COO of $680M MSP Shares Their Unique M&A Model, with Kelsey Randhawa

[00:00:00] Hey, before we get into this interview, my team and I, we're going to be in person at the Grocon 2024 event in St. Petersburg, Florida. It's December 3rd through the 5th. And if growth is your rock or your strategic objective, if sales and marketing is something you care about, then make sure you join us. And it's free. So it's a crazy good deal. You're not going to want to miss out on those conversations and discussions. Make sure you come by and say hello.

[00:00:40] Grocon, the industry's leading conference dedicated to one thing, and that's helping you grow. The real value for us here is actually putting an action plan together to achieve the goals that we're setting out for 2023.

[00:00:59] People will definitely take the time to invest into you and let you know, give you some ideas about how you can improve and get better in what you're doing. We're going to help you do one thing and that's achieve your dreams one step at a time.

[00:01:29] I think maybe my one piece of advice would be to be thinking about succession planning and how do you make your business resilient? Too many of the business owners I see, again, going back to earlier conversation, try to wear five hats and that's not sustainable.

[00:01:44] Another way to look at that is what opportunities are you not giving other people to rise and elevate and grow with the business that actually should enable you to achieve all of the aims you want to achieve, but to be able to do so in a faster time horizon.

[00:01:56] On this episode today, I'm joined by Kelsey Renhala, COO of Lyra Technology Group with over 70 MSPs in their holding company, which makes them one of the largest MSPs on the planet.

[00:02:14] Don't miss out on our conversation today.

[00:02:18] Kelsey, you're COO of Lyra Technologies and you were saying that's a family of brands.

[00:02:27] So that was interesting to me. Can you share a little bit about what that means?

[00:02:32] Yeah, I'd be happy to. So Lyra Technology Group is a family of companies or a family of brands.

[00:02:38] We have over 70 businesses across, I think now five different countries, US, Canada, Australia, New Zealand and United Kingdom.

[00:02:47] But why we call it a family of brands is unlike typical private equity backed strategies.

[00:02:53] We believe what got you to the point you are today is part of what makes you successful.

[00:02:57] And we want to make sure we maintain that legacy and create a permanent home for your business.

[00:03:01] So that means you keep your local brand strategy. You keep your technology stack.

[00:03:06] We're not forcing integration.

[00:03:07] What we're trying to do instead is create a network of some of the best companies and then really just try to pour gasoline on the fire of what's already working.

[00:03:17] So how do we connect you to benchmarking against our businesses to say what you do really well and where you have opportunities?

[00:03:23] How do we also deploy the best team members and the best talent to your businesses to help get you to the next level?

[00:03:30] And then how do we mine the brightest spots and what works in our businesses and give you access to those tools and the things that work in playbooks that enable your business to grow while still keeping its core identity and its people, its culture, all of that intact.

[00:03:43] And so I think that's very compelling for a lot of the founders and partners that we work with because they don't want to see their legacy go away.

[00:03:51] They want to see their business protected.

[00:03:52] And I think that's something we're really proud of.

[00:03:55] Yeah. So 70 MSPs.

[00:03:57] Yeah.

[00:03:57] Right. So can you give us some idea of revenue and headcount approximately?

[00:04:03] It varies. I would say probably our sweet spot.

[00:04:06] So we have we have on the smaller end businesses that are below five million revenue.

[00:04:10] We have some in the five to 10 and then we have some very large businesses that are more in the call it 20s, 30s, 40s and particularly large one that's that's close to 70 million revenue.

[00:04:21] But I would say our sweet spot of typically what we see when we're acquiring new companies is somewhere below the seven million dollar revenue threshold, which typically means anywhere from like 15 to 40 employees.

[00:04:34] And that's typically the sweet spot of where we see businesses come in.

[00:04:37] And then we grow from there.

[00:04:39] And what's the total revenue and headcount?

[00:04:42] For all of Lyra?

