Navigating the Volatile IT Market: AI, Consulting, and Private Equity Insights with Marcus Olsen

[00:00:13] [SPEAKER_02]: When an IT business owner told me the industry was in trouble, I paid attention.

[00:00:19] [SPEAKER_02]: Now one of my most popular interviews is back to discuss the market.

[00:00:24] [SPEAKER_02]: Marcus Olsen, CEO of Pliancy, returns.

[00:00:27] [SPEAKER_02]: Welcome to the Business of Tech Lounge, the live version of the Business of Tech podcast.

[00:00:32] [SPEAKER_02]: It's Thursday, August 15th, 2024, and I'm Dave Solvill.

[00:00:37] [SPEAKER_02]: We'll be taking questions and comments throughout the show, so make sure to put them in chat.

[00:00:41] [SPEAKER_02]: This will be an interactive event allowing you to chat and comment all throughout the session,

[00:00:46] [SPEAKER_02]: and I really do value that opportunity to interact with you.

[00:00:50] [SPEAKER_02]: And if we need to, we'll break out for a listener submitted question section as well.

[00:00:54] [SPEAKER_02]: I want to thank Sales Builder, our Patreon sponsor, whose support makes this show possible.

[00:01:00] [SPEAKER_02]: Focus on your IT sales workflow with the power of automation,

[00:01:04] [SPEAKER_02]: and visit them at salesbuilder.com.

[00:01:07] [SPEAKER_02]: That's B-U-I-L-D-R dot com.

[00:01:10] [SPEAKER_02]: And a reminder, I am watching that chat.

[00:01:13] [SPEAKER_02]: Now one of my most popular interviews and bonus episodes on the channel to date

[00:01:18] [SPEAKER_02]: was my interview with the CEO of Pliancy, Marcus Olsen.

[00:01:23] [SPEAKER_02]: He made some big statements about the future of the industry,

[00:01:26] [SPEAKER_02]: and I really appreciated his willingness to express a big and bold opinion.

[00:01:32] [SPEAKER_02]: So I had to have him back.

[00:01:33] [SPEAKER_02]: Marcus, welcome back to the show.

[00:01:36] [SPEAKER_01]: Hey, thanks for having me, Dave.

[00:01:38] [SPEAKER_02]: We had such a fun time talking last time, and I knew that a little bit later,

[00:01:42] [SPEAKER_02]: I'd want to follow up and hear a little bit about how things were going.

[00:01:46] [SPEAKER_02]: Now when we last talked, you were growing really rapidly

[00:01:49] [SPEAKER_02]: with this unique model of no traditional sales team

[00:01:54] [SPEAKER_02]: and going out to the market, focused on very specific verticals.

[00:01:58] [SPEAKER_02]: It's two years later.

[00:01:59] [SPEAKER_02]: How has the business evolved, and have you made changes to your approach since then?

[00:02:05] [SPEAKER_01]: Well, obviously, the economy has gotten quite volatile,

[00:02:09] [SPEAKER_01]: and we serve probably one of the most volatile parts of that economy,

[00:02:14] [SPEAKER_01]: which is biotech, venture capital, private equity.

[00:02:18] [SPEAKER_01]: So it's been like a bit of a roller coaster

[00:02:20] [SPEAKER_01]: where it's like a record quarter followed by a record disaster.

[00:02:23] [SPEAKER_01]: So it's been a lot of whiplash and challenging.

[00:02:30] [SPEAKER_01]: But the other side of that was you mentioned the sales team.

[00:02:33] [SPEAKER_01]: We do have two people in sales now.

[00:02:36] [SPEAKER_01]: When you get to our size, I think we're like maybe 170 or something clients,

[00:02:41] [SPEAKER_01]: about 100 employees or so.

[00:02:43] [SPEAKER_01]: You need them for the process, and you need them to communicate

[00:02:46] [SPEAKER_01]: because you start to get a different experience,

[00:02:48] [SPEAKER_01]: which is clients stumbling across your brand or leads,

[00:02:51] [SPEAKER_01]: I should say, stumbling across your brand or what you do,

[00:02:53] [SPEAKER_01]: and calling in and asking questions like,

[00:02:55] [SPEAKER_01]: hey, do you guys work with venture capital firms?

[00:02:57] [SPEAKER_01]: And it's like plastered all over your website.

[00:02:59] [SPEAKER_01]: And so they're starting to get a lot of leads and a lot of noise.

[00:03:03] [SPEAKER_01]: And so we do have a sales team now,

[00:03:05] [SPEAKER_01]: but I'm still under the philosophy of trying to not scale a large sales team,

[00:03:09] [SPEAKER_01]: but instead think about how do you bring clients to your door through other means.

[00:03:15] [SPEAKER_01]: And we launched another company that has been doing a lot of...

[00:03:20] [SPEAKER_01]: It's been helping support bring clients in.

[00:03:22] [SPEAKER_01]: It's a different separate name and everything.

[00:03:23] [SPEAKER_01]: We can get into that later if interested,

[00:03:24] [SPEAKER_01]: but I'm still adamant that I need to build a system to bring clients in

[00:03:29] [SPEAKER_01]: and educate them on what we do and not just throw manpower at it.

[00:03:33] [SPEAKER_02]: Gotcha.

[00:03:34] [SPEAKER_02]: So you have sort of leaned into a little bit of that and systemized it.

[00:03:38] [SPEAKER_02]: And it sounds like the real emphasis is on that systemization.

[00:03:42] [SPEAKER_02]: Now, I want to actually hit on one of the things that intrigued me most

[00:03:46] [SPEAKER_02]: now that we've caught up a little bit about where you're at.

[00:03:48] [SPEAKER_02]: When we last talked, you talked a lot about the idea of disruption.

[00:03:51] [SPEAKER_02]: You really drew parallels to the idea of the taxi industry before Uber.

[00:03:56] [SPEAKER_02]: We're a little further along here.

[00:03:57] [SPEAKER_02]: Are you seeing signs of that disruption?

[00:04:00] [SPEAKER_02]: You're looking out there and you're fighting off competitors

[00:04:02] [SPEAKER_02]: and talking to different people.

[00:04:04] [SPEAKER_02]: Are you seeing players that have emerged that look a little different

[00:04:07] [SPEAKER_02]: or are more the Uber of MSPs?

[00:04:11] [SPEAKER_01]: Yeah, us.

[00:04:13] [SPEAKER_01]: So I mentioned that other company that we launched.

[00:04:16] [SPEAKER_01]: It's called packet.io, P-A-C-K-I-T.I-O.

[00:04:21] [SPEAKER_01]: And our philosophy or thought behind that offering,

[00:04:25] [SPEAKER_01]: that company was that what we were seeing in...

[00:04:28] [SPEAKER_01]: Keep in mind, we work with early stage startups.

[00:04:31] [SPEAKER_01]: Some of those are large names now, but when we first started working with them,

[00:04:34] [SPEAKER_01]: maybe five years ago, 10 years ago, they were a couple people.

[00:04:37] [SPEAKER_01]: To this day, we're still primarily working with startups and then scaling them.

[00:04:40] [SPEAKER_01]: And then they become our biggest clients.

[00:04:42] [SPEAKER_01]: One of them went from 20 to like 3,000 people over the course of a couple years.

[00:04:46] [SPEAKER_01]: But in those early stages, it's still a big DIY mentality.

[00:04:50] [SPEAKER_01]: We don't really need an MSP yet.

[00:04:53] [SPEAKER_01]: We don't need an IT consultant.

[00:04:54] [SPEAKER_01]: It would be nice if we had one.

[00:04:57] [SPEAKER_01]: But the barrier to entry to start working with an MSP

[00:04:59] [SPEAKER_01]: because of the pricing models or because of the way they work is

[00:05:02] [SPEAKER_01]: going from spending zero because the founders never value their time

[00:05:06] [SPEAKER_01]: to spending maybe a couple grand a month

[00:05:08] [SPEAKER_01]: depending on what solutions they're doing or whatever.

[00:05:11] [SPEAKER_01]: And so there's this big gap.

[00:05:12] [SPEAKER_01]: And a lot of times we would see these customers come to us,

[00:05:15] [SPEAKER_01]: and I'm sure others have seen this too.

[00:05:16] [SPEAKER_01]: They come to them when all the wheels are falling off the thing.

[00:05:19] [SPEAKER_01]: They've done nothing right.

[00:05:21] [SPEAKER_01]: They've been running in this DIY model for so long that

[00:05:24] [SPEAKER_01]: they don't have proper security.

[00:05:26] [SPEAKER_01]: They haven't set up anything properly.

[00:05:27] [SPEAKER_01]: And now you're going to untangle this mess.

[00:05:29] [SPEAKER_01]: And for us, the biggest frustration that we kept running into

[00:05:32] [SPEAKER_01]: was like one of our most talented teams.

[00:05:35] [SPEAKER_01]: Like, I mean, it's like SEAL Team 7 or whatever, 6,

[00:05:38] [SPEAKER_01]: is our onboarding team.

[00:05:40] [SPEAKER_01]: Untangling that mess as rapidly as possible

[00:05:42] [SPEAKER_01]: because the client has pain and we want to get them

[00:05:44] [SPEAKER_01]: to the other side of that equation ASAP.

