Balancing MSP Standardization, Talent, & Strategic Decision-Making w/ Elliott Hyman

[00:00:02] Dave Sobel here at IT Nation Connect. I got the opportunity to sit down with Elliott Hyman. He is the CEO of the Myra Technology Group, which is notably part of the operational end of Evergreen. Welcome to the show.

[00:00:15] Thank you, Dave. Appreciate you having me on here.

[00:00:17] I was really fascinated to talk to you because you're in an interesting position of being kind of a little bit of overseeing operations for a group of disparate MSPs that are also trying to work collectively.

[00:00:28] That feels like it brings a lot of really interesting challenges, particularly in a market that leans really heavily into standardization, like we constantly are talking about.

[00:00:38] Tell me a little bit about your approach and the way you think about that problem, Dave.

[00:00:43] Yeah. So the way that we think about our businesses is, you know, first we're going out and we're trying to select the best companies in the industry to do it.

[00:00:53] So we're already getting a great business or what we believe to be a great business.

[00:00:57] And I think, you know, over the years we, you know, developed an ability to identify those pretty well.

[00:01:04] And then we're saying, hey, we want to take each of these businesses and move them on the continuum of progress for them.

[00:01:11] Not that it's not the same for every business.

[00:01:13] And so what that requires is really different from what others are doing is going deep into each one of our companies and really understanding who they are, who their employees are, who their customers are, and what's the next step in their progress and how do we support that.

[00:01:28] So how are you balancing that trend of like, well, you know, I've done it over this way or we've learned it over here without balance, you know, breaking the thing that made that asset unique?

[00:01:38] Because one of the things you guys are trying to do is in continuing to keep that business running strongly, yet at the same time, accelerate it and make it better.

[00:01:48] How are you like, is there a process you think about or a technique or an approach that helps you understand what to change and what not to?

[00:01:56] Yeah, there is.

[00:01:58] And we're actually in the process of more deeply sort of formalizing that and building out more of our content.

[00:02:05] One of the big initiatives that will be continuing next year is something we call Lyra OS, which is sort of an adaptation or you could think of it as something similar to service leadership, but designed specifically for Lyra businesses using what we've learned over the years and operating these companies.

[00:02:22] And so the vision for Lyra OS is that we will be able to evaluate all of our businesses on, you know, right now it's about 120 different criteria and give them resources to move them along essentially their operational maturity level for each of those parts of the business.

[00:02:40] And so that's kind of how we think about it.

[00:02:42] Okay.

[00:02:43] Now, one of the things that I really appreciate about you is you are a former MSP and you're heavily involved with them.

[00:02:48] Now you can potentially even be still one because you're involved in the operation.

[00:02:52] Give me a little bit about your vision of what sustainable growth means.

[00:02:57] Where do you call it?

[00:02:58] Yeah, it's a great question.

[00:03:01] You know, sustainable growth is about building healthy companies that serve their employees well and serve their customers well.

[00:03:10] And, you know, for us, that means adding value to those key stakeholders.

[00:03:15] And so we do that in a lot of different ways.

[00:03:17] But if we're doing that consistently, then, you know, that's going to produce a sustainable growth.

[00:03:22] And, you know, we also know what doesn't produce a sustainable growth, which is trying to squeeze every dollar cost out of a business and, you know, run it in a way that isn't for the long-term good of the employees or customers.

[00:03:39] And we work very, very hard to not do that.

[00:03:44] And, you know, it can be tempting.

[00:03:46] But, you know, we're always balancing the long-term and short-term in how we operate.

[00:03:53] So give me a little bit, particularly because you're really heavily involved in helping individual MSPs and the ones within the portfolio grow.

[00:04:01] So tell me how you approach that sort of short-term, long-term knob, right?

[00:04:05] Because as every business owner knows, I can lean into kind of spending more for growth now.

[00:04:12] Or I can be a little bit more diligent on long-term or long-term investments.

[00:04:17] Give me a little bit of your framework about thinking about how to apply that knob.

[00:04:20] Yeah.

[00:04:22] I mean, it's about building great companies, right?

[00:04:24] And so, you know, that's not a simple thing.

[00:04:28] If it were simple, there'd be more great companies.

[00:04:30] And so for us, it's, you know, it always starts with talent, making sure that we have the right team on the field to go, you know, to go win.

[00:04:39] And then we think about, you know, knowledge and how do we share all the knowledge that we acquire from working with our companies, from understanding our business, from understanding our businesses and moving those best practices across the portfolio.

[00:04:56] And, you know, and then we have all the advantages of scale now.

[00:04:59] As, you know, one of the larger platforms in the industry, we have a stronger relationship with vendors and we can make interesting investments that, you know, it's very hard for a small local MSP to make.

[00:05:14] And, you know, those things are really powerful and done together.

[00:05:18] Okay.

[00:05:18] Now, I think the words, the benefit of scale, the power of scale are doing a lot of heavy lifting there.

