you’ve worked hard to build this asset. Think more about the asset itself. Is it appreciating in value?

Is it growing? What’s the market doing? The other thing I would say is why do you wanna buy a business or sell a business? I think that’s really important to know your goals. There are so many buyers just in this building, there’s never been a better time if you’re interested in selling the business because you’ve got tons of choices.

You’ve got different models you can choose from. And the good news is there’s really no villains in our industry, right? It’s not, there’s different models. Some have different. Success factors than others, but it’s not like there’s a terrible [01:01:00] choice you can make. So what I would tell you is really identify your goals.

Do you wanna stay with the business? Do you want the brand to stay the same? What’s the plan for the team? And why am I saying all that? Because you’re not selling a technical business. You’re selling a relationship business. And so when you hear horror stories in m and a about a transaction that led to a ton of employee churn and a ton of customer churn, usually the reason is the relationship dynamics were not aligned.

It’s not that they had bad plans or bad integration, strategies. It’s the expectations weren’t there. And so I think that’s a huge part of what you have to make sure is aligned before you embark in a transaction.

Erick: I think you’re double clicking down on culture, right? I think Now, Tammy, you made your first acquisition last year.

So walk us through how that came about and what are your future plans?

Tammy: That started as a relationship that we’ve had with the another MSP owner for quite some time. He did not pivot as quickly as he should have on in some instances, and so we were fortunate enough to make an [01:02:00] arrangement with him and we have had zero client churn from that.

We’ve maintained everyone that we acquired as part of that. And so I think I would certainly look at that dynamic as a model for going forward. I think that was a recipe for success for us.

Erick: And your feature plans?

Tammy: I think that we might have more, one more in the works maybe before the end of the year in a similar situation.

Erick: Alright. Thanks for sharing.

Rich: Nick, Tammy, you’re more in that acquisition kind of mode right now, but there are gonna be people in the audience here who are either approaching a sale, thinking about they’re less interested in buying than selling at some point. From a buyer’s standpoint, what should they know about what you look for, what you run away from, what they need to be thinking about to make themselves a good acquisition target?

Chris: Sure. I’ll start with the most obvious that you probably heard, but percentage of recurring revenue is very important. It’s one of the primary value drivers in a transaction in the SP space. So the higher your percentage of recurring revenue the [01:03:00] better. When you think about recurring revenue, it’s primarily service revenue, but also licensing reoccurring services also can, I’m sorry, reoccurring licensing can count that number.

The next one is customer dilution. So again I’ve experienced this at parts in my history. I had customers that were uncomfortably large percentage of my business. If you have that, just. Face the brutal facts and figure out how to dilute that, because that’s a value degrader is if you’ve got one customer that represents anywhere, say 15 to 20% of your business, that can be a challenge.

So that’s a big issue. Things that I think buyers that are focused, there’s buyers that don’t pay a lot of attention and they’re just buying anything. But I think the more discerning buyers, we wanna look at the team, we’re gonna look at things like employee churn. If you’re having churn issues, it happens like a, any entrepreneur knows there’s parts of your lifecycle you’d rather not talk about, but know why they’re happening and what you’re doing to fix them.

If you are having employee churn issues, same thing with customers. Customer churn, net revenue retention, net revenue [01:04:00] retentions of, if you’ve not heard that phrase before, it’s primarily used in SaaS valuation, but it’s really starting to sneak into our business. So running that and understanding what your net revenue retention is really important.

’cause many of you are probably not giving yourself sufficient credit for current customer expansion. And that number comes out more easily in that number. And then the final thing I would say is. If you don’t know these numbers going into the transaction, you’re gonna be at a disadvantage. And so there are so many resources available to us now.

We’re in the golden age of MSP, mergers and acquisitions, so just resources like Kaseya, the folks next door. And candidly, most of the buyers now there’s no disincentive for us to provide you those tools in advance. So if you meet a buyer often, like I’ve met with MSP owners, where I’ll help them map out what to do to reach kind of maximum value, wearing that shareholder hat, like how can they get the most for what they put their time into.