[00:05:46] [SPEAKER_01]: They are incredible at that, but it's a very costly endeavor.

[00:05:49] [SPEAKER_01]: It's a lot of communication.

[00:05:50] [SPEAKER_01]: It's a lot of complexity.

[00:05:52] [SPEAKER_01]: And we thought, well, what if we could just get ahead of that?

[00:05:54] [SPEAKER_01]: It would save us money and them money.

[00:05:56] [SPEAKER_01]: And so we started looking at, well, like how do we get to these clients

[00:05:59] [SPEAKER_01]: with a price point and an offering that makes sense

[00:06:02] [SPEAKER_01]: where they go, I could DIY this, but I'd rather use you guys.

[00:06:07] [SPEAKER_01]: And so we started building more self-service tooling

[00:06:09] [SPEAKER_01]: and expanding the product that we had already built called

[00:06:11] [SPEAKER_01]: our Plyancy Admin to the point where now our clients can log in,

[00:06:14] [SPEAKER_01]: create users, reset MFA, reset passwords, sign apps,

[00:06:18] [SPEAKER_01]: do all that sort of thing.

[00:06:19] [SPEAKER_01]: So they have their own portal.

[00:06:21] [SPEAKER_01]: So that's what we've been building.

[00:06:23] [SPEAKER_01]: And the goal, of course, long-term is that those clients graduate

[00:06:26] [SPEAKER_01]: to Plyancy.

[00:06:27] [SPEAKER_01]: They get to the point where that doesn't work for them anymore.

[00:06:30] [SPEAKER_01]: They're 30 people, whatever.

[00:06:31] [SPEAKER_01]: And they go, well, we can easily migrate to Plyancy

[00:06:33] [SPEAKER_01]: with a couple clicks of a button, get a named consultant,

[00:06:36] [SPEAKER_01]: work with a more full team.

[00:06:39] [SPEAKER_01]: And that's really our idea, is like a lower cost offering

[00:06:43] [SPEAKER_01]: with less complexity and barriers that allows us to get ahead of tech debt.

[00:06:48] [SPEAKER_02]: So why split it out?

[00:06:49] [SPEAKER_02]: Because it feels like a natural service connection between the two bit.

[00:06:53] [SPEAKER_02]: Like what you do in Plyancy, like having a version

[00:06:55] [SPEAKER_02]: that's a starter version that they graduate to,

[00:06:57] [SPEAKER_02]: it all feels like it would make a lot of sense

[00:07:00] [SPEAKER_02]: as a single integrated business.

[00:07:02] [SPEAKER_02]: Why split it out?

[00:07:04] [SPEAKER_01]: I love when people say it makes so much sense

[00:07:05] [SPEAKER_01]: because the smartest people in the world see the obvious,

[00:07:09] [SPEAKER_01]: but that's not the way the world works.

[00:07:11] [SPEAKER_01]: Rory Sutherland, he's a great marketer from Europe, said it best,

[00:07:16] [SPEAKER_01]: and I quote this way more than I should.

[00:07:17] [SPEAKER_01]: It's probably annoying.

[00:07:18] [SPEAKER_01]: But he said if you got the smartest people in the room

[00:07:21] [SPEAKER_01]: and said go compete with Coke, they would make a bigger can

[00:07:24] [SPEAKER_01]: at a cheaper price that tastes better.

[00:07:26] [SPEAKER_01]: And to date, that's never worked.

[00:07:28] [SPEAKER_01]: What has worked is somebody made a can that was half the size,

[00:07:31] [SPEAKER_01]: twice the price, and tasted like crap.

[00:07:33] [SPEAKER_01]: And that was called Red Bull.

[00:07:35] [SPEAKER_01]: And so you go, oh, well, it makes sense.

[00:07:38] [SPEAKER_01]: Let's just mash it all up like Accenture or Deloitte,

[00:07:41] [SPEAKER_01]: and we'll just have one name.

[00:07:42] [SPEAKER_01]: We do it all.

[00:07:44] [SPEAKER_01]: But that's not how people buy.

[00:07:46] [SPEAKER_01]: People in a really crowded marketplace

[00:07:49] [SPEAKER_01]: or fragmented marketplace tend to choose when possible

[00:07:53] [SPEAKER_01]: something that resonates with them

[00:07:55] [SPEAKER_01]: or clearly communicates to them the value

[00:07:57] [SPEAKER_01]: or the problem that you're trying to solve.

[00:08:00] [SPEAKER_01]: And in today's world, that's even more

[00:08:01] [SPEAKER_01]: with search engines and everything else.

[00:08:03] [SPEAKER_01]: You'd be like, I need mud flaps for my truck.

[00:08:06] [SPEAKER_01]: And you're going to land on some company that's like,

[00:08:08] [SPEAKER_01]: we only do mud flaps for Dodge trucks.

[00:08:11] [SPEAKER_01]: I was shopping for mud flaps about a half an hour ago.

[00:08:13] [SPEAKER_01]: But the point is I landed on a site like that.

[00:08:17] [SPEAKER_01]: And I was more compelled to buy from a site like that.

[00:08:20] [SPEAKER_01]: And so for us, being really good at branding and creative

[00:08:23] [SPEAKER_01]: because that's my background.

[00:08:24] [SPEAKER_01]: My dad was owned an ad agency and a marketing agency

[00:08:27] [SPEAKER_01]: and brand.

[00:08:28] [SPEAKER_01]: So I kind of understand that.

[00:08:29] [SPEAKER_01]: And so we were like, well, we'd rather do a house

[00:08:31] [SPEAKER_01]: of brands approach, which is for every offering we build

[00:08:34] [SPEAKER_01]: we should build an entire entity or name

[00:08:36] [SPEAKER_01]: or brand that really communicates clearly

[00:08:39] [SPEAKER_01]: to the consumer what we do, how we do it

[00:08:42] [SPEAKER_01]: and how we solve their problem.

[00:08:44] [SPEAKER_01]: And secondly, the reason I like that approach

[00:08:46] [SPEAKER_01]: is we can give more autonomy to that brand too.

[00:08:49] [SPEAKER_01]: It doesn't have to get mixed into the monolithic approach

[00:08:51] [SPEAKER_01]: of one major brand.

[00:08:53] [SPEAKER_01]: It doesn't have to worry about every system

[00:08:55] [SPEAKER_01]: in the major brand and how it all plugs in.

[00:08:57] [SPEAKER_01]: It can move faster with the market, with the changes.

[00:08:59] [SPEAKER_01]: It can adjust itself.

[00:09:02] [SPEAKER_01]: And then it gets more autonomy and ownership

[00:09:04] [SPEAKER_01]: so it can thrive in terms of hiring

[00:09:07] [SPEAKER_01]: and putting people into it too.

[00:09:09] [SPEAKER_01]: Once you build a big monolithic brand,

[00:09:11] [SPEAKER_01]: that gets harder and harder and harder to innovate and keep up.

[00:09:13] [SPEAKER_01]: So that was our thought there.

[00:09:15] [SPEAKER_01]: If Packet wants to today we had a meeting

[00:09:16] [SPEAKER_01]: talking about a new offering for Packet,

[00:09:18] [SPEAKER_01]: a new thing that we might be doing over there.

[00:09:20] [SPEAKER_01]: None of it asked.

[00:09:21] [SPEAKER_01]: Appliancy didn't matter.

[00:09:23] [SPEAKER_01]: Appliancy is doing.

[00:09:25] [SPEAKER_01]: Now if that wasn't the case and it was one skew of appliances,

[00:09:27] [SPEAKER_01]: now we'd be worrying about cannibalizing offerings

[00:09:29] [SPEAKER_01]: that Appliancy has or whatever.

[00:09:31] [SPEAKER_01]: So we didn't have to go through that.

[00:09:33] [SPEAKER_01]: So that's our idea there is modularization.

[00:09:35] [SPEAKER_01]: It's like code, right?

[00:09:36] [SPEAKER_01]: One big monolithic piece of software

[00:09:38] [SPEAKER_01]: versus a modular piece of software with microservices.

[00:09:41] [SPEAKER_01]: So we're kind of taking like a microservices approach

[00:09:43] [SPEAKER_01]: to building our offerings.

[00:09:45] [SPEAKER_02]: Okay.

[00:09:45] [SPEAKER_02]: You've mixed a bunch of metaphors and I love it

[00:09:47] [SPEAKER_02]: because perhaps what...

[00:09:49] [SPEAKER_02]: No, no, I actually love it because perhaps

[00:09:50] [SPEAKER_02]: what I'm latching onto is the misunderstanding

[00:09:53] [SPEAKER_02]: of split out because in a way I was in view...

[00:09:55] [SPEAKER_02]: When you said that my initial thought was,

[00:09:57] [SPEAKER_02]: oh, that's a fully separate company.

[00:10:00] [SPEAKER_02]: It's a completely other thing.

[00:10:03] [SPEAKER_02]: But then your use of the house of brands,

[00:10:06] [SPEAKER_02]: that actually does imply

[00:10:08] [SPEAKER_02]: that there's some shared infrastructure.

[00:10:10] [SPEAKER_02]: There's some shared backend.

