Slide’s Flexible Contracts: Balancing Client Retention and Revenue Risk - Carlson Choi

[00:00:00] Dave Sobel here reporting from the floor of ChannelCon. I'm sitting down today with Carlson Choi. He is the COO at Slide. Now, Slide's about 18 months old, running about a thousand partners right now. Carlson, welcome to the show. Well, thank you for inviting us. It's exciting to come and catch up and share a little bit of news and we've been going with that Slide. Well, a quick disclosure for everyone. We reported on the Slide v Datto lawsuit going on. Actually, Datto v Slide. You can catch that investigative reporting, but it's a quick disclosure.

[00:00:29] Carlson was at Datto prior, so just everyone has a context. Give me a little bit of the context of where Slide is right now. You're kind of 18 months post-launch. What are the measurements? Like storage size, partner size? Give me some of those numbers. Let's see. 15 months. Let me count this. It's been crazy 15 months if you think about it, right? For us, it feels more like 15 years. Why? Because I think the acceleration, acceptance of the community from us, it's been great.

[00:00:54] So, you know, if you look at the last 15 months, what we have grown to, we went from, you know, the dozen of partners who really early piloted with us to now a thousand plus partners worldwide, which is great things to hear. Other thing we have done now, we're operating with two headquarter offices. We have one in the U.S. in Westport, Connecticut, and we also have opened an office recently in the U.K. to really serve our partner in the European region.

[00:01:18] We went from one data center to four. I think that's a really important aspect to know because of data residency, but you can't just serve everything out of one single data center, but rather in where the partners and the client data need to be. From an employee count perspective, we actually have grown also. We went from, I think, a year ago, about 10 and we got started. We're almost at 100 employees, but it's still really maintaining that heavy duty focus at engineer and product first, and then the rest of the organization.

[00:01:48] But last but not least, I think for us, you know, we're now being operating all those different data centers with all these partners in place. We're still one single product as we stand, really continue going deeper and making our on-prem solution, the BCDR, being what we need for the partners out there today. So right now, what's like the main thing that a partner could put in production right now that's the kind of the lead feature? Right now, what they can put in today is an on-prem backup. It's a BCDR product that we have today as we launched about a year ago, well, 15 months ago. Right.

[00:02:17] We continue to expand on the depth of the product, right? Now we have not only have, we're out of our capability, including for different agents. Now we're supporting Linux, which is a lot of demand from the partner, sharing what they asked for, adding them into places. So as of today, what they have available to them is the BCDR on-prem backup box. Okay. Now in setting this all up, you made the pitch to me that you want to argue against the single pane of glass for the MSP.

[00:02:43] And this has been kind of the trope for a very long time in the space. Make the case for me against the single pane of glass. I think you think about single pane of glass, right? It's how you execute it. I would say close to consolidation. You take a look at the world that we have in place. A single pane of glass, what do you know it about today? Mostly hearing that, you know, single sign-on. Great.

[00:03:03] I now can sign on the same place. But the moment you go deep in using application, the experience is going to be very different depending how they execute. I'll take an example, right? Look, you look at a car dealer. They consulted in person multiple different car brands. You might be able to buy the different car brand from one dealership, but ultimately at the end, the operating experience of four different car brands are going to be slightly different.

[00:03:28] And the development platform are usually not sharing some of the knowledge. But then you take a look in a sign with a software giant like a Microsoft, right? When they do acquisition and consolidation, they actually do it in a really interesting way. I'll take an example of Skype, right? Skype was probably acquired 10 plus years ago. But when they bought it, they didn't just stitch it together by putting a single sign and put duct tape around. Oh, now they're one product suite.

[00:03:52] But rather, they started a new route called Teams. Teams, a product that developed over time, integrated within that complete stack. So in some way, yeah, this might be a single pain of God, but that single pain of God is fully rooted from within. And over the year, Skype is no longer, you know, in sunset. But Teams now become that truly integrated piece in the environment. So it's seamless integration based on how they integrate in place.

[00:04:16] So rather than taking all these consolidation in place, put a single sign on and call a portal integration and you duct tape them to work within it, you have an opportunity to choose to make them work better together from a functional level. You just shipped a ConnectWise integration, right? Yep. And so the argument that those who make for a single pane of glass would be is that it's about data feeds, right? It's we want to pull everything into a place that I'm able to work for. I could make an argument that you've literally just shipped that in product.

[00:04:44] Talk to me a little bit about the way that you think about the difference between that single pane of glass versus integration point. Very good point, right? You think about the business we're in when the business is backup, right? If you look, we're talking a lot of MSP, the multiple type of backup they backup today. If anything, there is a, on the traditional side on the on-prem, there is server workload and then there is workstation endpoint workload.

