The Evolution of Managed Services with Michael George, CEO of Syncro

[00:00:01] This one's an easy intro for those that have been doing managed services for a while

[00:00:06] Michael George is the CEO of Synchro which he joined in February of 2024

[00:00:11] He was the CEO of Continuum from 2011 to 2019 when it was acquired by ConnectWide

[00:00:17] He's held other roles and he talks to me today about why he joined and where the organization is going on this bonus

[00:00:24] episode of the Business of Tech

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[00:01:15] Well, Michael, thanks for joining me I'm super excited to have you today

[00:01:19] Dave I'm really grateful to have the opportunity to be with you

[00:01:23] So, thank you

[00:01:24] And this is fun because we've known one another for a while now across the evening at times where my MSP

[00:01:29] Worked with the precursor to Continuum. We've been competitors to now

[00:01:34] I'm over the analyst side like it's been fun to chat

[00:01:37] But I want to ask is because I think let's start off with just really the headline

[00:01:42] You recently joined Syncro as the CEO and

[00:01:46] As the analyst when I'm trying to understand what the adventure is what the big challenge is

[00:01:51] I took a look and I say well me back at a MSP platform company

[00:01:57] I don't understand why because I want to under because I haven't gotten in your head. What's different?

[00:02:04] What brought you back for this adventure?

[00:02:06] Yeah, it's a terrific question because if you look at my career

[00:02:11] And I'm grateful. I've had a really extraordinary career

[00:02:16] And I but I have never done the same thing twice including never even been in the same sort of category twice

[00:02:25] And I actually think so much has changed. It's not even the same category anymore

[00:02:30] So that's and we'll talk a little bit about that for sure

[00:02:34] What's interesting is and if you think about in as you know, we knew each other from I joined

[00:02:41] Continuum I created continuum from an acquisition of the assets out of ZNIP and

[00:02:49] You know you and I cross paths back then because you were

[00:02:52] We're a customer of our you were a partner of ours the MSP space and a very successful one at that

[00:02:57] And so you knew how to benefit from the tools and the platform that we provided

[00:03:03] We were at the time solving fundamentally the same

[00:03:07] Challenges that the market faces today, but in a very very different dimension

[00:03:12] The the thing that drives the whole MSP market is the same thing that actually challenges it there has been a

[00:03:21] Transformation a digital transformation underway now for at least two decades

[00:03:27] The internet has been the last, you know, the most recent, you know digital

[00:03:32] tectonic shift in and in the world and has created now an

[00:03:39] $11 trillion

[00:03:41] digital economy and

[00:03:43] And it's a gold rush and everybody has been rushing at for a long time as you know

[00:03:48] And it has created a skills gap right? Everybody's in this movement for this digital transformation

[00:03:55] What we did at Continuum Dave as you well know is we closed the skills gap by very cleverly

[00:04:02] Taking something that the enterprise had figured out and had been doing for about a decade very very successfully

[00:04:08] And we brought it into the small medium business market through the MSP channel

[00:04:12] And that was to take an offshore model, right?

[00:04:17] We had a knob a sock and a help desk operation in low-cost

[00:04:23] Economies India principally and the Philippines and we packaged that into an integrated services

[00:04:30] delivery model

[00:04:31] Into our technology platform enabling our MSP partners again to close the skills gap on an economic

[00:04:39] Basis that would benefit them so that they could grow

[00:04:43] Expand get new customers and not have to linearly hire

[00:04:48] IT people to solve the IT problem that they were solving for the businesses that they were in

[00:04:53] So it was really very MPI. I think you'll agree. Maybe you could speak to it in your own successful journey

[00:04:59] You know with us because I know you got acquired and it was a great run for you

[00:05:03] And then you jumped over on to the vendor side. So you've got both perspectives down cold

[00:05:09] But it was a very clever way to close that skills gap. What's changed is really two things

[00:05:16] The

[00:05:17] private equity world entered when this category back

[00:05:22] Candidly when summit partners funded continuum and then to say

[00:05:27] and then enable and you know, you know the whole journey and I think most people do and

[00:05:34] if you look at and understand the capital at the

[00:05:38] capital markets and the asset classes

[00:05:41] private equity has

[00:05:43] Two different cycles and the first is value creation and the second is value extraction

[00:05:52] When we were with summit partners, frankly their growth firm. They're an outstanding

[00:05:58] Firm to be funding these companies because they were we were on the value