[00:10:11] [SPEAKER_02]: It's potentially one legal entity

[00:10:13] [SPEAKER_02]: with lots of positioning to the world.

[00:10:15] [SPEAKER_02]: So I'm going to push a little bit.

[00:10:17] [SPEAKER_02]: Define for me what you mean by split up.

[00:10:21] [SPEAKER_01]: So yeah, house of brands approach more like Procter and Gamble.

[00:10:24] [SPEAKER_01]: Right?

[00:10:24] [SPEAKER_01]: You might not want to put Clorox diapers on your baby.

[00:10:27] [SPEAKER_01]: Right?

[00:10:29] [SPEAKER_01]: And they have competing products like Pampers and Huggies.

[00:10:31] [SPEAKER_01]: One is a luxury and one is more commodity.

[00:10:35] [SPEAKER_01]: So it's not so much separate entities,

[00:10:37] [SPEAKER_01]: although we could do that.

[00:10:39] [SPEAKER_01]: If we get to the point where one's doing exceptionally well

[00:10:41] [SPEAKER_01]: and maybe it's not a core focus we want to do anymore

[00:10:43] [SPEAKER_01]: or maybe it needs funding because it's so successful,

[00:10:46] [SPEAKER_01]: whatever it is,

[00:10:46] [SPEAKER_01]: we can spin that out much easier

[00:10:48] [SPEAKER_01]: because it's its own brand.

[00:10:50] [SPEAKER_01]: But for the most part, we share infrastructure.

[00:10:52] [SPEAKER_01]: And if you know how Accenture and many of the large,

[00:10:55] [SPEAKER_01]: big four, whatever, many years ago,

[00:10:57] [SPEAKER_01]: they kind of started adopting a model

[00:10:59] [SPEAKER_01]: where they were separate entities

[00:11:00] [SPEAKER_01]: buying services from each other,

[00:11:02] [SPEAKER_01]: even though you look at it as just Accenture.

[00:11:05] [SPEAKER_01]: So there's complexities behind the scenes

[00:11:07] [SPEAKER_01]: on how those things operate.

[00:11:08] [SPEAKER_01]: But the real important thing is

[00:11:09] [SPEAKER_01]: how are you communicating to the consumer?

[00:11:11] [SPEAKER_01]: How is the consumer understanding your offering

[00:11:13] [SPEAKER_01]: and what you do?

[00:11:14] [SPEAKER_01]: And of course, by having a house of brands,

[00:11:16] [SPEAKER_01]: you get a lot of economies of scale.

[00:11:17] [SPEAKER_01]: We only need one invoicing system that we've developed.

[00:11:20] [SPEAKER_01]: We only need one set of salespeople

[00:11:22] [SPEAKER_01]: that can communicate.

[00:11:23] [SPEAKER_01]: As it gets bigger, there'll be specialists and stuff.

[00:11:25] [SPEAKER_01]: But you get the point.

[00:11:25] [SPEAKER_01]: It's much easier to reduce the overhead

[00:11:28] [SPEAKER_01]: and just focus on the service you deliver to the clients.

[00:11:31] [SPEAKER_02]: Oh, yeah. I totally get it.

[00:11:32] [SPEAKER_02]: But it's an interesting, different approach.

[00:11:35] [SPEAKER_02]: And I want to be clear on what we're talking about.

[00:11:38] [SPEAKER_02]: Yep.

[00:11:38] [SPEAKER_02]: I love the idea.

[00:11:40] [SPEAKER_02]: And in a way, it actually almost leads into

[00:11:42] [SPEAKER_02]: my next sort of follow-up

[00:11:43] [SPEAKER_02]: because one of the things we talked about

[00:11:45] [SPEAKER_02]: was the potential for MSPs, IT service providers,

[00:11:50] [SPEAKER_02]: to become conduits for varying emerging technologies,

[00:11:54] [SPEAKER_02]: particularly into the enterprise space, upper mid-market

[00:11:56] [SPEAKER_02]: and a house of brands approach

[00:11:58] [SPEAKER_02]: actually would be really well positioned

[00:12:00] [SPEAKER_02]: to be able to offer that.

[00:12:02] [SPEAKER_02]: It's two years later.

[00:12:04] [SPEAKER_02]: Where do you see that evolving?

[00:12:06] [SPEAKER_02]: Are you doing more of it in particular

[00:12:08] [SPEAKER_02]: or what are you waiting for?

[00:12:10] [SPEAKER_02]: What kinds are you looking for?

[00:12:11] [SPEAKER_02]: Where are we with that emerging tech channel

[00:12:14] [SPEAKER_02]: up into the enterprise?

[00:12:15] [SPEAKER_01]: It starts with autonomy and ownership.

[00:12:19] [SPEAKER_01]: You have to give that channel for us,

[00:12:22] [SPEAKER_01]: let's say it's cloud services

[00:12:23] [SPEAKER_01]: or a new security consulting offering

[00:12:25] [SPEAKER_01]: that we've been working on.

[00:12:28] [SPEAKER_01]: They have to have the autonomy and ownership

[00:12:29] [SPEAKER_01]: to focus on the client

[00:12:31] [SPEAKER_01]: without focusing on the mothership,

[00:12:33] [SPEAKER_01]: meaning don't worry about what appliances is doing

[00:12:36] [SPEAKER_01]: or how it serves its clients.

[00:12:37] [SPEAKER_01]: Just focus on building a product, offering,

[00:12:39] [SPEAKER_01]: whatever it is that solves the problem you want.

[00:12:41] [SPEAKER_01]: And then we as clients,

[00:12:42] [SPEAKER_01]: he can introduce the consumer to that offering.

[00:12:45] [SPEAKER_01]: They might choose that or some other competitor

[00:12:47] [SPEAKER_01]: and that's fine.

[00:12:49] [SPEAKER_01]: But the idea is that

[00:12:50] [SPEAKER_01]: we just want to have these autonomous companies

[00:12:53] [SPEAKER_01]: that can move faster with smaller teams.

[00:12:55] [SPEAKER_01]: It's hard at 100 people to make any sort of change.

[00:12:57] [SPEAKER_01]: I mean, any change we make is a lot of communication

[00:13:00] [SPEAKER_01]: and certainly slows it down.

[00:13:02] [SPEAKER_01]: And any company as large has that problem.

[00:13:04] [SPEAKER_01]: And this is just one approach for us.

[00:13:07] [SPEAKER_01]: We're not the first to do it.

[00:13:08] [SPEAKER_01]: There was an MSP in, I think it's Denmark

[00:13:12] [SPEAKER_01]: that did it and then exited for like a billion dollars.

[00:13:15] [SPEAKER_01]: By acquiring, they did a different method

[00:13:17] [SPEAKER_01]: of acquiring these separate different companies

[00:13:18] [SPEAKER_01]: that did different things,

[00:13:19] [SPEAKER_01]: but they kept them all separate,

[00:13:20] [SPEAKER_01]: just freshened up their brands

[00:13:22] [SPEAKER_01]: and grew the company over the course of like five years

[00:13:25] [SPEAKER_01]: to be quite a behemoth for such a small country

[00:13:27] [SPEAKER_01]: of like 8 million people.

[00:13:29] [SPEAKER_01]: But then of course,

[00:13:30] [SPEAKER_01]: the private equity firm that bought them in the end

[00:13:31] [SPEAKER_01]: about a year ago said,

[00:13:33] [SPEAKER_01]: well, you know what would be genius?

[00:13:34] [SPEAKER_01]: Let's make it one name.

[00:13:36] [SPEAKER_01]: And they mashed it all together

[00:13:37] [SPEAKER_01]: and then you go read their glass door

[00:13:39] [SPEAKER_01]: and you read comments on areas.

[00:13:41] [SPEAKER_01]: Everyone's confused now what they do

[00:13:43] [SPEAKER_01]: because now it's just one name called ITM8.

[00:13:47] [SPEAKER_01]: And it's, we do everything for everyone

[00:13:49] [SPEAKER_01]: and that just doesn't work.

[00:13:53] [SPEAKER_01]: That's hard to communicate that way.

[00:13:56] [SPEAKER_01]: So our approach is just to try and avoid that.

[00:13:59] [SPEAKER_01]: And there's a overhead that helps with that.

[00:14:03] [SPEAKER_02]: It's intriguing because you're exactly right.

[00:14:05] [SPEAKER_02]: Oftentimes, it gets rolled up

[00:14:06] [SPEAKER_02]: and then you think,

[00:14:07] [SPEAKER_02]: well, we can just make more value out of it.

[00:14:09] [SPEAKER_02]: And in particular, we see it with,

[00:14:11] [SPEAKER_02]: you brought up the two words, private equity.

[00:14:14] [SPEAKER_02]: We'll get involved

[00:14:14] [SPEAKER_02]: and then they'll change for whatever reason

[00:14:17] [SPEAKER_02]: to run whatever particular playbook.

[00:14:19] [SPEAKER_02]: And the subtlety that I've been exploring

[00:14:20] [SPEAKER_02]: over the past few years is,

[00:14:22] [SPEAKER_02]: look, there are lots of different private equity types

[00:14:24] [SPEAKER_02]: and there are lots of different private equity playbooks.