[00:04:43] I have to think off the top of my head.

[00:04:44] I think we are close to over 680 million revenue, which I think translates to roughly 3000 employees.

[00:04:52] Wow. That's a lot.

[00:04:54] And you're COO of all of that, if I understand.

[00:04:57] Correct.

[00:04:57] Yes. That seems like a lot to do.

[00:04:59] It is a lot to do, but also not much because we do try to keep the decisions down in the hands of the people who are closest to the customers.

[00:05:06] So we also have a regional structure and strategy where we've taken some of the best leaders of our businesses, CEOs, and elevated them into regional CEO roles where they oversee, call it six to 10 companies or so, working with them as a board lead.

[00:05:21] And they get to help share some of those best practices.

[00:05:24] And so that makes our job easier where we're focusing primarily on the M&A side.

[00:05:29] We're focusing on the benchmarking side, sharing the best practices.

[00:05:34] But again, the day-to-day decisions are down in the right hands where it really should be.

[00:05:38] So I want to unpack that because unusual, I think, the way you guys do this.

[00:05:44] And most people, I think, are definitely concerned about sweeping changes with private equity.

[00:05:51] But if I just try to understand the basic level, you're acquiring a company.

[00:05:55] And if the founder owner wants to stay and that's the right spot, if they don't become the regional CEO or whatever that is, then that might just be the case.

[00:06:05] So post-acquisition, you might still be running that company, that brand, that team.

[00:06:11] And we see a lot of that.

[00:06:13] So I say we see a couple different pathways that founders take.

[00:06:16] Some is they want to stay with the business and they stay and they grow with the business.

[00:06:19] We typically are also placing other talents such as a growth leader or a chief of staff, somebody who can grow with the business leader and also augment their skill set and help get the business to the next level.

[00:06:32] They might choose that they want to leave the organization, in which case that either means we might elevate someone internally or we might place our own talent there.

[00:06:40] The founder might want to go into more of a chairman position.

[00:06:43] So I think there's a lot of different pathways.

[00:06:45] Our CTO came from one of our MSPs, Cloud IT.

[00:06:48] Some of our regional CEOs came from running businesses.

[00:06:52] And so I think there's a lot of different pathways depending on what you're engaged in, how you can add value, where you want to add value.

[00:07:00] At the end of the day, what we care about are the outcomes and working with great people.

[00:07:03] That's really cool.

[00:07:05] I mean, it seems counterintuitive but also intuitive that you could stay.

[00:07:11] You could do the same thing.

[00:07:12] You don't necessarily have to know.

[00:07:14] You could be the chairman.

[00:07:15] You could leave entirely.

[00:07:17] You could be the regional CEO or some other role.

[00:07:20] But the fact that you could continue to do that and I can't tell you how many times people need a chief of staff or a growth leader.

[00:07:28] So that's amazing that you're also helping.

[00:07:29] But the opportunity to stay.

[00:07:33] And not only that but speaking to somebody that founded a business and ran an MSP, I tend to wrap my identity sometimes a little too tightly to this.

[00:07:44] So I can have an exit of some way of an exit without exiting this entire business.

[00:07:52] Like I don't have to shed my identity and my team because there's not only some identity wrapped up in there but you spend all your hours with this amazing team.

[00:08:02] And there's some folks I know that haven't just kind of done the walk away exit.

[00:08:06] And I think besides the identity, they struggle with, I miss the team.

[00:08:11] Like I spent all these waking hours with my team and now I've kind of walked away from that.

[00:08:16] And I think some people, they surprise themselves later when they're like, I miss this.

[00:08:21] So this seems like just an incredibly good, like maybe it's conventional but it seems unconventional way to approach things.

[00:08:29] I'd say I think it's conventional and unconventional.

[00:08:31] It's typically what you see from the aggregator strategies but I would say actually one of the best testaments to I think Lyra and what we're building is the fact that primarily we see owners who want to stay on.