[00:05:08] Then you look at the cloud side of the world, you've got the Azure, the server workload on the cloud, and then you've got the SaaS backup, like the O365 Google Workspace. Now, that in some way is a four-corner backup that we did today. Expect us to come into those place at some point. But if you think about what the MSP has in manager today, all those four corners are typically, if not all, are four individual different products.

[00:05:33] And even if they're owned by the one single vendor today, there are still four separate product architecture that was built through acquisition. And inoperability is probably most of the time to the extent of just a single sign-on. But then let's say we have to do a search for file, the most typical exercise MSP would tell you. One of my client call, I'm looking for this really important files. Here's a file name and description.

[00:06:00] Today, no matter which solution look in the market, the MSP would have to go, all right, I think they're back on the BCDR workload, the server. They go down painstakingly. Oh, I might have found it, I might not have found it. Let me go take a look at my M365 product workload. Even though the portal have a single sign-on, they still have to go through a different work stream. Azure backup, endpoint backup. So typically, what we're actually talking to MSP, that experience there alone, are these endpoint workloads being backed up? Yes, they are.

[00:06:29] Can I find a file where I need to? Yeah, kind of, because I've done it four times. And that adds up on average three hours of non-buildable hours. In what we're thinking about from an approach perspective, the world where it needs to move to is that when an MSP said, I need to look for a file. The file descriptor can enter in there. Now this is where you can leverage a lot of tooling, like an AI can help you to say, I'm going to find this from this first BCDR stack. Reduce the time there.

[00:06:56] But then also unify search across these four different environments. This is where the investment need to come in and become more uniquely integrated from a functional perspective. So now MSP, instead of spending three hours looking for a file, they can spend literally 30 seconds and really get to get back to the billable work time. And that's kind of how we're thinking about from a strategy and approach perspective. Are you and your clients tired of the time-consuming ticket tennis of coordinating meetings and help desk calls?

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[00:07:52] Visit TimeZest.com slash MSPRadio and use the code MSPRadio to get 10% off your first year of TimeZest. Now I want to layer on that the best in breed approach. Because you guys have declared that that's your strategy is we want to be a best in breed solution. That sets the bar pretty high. And it also means that any sort of small stumble makes it very difficult to do. So, for example, there's little things like SentinelOne integration. Right. Exactly.

[00:08:21] Every time there's an issue like that, it's the like, well, if I can get an integrated stack that doesn't have those issues. Talk to me about the way that you are thinking about the best in breed argument and why you think that's the right winning play. Yeah, I think for us is that if you can rest in breed in that approach, what you can then do is hire the right resource to address for those issues. Right. I always tell our partners that when they come on board, they will say, well, you know, I always say this is going to be the worst version of our product you can ever experience. Right. Right.

[00:08:50] Expect us to make mistakes along the way, which is the strangest thing to tell people. Because at the end, this is the beginning of a good partnership. In our mind, by having the right resource in place, though that you brought up the SentinelOne issue. Great. We've known, we saw it, but because we're the right talent, we're able to address it pretty quickly. On the short term, but also on the longer term, strategically, we partner with SentinelOne to make sure those things are getting addressed.

[00:09:14] I think part of that's key is the investment in the right talent to support when the issue comes, not if the issue comes. Second, in our mind, is that if you're transparent with the partners right up front that we know there's going to be an issue, but trust that we have the right resource that can partner with you and be transparent to help you get over those hurdles. And that's kind of been our approach and mindset behind that. You said that the threat landscape has changed so much that it requires real changes to traditional backup and recovery.

[00:09:43] Now, when I look at the data and when I look at most of where the failures are, it's not a tooling problem. It's usually process. It's usually people. It's usually that side. So give me a little bit of a sense of how you think tooling is going to address what has ultimately been a failure of people in process. Yeah. I'll take a couple of things. Probably the two things that we've seen the most since we've been 15 months since birth. One, encryption. Let's talk about that a bit.

[00:10:11] And the second is, to your point, process and tooling. Data encryption is important in our mindsets because if you look at where the threat and net landscape was 15, 20 years ago when our industry was growing, cyber attack was like a if, not a when. Right? So most of the tooling said, hey, by the way, data encryption is an optional feature you add on. And we add it on. There's a cost to it from, you know, different level of compression becomes less efficient than that.