[00:14:27] [SPEAKER_02]: They are very different services focused

[00:14:29] [SPEAKER_02]: private equity versus product focused ones.

[00:14:32] [SPEAKER_02]: And what I kind of wanted to talk about

[00:14:34] [SPEAKER_02]: is I want to get your sense

[00:14:35] [SPEAKER_02]: and we're going to kind of focus on both sides of it

[00:14:37] [SPEAKER_02]: because they are running very different strategies.

[00:14:39] [SPEAKER_02]: They're private equity

[00:14:40] [SPEAKER_02]: that is playing over on the product side

[00:14:43] [SPEAKER_02]: that are getting involved with the technologies and tools

[00:14:45] [SPEAKER_02]: that providers use.

[00:14:47] [SPEAKER_02]: And there's private equity

[00:14:48] [SPEAKER_02]: that is involved in the services delivery themselves.

[00:14:52] [SPEAKER_02]: You've got some very strong opinions on this.

[00:14:55] [SPEAKER_02]: Let's go ahead and dive in.

[00:14:56] [SPEAKER_02]: How about we dive in on the services side first

[00:14:59] [SPEAKER_02]: because I think that's a little bit more interesting

[00:15:01] [SPEAKER_02]: to see what's happening with people

[00:15:03] [SPEAKER_02]: that you would potentially be competing with

[00:15:05] [SPEAKER_02]: or collaborating with.

[00:15:07] [SPEAKER_02]: Where have you seen the shift happen

[00:15:10] [SPEAKER_02]: on kind of the private equity investment

[00:15:12] [SPEAKER_02]: in services in our space?

[00:15:15] [SPEAKER_01]: I mean, it's probably one of the best industries

[00:15:17] [SPEAKER_01]: for private equity given the stickiness of the customer,

[00:15:21] [SPEAKER_01]: the growth with, you know, like it outpaces

[00:15:24] [SPEAKER_01]: generally the market.

[00:15:25] [SPEAKER_01]: You might get 20% growth year over year

[00:15:27] [SPEAKER_01]: with these really sticky customers.

[00:15:29] [SPEAKER_01]: The customers have a lot of expansion.

[00:15:31] [SPEAKER_01]: Expansion is easy revenue.

[00:15:34] [SPEAKER_01]: It's fragmented so they can use money to consolidate.

[00:15:37] [SPEAKER_01]: But I think it's getting harder and harder to do that.

[00:15:40] [SPEAKER_01]: The middle of the market has just been chewed apart.

[00:15:43] [SPEAKER_01]: There's a huge divide now between these really small players

[00:15:46] [SPEAKER_01]: and then the medium and up.

[00:15:49] [SPEAKER_01]: I'm sure there's a couple MSPs out there.

[00:15:51] [SPEAKER_01]: I can't think of their names.

[00:15:52] [SPEAKER_01]: I know at least one, I think it's RFA in New York

[00:15:54] [SPEAKER_01]: that's private and over 100 employees.

[00:15:56] [SPEAKER_01]: Almost all have taken private equity

[00:15:59] [SPEAKER_01]: and scaled through acquisition.

[00:16:01] [SPEAKER_01]: And I think at this point now,

[00:16:01] [SPEAKER_01]: all the largest players are 100% owned by private equity.

[00:16:05] [SPEAKER_01]: So yeah, they're going to start deploying

[00:16:07] [SPEAKER_01]: different playbooks.

[00:16:08] [SPEAKER_01]: Private equity will let you do whatever you want

[00:16:10] [SPEAKER_01]: as long as it's working.

[00:16:12] [SPEAKER_01]: Generally, I'm not a big fan of being involved

[00:16:14] [SPEAKER_01]: with private equity when what you're doing isn't working

[00:16:16] [SPEAKER_01]: because then they're going to revert to their playbook.

[00:16:19] [SPEAKER_01]: But I do see this huge divide between the small

[00:16:21] [SPEAKER_01]: and the medium and up.

[00:16:23] [SPEAKER_01]: And I don't know how it's all going to flesh out.

[00:16:25] [SPEAKER_01]: And as you know, there's more than one strategy

[00:16:26] [SPEAKER_01]: that they're taking.

[00:16:28] [SPEAKER_01]: There is the ones that are rolling them all up

[00:16:29] [SPEAKER_01]: into one big name.

[00:16:30] [SPEAKER_01]: And then there's those that are acquiring them all

[00:16:32] [SPEAKER_01]: and keeping their names separate.

[00:16:34] [SPEAKER_01]: And the ones that are keeping their names separate

[00:16:35] [SPEAKER_01]: are playing the HVAC playbook,

[00:16:37] [SPEAKER_01]: which is what private equity did with HVAC

[00:16:39] [SPEAKER_01]: and plumbing and others as they go.

[00:16:41] [SPEAKER_01]: You know, people like buying from Tim's small HVAC

[00:16:44] [SPEAKER_01]: more than they do, you know, big HVAC co-incorporated.

[00:16:48] [SPEAKER_01]: And so they started just keeping them all separate

[00:16:50] [SPEAKER_01]: because it was A, easier from an integration perspective

[00:16:53] [SPEAKER_01]: and B, it tend to make, if you don't like Tim's price,

[00:16:57] [SPEAKER_01]: go across street, we own that one too.

[00:17:00] [SPEAKER_01]: So I don't know how it's all going to flesh out

[00:17:02] [SPEAKER_01]: because there hasn't really been any major exits

[00:17:04] [SPEAKER_01]: of the major roll-ups yet.

[00:17:08] [SPEAKER_01]: So it's kind of like a wait and see.

[00:17:10] [SPEAKER_01]: But I do think that these bigger players

[00:17:12] [SPEAKER_01]: have so much more capability to build systems,

[00:17:15] [SPEAKER_01]: whether it's on top of service now, custom software.

[00:17:19] [SPEAKER_01]: I mean, there's going to be a big divide

[00:17:21] [SPEAKER_01]: and you might start to see proprietary tooling

[00:17:23] [SPEAKER_01]: and solutions take off instead of everyone being hooked

[00:17:26] [SPEAKER_01]: to the ax and picks and axes approach of private equity,

[00:17:30] [SPEAKER_01]: which is what you mentioned where it's like,

[00:17:32] [SPEAKER_01]: hey, build software for the entire industry.

[00:17:34] [SPEAKER_01]: Eventually somebody is going to

[00:17:36] [SPEAKER_01]: give it away from that and build something meaningful

[00:17:39] [SPEAKER_01]: that's proprietary.

[00:17:40] [SPEAKER_01]: It's $143 billion market.

[00:17:42] [SPEAKER_01]: You could make money on the pick and axes

[00:17:43] [SPEAKER_01]: or building your own proprietary software

[00:17:46] [SPEAKER_01]: and delivering to the market.

[00:17:48] [SPEAKER_01]: It's still a lot of interesting things could happen.

[00:17:51] [SPEAKER_02]: There's a couple of players, I'll give you two more.

[00:17:52] [SPEAKER_02]: The guys out at MyTech Partners out in Minneapolis

[00:17:56] [SPEAKER_02]: have a bunch of locations

[00:17:57] [SPEAKER_02]: and they haven't taken a penny of private equity.

[00:18:00] [SPEAKER_02]: And the guys at Five Nines out in Omaha, Nebraska

[00:18:04] [SPEAKER_02]: also proudly have told me

[00:18:05] [SPEAKER_02]: that they have not taken any private equity as well.

[00:18:07] [SPEAKER_02]: Nice, I'm from Minnesota.

[00:18:08] [SPEAKER_02]: There's a few of you guys out there

[00:18:10] [SPEAKER_02]: that I'm keeping track of

[00:18:11] [SPEAKER_02]: that are fighting the good fight

[00:18:14] [SPEAKER_02]: as full entrepreneurs on the bootstrap model.

[00:18:16] [SPEAKER_02]: So I will keep drawing a tent.

[00:18:18] [SPEAKER_01]: Must be something in the water in Lake Minnetonka.

[00:18:21] [SPEAKER_02]: Clearly is.

[00:18:23] [SPEAKER_01]: Scandinavian pride.

[00:18:25] [SPEAKER_02]: Let's turn our attention to the other side then.

[00:18:27] [SPEAKER_02]: I think we're sort of watching further investment

[00:18:31] [SPEAKER_02]: in private equity and seeing them sort of evolve

[00:18:35] [SPEAKER_02]: their strategy over on the tool side.

[00:18:38] [SPEAKER_02]: I think I can pretty safely say two years later,

[00:18:40] [SPEAKER_02]: we're in much the same position that we were before

[00:18:44] [SPEAKER_02]: in terms of the tool position.

[00:18:46] [SPEAKER_02]: Although I will observe

[00:18:47] [SPEAKER_02]: that the only area that I'm seeing a difference in strategy

[00:18:51] [SPEAKER_02]: is their AI rollouts.

[00:18:53] [SPEAKER_02]: There are some of the large,

[00:18:55] [SPEAKER_02]: I'm gonna not name names this point

[00:18:57] [SPEAKER_02]: but I'll let you if you want to.

[00:18:59] [SPEAKER_02]: There's strategies which are much more pricing ones.