[00:08:44] More recently, we're starting to see in the market some owners who want to leave.

[00:08:47] But in this past year, we've had two of the founders say, you know what, I actually really like this community and I want to stay on.

[00:08:53] And so they are staying on.

[00:08:54] And to me, that's such a wonderful testament to the teams that we have, the people that we have, that they still have the fire in their belly to want to grow, to want to stay and to want to be part of the community.

[00:09:04] As I think to your point of a lot of your identity can be wrapped up in the business.

[00:09:08] But also, you have to want to continue to grow the business.

[00:09:11] And you also want to have confidence that if you do choose to leave, that everything's not going to crumble.

[00:09:17] And most of the businesses we see, typically it's founder-led or principal-led sales.

[00:09:21] A lot of it is cult of personality.

[00:09:24] And this is almost like the founder wears five hats.

[00:09:26] And so what do you do to start unpacking that and give people the tools to be able to build scalable, resilient businesses that continue on the founder's legacy and are able to do so, whether or not that person stays, elevates, or decides to retire?

[00:09:39] Yeah, now you're amongst a whole bunch of peers that are in the same spot.

[00:09:43] So you're not alone.

[00:09:44] Peers who are like former competitors, now turned peers, who you're able to collaborate with, who you're able to benchmark against, and who are all solving the exact same types of issues and problems.

[00:09:56] Really interesting.

[00:09:57] What's one of the common challenges or misperceptions that MSP owners have now that you've seen so many go from running it themselves to joining, exiting, whatever role they fit into?

[00:10:13] There's a lot of different ways I could answer that.

[00:10:16] I would say maybe two of the biggest misconceptions I see are actually on the growth side.

[00:10:22] I see both founders as well as place talent over index to the ability of marketing to bring in new customers and then also wanting to jump immediately to hiring more junior members of sales to lead their teams.

[00:10:35] But they forget.

[00:10:37] They have executive presence.

[00:10:38] It is their magnetism.

[00:10:40] It is their connections.

[00:10:40] It is the years in which they have honed their craft that has enabled them to grow to the business.

[00:10:45] It is their business.

[00:10:45] Expecting a junior employee who you just put in the field to immediately be able to produce isn't going to drive results.

[00:10:52] And so the biggest, I would say, mind shift set that we have to help people through is let's invest in someone who's a little bit higher power, who's going to be a growth leader, who is going to focus on not only the tactics, but the strategy to get there and have ownership over both of those areas, be a member of the leadership team,

[00:11:12] who can then mentor and has much more time than a CEO to focus on developing more of that junior talent.

[00:11:19] But the biggest mistake I see is wanting to try to hire that junior talent, expecting them to thrive.

[00:11:24] Doesn't work out.

[00:11:25] Then we say, oh, it didn't work.

[00:11:27] Can't do that.

[00:11:27] Doesn't work.

[00:11:28] And then we just go back into the same cycle.

[00:11:30] I can totally relate to that.

[00:11:32] Maybe it's got something to do if you did bootstrap this.

[00:11:35] You're so used to having to do so little with so or do so much with so few resources.

[00:11:42] So I love the word used invest, right?

[00:11:44] Because it is an investment to make that more senior hire, but it's far more expensive to make the wrong hire.

[00:11:51] Yes.

[00:11:51] And I think it's that conversation that we're having with them around, OK, how can we get you comfortable?

[00:11:56] Here's the case studies we've seen where it's worked out really well.

[00:11:59] They're not going to be on an island.

[00:12:00] They're going to be part of a peer group of growth leaders.

[00:12:03] And here's some of the metrics you should be looking at or ways to evaluate their success.

[00:12:08] And we're going to help you figure out a way to try to do this that is not going to – it still will be an investment.

[00:12:13] You need some skin in the game for your business.

[00:12:15] It can't be all on us.

[00:12:16] It needs to be someone on you so that it's a meeting in the middle of we help make it a little bit less painful, but also you're bought in.