Rich: Tammy, you’ve got recent experience in this area, so some thoughts about what you look for [01:05:00] and what worries you

Tammy: Coupling off of what he was just saying I completely agree. A client churn. I wanna make sure. Because we are in the relationship business. Are there agreements in place with those clients?

Three year agreements would be lovely, but at least one year agreements on the MRR and not something with a 30 day ability to cancel. You want something at 90 days, even with a buyout for longer would be preferable. Preferential for employees. Same the tenure of the employees, the average tenure.

And then to see what percentage of the MRR is growth over year over year to making sure those relationships are solid and continuing to to grow at the same time.

Chris: Grace, there’s one more I didn’t mention that I wanna say real quick. If you have, especially an end market focus, that’s incredibly valuable.

So if you have a lot of legal customers or healthcare, the more you can nurture that end market expertise. Big value driver.

Erick: Tammy, something you said stuck with me [01:06:00] in your last acquisition. You said you had. 100% client retention. That is very unusual. You did a lot of things right. Can you share with us what tactics, techniques, challenges, struggles that you went through to maintain those existing clients?

’cause, after a merger, an acquisition, typically you’re gonna lose a few customers. So give us some insight.

Tammy: The the person who sold we were just in a very fortunate situation. We had known him for a long time. And so it was just an ideal match. I believe on our part as well as his he was instrumental in handing those clients off and he remains a resource, should we need him.

So I think having just a very good relationship with the person who’s selling it is important.

Erick: So it sounds to me like there was some cultural alignment, but then there was also the willingness. From the seller to help make sure that things went well. ’cause I think, as [01:07:00] folks that wanna sell their businesses, the first things we think about are, will our staff be taken care of?

Will our customers be taken care of? And it sounds like you just, it was a perfect opportunity.

Tammy: It was. And hopefully we can replicate.

Rich: We are just about out of time here. For those of you who’d like to get in touch with Erick or myself, here’s how you can reach us. How could folks best learn more about you?

Maybe get in touch with you, Chris.

Nick: I’m on LinkedIn like everybody else. If you wanna see pictures of my dog, I’m at C Swer,

Tammy: Jeremy, Tammy, Anthony Baker on LinkedIn.

Nick: Yeah,

Chris: LinkedIn’s the fastest way to find me as well.

Rich: Okay. Phenomenal. So for the podcast audience Erick and I are gonna take a break. We come back on the other side, we’re gonna share some thoughts about this really interesting conversation and have a little fun wrap up the show.

But for the live audience, that is it. Let’s hear it for this amazing panel.[01:08:00]

All right, and welcome back to part three of this episode of the MSP Chat podcast. So much fun re-experiencing that panel. Erick, we actually did we, we co-led two other panels the next day at the Cass actually one of them was just you presenting to the audience, and then we did a panel together.

So this was only part of what we did at that show and just a lot of great content and a lot of fun in terms of this particular panel. I I think back to something that Manny Revelo, the CEO now of ConnectWise said like a couple of months ago I was at their conference in London and he was talking about how struck he has been since getting into the managed services space and taking over ConnectWise.

How willing MSPs are, in the context of a community to share their best practices their lessons learned. We had Brad Gross attorney at law who works with MSPs on the show with us right around New Year’s. He was [01:09:00] talking about in the legal profession, there, there is no community like there is in the m MSP world where people are sharing all their best ideas with one another.

We take it for granted in the MSP world and in the IT channel that people are gonna do this. But what a great example. You got three MSPs there, very successful. And they agree. They volunteer to get on stage in front of several hundred of their peers who would maybe love to knock them off the, as king of the hill or whatever, and say, here’s what I’ve learned.

Here’s how you can implement that too and benefit that too from partners. MSPs do this all the time. And this was a great example of it.

Erick: Yeah. Rich, I talk about this all the time. It’s one of the things that I love most about the MSP community is that we, I think are just wired to help. I think that’s what drives.

At least the majority of the MSP partners that I talk to and work with, it’s they’re there to help their clients. They’re, they didn’t start [01:10:00] an MSP practice because they wanted to make $12 million at exit. They started an MSP practice because they were good at what they did, and they wanted to help other business owners with their services.