[00:19:01] [SPEAKER_02]: There are ones where it's an investment,

[00:19:04] [SPEAKER_02]: a cautious investment in the technology.

[00:19:05] [SPEAKER_02]: And there's a couple even of private equity invested ones

[00:19:08] [SPEAKER_02]: who are advanced and investing in AI as a differentiator.

[00:19:14] [SPEAKER_02]: What's your take on kind of the platform plays

[00:19:18] [SPEAKER_02]: over on the software side with private equity?

[00:19:21] [SPEAKER_01]: I wouldn't do it.

[00:19:22] [SPEAKER_01]: I would not invest in building your own AI tooling.

[00:19:29] [SPEAKER_01]: Think about like Tesla and them shutting down

[00:19:31] [SPEAKER_01]: all their charging stations or whatever now.

[00:19:33] [SPEAKER_01]: And I may have that wrong,

[00:19:34] [SPEAKER_01]: but I thought I had heard somewhere

[00:19:35] [SPEAKER_01]: that they're gonna be discontinuing that.

[00:19:37] [SPEAKER_01]: They only did that to facilitate their product.

[00:19:41] [SPEAKER_01]: They're building electric car,

[00:19:42] [SPEAKER_01]: they need charging stations

[00:19:43] [SPEAKER_01]: or else people will buy the car.

[00:19:45] [SPEAKER_01]: There's always gonna be that middle player.

[00:19:48] [SPEAKER_01]: And there's gonna be a company

[00:19:50] [SPEAKER_01]: that focuses exclusively on building solutions or AI

[00:19:53] [SPEAKER_01]: and they will serve our market or be close enough

[00:19:56] [SPEAKER_01]: that they can be applied to our market.

[00:19:58] [SPEAKER_01]: And they'll do a far better job at it.

[00:20:00] [SPEAKER_01]: I don't think it would be wise,

[00:20:02] [SPEAKER_01]: certainly not this early in the technology

[00:20:04] [SPEAKER_01]: to be spending a lot of money and time

[00:20:06] [SPEAKER_01]: trying to figure out how you can use AI

[00:20:08] [SPEAKER_01]: to be competitive because yeah,

[00:20:10] [SPEAKER_01]: you might be competitive for a short burst of time,

[00:20:12] [SPEAKER_01]: but everyone else will catch up.

[00:20:14] [SPEAKER_01]: And it's very expensive and still not even 100% proven.

[00:20:17] [SPEAKER_01]: Where we're using AI and I can't say too much

[00:20:20] [SPEAKER_01]: because we're working with another founder

[00:20:22] [SPEAKER_01]: and company that's doing it.

[00:20:24] [SPEAKER_01]: And he made me sign an NDA unfortunately,

[00:20:26] [SPEAKER_01]: which I hate signing those.

[00:20:28] [SPEAKER_01]: But hey, we've been working on basically using AI

[00:20:32] [SPEAKER_01]: more on the operational side.

[00:20:34] [SPEAKER_01]: Not so much on the client side,

[00:20:36] [SPEAKER_01]: not on how the client interfaces with us,

[00:20:38] [SPEAKER_01]: but more like against our large data sets that we have.

[00:20:41] [SPEAKER_01]: And we've been dumping data into Looker

[00:20:43] [SPEAKER_01]: and BigQuery for years.

[00:20:45] [SPEAKER_01]: And we have these huge data sets

[00:20:46] [SPEAKER_01]: that we use for predictive things,

[00:20:49] [SPEAKER_01]: for looking at trends,

[00:20:49] [SPEAKER_01]: for looking at usage patterns.

[00:20:51] [SPEAKER_01]: And we use that data for figuring out

[00:20:52] [SPEAKER_01]: what offerings clients actually want or use,

[00:20:55] [SPEAKER_01]: what the right pricing is gonna be.

[00:20:58] [SPEAKER_01]: And so we're looking at using AI for efficiency.

[00:21:01] [SPEAKER_01]: You can infer from that,

[00:21:03] [SPEAKER_01]: it's basically related to ticketing

[00:21:06] [SPEAKER_01]: and routing and assigning and resource planning,

[00:21:10] [SPEAKER_01]: which is obviously the biggest expense

[00:21:12] [SPEAKER_01]: in any professional services firm is its people.

[00:21:15] [SPEAKER_01]: And getting the request to the right people

[00:21:17] [SPEAKER_01]: with the right information.

[00:21:18] [SPEAKER_01]: That's where we've been using and focusing our AI.

[00:21:21] [SPEAKER_01]: We're not using it yet in production,

[00:21:24] [SPEAKER_01]: but that's what we've been looking at.

[00:21:26] [SPEAKER_02]: It makes sense that it would be thematically

[00:21:29] [SPEAKER_02]: along the lines of making your text better

[00:21:31] [SPEAKER_02]: versus replace your text

[00:21:33] [SPEAKER_02]: is that you're kind of nodding.

[00:21:35] [SPEAKER_01]: Yeah, yeah, texts are critical.

[00:21:36] [SPEAKER_01]: Texts are critical.

[00:21:37] [SPEAKER_01]: And the only way to keep the amazing text

[00:21:39] [SPEAKER_01]: is to keep them from resetting passwords.

[00:21:41] [SPEAKER_01]: The first password you ever were set

[00:21:43] [SPEAKER_01]: in your career, Dave,

[00:21:44] [SPEAKER_01]: you were probably excited about.

[00:21:45] [SPEAKER_01]: You got that first call or whatever it is,

[00:21:47] [SPEAKER_01]: and now you're doing something

[00:21:48] [SPEAKER_01]: you've never done before.

[00:21:49] [SPEAKER_01]: But by the end of the week,

[00:21:50] [SPEAKER_01]: you don't want to reset passwords anymore.

[00:21:53] [SPEAKER_01]: There's always somebody excited

[00:21:54] [SPEAKER_01]: to do some form of work

[00:21:56] [SPEAKER_01]: until they're not anymore

[00:21:57] [SPEAKER_01]: because they've outgrown it

[00:21:58] [SPEAKER_01]: or it's not challenging enough

[00:21:59] [SPEAKER_01]: or rewarding enough

[00:22:00] [SPEAKER_01]: or whatever it might be.

[00:22:02] [SPEAKER_01]: Some of us like me love doing that

[00:22:03] [SPEAKER_01]: because I just love helping people.

[00:22:04] [SPEAKER_01]: So I love a good easy password reset

[00:22:06] [SPEAKER_01]: with our platform.

[00:22:07] [SPEAKER_01]: I can have it done in 10 seconds for my phone.

[00:22:09] [SPEAKER_01]: So I love that.

[00:22:10] [SPEAKER_01]: It's like that reward cube,

[00:22:11] [SPEAKER_01]: but not everyone does.

[00:22:13] [SPEAKER_01]: The idea is getting the right challenge

[00:22:15] [SPEAKER_01]: to the right individual

[00:22:16] [SPEAKER_01]: as quickly as possible

[00:22:17] [SPEAKER_01]: that is enjoying doing it,

[00:22:19] [SPEAKER_01]: can solve it the fastest

[00:22:21] [SPEAKER_01]: and really like learning from that.

[00:22:23] [SPEAKER_01]: That's probably saying more

[00:22:24] [SPEAKER_01]: than I'm supposed to say already,

[00:22:26] [SPEAKER_01]: but it's routing the resources

[00:22:28] [SPEAKER_01]: to the right person,

[00:22:30] [SPEAKER_01]: analyzing how the person solves it

[00:22:32] [SPEAKER_01]: and then making sure

[00:22:33] [SPEAKER_01]: that you're consistently

[00:22:34] [SPEAKER_01]: improving that model.

[00:22:36] [SPEAKER_02]: So let's shift the conversation out

[00:22:37] [SPEAKER_02]: to where the money is made,

[00:22:38] [SPEAKER_02]: which is the interactions

[00:22:39] [SPEAKER_02]: with actual customers.

[00:22:41] [SPEAKER_02]: So what are customers asking about

[00:22:44] [SPEAKER_02]: or demanding or looking for

[00:22:46] [SPEAKER_02]: in solutions driven by AI right now?

[00:22:51] [SPEAKER_01]: Man, I have to be honest, Dave.

[00:22:52] [SPEAKER_01]: I'm probably a little too far away from that.

[00:22:55] [SPEAKER_01]: I mean, biotech is obviously

[00:22:57] [SPEAKER_01]: very curious with it

[00:22:59] [SPEAKER_01]: given the nature of large data sets

[00:23:01] [SPEAKER_01]: they work with

[00:23:02] [SPEAKER_01]: and just the nature of biotechs.

[00:23:05] [SPEAKER_01]: Venture Capital hasn't really asked us

[00:23:07] [SPEAKER_01]: for their specific business needs

[00:23:09] [SPEAKER_01]: and whatnot.

[00:23:10] [SPEAKER_01]: So I don't think anyone's had a clear ask.

[00:23:12] [SPEAKER_01]: I think everyone's just really curious.

[00:23:15] [SPEAKER_01]: And oddly enough, if there is a clear ask,

[00:23:17] [SPEAKER_01]: it's more around compliance

[00:23:18] [SPEAKER_01]: and security around AI,

[00:23:20] [SPEAKER_01]: which is like, how do we do this safely?

