Episode 75: Dropping the AI Bomb
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Inspired by the panel discussion they led at a recent conference, Erick and Rich discuss how real MSPs are making real money in AI, as well as three proven techniques for increasing the value of your managed services business in a crowded M&A market.
Then they’re joined by Jason Beal, Americas president at Exclusive Networks, and Andrew Warren, the company’s North America vice president of sales and marketing, for an insightful conversation about the value of distribution in the age of services-first business models.
And finally, one last thing: why $100 ice cubes are the perfect gift for the billionaire in your life who has everything.
Discussed in this episode:
There’s Money in AI. There’s Profit in Vertical AI.
Exclusive Networks: Aggregating Services
Transcript:
Rich: [00:00:00] And three, two, One, Blast of 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 sets, tips you need to make it big and manage services. My name is Rich Freeman. I am chief analyst of Channel Mastered to the organization responsible for this program.
And I’m joined. I also one of your co-hosts. I’m joined by your other co-host, our chief strategist at Channel Mastered. His name is Erick Simpson. Erick, how you doing?
Erick: Doing well, rich. How are you doing?
Rich: You know what? I am, I’m doing well. Yeah. Both of us are, as we record this, coming off a whirlwind week.
We shared in the previous episode of the show a recording of a panel session [00:01:00] that we did during the glue experience event within an event at Kaseya Connect. So as we record this, we’re coming off a week where we went running around the Western United States at Kaseya Connect and the RSA conference, and now we’re actually home.
Erick: Yeah. And I think I’m, I think I’m about 98% recovered rich being almost the end of the following week. Yeah. Took a little outta me, but man what an exciting couple of conferences
Rich: it was. It was a great week and a nice week to be back at the desk too. And and. Work from home Prep up for for some more travel.
Both of us will be doing next week, but we’ll talk more about that I think in the next episode of the show. For now, let’s dive into our story of the week here. And like I said in the prior episode, we shared a recording of a panel session that we moderated at the Glue Experience event.
What folks have not heard and will not get a chance to hear sadly for them is another session that we worked on together, APTA [00:02:00] Kaseya Connect about AI and specifically how to make money, how Real World MSPs are making money with AI right now. And I’m gonna share some statistics here, a few of which actually showed up in that session, and a few of which I’ve encountered since then.
As I shared with folks in our audience, Gartner Forecast that worldwide generative AI spending is gonna reach $644 billion this year. And 91% of SMBs who use AI say it has increased their revenue. So there’s a giant market there is enormous demand including among MSPs, and people are seeing results.
And yet Erick, and yet Garner published some data more recently here in which they said that 77% of the CEOs, so these are probably larger businesses, they’re they’re surveying 70%. 7% of the CEOs believed that folks who are running their organization or running it are not sufficiently AI savvy that they lack AI savviness.[00:03:00]
Think about what would have to happen for A CEO To con conclude, my tech people aren’t sufficiently AI savvy. There was a study published by an organization or a business called org view. They do HR software. 39 percent of businesses that are using ai have laid somebody off gotten rid of somebody, be because they decided AI is going to be able to do that job at least as well.
55% of the companies that eliminated somebody’s position because of ai now say they regret it. There’s data as well from Ivanti about employees. Something like a third of employees who use generative AI tools that work, say they’re keeping it a secret from their employer and from their peers, either because they think it’s their secret weapon or because they think if the boss finds out that they’re doing their job with ai, the boss will conclude, why do I need you?
Then? It’s much cheaper to just get a chat GPT subscription. What all this adds up to Erick, and we’ve spoken about this on the [00:04:00] show before, is that there’s still a lot of uncertainty there. There’s a huge appetite for AI among businesses of all sizes. A giant and expanding market, but still a lot of uncertainty about where do we begin, how do we get real value from ai and therefore a massive opportunity for MSPs and solution providers to step in and provide some clarity and help people actually start saving money and making money with this technology.
And that’s what we were talking about on stage with our panel of four MSPs at Kaseya Connect. And just to give people a little feel for the kind of thing ’cause we got a lot of questions from folks in the audience, make this real. Don’t just talk to me in abstract terms about building solutions for my customers.
What are you actually doing that people are buying and paying you for? And just to give you a little sample of the kind of thing that was discussed during the session, there was somebody there who was talking about, I. A tool, an AI powered tool that he’s [00:05:00] using. Think of it as like LinkedIn Sales Navigator on steroids.
It goes off and it doesn’t just find potential sales prospects for you. It, it finds businesses that are really targeted to who you’re going after and your skillset. It pulls together a bunch of information about them so that when you get on a call with the sales prospect, you’re really prepared to have a meaningful conversation with them.
And, a an MSP on that panel, using this tool internally saw his close rate on leads go from 30% to 55% just by adding this tool. Imagine being able to deliver that kind of value to your customers. We had two people, and this was random, but it turned out two people on the panel. Are building solutions that they are selling to customers who are paying them handsomely for it just to automate the creation of RFPs.
If you think about how many businesses need to get RFPs out to a current and potential clients on a regular basis, if you could accelerate [00:06:00] that process, free up bandwidth, this is, very repetitious stuff a lot of the time. If you can build somebody a tool that’s gonna help them spit out RFPs very quickly so that their people, their salespeople in particular, can focus on higher value tasks.