So there’s this kind of entrepreneurial kinship that happens, at least for me and the partners I talk to that, Hey, we really want to be an integral part of your organization and celebrate growth together. The MSP business model is all about getting paid for helping your clients operate and stay secure and have uptime and all that.

The break fix model was we profited when you were in the most pain, you wouldn’t show up and, oh, boy your stuff’s down and it’s a Saturday. That’s our triple time rate, a thing. And now it’s like we benefit and we profit equally from each other’s success, which is so cool. And yes, to have these partners get up there on stage and just basically share their stories and their journey and their [01:11:00] challenges and their wins is in a great example of that spirit.

Rich: We we attended a dinner the night before that panel with some other speakers at the event, and I wound up seated across the way from Tammy, one of the panelists there, and she was talking about how their busy, she very much wants to add some sort of deliverable or something tailored specifically to what she called micro businesses.

And so very small organizations, and she freely conceded, these are not the most profitable businesses for me to be expanding into this. This isn’t really about, this great thing for my company. It’s just her perception that there are so many businesses out there in desperate need of it help from companies like hers that they can’t really afford right now.

There ought to be something that they can’t afford. So it’s that, that mindset you’re talking about, Erick, the kind of people who get into managed services and prosper in managed services. Have this desire to be helpful to, [01:12:00] to help people be better. And it, it reflects itself in numerous ways including a willingness to get up on stage and tell stories like we just heard.

Erick: And we love celebrating these go givers as much as we can. It’s it’s very rewarding, to share and give back and I appreciate the community and the leaders that do that.

Rich: Folks, that leaves us with time for just one last thing this week.

As we are recording this. It’s been just a few days since a big election in Australia, and in reading about that election a little bit, I learned about an election tradition in Australia that I had never heard of before. Now, this involves a, apparently a popular snack all year long in Australia where you take a grilled sausage and you wrap it in a slice of white bread.

And typically you’ll top that with onions and ketchup. This is just a popular snack, just like the ballpark hot dog here in AmEricka. But if [01:13:00] you eat one of those on election day in Australia, on your way in or out of a polling place, they call that a democracy sausage. Tradition, election day tradition, get yourself a democracy, sausage as a reward maybe for going out and voting.

And it, it does make me think, I mean that, politics, democracy, it’s one of those fields, Erick, where, typically the advice is you don’t wanna see how the sausage gets made, right? You don’t wanna know about the backroom deals and the money changing hands may, maybe this is some sort of constructive spin on that.

You’re not gonna see how the sausage gets made. You’re gonna cast your vote, you’re gonna eat the damn sausage and then just move on.

Erick: I love that rich. Yeah. Because we always say don’t tell me how the sausage is. Just tell me how delicious the sausage is, how we present things to clients as MSPs.

Don’t tell them about the speeds and the feeds. Don’t tell ’em how the sausage be. Just tell ’em how amazingly delicious it is once they subscribe to your services. Yeah, I like it. I like it. Everybody should have democracy sausages a lot, all the time. [01:14:00]

Rich: And now I’m hungry. We’re gonna wrap things up here right now.

Before we do I will just remind you, this is both a video and an audio podcast. If you are listening to the audio version of the show, but you’d like to check us out on video, go to YouTube, look up MSP chat, you’ll find us there. If you are watching us on YouTube and you’re into audio podcast, go to Spotify, apple, Google, wherever it is, you get your audio podcast.

You’re probably gonna find us there too. And wherever, however you find us, please subscribe, rate, review. It’s gonna help other people find and enjoy the show just like you do. This show is produced by the Great Rest Johns. It is edited by the great Riley Simpson. They’re part of the team with us Channel Mastered.

They can create a podcast for you if that’s of interest. And podcasts are just. The tiniest sliver of what we do for our clients at Channel Mastered. So I would encourage you to go to www.channel master.com to get the big picture on all of the services we provide our clients channel Mastered has a sister organization called MSP Master, that [01:15:00] is Erick working directly one-to-one with MSPs to help them grow and optimize their business. And you can learn more about that business at www.mspmastered.com. So once again, we thank you very much, folks for joining us. We’re gonna see you in a week’s time. Until then, I will remind you that you cannot spell channel.

Without MSP.