[00:23:22] [SPEAKER_01]: Or what are the risks

[00:23:23] [SPEAKER_01]: we're taking if we do this?

[00:23:26] [SPEAKER_01]: Understanding how they use AI,

[00:23:28] [SPEAKER_01]: not so much in when I say use,

[00:23:30] [SPEAKER_01]: I mean like what's happening

[00:23:31] [SPEAKER_01]: when I do this,

[00:23:32] [SPEAKER_01]: when I put my data here,

[00:23:33] [SPEAKER_01]: how do we protect this?

[00:23:34] [SPEAKER_01]: Not so much like

[00:23:35] [SPEAKER_01]: we want to use AI to do this.

[00:23:37] [SPEAKER_01]: We get some customers that do that,

[00:23:38] [SPEAKER_01]: but I wouldn't say enough

[00:23:39] [SPEAKER_01]: to have like a trend or pattern.

[00:23:42] [SPEAKER_02]: Gotcha.

[00:23:43] [SPEAKER_02]: Now, one of the things that

[00:23:44] [SPEAKER_02]: in our early conversations

[00:23:45] [SPEAKER_02]: that warms my heart so much

[00:23:47] [SPEAKER_02]: because we're so simpatico on this

[00:23:49] [SPEAKER_02]: is the idea that consulting,

[00:23:52] [SPEAKER_02]: kind of the old school consulting

[00:23:53] [SPEAKER_02]: and delivering advice

[00:23:54] [SPEAKER_02]: is the actual key

[00:23:57] [SPEAKER_02]: to delivering really good services.

[00:23:59] [SPEAKER_02]: Where again, I wanted to get a sense of like

[00:24:01] [SPEAKER_02]: has that demand been constant?

[00:24:04] [SPEAKER_02]: Is it shifting even faster than you expected?

[00:24:07] [SPEAKER_02]: When you look at the kinds of services

[00:24:09] [SPEAKER_02]: you're offering out to customers,

[00:24:11] [SPEAKER_02]: how much of it is that raw

[00:24:13] [SPEAKER_02]: consulting advice component?

[00:24:16] [SPEAKER_01]: Never as much as you want it to be.

[00:24:18] [SPEAKER_01]: You can lead the horse to water.

[00:24:20] [SPEAKER_01]: The challenge is,

[00:24:22] [SPEAKER_01]: it's always been that

[00:24:23] [SPEAKER_01]: really great technical people

[00:24:25] [SPEAKER_01]: that are passionate about business outcomes

[00:24:26] [SPEAKER_01]: really want to do consultative efforts

[00:24:29] [SPEAKER_01]: for their clients.

[00:24:30] [SPEAKER_01]: I was obnoxious about it

[00:24:32] [SPEAKER_01]: when I started this company

[00:24:33] [SPEAKER_01]: many years ago.

[00:24:35] [SPEAKER_01]: With those early clients

[00:24:36] [SPEAKER_01]: I remember pushing,

[00:24:37] [SPEAKER_01]: and I told you this before

[00:24:38] [SPEAKER_01]: we started going live,

[00:24:39] [SPEAKER_01]: I used to build Zoom rooms for free

[00:24:42] [SPEAKER_01]: for clients because they would tell me

[00:24:45] [SPEAKER_01]: oh we don't use video conferencing

[00:24:46] [SPEAKER_01]: and I was like well no crap

[00:24:47] [SPEAKER_01]: you don't have it.

[00:24:49] [SPEAKER_01]: If you had it,

[00:24:50] [SPEAKER_01]: you might really use it like it.

[00:24:51] [SPEAKER_01]: This would have been like 2016, 2015

[00:24:53] [SPEAKER_01]: somewhere in that range.

[00:24:54] [SPEAKER_01]: So I started saying

[00:24:55] [SPEAKER_01]: I'll spend all my personal money

[00:24:57] [SPEAKER_01]: we're only like four or five people

[00:24:58] [SPEAKER_01]: at the time

[00:24:59] [SPEAKER_01]: we'll build the Zoom rooms

[00:25:00] [SPEAKER_01]: and if you don't like it

[00:25:00] [SPEAKER_01]: we'll take it all down

[00:25:01] [SPEAKER_01]: and you won't get charged a penny

[00:25:02] [SPEAKER_01]: for any of the labor or anything.

[00:25:04] [SPEAKER_01]: It always led to four more Zoom rooms

[00:25:06] [SPEAKER_01]: by the end of the month being built.

[00:25:08] [SPEAKER_01]: Because they loved it,

[00:25:08] [SPEAKER_01]: this is game changing, etc.

[00:25:10] [SPEAKER_01]: And we had to do that with cloud stuff

[00:25:12] [SPEAKER_01]: back in the day as well.

[00:25:13] [SPEAKER_01]: We pushed for them to try cloud storage

[00:25:15] [SPEAKER_01]: instead of this or that.

[00:25:17] [SPEAKER_01]: So that conservative thing

[00:25:19] [SPEAKER_01]: is really tough

[00:25:20] [SPEAKER_01]: because oftentimes

[00:25:21] [SPEAKER_01]: the customers aren't like

[00:25:22] [SPEAKER_01]: oh really cloud?

[00:25:23] [SPEAKER_01]: Yeah let's do that

[00:25:24] [SPEAKER_01]: or oh Zoom room five grand?

[00:25:25] [SPEAKER_01]: Yeah let's do it.

[00:25:26] [SPEAKER_01]: You have to really work at it.

[00:25:29] [SPEAKER_01]: Convince them and the foundation

[00:25:30] [SPEAKER_01]: to even have that conversation

[00:25:32] [SPEAKER_01]: is trust.

[00:25:33] [SPEAKER_01]: First the client has to trust you

[00:25:35] [SPEAKER_01]: and they have to trust

[00:25:36] [SPEAKER_01]: what you're selling them

[00:25:37] [SPEAKER_01]: is you know and that starts with consulting.

[00:25:40] [SPEAKER_01]: If you have a consultative thing

[00:25:41] [SPEAKER_01]: you have a named person

[00:25:42] [SPEAKER_01]: you're working with

[00:25:43] [SPEAKER_01]: you've built rapport

[00:25:43] [SPEAKER_01]: that's like the easiest way

[00:25:46] [SPEAKER_01]: to then work with them

[00:25:47] [SPEAKER_01]: to get them to adopt change

[00:25:48] [SPEAKER_01]: and do things.

[00:25:49] [SPEAKER_01]: If it's around about different

[00:25:51] [SPEAKER_01]: IT person via help desk non-stop

[00:25:53] [SPEAKER_01]: you know you're not going

[00:25:54] [SPEAKER_01]: to build that rapport as much

[00:25:55] [SPEAKER_01]: it's going to be far more challenging.

[00:25:58] [SPEAKER_01]: So for us we think

[00:26:00] [SPEAKER_01]: the consultative approach allows you

[00:26:02] [SPEAKER_01]: to then build deeper relationships

[00:26:03] [SPEAKER_01]: with the client

[00:26:03] [SPEAKER_01]: which then allows you

[00:26:04] [SPEAKER_01]: to introduce technology

[00:26:06] [SPEAKER_01]: at a more rapid rate

[00:26:06] [SPEAKER_01]: which then gives the clients

[00:26:07] [SPEAKER_01]: a more competitive advantage.

[00:26:09] [SPEAKER_01]: When COVID hit

[00:26:10] [SPEAKER_01]: none of our clients had to make

[00:26:11] [SPEAKER_01]: a single change.

[00:26:12] [SPEAKER_01]: They're all pure cloud

[00:26:13] [SPEAKER_01]: are using Zoom

[00:26:14] [SPEAKER_01]: already had all the technology

[00:26:15] [SPEAKER_01]: and they did a lot of thanking

[00:26:17] [SPEAKER_01]: to us when that happened

[00:26:19] [SPEAKER_01]: and we were also like

[00:26:20] [SPEAKER_01]: the next morning like oh

[00:26:21] [SPEAKER_01]: the world has changed

[00:26:22] [SPEAKER_01]: and we didn't have to change anything.

[00:26:25] [SPEAKER_01]: So you know ultimately

[00:26:26] [SPEAKER_01]: that's why I like consulting.

[00:26:28] [SPEAKER_01]: Getting clients to see that value

[00:26:30] [SPEAKER_01]: is not easy.

[00:26:31] [SPEAKER_01]: They don't come to you with like

[00:26:32] [SPEAKER_01]: we need a great IT consultant

[00:26:33] [SPEAKER_01]: that can help steward technology.

[00:26:34] [SPEAKER_01]: They come to you because

[00:26:35] [SPEAKER_01]: the CEO can't get his laptop working

[00:26:37] [SPEAKER_01]: and they got an important thing

[00:26:38] [SPEAKER_01]: and they just need help.

[00:26:40] [SPEAKER_01]: So it's still not easy to sell that.