[00:10:42] Well, now I think we moved to a landscape where it is a when. Client will get breached. It's when they can get breached. A lot of time when we come to that, the tooling do forget the fact that when you get breached, somebody will breach your facility physically and or be able to get to your data. That is at rest. So for us, we see the encryption piece as a must-have option. It's no longer an option. It's a requirement. So if MSP come to us and say, Carlson, we want to turn off your encryption. I said, you can't return it off if you want to.

[00:11:11] And you're not paying the extra tax. We have to increase the storage side, which is a great starting point so that they know at least the last line of defense is protected from an encryption perspective. Now, second piece, we talked about process, right? How do you make sure you eliminate the process issue? A couple of things that we have found in our journey in the last 15 months is that MSP has to train their technician so they can deliver it consistently. For example, doing a disaster recovery incident.

[00:11:39] Well, there's a type protocol that they can run. There's somebody in level three tech who trained to run that SOP. Well, we're now living in a world where I think I was sharing earlier about how my daughter is simply able to live and breathe through the AI world.

[00:11:54] So we're actually leaning into building capability where now the tooling itself, the consistently executing this SOP is living within our tools so that MSP, even at a level one technician, can easily go into our tool and be able to say, I'm looking to recover Dave's environment in the cloud. Can you take me through that process? And the tool will automate and run it based on the protocol that MSP has created. So the simple is making that simple runbook in a conversational manner.

[00:12:24] Now you no longer have to rely on the training and you can also eliminate error on the individual level. So how much of that is achievable right now? Because I mean, lots of people are still testing out the capabilities of automation using agentic AI. Talk to me a little bit about what's implementable now versus what you see is coming down the road.

[00:12:43] Yeah. In fact, in our tool today, we don't typically, we have a mindset in our organization today is not to talk about capability or even demo a feature at a show without being available. Because I think so many times when you have MSP that comes to a show like this, they get excited, they see something, and then they ask a vendor to go, when does that have a, oh, we fall? Why don't you sign up an alpha and beta program?

[00:13:06] And you're like, oh, okay, that's, so our mindset at Slide, it's always that we don't demo a feature that is not available now in production without at the show. So to your point is that a lot of what we talk about, they are in production with MSP that are using it. Like I mentioned, we even like, you know, if you guys got time, come on by, you'll see that we have this chat capability built in. You can literally say, Dave's environment just went down. I need to take this entire environment on the cloud to get him back and running ASAP.

[00:13:35] You type that in, it will run through the system and look through and find environment. Oh, wait a minute, I do find Dave's environment. Are you sure you want to execute this? Once you say yes, we'll be in second. Dave's environment will completely back up on the cloud, including all the most difficult thing where you need a level three engineer. Set up the networking. It will automatically build those in. So for us, we feel like that's an area a lot of value add to MSP, especially when it comes to disaster recovery area. So I want to switch gears a little bit.

[00:14:03] And I want to talk about the way you think about risk. And I'm going to think about it in your own business, right? So one of Slides' positioning is that everything is, at any point a partner can cancel. That's a lot of potential financial risk to have, particularly as the organization grows, right? Feature for the partner, but it also has operational risk. And you guys have growth targets and the way you want to think about this financially.

[00:14:24] How do you think about that risk to balance that when the contractual base that a lot of investors are looking for isn't necessarily there? How are you thinking about risk? Yeah. A couple of interesting things for us. I think as we've gone to the beginning of this journey, as you know, one of our main investors, Austin McCoy himself, right? And you also call Michael Fast, who both have been our co-founder of our company. And we have actually saw, you know, in that what the MSP want is to maximize the flexibility for their business, right?

[00:14:54] And as we talked to many of the MSPs, they want that flexibility. So what happened was that as we got into, you know, investors fundraising, we've actually made that part of the requirement. Understanding that this is our virtual, how we work about it from that standpoint. So that they actually, in some way, as they invest in the company, they walk in there knowing this is what they're investing. Now, second to that, you might go, well, how do you know if, you know, somebody is going to churn for an account? And it is a risk that we will need to take. It's a risk of doing your business. It is.

[00:15:23] And the thing that we do train our employee on a day-to-day basis is that you never take a partner for granted. Even though you might have close say, wow, this is a big deal. But one day, if you don't serve them well, guess what happened? They can leave any day. So it's almost like it's an interesting tension that you want to manage.

[00:15:40] I will say from a, you know, churn perspective, we are extremely healthy in a good way because what we're seeing is that our employee, every one of our account manager, they sign up daily today. You're going to consistently get a call back from them because they want to make sure that every single morning when they wake up in the morning, they're there to earn your business over and over again. So there's a healthy tension in my mind. It's actually a positive way of thinking because in too many times, right, humans are driven by the behavior.