[00:05:24] Give me a little bit of the insight of what you have found have really been the actual tangible benefits of size to scale.

[00:05:31] Yeah.

[00:05:32] So there's a couple.

[00:05:33] One would be obviously our relationship with vendors and the cumulative purchasing power that we have.

[00:05:39] Okay.

[00:05:39] In the early years of Evergreen and Lyra, you know, we got, we caught a lot of flack because we weren't standardizing on specific products.

[00:05:47] And, you know, there was a feeling of, well, gosh, you're leaving so much on the table because you could go, you know, use a single RMM across the entire platform and probably get that price down.

[00:05:57] And, you know, there's value in that.

[00:06:01] What's happened over the last couple of years is that we've grown to a scale where even having a subset of our companies purchasing from any particular vendor may be one of their largest customers.

[00:06:13] And so we ended up getting to that place without doing all the disruption of switching out the tech stack and, you know, breaking a bunch of stuff along the way.

[00:06:24] And that's, that's one of the advantages of scale.

[00:06:28] Another significant advantage of scale is what you can do for the people.

[00:06:32] And so there's countless examples of folks who've been able to progress their career throughout the org, you know, in a way that they couldn't if they're at a 30% MSB.

[00:06:43] Because a lot of times if you're, you know, if you're trying to move forward in your career at a smaller business, you might run into someone who's been there longer or is in the role ahead of you and you're waiting for them to retire or you can't move up.

[00:06:58] And so what we facilitated is, hey, if you're ready for that next step and there's not a place in your existing business, we can actually, you know, have you move into another one of our companies, get that career step up and stay with us.

[00:07:11] And so that's a big deal for acquiring talent in this industry.

[00:07:16] And, you know, when I was, you know, going back to the early days of Evergreen, we were at Wolfley Salting.

[00:07:20] We were a 30-person business.

[00:07:22] I saw that in action.

[00:07:23] I saw that people were getting stuck.

[00:07:25] And so that's a really big deal for keeping talent and for getting talent in the first business.

[00:07:32] I think you're actually really well positioned to give me a perspective on something that I've been really trying to understand.

[00:07:37] And one of the things that I talked to your colleagues at Evergreen, I've also talked to other investors in the space.

[00:07:42] And one of the things that they've all been focused on is there's a lot of small MSBs.

[00:07:46] There's a growing number of large and platform players.

[00:07:49] And there's actually something of a lack of ones in the middle of them right now.

[00:07:53] Is there something that's going on in that middle space?

[00:07:58] As somebody who's got a lot of experience growing these businesses from smaller and larger,

[00:08:03] is there something notable about that smaller or that mid-sized space that really needs to be a warning sign

[00:08:10] or something we need to invest in as an industry or individual owners can do?

[00:08:13] Tell me a little bit about your perspective on that middle-sized MSB.

[00:08:18] What can you define middle for me?

[00:08:20] I almost want you to help me there a little bit because I think we're good at defining small.

[00:08:26] And I think we're really good at defining the new emerging large.

[00:08:29] Tell me what popped into your head when I said middle.

[00:08:33] Yeah.

[00:08:33] So there's a subset of our businesses.

[00:08:35] So, you know, across the portfolio,

[00:08:40] the average size of the business is a little shy of a million and a half of EBITDA.

[00:08:45] Okay.

[00:08:46] Within that group, there's maybe 10 of our businesses that are in the sort of 3 million plus range.

[00:08:53] You know, 60 to 100 plus employees.

[00:08:56] That type of scale.

[00:08:58] Those, you know, I think what's happening in the industry when you get to that scale,

[00:09:03] which is sort of that step up from sort of, you know, the larger end of small,

[00:09:10] which is like a million.

[00:09:11] I mean, these are not small businesses, but they're, you know, the smaller end of,

[00:09:15] you know, certainly interesting for us to invest in.

[00:09:19] I think that the industry has not really, you know, consistently developed.

[00:09:24] How do you maintain your growth rate as you get that big?

[00:09:28] And because a lot of times you're coming from, you know, founder-centric sales operations.

[00:09:35] Right in the south.

[00:09:36] And generally an underinvestment in the sales team.

[00:09:39] And like the reality is when you get to that scale, you know,

[00:09:45] you just need more people trying to sell if you want to maintain a 10 or 15% growth rate year over year.

[00:09:51] And that's what we're working on for those businesses.

[00:09:55] Encoded in that, I want to make sure I understand it well,

[00:09:57] because you're talking about people trying to sell.

[00:09:58] I think you're talking about more than just sales head pal.

[00:10:03] I think you're talking about strategy, marketing, messaging,

[00:10:06] all of the human resources and efforts that go into bringing in new logos to an MSP.

[00:10:13] Is that kind of the way you're thinking about it?

[00:10:15] Yeah, it's the scale of the cumulative investment.