[00:26:42] [SPEAKER_01]: Every IT guy that leaves

[00:26:43] [SPEAKER_01]: and wants to start their own practice

[00:26:44] [SPEAKER_01]: thinks that they're going to build

[00:26:45] [SPEAKER_01]: some amazing IT consultative thing

[00:26:47] [SPEAKER_01]: and it's like

[00:26:48] [SPEAKER_01]: oh it's an uphill battle.

[00:26:49] [SPEAKER_01]: It takes a long time

[00:26:50] [SPEAKER_01]: and we've been doing it

[00:26:52] [SPEAKER_01]: for a long time

[00:26:53] [SPEAKER_01]: and it's still really challenging.

[00:26:54] [SPEAKER_02]: If it was easy

[00:26:55] [SPEAKER_02]: everyone would be doing it

[00:26:56] [SPEAKER_02]: all the time

[00:26:56] [SPEAKER_02]: and it would then also

[00:26:57] [SPEAKER_02]: turn into a commodity.

[00:26:59] [SPEAKER_02]: So this is a ton of stuff

[00:27:00] [SPEAKER_02]: I wanted to talk about.

[00:27:02] [SPEAKER_02]: What's most on your mind these days?

[00:27:06] [SPEAKER_01]: I mean the economy.

[00:27:09] [SPEAKER_01]: Obviously managing expectations

[00:27:12] [SPEAKER_01]: with team members, employees, clients.

[00:27:14] [SPEAKER_01]: I mean there's just so much

[00:27:17] [SPEAKER_01]: volatility out there right now.

[00:27:20] [SPEAKER_01]: So it's been really hard

[00:27:21] [SPEAKER_01]: to meet the expectations

[00:27:22] [SPEAKER_01]: of clients, employees and others.

[00:27:25] [SPEAKER_01]: When everyone had like

[00:27:26] [SPEAKER_01]: a very clear goal of grow

[00:27:28] [SPEAKER_01]: and do new things and whatever

[00:27:30] [SPEAKER_01]: and then like now

[00:27:31] [SPEAKER_01]: different people react to like this market

[00:27:33] [SPEAKER_01]: and the challenges differently.

[00:27:35] [SPEAKER_01]: Some still have that hey I want this

[00:27:37] [SPEAKER_01]: more challenges I want to grow

[00:27:39] [SPEAKER_01]: and others are like fearful

[00:27:40] [SPEAKER_01]: of like their jobs

[00:27:41] [SPEAKER_01]: and what's going on.

[00:27:42] [SPEAKER_01]: It's like impossible

[00:27:43] [SPEAKER_01]: to manage expectations

[00:27:44] [SPEAKER_01]: really efficiently in a volatile world

[00:27:47] [SPEAKER_01]: like this

[00:27:48] [SPEAKER_01]: and that's been really

[00:27:50] [SPEAKER_01]: like keeping me up at night

[00:27:51] [SPEAKER_01]: is like how do you manage

[00:27:53] [SPEAKER_01]: 100 people that all have different wants

[00:27:56] [SPEAKER_01]: and needs

[00:27:56] [SPEAKER_01]: and are all reacting to this economy

[00:27:59] [SPEAKER_01]: and what's going on

[00:28:00] [SPEAKER_01]: in the world so differently.

[00:28:02] [SPEAKER_01]: It's been an eye-opening

[00:28:03] [SPEAKER_01]: and very challenging experience.

[00:28:05] [SPEAKER_02]: Yeah I mean it's very difficult

[00:28:07] [SPEAKER_02]: to read the tea leaves on the economy

[00:28:09] [SPEAKER_02]: because it's good and bad

[00:28:11] [SPEAKER_02]: all at the same time

[00:28:13] [SPEAKER_02]: and many of our indicators

[00:28:15] [SPEAKER_02]: are trailing right

[00:28:16] [SPEAKER_02]: and so we're always trying

[00:28:17] [SPEAKER_02]: to figure out exactly where it goes

[00:28:18] [SPEAKER_02]: and there's some that are promising

[00:28:20] [SPEAKER_02]: and there's some that are not.

[00:28:21] [SPEAKER_02]: It seems very industry specific.

[00:28:25] [SPEAKER_02]: It seems circumstance specific.

[00:28:27] [SPEAKER_02]: I can find examples

[00:28:28] [SPEAKER_02]: of poor performance.

[00:28:29] [SPEAKER_02]: I can also find examples

[00:28:30] [SPEAKER_02]: of really good performance

[00:28:31] [SPEAKER_02]: and there is elements of opportunity

[00:28:34] [SPEAKER_02]: but nothing is straightforward

[00:28:35] [SPEAKER_02]: and so that you're totally right on that.

[00:28:39] [SPEAKER_02]: It's why it covers as much

[00:28:40] [SPEAKER_02]: as the economic data

[00:28:41] [SPEAKER_02]: that I do on Mondays

[00:28:42] [SPEAKER_02]: because it's just we're looking

[00:28:44] [SPEAKER_02]: for the patterns

[00:28:45] [SPEAKER_02]: and they are not as clear

[00:28:47] [SPEAKER_02]: as we might hope them to be.

[00:28:50] [SPEAKER_02]: Do you have any particular

[00:28:51] [SPEAKER_02]: I mean is it just an obvious signs

[00:28:54] [SPEAKER_02]: of recovery?

[00:28:54] [SPEAKER_02]: Do we think

[00:28:55] [SPEAKER_02]: there are certain things

[00:28:56] [SPEAKER_02]: you're looking for

[00:28:58] [SPEAKER_02]: that will start making you feel better

[00:29:00] [SPEAKER_02]: about the conditions on the ground?

[00:29:03] [SPEAKER_01]: Yeah, when I tread carefully

[00:29:07] [SPEAKER_01]: around feel better

[00:29:09] [SPEAKER_01]: but ultimately these all have a pattern.

[00:29:11] [SPEAKER_01]: They all have a cycle

[00:29:12] [SPEAKER_01]: and generally once it hits Main Street

[00:29:14] [SPEAKER_01]: you're kind of at the bottom

[00:29:16] [SPEAKER_01]: and then it starts to go up from there

[00:29:18] [SPEAKER_01]: not rapidly

[00:29:19] [SPEAKER_01]: but everyone's just looking for

[00:29:21] [SPEAKER_01]: when can we be confident

[00:29:22] [SPEAKER_01]: that we're always going to go this way

[00:29:24] [SPEAKER_01]: and once again not rapidly

[00:29:25] [SPEAKER_01]: but just consistently

[00:29:28] [SPEAKER_01]: and people can't make decisions

[00:29:30] [SPEAKER_01]: when the data is all over the place.

[00:29:33] [SPEAKER_01]: It just creates paralysis

[00:29:34] [SPEAKER_01]: and paralysis makes it hard to do anything.

[00:29:37] [SPEAKER_01]: You don't want to buy a home

[00:29:38] [SPEAKER_01]: and the interest rates are high

[00:29:39] [SPEAKER_01]: you got to wait for them to come down

[00:29:40] [SPEAKER_01]: but if they come down

[00:29:40] [SPEAKER_01]: then the house prices go up

[00:29:42] [SPEAKER_01]: and like that just

[00:29:43] [SPEAKER_01]: when people are in a scenario like that

[00:29:45] [SPEAKER_01]: it's just very, very taxing mentally

[00:29:48] [SPEAKER_01]: and everybody gets worn out

[00:29:49] [SPEAKER_01]: and it's really, really exhausting

[00:29:51] [SPEAKER_01]: and so yeah

[00:29:52] [SPEAKER_01]: it's been really hard for us

[00:29:54] [SPEAKER_01]: because the data for example

[00:29:56] [SPEAKER_01]: we had an amazing quarter following after

[00:29:58] [SPEAKER_01]: and a disastrous quarter

[00:30:00] [SPEAKER_01]: and all the data would have said

[00:30:02] [SPEAKER_01]: why wouldn't the disaster continue?

[00:30:04] [SPEAKER_01]: It didn't.