[00:12:23] And I think that's where I think we're able to shine is a lot on the talent development, the placement.

[00:12:28] We have our own internal HR talent team that's doing a lot of recruiting, not only for these executive roles, but also recruiting for frontline service desk roles, professional services.

[00:12:40] And I think what they're able to do is they're able to really focus on what does great look like and meet you where you're at for your business and your business's unique needs.

[00:12:47] Hey, guys. Today's episode is sponsored by Servocity.

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[00:13:26] How the heck did you end up here?

[00:13:28] Tell me about that.

[00:13:30] And more specifically, we were talking before this because it seems like you turned down private equity.

[00:13:39] You had some lonely story of the better question.

[00:13:41] What was your view before of private equity before you joined?

[00:13:44] Before I joined, it was very leery of private equity.

[00:13:48] My view is private equity was a threat in the background that took over companies, gutted them for spare parts,

[00:13:57] and left behind less value for the people and for the community than was otherwise created.

[00:14:04] So I had a lot of negative perceptions of private equity.

[00:14:09] As do many.

[00:14:10] As do many.

[00:14:11] As do many.

[00:14:11] So that's why I love that, yeah.

[00:14:12] And I came from business school.

[00:14:14] I had worked for a larger B2B business with the Leadership Management Development Program.

[00:14:19] I knew I wanted to go into a higher impact environment, was looking a lot at startups,

[00:14:24] was looking at financial institutions, but was very much not going to approach private equity.

[00:14:30] And then our CEO, Elliot Hyman, reached out to me on LinkedIn.

[00:14:34] He had worked at the same company as me previously.

[00:14:37] He also went to my same business school.

[00:14:38] And I said, okay, I'll entertain what conversation he's going to have.

[00:14:42] And I think he knew all of the right selling points.

[00:14:44] He said, that's not what we're doing here.

[00:14:46] It is a family of brands.

[00:14:47] We are about maintaining the legacy.

[00:14:49] It is about giving people the opportunities to make outsized impact in the business, bringing

[00:14:54] in new talent like yourself and partnering you with entrepreneurs and people in these businesses

[00:15:00] who have grown them.

[00:15:01] And that to me was really compelling.

[00:15:02] And ultimately it was why I decided that I wanted to join.

[00:15:05] And funnily enough, he didn't have the right fit for me at the time.

[00:15:09] And so we used to have a sister strategy.

[00:15:11] He introduced me to that sister strategy operating in the South.

[00:15:15] And I actually joined that CEO, Tim Burke, as his chief of staff working at Net Gain Technologies

[00:15:20] in Kentucky.

[00:15:21] Really got to cut my teeth in MSPs there, but also see the broader strategy and just fell

[00:15:26] in love with how dynamic the industry is and also the people we get to work with every

[00:15:30] day and the people I meet who are running these businesses, operating in these businesses.

[00:15:34] It's just a special place to be.

[00:15:36] That sounds like a real blessing that he didn't have that role and that you got to play that

[00:15:39] chief of staff role and see what it was like more, a little more on the front lines.

[00:15:45] But I think so many people miss the value.

[00:15:48] We get too wrapped up in technology and tech stack and all these other shiny, you know,

[00:15:55] knobs we can turn.

[00:15:56] So I want to just take a second and say, why a chief of staff for so many folks that probably

[00:16:03] need one that don't realize that?

[00:16:05] I think chief of staff is one of those roles that's so amorphous and you have no idea what

[00:16:08] it could mean.

[00:16:09] It can mean a lot of different things.

[00:16:11] But I thought a chief of staff role actually became very compelling to me.

[00:16:15] I had never heard of it.

[00:16:16] I actually remember interviewing for a director of operations role at a fintech startup and

[00:16:21] then being asked to interview for the chief of staff role by the CEO.

[00:16:24] Thinking that it was an admin secretarial role was very caught off guard.