[00:06:03] Creation side of the equation investing in being innovative. We started with just this RMM

[00:06:10] When we were expanded the platform it to BDR we made an acquisition and then we

[00:06:15] acquired Carver and we were the first

[00:06:19] Really launched we did a at the company strategy on security and right we were we were we brought security to the market as you know

[00:06:26] When everybody thought in the small to medium business market, it was not there. It was not a small to medium business problem

[00:06:30] So we did that we brought Sentinel one in to the industry and I mean look at look at what it looks like today

[00:06:37] I say no more

[00:06:39] And it could continue them in the hyper growth in mode that it was in and that ultimately had a being acquired by connect wise

[00:06:48] When we were was 2019, it was an eight-year journey for me and I loved you know every bit of it

[00:06:53] It was a really extraordinary thing and I'm grateful for all the people that were a part of that that journey

[00:06:58] It was it was it was really extraordinary

[00:07:00] did you know I stepped out and then I didn't think I was gonna you know come back in but

[00:07:05] When the companies the leaders ended up on the other side the value

[00:07:11] extraction side with private equity companies and we all know what connect wise looks like today to say is

[00:07:18] Amalgamated, you know, it was a full acquisition strategy and an amalgamation of assets that don't you know?

[00:07:25] Don't really belong together and then enables, you know crushed under be I mean being a publicly traded company in a small cap

[00:07:32] Environments and impossibly nobody's investing in innovation and they're on the wrong side of that equation. So that's number one

[00:07:38] There's a market condition

[00:07:39] And the other is is just like when we like that the Internet is had in the world

[00:07:45] It's creating a digital economy that AI

[00:07:49] He has a new

[00:07:51] new set of

[00:07:53] Dynamics around it that is going to completely transform this market

[00:07:57] I'm gonna do everything I can to not say AI anymore and use the term automation

[00:08:03] Because what it really nobody really cares about what the underlying technology is and they shouldn't what they should care about

[00:08:10] Is is what's the impact to the MSP that makes it beneficial?

[00:08:14] And and so the real the reason I rejoin this category is it has changed

[00:08:21] Exponentially in those two dimensions it is a replacement market opportunity because the three leaders in it are on

[00:08:30] 15 to 30 year old technology that's brittle and they're not innovating and they're for their own by a set of asset classes

[00:08:37] That is not going to invest in anymore and everybody knows that and are are leading off of those environments

[00:08:44] But the other is is that there is a tonic shift underway

[00:08:48] And all of the things that we did a continue on day by bringing, you know

[00:08:53] An offshare model into the equation. We're bringing in in the form of automation

[00:08:58] using these underlying AI technologies and I you know and

[00:09:03] Syncro I had a lot of opportunity

[00:09:05] I looked at I was invited into a lot of places and I I'm so grateful

[00:09:10] That synchro was one of them and I was very deliberate about choosing that as a technology platform

[00:09:17] It's a cloud native, you know, it's it's a you know, it's the next generation of technology and it's with a

[00:09:26] Financial partner that wants to invest in innovate and completely disrupt this industry

[00:09:31] Using the technologies that we just talked about so I'm sorry if that's long-winded

[00:09:36] but I hope it explains and answers your question about a

[00:09:40] Why am I back?

[00:09:42] And the you know what I am back for

[00:09:46] So I since my follow-on question was what's different about the market and you've answered that you kind of got two questions for one

[00:09:52] And now it now you said something that actually that I wanted

[00:09:56] double click a little bit on which is this you because you were pregnant and say you purchased the

[00:10:01] Assets of Zenith Infotech and that wasn't it's an interesting. Yeah, you're very deliberate there and I appreciate that because one of the true

[00:10:09] Interesting things that happen then is is that asset that was Zenith Infotech was created under very unique circumstances

[00:10:16] Right. It was created by an investment

[00:10:20] You know by an organization might see them with a top it raised fun funds

[00:10:24] It actually went bankrupt and its assets were sold allowing for the creation of a very unique

[00:10:31] Asset that you were then able to leverage and and I thought a lot about

[00:10:35] What is the asset creation and competitive differentiation help tell me a little bit more about how that

[00:10:42] Parallel might fit here and what Synchros kind of unique part that intrigues you it I

[00:10:51] Don't want to get too far ahead of ourselves

[00:10:53] You're going to see us and I'm delighted to get back together with you again later this year