That’s going to be value and valuable to your customer, and it’s going to be appreciated by them as well. And then we spoke as well to a panelist on the session who is using a what I will call a small language model. A private LLM basically trained exclusively on data from law firms specifically.
And he’s using this basically to collect information about client conversations via copilot create transcripts and summaries and stuff like that, we’re seeing a lot of tools do right now. But this solution aside from the fact that it’s trained it’s private, it’s trained exclusively on the law firm’s data, it then goes out and because it knows how long the call was who was on the call, what was [00:07:00] discussed et cetera, it can actually automate, the time recording process and therefore dramatically accelerate the building process, which is very labor intensive stuff for laborers frequently frequently. And if you can just take that off their hands, you don’t have to think about that. We’re gonna build you an an AI tool that’s gonna get all the right timestamps in there.
It’s gonna interface with your billing system. It’s gonna help you just create accurate bills without ever having to be involved in it. Again, if you work with law firms, they’re really gonna appreciate that. There were more examples talked about during the session, and it’s an illustration of the opportunity out there for folks in our audience right now to help customers out there who don’t think they, they or their team has sufficient AI savviness who are making bad decisions about letting people go and then hiring them or somebody else back, et.
Help them get some clarity on how to get started, where to get started, help them get some real value in a quick timeframe from ai. And really not just make a a great deal of money, but kind of [00:08:00] cement your value, your stickiness with that account.
Erick: Yeah, rich, it was a really great panel and it was amazing to see how these MSPs have taken a pain that their clients are experiencing and applying their AI savviness as you put it to that and creating these, amazingly valuable services and solutions and then helping manage that along the way.
I can, I remember in my MSP Rich, one of our verticals were attorneys. One vertical were accounts, another vertical, were nonprofits and just taking. Two of those verticals, the attorneys, I can see the creating a solution just like this partner shared that they were doing for their attorneys and making that unbelievably valuable that you could just walk into any attorney’s office and pitch it to them and they would say [00:09:00] yes.
And the other one the RFP, the proposal process, I, we had clients that were their, whose customers were state and local governments. And their whole business was based upon responding to RFPs. One client that we had was very good at it. And they had these experts, highly paid individuals that would sit there and respond to these RFPs for them outside external experts.
And when we heard the one partner talk about when you respond to an RFP, like 80%. Of what you’re responding with is the same data. It’s about your company, your capabilities, your contract vehicles, all this other stuff, and only 20% of it or so might need to be tweaked or even less I could also see an MSP building a practice going after folks that are responding to rps.
And on, in the example that I gave where we, one of our verticals were nonprofits, [00:10:00] they were folks that were also always writing grant requests. So I immediately think, wow, AI could be really valuable in creating a process because a lot of those grant requests, it’s kinda like an RFP, right?
There’s some specific things that you can train the model on private LLM, which was also key here, keeping all that information within that organization and then responding or creating these grant proposals with, reducing the costly human labor that goes into it. These folks are on the leading edge, but it’s not bleeding edge it’s identifying a pain that a client has, building a solution for it, and then saying, oh, I can cookie cutter this for all these other prospects in this same vertical.
Rich: Yeah that’s a really critical point there, that you just made. The repeatability of these solutions is very important. ’cause once you get it down with a, an initial customer, if you’re working with a lot of law firms, you can just keep doing it for for all of [00:11:00] them there.
Yeah. And one of the things that came up during the panel all four panelists agreed that you really need to take a crawl, walk, run approach in ai. In ai, for yourself in terms of the complexity of the solutions you’re delivering. And with your customers you don’t necessarily wanna go straight into building them their own private language model, for example.
So crawl might be. Something around copilot. It might be something like this LinkedIn, sales navigator on steroids kind of tool. And then you work your way into the RFP kind of solutions up to these private language model kinds of solutions that take more sophistication interface with billing systems.
There’s more risk and reward. So yeah you want, you’re looking for repeatable solutions that are going to deliver real and tangible value in terms of accelerating workflows. And you wanna sequence that in a crawl, walk, run, fashion.
Erick: Absolutely no knee jerk reactions.
Don’t regret making a decision later, right? Because you felt a certain way today. And another [00:12:00] thing that I’ll note Rich, is these panelists that are doing this called out like ready their vendors out there that are delivering these services to MSPs today, they call out several vendors.
Are that are basically integrating and leveraging their service and solution to build these things. So think about it like this. There are already vendors out there that are serving the needs of MSPs and their end customers. They’re just using that solution to build on top of and make it a very specific, vertically focused outcome for their customers.
So you don’t have to build it all the way from the very basics and try to figure out all the platforms and all that. There are vendors out there that have, done a lot of that groundwork for you already.
Rich: Let’s move on to your tip of the week, Erick. Because if folks in our audience here follow the examples set by the panelists in the session that we did at Kaseya Connect, if they act on some of what we’re talking about in the show here, that’s probably going to increase.
The the success and the top line and bottom [00:13:00] line numbers at their MSP, which might make the business more valuable. And you are gonna be talking about some other things people can do to make the business more valuable.
Erick: You bet, rich. And the, a lot of the conversation that we’ve been having on the show and we hear about and see in the channel are about these the m and a activity that’s going on with MSPs.
And a lot of it is attractive to MSPs who are thinking about exiting their business, selling it off for, a valuable multiple when it’s time to, to exit. And there’s a lot of that going on. I wanna flip the script on this week’s tip and talk about. Partners that want to grow their revenues and EBITDA through acquiring other MSPs.