[00:16:10] And you look at the organization, you see other organization where an account manager, you might never hear from them after you sign a three-year agreement or one-year agreement for that matter. In my mind, it's like that agreement that signed is only as good as until the end of this month. For that matter, you can cancel tomorrow. Oh, guess what? Now the rep has to do to make sure that you're properly onboarded. You're ongoing getting the tools update that you need and you see ongoing value.

[00:16:36] So what we have seen in the last 15 months, it actually drove our account management team to work a lot more coactively than it was. And so thus far, it's been more positive than there's a risk of our business. This episode is brought to you by Control Map. Growing MSPs are using Control Map to build recurring revenue by expanding their GRC services. Starting now, Control Map is offering a free plan for MSPs looking to get started with providing compliance as a service.

[00:17:05] Create a free account and run an assessment. Track key items like policies, risks, and evidence in one place. It's a practical way to prove value to a client before deciding to expand your compliance offering. Try Control Map for free today. Visit scalepad.com slash Dave to get started. That's scalepad.com slash Dave. Are there business conditions where you might introduce annual agreements? What scenarios might make sense for that?

[00:17:35] Yeah, it's interesting. We've been talking about that. There's been a lot of requests. We actually have MSPs that come to me and say, well, can I sign a one-year contract or three-year contracts to get better pricing? I said, well, do you sign an annual contract? Yeah, we do a three-year contract. But now keeping control, keeping up to date on those contracts becomes such a nightmare for everybody.

[00:17:59] So I always really bring it back from an operational standpoint is that, yeah, when the time comes, I think we'll get there. But to this day, every time with some partner, a company means is I won one year, three years, long-term contract. It's mostly about pricing. And we've been able to meet those pricing demand and still maintaining that month and month for them. I think that's a win-win situation. And I think that's, if anything, I think it's a blessing of being a startup still.

[00:18:26] Now, at some point, as we grow up, it might, but we're going to continue to push for that to say, if it's purely real pricing, I never see pricing become the issue. Those one to three years contract, if it's not real pricing, I haven't heard them yet. Well, the other area that I do think is interesting with pricing is when I look at the feedback from partners and from the partner community, the smaller partners tend to think that they're out of reach of being able to engage with Slide.

[00:18:52] And so, like, do you look at that and say that there is a size floor where the math doesn't work for Slide? Do you think that there's a positioning and an ability? Can you not reach into that space? Yeah, it's interesting, right? Because if I look at, we talked about size of the partner. I think I'm more used to the word maturity of the partner themselves. I don't think there's any size that doesn't fit with us because I think the way we built the business structure MSP community, one thing I always invite MSP to come in, a lot of time we actually worked out real well,

[00:19:21] is that we are also becoming more a business consultant to the MSP partner. I would say that our initial engagement, yeah, we might be there's a transactional relationship for the first device. But after that, my account manager, I actually tell them that you're not an account manager. You're a business consultant. So when the less mature or the earlier stage MSP partner, if they're spending more time with that from that perspective, we will actually work into thinking about, all right, how do you work through things? Like, for example, I would ask those questions.

[00:19:51] When was the last time you increased your price for your client and backup? Nine out of ten would then say, oh, it's been the same price the last five years. So I go, oh, has grocery price gone up? Has gas price gone up? Has your employee come to you and asked for a raise yet? He's like, oh, absolutely. Okay, well then maybe it's an opportunity to think about how do we package the introduction of slide plus an opportunity to be able to increase your growth in the business. And I would say every time we engage in that conversation,

[00:20:21] that particular part, they might have two devices. Some of them might have three devices. Might have just one. They end up finding themselves on the other end and going, wow, that conversation is actually a lot easier than I thought. A year from now. Yeah. What's the question about success you want me to ask about? Wow, okay. I would say a year from now, we're going to ask us. You should ask us, have you achieved your goal of being the one and only backup platform and all the tool in the different corners of backup?

[00:20:51] You should ask me to go, hey, I'm holding you accountable that you don't go outside of that rate because this is an area that we feel strongly that we're going to continue to focus and be great at it. Third question I would love you to also ask me is like, hey, are you seeing other industry players? I'm following that footstep because I absolutely believe that there is a lot more here for all the different industry players to make greater product for the community that we believe in. Well, then we'll ask you that next year. Carlson, thanks for joining me today. Great. Thank you.

[00:21:26] Produced by Picture This Video. Part of the MSP Radio Network. Thank you. Thank you. Thank you.