[00:11:00] But in q3 of this year going to be relaunching the company

[00:11:06] around some technology initiatives that are

[00:11:11] transformational for the business and I don't want to get

[00:11:14] Bought in having everybody sort of wait to see what that looks like because we are incrementally already

[00:11:22] releasing

[00:11:24] Elements of what we're going to be relaunching the company around

[00:11:28] Later this year the the as I said at the at the heart of what we're doing is

[00:11:35] Really perhaps two elements again the leveraging of

[00:11:40] Ai in a way that's very unique from the way anybody else has been approaching it in this category

[00:11:46] Today Dave and since you're a you're more of a technologist than I am

[00:11:50] I will tell you that we are you know people are today using

[00:11:56] Chat gbt for instance and declaring in a position with AI

[00:12:01] And what they're really doing is adding it and and I'm not you know, I'm not criticizing it

[00:12:06] I'm just sharing with you sort of the difference between our approach

[00:12:10] to solving these challenges

[00:12:13] By saying what they're doing is they're taking their existing processes and they're adding

[00:12:18] chat gbt to an existing process

[00:12:22] What I've done and as you can imagine when

[00:12:25] Two eyes wired continuum. I'm not sure they fully understood

[00:12:31] the

[00:12:33] Some of the underlying assets that they acquired and so the team that built our

[00:12:39] Automation into what we were we were doing it continuum all left and they have joined me here

[00:12:46] They have joined me here. I have some of the core. I have the core engineering and ai team that we have

[00:12:53] Continuum are now part of the synchro a journey

[00:12:58] And what we've done is is broken down and are leveraging

[00:13:02] Uh ai at a traditional ai level not we're not using chat gbt today

[00:13:09] We're actually

[00:13:10] working on a processing level

[00:13:12] And we're using it in its traditional native state

[00:13:17] and we're

[00:13:18] incorporating it into literally

[00:13:21] Every aspect of our product we're using the large, you know language models and we're building ai natively into our product

[00:13:29] That's very different than plugging chat gbt as you know onto an existing process. We've re-engineered the process and

[00:13:37] again synchro

[00:13:38] Architecture a cloud native architecture

[00:13:41] You know was built and born in the cloud. So it's very different than trying to re-architect something

[00:13:47] It was an architecture built for this environment

[00:13:50] that is giving us an opportunity to do things that

[00:13:54] I will i will i'll jump to the

[00:13:57] Finish line and and then just give you a quick look back on it

[00:14:01] But that is given the matter is and I love you know in the image that you're in

[00:14:06] Uh in this podcast

[00:14:08] You've got computers that had floppy drives and you've got you know in the history, you know

[00:14:14] I'll remind us all that from you know from leonardo da vinci designs of flight

[00:14:21] It took you know

[00:14:23] Centuries to have you know, the wright brothers fly an airplane

[00:14:28] But from that moment in time it only took 66 years before we put a man on the moon

[00:14:34] That is good. So think about that right the acceleration of and we're in that same

[00:14:39] parabolic

[00:14:41] acceleration curve

[00:14:42] of technology in and around automation

[00:14:45] and the ultimate goal candidly is

[00:14:49] That is gooders. They are far better at solving computer problems than humans are

[00:14:55] And there is a level of autonomic computing

[00:14:59] that is dooders can fix and remediate

[00:15:02] And

[00:15:04] You know very preventatively

[00:15:06] Remediate problems before they emerge

[00:15:09] Into things that show up and manifest themselves to slow down systems to force this deep rag to

[00:15:16] Prioritize a you know, all of that stuff computers are better at it than human beings

[00:15:22] And so what we're doing is is moving

[00:15:25] the the

[00:15:27] Uh ability to automate up closer to the edge

[00:15:32] of the remediation process and getting in front of it and and

[00:15:37] Preventatively, you know remediating things before they emerge and so anyway, that's

[00:15:42] You know and we're so think about

[00:15:45] autonomic computing

[00:15:47] And work your way backwards and now think of us as the company that's going to bring that level of automation

[00:15:54] Into you know, the biggest challenges

[00:15:58] For msp's today so that all that root work and everything else is now out of the system

[00:16:04] All that noise is out of the system where the technician?

[00:16:08] Doesn't eliminate the technician. What it does is it it elevates?