So just a couple of quick ideas to think about there. This is also a way, rich, where you can [00:14:00] add a lot of value to your organization before exiting. So let’s say that you’ve got a, three to $5 million MSP practice and, multiples, might look like or an offer might look based on your EBITDA at about, $5 million or so.
What if you went out and acquired a sub $1 million MSP and added that to your portfolio and then went out and did that a couple more times over the next two years or so? That would definitely increase your valuation. It would increase your net profit to the bottom line you would be saving because you are sharing services, back office services, accounting attorney, HR and all that.
You could eliminate a lot of costs and standardize on platforms and services and be very focused in your marketing and sales approach. How can someone think about doing that? Number one, [00:15:00] try to identify some of these smaller MSPs. We, these acquisition ready, I’m hearing it called Micro MSPs, right?
Somebody below a million. I have a couple of partners I’m working with right now that are looking for sub $500,000 MSPs. Put a few of those together over time. These are folks that you want to have strong. Local relationships. Good brand awareness, right? They the, they have good authority and are growing, or, you could help a lot.
You would help them grow and even increase that valuation even more. Market yourself as a strong buyer. You’ve got to make sure that you have some sort of financing or funding in place. The, some partners I’m working with today have bank financing, believe it or not, rich. They banks now are like waking up to the fact that, hey, this is going on.
We’re ready to make some some financing deals. Now, the cost of financing these days is higher than it was, three or four [00:16:00] years ago, granted, but it’s still creating a lot of m and a activity. So either you’ve got some institutional financing or you’ve got a couple of investors or some friends that might wanna help fund some of this growth as well.
And then create some really attractive seller transition packages. You can, offer a little bit of cash upfront and then maybe some earn out over time, or maybe a small piece of equity in the larger organization, which could keep your initial cash outflow to acquire and integrate that new organization a little bit lower.
And as you grow, then everyone wins over time. It’s like the two bites of the Apple concept rich, where first bite is I’m gonna get, some cash, take some risk off the table for my hard work and sweat. And then maybe I can participate in some equity a few years later when the larger entity sells for a higher valuation.
Rich: I’m gonna [00:17:00] toss one more idea in there. It’s interesting that you chose to make this the topic of your trip of the week because we’re recording this about two, three days after I interviewed Abraham Garver, a focus, investment banking, and focus. And Abraham specifically, they work with MSPs on both the buy side and the sell side.
They have a lot of exposure to what’s going on out there. And Abraham just recently published a blog post in which he encouraged. MSPs who are in peer groups to think about merging with fellow peer group members. It’s like you, you have a relationship, you’re roughly the same size. There’s a good chance your tool stack and some of your processes are like your, your, the onboarding process will be easier and the chance of success will be better.
And he was quoting me some numbers. It you take two MSPs in the like one to 8 million kind of range and roll them together. And the difference it makes in terms of a multiple, when the combined entity cells is significant. And yeah, that, it buying smaller [00:18:00] MSPs is something people should really be looking at.
If that’s not an option, merging with people, a merger of equals I think is something they should be evaluating too.
Erick: Yeah, I think that’s a great example of kind of what I’m thinking about here is you’ve got some folks that. Wanna work together for mutual gain. I think in the merger there’s even probably less initial cash that exchanges hands potentially.
So there’s all different ways that you can grow your organization outside of, just, marketing and selling your services. Over and over again, some of the fastest growth MSPs have gotten that way through acquisition and we know that there’s, there’s some big names out there.
They’ve been doing it for a couple of years now, but I’m talking about the smaller MSPs that want to do it on their own and then build that institutional value and equity and then exit at a future point in time.
Rich: Okay. So give [00:19:00] it a thought folks. This is a good time. It’s always a good time actually to be contemplating expansion or an exit.
You never want to get started on that too late in in your journey. What what we’re gonna do right now though, folks, is take a quick break and when Erick and I come back on the other side, we are gonna be joined by Jason Beal. He’s the recently named AmEricka’s President at Exclusive Networks, a distributor, a value added distributor that specializes in security and networking as well as Andrew Warren, who’s vice president of sales and marketing for North AmEricka and exclusive networks.
We’re gonna have a very interesting conversation with them about the changing and still very relevant role of distribution in the it economy that we find ourselves in right now, where so much. Less of what partners focus on is around pick, pack and ship. And so much more of it is around services in particular.
We’ll be right back to dive into that with a couple of people who have a firsthand view on what that means for MSPs and how they [00:20:00] should be evaluating and selecting distributors as a result of those implications. We’re gonna be right back folks. Look around
and welcome back to part two of this episode of the MSP Chat podcast, our spotlight interview segment where we are pleased to be joined by not one. But two people from exclusive networks, a distributor that specializes in networking and security to particularly interesting fields right now. And we’re gonna have a conversation with them, not just about those markets and exclusive networks, but about the role of distribution in the channel and for managed service providers today.
But first, let us meet our guest starting with the recently named AmEricka’s President for Exclusive Networks, Jason Behl. Jason, welcome to the show.
Jason: Thanks, rich. Thanks for having me on. Good to see you again. You too, Erick.
Rich: Good to have you. So Erick and I have both known you for a while. For [00:21:00] folks who haven’t tell ’em a little bit about yourself and about your your new role here now at Exclusive Networks.