[00:30:04] [SPEAKER_01]: It went the opposite way

[00:30:06] [SPEAKER_01]: and I was talking to the CEO

[00:30:07] [SPEAKER_01]: of a really large MSP

[00:30:10] [SPEAKER_01]: and he's like

[00:30:11] [SPEAKER_01]: yeah we had a 17% growth in that quarter

[00:30:12] [SPEAKER_01]: I said we had 15

[00:30:14] [SPEAKER_01]: and it made me recognize like

[00:30:16] [SPEAKER_01]: this is macro stuff here

[00:30:18] [SPEAKER_01]: you know this is

[00:30:19] [SPEAKER_01]: when you get to our size

[00:30:20] [SPEAKER_01]: I mean you're dealing with a lot of macros

[00:30:21] [SPEAKER_01]: stuff that's outside of your control

[00:30:23] [SPEAKER_01]: and it's impacting others

[00:30:24] [SPEAKER_01]: that same size in a similar way

[00:30:26] [SPEAKER_01]: if you're a smaller company

[00:30:27] [SPEAKER_01]: you can compartmentalize

[00:30:28] [SPEAKER_01]: you might get really lucky

[00:30:29] [SPEAKER_01]: and that the six, seven clients

[00:30:30] [SPEAKER_01]: you have aren't impacted

[00:30:31] [SPEAKER_01]: and then therefore you're not

[00:30:32] [SPEAKER_01]: but when you get to our size

[00:30:34] [SPEAKER_01]: or even larger obviously

[00:30:35] [SPEAKER_01]: you're impacted by all these macro events

[00:30:37] [SPEAKER_01]: and it's all psychological

[00:30:40] [SPEAKER_01]: all of it

[00:30:41] [SPEAKER_01]: you know people get afraid

[00:30:42] [SPEAKER_01]: and sell the stocks

[00:30:43] [SPEAKER_01]: and that thing creates a thing

[00:30:44] [SPEAKER_01]: and then somebody goes

[00:30:44] [SPEAKER_01]: oh this is a great opportunity

[00:30:45] [SPEAKER_01]: so I mean it's just

[00:30:47] [SPEAKER_01]: it's just been whiplash

[00:30:48] [SPEAKER_01]: for like two and a half years

[00:30:50] [SPEAKER_01]: it's been really hard to plan

[00:30:51] [SPEAKER_01]: it's been really hard to meet expectations

[00:30:53] [SPEAKER_01]: for employees

[00:30:54] [SPEAKER_01]: you know you have a great quarter

[00:30:55] [SPEAKER_01]: and you want to now invest

[00:30:56] [SPEAKER_01]: and like spend on employees

[00:30:58] [SPEAKER_01]: and motions and things

[00:30:59] [SPEAKER_01]: but then half of them are like

[00:31:00] [SPEAKER_01]: no it's not because what if

[00:31:02] [SPEAKER_01]: and then the other half are like

[00:31:03] [SPEAKER_01]: finally I've been working my butt off

[00:31:04] [SPEAKER_01]: and like you're in the middle

[00:31:05] [SPEAKER_01]: like I don't know what to do

[00:31:07] [SPEAKER_01]: the data could go either way

[00:31:08] [SPEAKER_01]: in the morning

[00:31:09] [SPEAKER_01]: so yeah it's just been

[00:31:11] [SPEAKER_01]: it's been really exhausting

[00:31:12] [SPEAKER_01]: for sure

[00:31:13] [SPEAKER_01]: and I'm not the only one going through it

[00:31:15] [SPEAKER_02]: No you certainly aren't

[00:31:16] [SPEAKER_02]: and I always fall back

[00:31:18] [SPEAKER_02]: my colleague

[00:31:19] [SPEAKER_02]: Carl Palachuk always likes to quote

[00:31:21] [SPEAKER_02]: that you are economy of one

[00:31:23] [SPEAKER_02]: and that there are certain things

[00:31:25] [SPEAKER_02]: that you can focus on and control

[00:31:26] [SPEAKER_02]: and that attitude does often help

[00:31:28] [SPEAKER_02]: Marcus this has been great fun to catch up

[00:31:30] [SPEAKER_02]: I want to make sure

[00:31:30] [SPEAKER_02]: I'm going to have you back

[00:31:31] [SPEAKER_02]: a little bit more soon than

[00:31:33] [SPEAKER_02]: than two years out

[00:31:34] [SPEAKER_02]: particularly because we're going to be

[00:31:35] [SPEAKER_02]: doing a few more of these

[00:31:35] [SPEAKER_02]: as panel discussion

[00:31:36] [SPEAKER_02]: so I look forward to

[00:31:38] [SPEAKER_02]: continued conversations

[00:31:39] [SPEAKER_02]: really appreciate you joining me today

[00:31:40] [SPEAKER_01]: Of course thanks for having me

[00:31:42] [SPEAKER_01]: I always love talking shop

[00:31:44] [SPEAKER_02]: Well I want to make sure

[00:31:45] [SPEAKER_02]: for some there was an

[00:31:47] [SPEAKER_02]: excuse me

[00:31:48] [SPEAKER_02]: there was an interview

[00:31:49] [SPEAKER_02]: I just did with Cody Schneider

[00:31:51] [SPEAKER_02]: the CEO of Draft Horse AI

[00:31:53] [SPEAKER_02]: and swell AI

[00:31:54] [SPEAKER_02]: who shared his insights

[00:31:55] [SPEAKER_02]: on automating workflows

[00:31:56] [SPEAKER_02]: using artificial intelligence

[00:31:58] [SPEAKER_02]: in particular we talked about

[00:32:00] [SPEAKER_02]: the idea of iterative advancements

[00:32:03] [SPEAKER_02]: and we also talked about

[00:32:04] [SPEAKER_02]: the idea of churn

[00:32:06] [SPEAKER_02]: here's a preview of that interview

[00:32:09] [SPEAKER_00]: of action is like

[00:32:10] [SPEAKER_00]: the biggest measurement

[00:32:11] [SPEAKER_00]: of client satisfaction

[00:32:13] [SPEAKER_00]: like if they ask for something

[00:32:14] [SPEAKER_00]: you promise something

[00:32:15] [SPEAKER_00]: like how quickly you can get

[00:32:16] [SPEAKER_00]: that out to them

[00:32:17] [SPEAKER_00]: is what's the you know

[00:32:19] [SPEAKER_00]: that's like the only thing

[00:32:20] [SPEAKER_00]: I've ever found to be directly correlated

[00:32:22] [SPEAKER_00]: with reducing churn

[00:32:24] [SPEAKER_00]: and the longevity of that

[00:32:25] [SPEAKER_00]: client staying with you

[00:32:27] [SPEAKER_00]: and so when you think about

[00:32:28] [SPEAKER_00]: that in relationships

[00:32:28] [SPEAKER_00]: with products or implementing

[00:32:30] [SPEAKER_00]: these services for your clients

[00:32:32] [SPEAKER_00]: it's then coming back to

[00:32:33] [SPEAKER_00]: okay well what is the

[00:32:34] [SPEAKER_00]: even if it's not

[00:32:35] [SPEAKER_00]: all the way there perfect

[00:32:37] [SPEAKER_00]: and this is hard for everybody

[00:32:38] [SPEAKER_00]: right it's that

[00:32:39] [SPEAKER_00]: it's you know we want to do good work

[00:32:41] [SPEAKER_00]: and we want it to be

[00:32:43] [SPEAKER_00]: you know that's

[00:32:46] [SPEAKER_00]: our work is basically

[00:32:47] [SPEAKER_00]: a measurement of our value

[00:32:48] [SPEAKER_00]: like the quality

[00:32:49] [SPEAKER_00]: that we put out there

[00:32:50] [SPEAKER_00]: we've even found this

[00:32:51] [SPEAKER_00]: where it's like you know

[00:32:53] [SPEAKER_00]: every once in a while

[00:32:54] [SPEAKER_00]: it's just going to totally mess up

[00:32:55] [SPEAKER_00]: right and we just have to kind of

[00:32:57] [SPEAKER_00]: be okay with that

[00:32:58] [SPEAKER_00]: and also that creates

[00:32:59] [SPEAKER_00]: just a high impact activity

[00:33:01] [SPEAKER_00]: that you can do for these people

[00:33:03] [SPEAKER_02]: Cody had some really good ideas

[00:33:05] [SPEAKER_02]: about the way to apply technology

[00:33:07] [SPEAKER_02]: in a very iterative advanced way

[00:33:09] [SPEAKER_02]: as well as applying

[00:33:10] [SPEAKER_02]: artificial intelligence

[00:33:11] [SPEAKER_02]: and I'd encourage you

[00:33:12] [SPEAKER_02]: to check out that interview

[00:33:13] [SPEAKER_02]: it's available right now

[00:33:15] [SPEAKER_02]: on both the podcast feed

[00:33:16] [SPEAKER_02]: and on the YouTube feed

[00:33:18] [SPEAKER_02]: and remember my Patreon supporters

[00:33:20] [SPEAKER_02]: get these all early

[00:33:22] [SPEAKER_02]: if they want to dive in

[00:33:23] [SPEAKER_02]: you can visit patreon.com

[00:33:25] [SPEAKER_02]: to find out more and sign up

[00:33:28] [SPEAKER_02]: and I want to thank Sales Builder

[00:33:30] [SPEAKER_02]: our Patreon sponsor

[00:33:31] [SPEAKER_02]: whose support makes this show possible

[00:33:34] [SPEAKER_02]: focus on your IT sales workflow

[00:33:36] [SPEAKER_02]: with the power of automation

[00:33:37] [SPEAKER_02]: and visit them at salesbuilder.com

[00:33:39] [SPEAKER_02]: that's B-U-I-L-D-R.com

[00:33:43] [SPEAKER_02]: and vendors you too

[00:33:44] [SPEAKER_02]: can get your name mentioned

[00:33:45] [SPEAKER_02]: on the live show

[00:33:46] [SPEAKER_02]: it's a simple monthly subscription

[00:33:48] [SPEAKER_02]: visit patreon.com

[00:33:50] [SPEAKER_02]: slash MSB Radio to learn more

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[00:33:54] [SPEAKER_02]: the best thing you can do

[00:33:55] [SPEAKER_02]: to support the show

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[00:34:05] [SPEAKER_02]: you set what you think

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[00:34:14] [SPEAKER_02]: thanks for joining me today

[00:34:16] [SPEAKER_02]: on the Business of Tech Lounge

[00:34:17] [SPEAKER_02]: and I will see you next time