[00:16:13] Our technicians to doing higher value work our tech because they and you ask them they spend so much time just sort of

[00:16:20] digging around into very rote

[00:16:23] elements of

[00:16:24] Remediation

[00:16:25] And they're doing it once that stuff, you know already shows up

[00:16:28] It shows up in an alert or a complaint or an email or a ticket

[00:16:32] And what we're doing is is we're remediating those things before

[00:16:36] Uh on a preventative basis before they ever emerge. So it'll give that so anyway, that's sort of that's the mission

[00:16:42] This is a very mission-driven company people join our mission

[00:16:47] Because they're here to you know to to again close that skills gap use automation

[00:16:53] Uh to improve the value of the way

[00:16:56] Technicians are using their time and continue on the digital transformation for their for their customers

[00:17:02] So anyway, I could go on about it because I love this category and i'd love you know

[00:17:07] But that's that's that's what we're doing and that's what i'm here for and that's what you're going to see

[00:17:11] The sort of the next version the the re-emergence of synchro

[00:17:17] uh solved for

[00:17:18] Oh, I then I welcome you back to tell me more when you have something to do it

[00:17:22] now I want to get your insight as particularly as a business leader because this is a

[00:17:26] Category actually that synchro has been a leader in and and we've I've started talking about again

[00:17:31] And I want to get your take

[00:17:33] on

[00:17:33] This as a differentiator. So synchro actually was a leader in pricing changes by moving to the per user pricing

[00:17:41] As an early move, right? So very disruptive into think about pricing

[00:17:45] Pricing's been top of mind because there's been a recent set of announcements about

[00:17:50] suppose, you know disruptive pricing in the msp market and i'm alluding to

[00:17:54] Kaseya's big piece. I don't need you to weigh in on kaseya instead

[00:17:59] What I actually want to hear from you is your take

[00:18:02] On how you think about pricing as a differentiator particularly being at an organization that has previously differentiated on price

[00:18:11] Look, I commend anybody who's trying to

[00:18:14] Use whatever they can, you know to further their cause in the market

[00:18:20] The fact of the matter is is that if you think about how msp's

[00:18:25] charge bill for their

[00:18:28] Services, they're typically doing it on a per

[00:18:32] Employee basis. They're not doing it on a per device basis

[00:18:36] What they're doing is using the calculus that says that there are approximately

[00:18:40] 2.7

[00:18:42] devices in the hands of every worker

[00:18:45] In the workforce in first world economies, and that's where msp's

[00:18:50] Live, that's where they make their make their living

[00:18:53] So so that's really sort of the math that people use and there's always been

[00:18:59] use what uh calculation of

[00:19:02] Use how much can I charge and how much do I pay?

[00:19:06] And so there's been an alignment again the alignment's been on an endpoint basis and not on an employee basis traditionally

[00:19:14] Use what you're going to see in the next generation

[00:19:18] of and and pricing is only one element of it, but the next generation of

[00:19:24] Technologies they that really disrupt this market

[00:19:28] Is going to approach them the marketplace in a very different way

[00:19:33] It's not going to be on a per endpoint basis it is most likely they're going to be on a user basis

[00:19:41] Because users have more than devices. They also have things like policies

[00:19:46] and so

[00:19:48] Again, we live in a very microsoft-centric

[00:19:51] world

[00:19:52] Use and anybody who's paying attention needs to pay attention, of course

[00:19:57] You know microsoft I think the new leadership there and the things that they are doing

[00:20:02] Are extraordinary. I mean they made an 18 billion dollar investment in open ai

[00:20:08] clearly

[00:20:09] Indexing in on ai because they understand and we live

[00:20:14] In a microsoft os right? So pay attention on the on the ai front

[00:20:19] uh, number one and number two is also pay attention to

[00:20:23] tenant and policy

[00:20:26] management in and around that world and so

[00:20:29] The next big shift you'll see from a pricing perspective

[00:20:34] Is one that is likely to move more toward a per employee

[00:20:39] Because that's the way msps charge anyway, and that is the way

[00:20:43] The vendors, you know the people that are providing the tools and technologies

[00:20:48] Use thinking about

[00:20:50] You know pricing for their

[00:20:52] Use what you know for their msp partners and I will tell you directionally

[00:20:58] Our goal is to

[00:21:00] get the

[00:21:01] cost per you know at the ratio of

[00:21:05] device

[00:21:06] now employee

[00:21:08] Use technician to be the best

[00:21:11] Use go on the planet

[00:21:14] Right. We're trying to enable our technique, you know, the technicians of our msps