Jason: Should, Erick, should I go all the way back? Nearly 20 years ago when we first met in Orange County in before MSP was even called MSPI
Erick: always do Jason, so yeah, let’s let her rip baby. Let’s give folks a little bit of history on the MSP channel.
Jason: Yeah. So I had started at a domestic distributor back in Orange County that focused on content management and document imaging solutions.
And so that’s where I cut my teeth in the channel and in the industry. And then from there I went to a large global broadline distributor and worked with them both in the United States as well as in Europe. And then I transitioned to the the vendor community and worked for a couple different ISVs and OEMs leading distribution, leading channel organization, building partner programs.
I just always love staying close to partners, right? Partners are on the front lines. [00:22:00] They’re the ones every day solving the challenges for end customers. And so I’ve stayed close. That’s how I learn. And after about what maybe a dozen years in the vendor community, I had this great opportunity to come back to distribution and lead the exclusive networks north AmEricka’s organization.
So I am still based in Southern California, not too far away from from where Erick is and exclusive networks North AmEricka. We have strong presence across the United States and Canada.
Rich: All right. Now Erick and I have not until now, met our other guest, Andrew Warren. He’s the Vice President of Sales and marketing for North AmEricka at Exclusive Networks.
Andrew, welcome to the show.
Andrew: Yeah, thanks.
Rich: Great to be here. Great to meet both of you. So give folks a little bit of rundown on who you are and what you do at Exclusive Networks.
Andrew: Sure. I. As you said leading sales and marketing at exclusive networks, 20, 20 plus years in the channel. 15 of those on the distribution side of the business.
And within those 20 [00:23:00] years, the majority of that time in the network security space. And have held responsibilities and distribution from from carrying a bag and an individual contributor to, running a two and a half billion dollars business, prior to acquisition. So no stranger to this space.
Exciting to be here. And as Jason said, spent about five years of those 20, on the vendor side most recently, leading channels and go to market organizations. Good to be back in distribution. And I think, huge opportunity, for distributors to to add really unique value in, in this marketplace today.
Rich: Let’s let’s get into that. Jason, part of the inspiration, the impetus behind this interview here is. An interview I did with you shortly after you stepped into the role you’re in right now, in which we got into a number of different distribution related issues including the role of hyperscaler marketplaces in the channel right now.
And you pointed out that there’s a lot for solution providers and MSPs and other [00:24:00] partners to like and lean into and utilize around the marketplaces. There are a lot of howevers attached to that as well. And so to kick things off, talk a little bit about that, that give and take the trade off prone cons, how MSPs in our audience should think about leveraging the hyperscaler marketplaces from AWS Azure, Google, et
Jason: cetera.
Sure. Richie, I always say for partners, you wanna meet the buyers, where they want to procure and manage and consume technology. Partners have been really good over the years providing many different options to their end customers, both on the procurement side as well as on the service delivery side.
There’s a new avenue for end customers and partners and distributors to transact and the technology purchases, and those are on the hyperscalers, and so it’s starting to have some more of a share of it spend where end customers are choosing to, to transact [00:25:00] on marketplaces. So I would say for partners, I see partners approaching their relationships and their investment in hyperscalers from both a offensive and a defensive perspective.
One, they don’t wanna lose out on business. For example, if a larger mid-market or enterprise size end customer has a kind of a pre-commit with those hyperscalers and wants to retire more and more of their third party software. Sales through those hyperscalers. The partner wants to be involved in those transactions, wants to be a part of the partner of record and wants to do the services all around that.
Instead of just saying, no, we don’t wanna be involved in that private offer. They can say, we wanna do a consulting partner, private offer. We wanna be in this transaction and we’re gonna help you with all sorts of different services. Around that during and post-sale. And from an offensive perspective, there [00:26:00] are new buyers.
There’s a lot of kind of these classic born in the cloud or maybe entrepreneurial startups who don’t have, historic footprint as far as infrastructure data center hardware, and do a lot of the consumption of their technology through the hyperscalers or through the cloud. So that represents an incremental growth opportunity for our partners.
An offensive opportunity to go out and find those buyers with whom maybe they don’t know, add new customers. And there too, provide a whole lot of services and consulting for those customers that they may not have been able to do before. So for partners, it’s both an offensive and a defensive strategy, and I think from what I’ve seen so far they’re making a good balance with their investments and the amount of time that they’re spending educating and enabling themselves and their sales organizations to help partners.
On my on hyperscalers.
Erick: Jason, you mentioned the term services a few times in that response, so [00:27:00] partners generating more revenue from services. In fact, in the interview that you did with Rich you said that channel partners are making more of their money than ever before from services and less.
From a resale. So what kind of challenges do you think that poses for them?
Jason: I’ll say that I believe it, it creates opportunities, right? We’ve seen a lot of the studies in the industry around this multiplier effect, right? The dollar of hardware or the dollar of license that’s sold for a particular vendor.
What is that generating as far as total ecosystem economic opportunity for the partners? And we’ve seen many of these studies are published that saying the dollar turns into 5 6 14. I was with a vendor last week at RSA that used that figure. They said it’s $12 of partner services opportunity for every dollar of LI sold.