[00:10:18] I do still believe that MSP sales is, you know, hand-to-hand combat.

[00:10:22] I think you do have to have people out on the field having conversations.

[00:10:26] You know, our competitors.

[00:10:28] We always think about, hey, how can we offer something better than what our local competitors got?

[00:10:34] And certainly as well, you know, there's the larger competitors.

[00:10:37] But, you know, most of our competitors, our industry is highly fragmented.

[00:10:41] Most of our competitors are smaller competitors.

[00:10:43] And so, you know, there's advantages that they have over us, right?

[00:10:48] But what are the advantages we have, you know, over them?

[00:10:52] And how do we leverage those to deliver the best possible experience for employees and customers?

[00:11:01] And so, you know, that's kind of how we think about it.

[00:11:05] But, you know, I'd also add, you know, it's people first, then it's all the great things that you mentioned.

[00:11:13] And it's the quality of those people, too.

[00:11:15] And so, you know, we've gotten a lot smarter over the last seven years on what does, you know, good sales or an MSP look like.

[00:11:26] And that's what we try to build in our business.

[00:11:29] As I'm getting to my last question, there's one area that I definitely need to have your expertise give me a little bit of your take on.

[00:11:35] One of the things I've been hearing a lot about from vendors is this idea of moving toward platform approaches.

[00:11:42] I've heard it the investor side, but I'm thinking about it kind of on a technology stack position.

[00:11:47] I'm thinking about the level of that.

[00:11:49] I'm hearing from you the level of standardization is important, but you're focused on individual MSPs more than across your, say, network of investments.

[00:11:57] But what I really want to get your sense there is, how are you thinking about the investments in MSP platforms, the technology stack themselves versus kind of a classic integration approach to bring it together?

[00:12:11] Like, how are you thinking about that tension and where this is going?

[00:12:16] It's a great question.

[00:12:19] I think, you know, I'm probably going to give you a somewhat unsatisfying answer on this.

[00:12:24] Then it's real.

[00:12:25] I appreciate that.

[00:12:25] Which is, you know, I don't know that we totally know.

[00:12:29] I think what we do know is if we build great leadership teams that are individual operating companies and we equip them to evaluate the best solutions for their team and their customers, we'll ultimately be okay.

[00:12:46] Okay.

[00:12:46] And so, you know, in general, our philosophy has been if we put great decision makers close to employees and close to customers, they're going to take care of a lot of these things.

[00:13:00] You know, and really doing what you're describing is change management, right?

[00:13:04] The industry is changing and how do we stay nimble to keep up with that change?

[00:13:09] And that's the foundation of our philosophy.

[00:13:11] So, you know, I don't know.

[00:13:13] Obviously, I've been hearing all the conversations about that.

[00:13:17] But I don't think, you know, the industry is so large and so fragmented.

[00:13:21] I don't see massive change coming very fast.

[00:13:25] And I also don't see consolidation on a single platform being an easy outcome for anyone to achieve.

[00:13:34] So, I love the way that you think and you're very deliberate and careful with this.

[00:13:38] So, I'd really, so this is my last question.

[00:13:40] I'd like to get a little bit of insight into your decision making framework.

[00:13:45] You've clearly got an approach.

[00:13:46] How do you think about making decisions and making sure that they're the right and effective decision?

[00:13:53] How does it get?

[00:13:55] You know, it's a great question.

[00:13:58] Oh, no.

[00:13:59] It's good.

[00:14:00] It's good.

[00:14:01] I'm sorry.

[00:14:02] What are you talking about?

[00:14:03] I think maybe another way to think about it is it's not just making decisions, but it's thinking through, you know, sort of Jeff Bezos has this like one-way door, two-way door.

[00:14:14] Part of, I think, the reason that we, you know, our best ideas have been stuff that we just said, let's just try that.

[00:14:21] Like, let's make a bet.

[00:14:23] Let's see what happens.

[00:14:24] And we'll adjust as we learn.

[00:14:26] And so, you know, for me, it's a bias towards action and saying, hey, I can kind of run this thought experiment about what I think the outcome is going to be.

[00:14:38] But we're going to be a lot better off making the decision of let's try it and then really closely measure our progress against what we thought the outcome would be and maintain the ability to pivot as is necessary throughout that process.

[00:14:56] And every good idea that we've had in the business started as probably a half-baked, decent idea.

[00:15:02] And then we just iterated on it over time as we figured out what was working and what wasn't.

[00:15:06] But that gives me a ton of insight of the way you think.

[00:15:08] Elliot, this has been fascinating.

[00:15:10] Really appreciate you sitting down and chatting with you today.

[00:15:12] Yeah, I appreciate it, Dave.

[00:15:13] Thanks so much.

[00:15:15] With as many breaches and security concerns as I report in this show, it should be obvious that cybersecurity is not just about technology, but also the human expertise needed to interpret and respond to complex threats.

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