[00:21:18] To become like a 10x tech

[00:21:21] And you know instead of having 125 or 150 devices

[00:21:27] Which might you know calibrate down into you know, some number of employees

[00:21:32] You know recalibrate that ratio and know that the number of devices and then therefore the number of employees

[00:21:39] Will be exponentially higher

[00:21:42] using the synchro technology

[00:21:45] use with any other platform and

[00:21:48] There will be when we relaunch ourselves. They we are going to launch

[00:21:53] We'll call it an automation index, I don't know exactly how we're going to frame it call it the pepsi challenge

[00:22:00] for that matter we will

[00:22:02] Use wick up against any vendor in this industry

[00:22:06] And we'll be we will provide the highest amount of automation

[00:22:11] To enable the technicians in our msp partner environment

[00:22:16] to have

[00:22:18] the best ratio

[00:22:19] Of technician to employee

[00:22:22] If that's the way it's priced or by device

[00:22:25] on the planet

[00:22:27] Use what so michael i'm going to ask sort of what's the

[00:22:30] You're looking at this space. You've got lots of stuff you're working on. What do you think the biggest?

[00:22:34] headwind and challenge

[00:22:36] In 2024 for the managed services space because you've alluded to a bunch of different things and pressures of the past

[00:22:42] But what's the one now that you think the most about for this?

[00:22:47] That the I I think it's the same skills gap problem that they've been trying to face

[00:22:54] Again, the digital transformation of these first world economies is not over and in fact, it's gotten even more complex

[00:23:04] You know now people are like, you know with office 365

[00:23:08] Right moving into the cloud and you've got azure

[00:23:12] Most of the applications people are working on or all cloud base and everything else. So we have this

[00:23:18] We have a complex a more complex

[00:23:21] digital environment

[00:23:23] That managed service providers are working in today than they ever have before

[00:23:28] Right, there are these you know

[00:23:30] hybrid

[00:23:31] cloud premise

[00:23:33] You know application

[00:23:35] Every you know device and everything else and interval hearings, right?

[00:23:39] Interval hearings right the covid just completely disrupted people

[00:23:44] And where everybody was investing in things behind the firewall

[00:23:48] They can on premise, you know, covid came in pushed everybody out and the internet became the new network

[00:23:57] So right that is the new network. And so all that money that went into protecting so you have a

[00:24:04] very very complex

[00:24:06] Digital environment that msp's are trying to manage and support with a very distributed, you know

[00:24:13] workforce

[00:24:15] and

[00:24:16] security

[00:24:17] is going to

[00:24:19] Persistent again. Nobody ever thought that

[00:24:21] You know security was going to be a small to medium business problem until the invention of ransomware

[00:24:27] And yeah, I mean again, this is old news now, but the issue around security

[00:24:34] Is going to get worse, uh and not better it is a technically

[00:24:39] You know one of the most unsolvable problems

[00:24:43] um, you know that our digital economy faces and so

[00:24:47] It's going to be the is how many?

[00:24:51] Security experts are there in all the different aspects of security that you need to be an expert in today, right?

[00:24:57] It's not just sort of a firewall or a device

[00:25:01] It's applications

[00:25:03] It's everything you'll have this whole digital ether now that is, you know, the

[00:25:09] attack surface

[00:25:11] Is for you know, so anything?

[00:25:14] people can do

[00:25:15] Is simplify this very very complex digital environment

[00:25:20] And also secure it and I think securing it

[00:25:24] um, you know, I mean

[00:25:26] You know msp should be thinking

[00:25:29] Security first in their posture and their approach to how they are, you know

[00:25:36] managing these digital environments today, so

[00:25:40] Again a little long-winded but if you break that down, it's a combination of a skills gap

[00:25:46] in particular round sort of security

[00:25:50] And and a very very complex digital environment

[00:25:53] That is, you know going to be continuously under attack

[00:25:58] um and and hard to maintain and hard to support and everything else so that's a that's a complex

[00:26:06] Challenge and that's a 2024

[00:26:09] 2025 and probably a 2026

[00:26:12] Challenge not I feel like we'll be at security for a while my god

[00:26:15] I really appreciate you joining me and and diving in and answering these questions

[00:26:18] And I look forward to hearing from you when you've got those other things stood out

[00:26:22] Dave really grateful to be reconnected with you again and and really appreciate the opportunity to speak with you and your audience

[00:26:28] Thank you. It's been fun. Thanks a lot. Thank you

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