So potentially Erick [00:28:00] challenges are around, can they upskill? The bench, add to their bench drink, had sufficient engineers manage their utilization, retain their talent. There are some challenges with the service delivery side, but that opportunity to take, the dollar of what might been resale and turn it into six or $12 of pre and post and ongoing lifecycle management services, that’s a huge opportunity for the partner community and for the distributors with which they’re working on a lot of that service.
Erick: Yeah, I’ve heard that. I’ve heard $7 of pull through additional services to every dollar spent. I’ve not heard 12 yet, so I guess that’s a positive for partners.
Jason: Yeah. Like Andrew was in the same, we won’t disclose the vendor, but he was in the same meeting at RSA, it is a complex technology, certainly that requires a lot of implementation and then ongoing.
Services, for the end customers to get full feature adoption and utilization out of it. But that was the stats that they quoted in the meeting, [00:29:00] 12 to one.
Rich: So Andrew obviously a lot of opportunity out there for partners, but also a lot of challenge in terms of adding services a personnel, the skills, figuring out the price, a lot of the things that Jason was building off there that you have to figure out to go after that potentially giant opportunity out there.
GenErickally speaking, as opposed to, just in terms of exclusive networks, how can distributors, how do distributors help partners who want to make that resale to services shift? Do that successfully.
Andrew: Yeah. I think distributors are in a great spot to do that, right? Because we are aggregators, of those things.
And if we’ve got, a thousand different partners that we’re working with on a certain, vendor’s, technology, we can build those services capabilities. And then they also have a trusted source, as they either build their bench or they need augmentation on those services.
So I think distribution’s in a phenomenal spot, right? And exclusive [00:30:00] networks has built, really extensive services around, our top vendors, to help the partner community, scale and augment. Plus, I think if you look at it vendors, w will they have to do some level of services, right?
For their customers, et cetera, but it’s really not what they want to be doing. They’re in the product business and the gross margins on product are far superior to services and the complexities of running a services business. So I think there’s a couple things, in the favor of the partners as well as us, as distributors in that aspect is, this is work that absolutely needs to be done.
This is not work the vendors want to be doing and, distribution’s in a great space, right? Because we are trusted, amongst that and that way partners have an area to go to to go ahead and procure and use those services. And it makes it sticky for everybody from that perspective because also it’s a risk for the partner.
If they’re not doing the services and just delivering, a product, then, they are opening the [00:31:00] door to their competitors as well. So I think we’re in a fantastic spot. And I think distribution continues to evolve, in that services space. And we’re doing a lot on in that space as we speak today.
Erick: Andrew, sticking with that train of thought we know that the more mature service providers, MSPs really know how to leverage the support that they can get. Delivering services from their distribution partners. Yep. But what would you say to partners that are still a little bit nervous about, engaging with a distributor like yourselves who deliver these services in tandem with them?
Andrew: Yeah. First of all I think it’s a natural, right? And what, why do I say that is we already have a, an agreement, a level of, relationship and right. Distribution relationships are, go back a long ways, quite frankly. So they definitely have a trusted partner that they can lean on to [00:32:00] go do these and lean into.
So like I said, I think it’s a natural we’re very few of our partners are we just single transactions, right? And then you don’t see them again. It’s, they’re buying from us, sometimes daily, weekly, monthly, and, with that, it allows them to, to really learn on how we can support them from a services perspective.
I honestly, I think it’s really natural and. Also even the biggest partners are using some level of third party service, especially in, this network security space. Because it is so co complex and there’s new technologies coming out every day, there’s no way to stay, completely on top of all of this.
So again, if we can aggregate and orchestrate, a lot of these things, then it’s a real opportunity to help our partners grow. Erick,
Erick: that’s interesting. I was speaking with an MSP partner just this week, and they were sharing a challenge that they were having in a technical solution to deliver to one of their clients, [00:33:00] and I had to remind them to reach out to their upstream distribution support or help in getting that.
Do you think that sometimes we’re not messaging that capability enough to these partners and reminding them that, Hey, we’re here to support you as your distribution or third party. Vendor partner, whatever the case may be. A
Andrew: hundred percent. I think I think we have to do a better job of positioning and selling our services.
And it’s something we, we are working on. But I think it is the old saying, you have to tell ’em again and tell ’em again and then you know when the need is there, you hope they remember that you had that conversation, right? But yes I think we can continue to do better in positioning and letting you know our partner community know about all the capabilities we have.
Jason: Yeah. And Erick, can I jump in and be maybe a bit provocative on the two questions as well?
Erick: Ooh, I love provocative. Let’s go.
Jason: If you were a if you are a partner and you need service delivery augmentation in an end [00:34:00] customer, who would you trust as far as bringing in. If you wanted to minimize the potential of that entity from stealing your end customer, the vendors professional service team directly, an independent service contractor, a third party services company, or the distributor you’ve worked with for one or two decades.
I think that we present, when Andrew talks about trust, we’ve seen example after example in the industry where those other entities that I’ve mentioned will absolutely go and try to take the end. Customer direct and distribution in multiple decades has proven it’s loyal to the partner channel.
Rich: And just to be clear here, when we’re talking about going to, a company like Exclusive Networks going to market with an MSP in our audience. This is at [00:35:00] least some of the time, potentially white label they’re essentially representing you.
Jason: Yeah. Great. Point we, we have I’m, today I’m in Grand Junction, Colorado.
Gorgeous, 350 degree views of the mountains in the mesa here because exclusive networks acquired Cloud rise in December of 2024. Now, cloud rise has global delivery capabilities and is one of the top SSE security and data security posture management, service delivery companies in the world. Exclusive has brought that capability on board, and it’s a channel sales model.
We work with the partners and their end customers when they need bench strength and skills that they don’t have, or there’s a, as an opportunity cost on a particular project for them to use our resources versus theirs. White labeling is always difficult these days, the era of, [00:36:00] LinkedIn because sometimes end customers can find out where people work.
And so I see partners more and more being transparent with their end customers that they are partnering with a service delivery company like a cloud rise with exclusive networks rather than trying to just white label it. So there’s, it works both ways. We can, we can put on the shirts and such, but excellent delivery capability that augments the partners and they, they’re the ones that are really representing cloud rise in the ways that they want to, to their end customers.
Rich: So we’ve been, we’ve talked a little bit about marketplaces and the context of the hyperscalers. We’ve talked about services in the context of distributors like exclusive networks. There are distributors and there are distributors, right? There, everyone is familiar with the big name Broadline distributors out there.
They all have marketplaces now. They all have services [00:37:00] organizations. How should the folks in our audience kind of think about working with broadline? Like when should they, shouldn’t they work with Broadline? What should they be considering as they evaluate that possibility?
Jason: Andrew, you wanna start with that one?
Andrew: Yeah, and it I, I think if we let’s stay on the services theme a little bit here, right? Is, as Jason said, we’ve got, incredible capabilities in the network security space. So when you think about doing SSE implementations and, cutting edge and next generation security services, I think, you know that’s why you go to, that’s why you go to a specialist, right?
If if you’re gonna, if you need, somebody to help you hang, if know 50 display flat plan displays in, in a, in your restaurants or wherever that might be, that’s probably a great, use your traditional broadline distribution partner. But when it comes to specialization and focus, I think that’s why, we’re standing out and really, doing well in this marketplace.
[00:38:00] So I think, look both absolutely, have a place. But I think, we are so focused on this security space, to include the services that it really gives us an opportunity in the marketplace to, to differentiate ourselves.
Erick: So you’ve shared that exclusive networks really focuses on security and networking.
So for our audience that is thinking about really growing their security practice, what are the especially promising security opportunities that you’re tracking now and how, and what, which ones of those types of opportunities should partners be especially paying close attention to for either of you?
Jason: Although Andrew knows the technology a lot better than I do I’ll start and give two quick ones and then you can give a much better answer. But I certainly see that I mentioned earlier I mentioned Sass E and I certainly see that SASS e is a growing category. The market’s talked about that [00:39:00] for a few years and I think we’ve certainly seen.
As far as both in pipeline and closed sales in the last number of quarters at that Sass e opportunity is taking off. For example we were out in Berlin at Fortinets large accelerate event and the keynotes and some of the breakout sessions that we saw in Sas, SE and the technology there in the market opportunity was phenomenal.
So I think that’s a big category that we’re really seeing now, end customers. Spend their money. Another interesting one for partners to consider is around OT security. So we are seeing now more and more of this convergence between kind of that classic OT or industrial control space. And it representing a great opportunity for our partner community.
Because unfortunately, most of those de the equipment that’s in these plants, HVACs and manufacturing plant, they’re just as vulnerable and they’re getting attacked and the bad guys are finding a way in through the OT side [00:40:00] of the house and then eventually getting into the data center or the IT infrastructure.
So OT security, we partner with fortine, with Ms. Omi, with others who have a strong interest in that space. That’s another area that I would encourage partners to look at. Andrew, over to you.
Andrew: Yeah, no I think those I do think, the SSE and the OT and the SD-WAN space is absolutely a growing space.
I think the other area, which I think we’re also really investing in and spending time with vendors on is all, is everything about the data, right? Is really looking at your data strategy because, even, and I gotta drop an AI bomb in there, right? ’cause it wouldn’t be, if I didn’t.
But you think about all the data that’s being created around that as well. It’s, your data security is gonna, is critical. So I think that’s, that would be the other area that, we’re spending a lot of time and energy, looking at and figuring out, okay where do we do some of these things?
And then I think another area is in the application security space. So I think there’s a lot of [00:41:00] opportunities there and I think that’s, a bit of an underserved channel, but it’s also, a bit complicated at times. But I think where there’s complication that’s also where, solution providers usually, do very well.
I think those are a couple areas
Rich: I’d like to test one more out with you folks and see what you think and this, I’m doing this just a little bit selfishly. ’cause as we record this interview, I’m taking a break from writing a column from my blog channel Holic, about two new SIM solutions that came out last week.
One from Kaseya, one from Huntress. And both of those vendors when I interviewed them about these new product launches, said SIM has traditionally been this sort of expensive, complicated, enterprise oriented category that is now making its way into SMB principally though not exclusively because of cyber insurance and compliance requirements and so on.
And so they, they’re both very bullish on the SIM opportunity for MSPs who serve SMBs. What do you folks think about SIM [00:42:00] as an emerging or neglected security opportunity right now?
Andrew: Yeah, I would just say it continues to evolve. It’s an, it’s amazing, right? When you think of how, where SIM was, way back.
And I think, there’s a reason why, there are new startups, right? We were just at RSA last week and in, some of the things you’re talking about right there, there is a massive opportunity because there are new architectures always happening right there. And this was, somebody said this to me at RSA last week and it really, hit home is, we had the on-prem world, right?
And then we had SaaS really disrupt the on-prem world. Now we have ai, really, what I’ll say is gonna disrupt the SaaS world because certain applications built in SaaS, you can’t just bolt on ai, right? So now we’re gonna have this, built on ai, next, level. So I think no, I think sim continues to evolve.
It’s really fascinating to actually watch how that has happened. And I do think you, it will continue to go downstream like that, right? [00:43:00] Because for exactly the reasons you talk about compliance and other reasons why they, they still need to understand those events, et cetera. So I think it it’s really an interesting time as and again I think the on-prem to the SaaS, to the ai, is an interesting way to look about it. At least for somebody who’s not super technical. It made a lot of sense to me. We’ll get to watch and see how that evolves.
Erick: Jason over to you. Now. When you last spoke with Rich for Channel Holic, you said that we are in a golden age of two tier aggregation. Can you sum up what you meant by that?
Jason: Absolutely. We’ve been in this channel right for a couple of decades and there’s always been some of this fear and loathing around the, kinda the disintermediation of distribution.
At first, it was maybe the advent of the e-commerce or box software, going to license form or then on-premise going [00:44:00] to cloud and hardware being re reduced. And yet distribution has continued to evolve and to transform. And in our industry now, distribution is really a channel services aggregator.
It’s providing a. A whole host of different services for partners and for vendors beyond the transactional procurement and the financing. There’s so many things that we do using business intelligence, using our analytics, with the install base, with our partner relationships to truly grow the business, truly grow the end user pie with our partners and for our vendors.
And we’re aggregating product purchases, we’re orchestrating services and they need us more than ever. Distribution is at the center of that ecosystem and every day we provide different types of services depending on what the end user, what the partner, and what the vendor needs. I think we are in a golden age.
The [00:45:00] rise of marketplaces, many of those have now gone to two tier is a demonstration of that. There’s always been episodes where certain vendors or certain business models in the last 20 years have said. Everything’s gonna go direct. And then, by the way, who’s gonna recruit to partners, by the way, who’s gonna maintain relationships, by the way?
Who’s gonna train those partners? Who’s gonna provide alternative financing? Who can help them with really sophisticated marketing, who can help them on pre-sale? Who’s gonna do true customer lifecycle management? Who’s gonna drive that long tail of renewals? All of those questions still need to be answered.
And the distribution or channel services aggregation, like in exclusive networks North AmEricka, we have that full breadth of resources to help out those partners and vendors. So I do truly a golden age of two tier aggregation.
Rich: It is remarkable actually. A couple of things are remarkable and one is I’m right there with you in terms of having covered the industry through multiple [00:46:00] periods in which a lot of people confidently predict that distribution is dying.
We don’t need a warehouse full of boxes anymore. What good is distribution and distributors? Became a very central, very important part of the SaaS ecosystem in the SaaS marketplace. And now we’re at the time where the most in demand and profitable solutions that end users want in areas like AI and security is they are very complex and they require, multiple products and services and capabilities.
And, you both of you have been using the word aggregate a lot. That’s what distributors can help partners do is aggregate these different things, pull them together and take them to market as a solution. Yeah, it is, you’re, it is a good time in that respect to be in distribution.
Jason: Yeah. And Rich, you know what? I love boxes still. I’m not afraid to say it. I love walking around and seeing our productive full warehouses churning out boxes. In fact, rich and Erick [00:47:00] in the last few weeks. We have had two different eight figure plus deals related to hardware, where one of ’em we’re doing consignment and global logistical deployment on hardware related product.
And on another one we’re doing a, specialty warehousing and time for a managed service provider that’s doing a big replacement for wireless infrastructure. I’m proud of boxes. We still do boxes, we do SaaS and AI and cloud and all these other services as well. But guess what? There are still great services and needs around that side of the business too.
Erick: Gotta get
Jason: some
Erick: swag with that on there. I love boxes. Can’t give him any ideas. I don’t need to give Jason any ideas. He comes up with ’em on his own.
Rich: Super interesting stuff guys. We really appreciate you making time for us, [00:48:00] for for folks in the audience who want to learn more about exclusive networks or maybe get in touch with one of you where should they go?
Jason: You can always find me on LinkedIn and then in order to be signed up and use the great services that exclusive networks provides us, go to www.exclusivenetworks.com.
Andrew: Yeah, and likewise, LinkedIn’s probably the easiest place to find me, so thank you.
Rich: Alright, thank you very much folks. Erick and I are gonna take a quick break, right?
Right now when we come back on the other side, I’m gonna share a few final thoughts about this conversation with Jason Beal and Andrew Warren of Exclusive Networks. Have a little fun wrap up the show. Stick around. We’re gonna be right back
and welcome back to part three of this episode of the MSP Chat podcast. Once again, we thank Jason Beal and Andrew Warren from Exclusive Network for coming on the show and speaking with us. And I [00:49:00] guess I’ll just kinda reiterate you know what I was saying towards the end of that conversation there, but from the perspective of somebody who’s spent the last 20 years or so covering the channel and and written about predictions from various people that that this is it for distribution.
SaaS is gonna kill distribution. And fill in the blank. The resilience of the industry has been a remarkable thing to watch. And and like I said to watch distribution not just remain present and in the market and and relevant, but actually arguably be more relevant than it was before, given the need for solutions, demand for solutions in the marketplace, and the fact that solutions have to be aggregated for multiple parts, and distributors are in an excellent position to do that much better than any one, partner in our audiences.
Certainly,
Erick: yeah. Rich. And I think that distributors have done a really good job of adapting and adjusting to the needs of the [00:50:00] market and of their partners. We just heard, I. How well Jason and his team are providing these additional services, even though, arguably every distributor could do a little bit better job of making sure that their partners know to reach out to them.
It’s still, interesting to me that in this day and age of all these really close, trusted relationships that partners build with their distribution partners and third party vendors, that they think they still have to figure out technology themselves when they have the brightest engineers and technicians and pre and post-sale support available through these really trusted relationships.
It was just interesting that that we ended up talking about that during this podcast. When in fact, that’s not the only time I recommend partners to, to, hey, raise your hand and get support from the folks that you are engaged with in your trusted relationship to deliver services to your client base.[00:51:00]
Rich: That too is another one of these perennial issues that I’ve been writing about for the last 20 years. If you really wanna get someone who works for a distributor, to grind their teeth. Just ask them, do you guys have services and capabilities that your partners never ask you about?
So many people still think of distributors. The old expression was a warehouse in a bank, right? These are the two things that I use distributors for. And all of these companies do all sorts of things beyond that. And it just drives the employees and the managers at these companies nuts that the partners don’t know.
They don’t take advantage. They don’t ask. To your point, they don’t think to ask.
Erick: And the distributors are emailing and messaging the partners. It’s just we’re not reading the communications, we’re not jumping on the webinars, right? Because we’re focused on other things.
And I think that’s that, that contributes to this, missed opportunity for closer collaboration mutual sales growth stickier relationships between the partners [00:52:00] and their distributors and partners and their clients, right? The MSPs and their clients. Still got a lot of work to do here in 2025 and Beyond.
Rich,
Rich: no question about it, Erick. And that leaves us with time for just one last thing and at. At this somewhat uncertain economic moment we’re in. There are probably a lot of people who are being a little bit conservative about their spending, but there are plenty of other people who have the the financial confidence to engage in what is sometimes called conspicuous consumption.
And this might be the ultimate example of a conspicuous consumption opportunity. ’cause it turns out there’s a company called Arctic Ice. It’s a 2-year-old startup. They are based in Greenland. They go out into the wilderness in Greenland. They cut up car sized floating icebergs from a frd in Western Greenland, and then chop them up into pieces and sell those pieces as ice cubes.
And not in Greenland, right? Like they’re putting the stuff on boats and sending them a. [00:53:00] To Dubai. We’re sending them around the world and people are paying crazy amounts of money for Greenland iceberg Ice a hundred bucks for six cubes. There is a a restaurant in Dubai I mentioned.
And there this article I’m looking at here that quotes a 28-year-old French entrepreneur who lives in Dubai who says he likes his 18 year single malt scotch over Greenland ice. The ice costs him. I don’t even know what the scotch costs him, but the ice costs him $218. It must be nice to have the means to put $218 worth of ice in a cocktail glass and sip that away in a matter of minutes.
Erick: Rich, I, now that we’ve promoted this. I am just waiting for folks to start scamming now. Oh, we’ve got Greenland ice, we’ve got, this ice or that ice and it’s just tap water. Run through a filter.
Rich: Yeah. Who’s to [00:54:00] know? Basically, it’s really all about branding and labeling, isn’t it?
Erick: Yeah. That’s why we can pay for bottled water the exorbitant prices. I was quick sidebar story. I remember when we were on a trip with my oldest son, Connor one time, and we were visiting some friends in Georgia and they were talking and, he wanted water and they said, oh, just get it out of the tap.
And he’s drink it out. Yeah. And it’s free. ’cause, used to paying for bottled water, couldn’t imagine that when we were kids, we just drank water out of the tap and it was fine. Yes, it was.
Rich: Yeah. Yeah. We survived. We grew up to be big and strong. Free water out of the tap was just fine.
Yeah. Folks that is all the time we’ve got for you on this episode of the show. We thank you very much for joining us. We’re gonna see you in a week’s time for another episode of the program here. Until then, I will remind you this is both a video and an audio podcast, which means that if you are listening to us right now, but you’d like to check us out on video, go to YouTube, look up MSP chat.
You’re gonna find us [00:55:00] there if you are watching us, but you’re into audio podcasts, go to Google, apple, Spotify, you name it. Wherever you get your audio podcast, you’re probably gonna find us there as well. And however, wherever you find us, please subscribe, rate, review. It’s gonna help other people find and enjoy the show.
This show is produced by the great Russ Johns. It is edited by the great Riley Simpson. They’re both part of the team with us here at Channel Mastered. They’re already willing and able to create a podcast for you. And believe me when I tell you Channel Mastered does way, way more for its clients than podcast.
You can get the complete picture by visiting our website at www.channelmastered.com channel Mastered has a sister organization called MSP Mastered. That’s Erick working one-on-one with MSPs to help them grow and optimize their business. You can learn more about that organization at www.mspmastered.com so once again, we thank you for joining us.
We’ll see you in a week. Until then, folks, please remember you can’t spell channel. Without [00:56:00] MSP.