[00:16:28] But that same week, one of my good friends and a professor happened to say, I think you'd

[00:16:32] be a good chief of staff candidate.

[00:16:34] You're very much a generalist.

[00:16:35] You've seen broad swath of the business.

[00:16:37] It's an opportunity to learn at the hands of someone who has done this job and been

[00:16:40] successful.

[00:16:41] And that was compelling to me.

[00:16:42] And so I said, OK, let's start looking into this more.

[00:16:45] And I think chief of staff can mean a lot of things.

[00:16:48] But I think in the fully realized version of a chief of staff is you're a strategic member

[00:16:52] of the leadership team.

[00:16:53] What I was really special about that role working with Tim Burke, who still he was he was

[00:16:59] my CEO, my principal.

[00:17:00] And now he's actually my board lead for Lyra.

[00:17:03] But what was really special about partnering with him is that he had done the role of CEO

[00:17:07] at an MSP for three years, learned a lot there.

[00:17:10] But we were really able to be partners for each other.

[00:17:12] So he wanted someone who would push him and coach him and observe dynamics that he couldn't

[00:17:17] see and wasn't privy to because it can be really lonely in the CEO suite.

[00:17:21] And I was looking for someone who was strong in all the areas I was weak and vice versa.

[00:17:25] And I think that's a credit to him for saying, how do I find someone who's very complimentary

[00:17:29] to my skill set to push me in different ways?

[00:17:31] And it was a healthy tension.

[00:17:33] He would have a perspective.

[00:17:34] I would have a different perspective.

[00:17:35] We would disagree.

[00:17:36] We would end up with either a better solution, his solution, my solution.

[00:17:40] But it was very much a give and take.

[00:17:41] And for me, that was what was really important is that I had to when I selected a principal

[00:17:45] to work with, I had to trust that we were different enough that we would see the world

[00:17:49] in different ways.

[00:17:49] But we would be happy to have some healthy conflict and healthy tension to discuss and

[00:17:55] debate ideas.

[00:17:55] And I think that's what I got out of it.

[00:17:57] And I think for him, it meant that I could go into other areas of the business where

[00:18:01] he could then invest his time in other areas, like focusing on growth.

[00:18:05] I could focus on process.

[00:18:07] And I think in some ways, chief of staff can just be a Swiss army knife.

[00:18:10] It's what you need.

[00:18:11] Can the person flex into that position?

[00:18:13] And so you want to be flexible, adaptable, nimble.

[00:18:15] But also while you're doing it, you're learning what you're really good at.

[00:18:18] You're learning what you love and ultimately making the businesses better.

[00:18:22] And then you mentioned you're learning it.

[00:18:25] As a CEO, am I learning it?

[00:18:27] Are you learning it as the chief of staff or yes?

[00:18:29] I think yes.

[00:18:30] I think if it's an ideal relationship, both sides should be learning.

[00:18:34] And so the chief of staff should be challenging the CEO to find blind spots and overcome certain

[00:18:41] ways of thinking and vice versa, because the CEO has really valuable perspective and experience.

[00:18:46] And I think that leads to the gut instincts of this is why we should do this.

[00:18:50] But I think you need to be able to have a relationship where the chief of staff can say, well, have

[00:18:55] you thought about it from this perspective?

[00:18:56] Or while I was in this role, like, I think this is what our shareholders are looking for.

[00:19:01] Or I think that a better way to approach this conversation with this person would get more

[00:19:06] buy-in from them is to approach it in this way.

[00:19:10] And so I think it should be a learning on both sides.

[00:19:12] I think that's the best fully realized relationship of a true chief of staff CEO position.

[00:19:17] But it does take time and investment, right?

[00:19:18] You have to build that trust.

[00:19:20] And you have to build that trust and get some reps together.

[00:19:24] But I think that's why it's such a personal decision.

[00:19:26] So both sides need to be very bought in.

[00:19:28] And I came went in very eyes wide on what Tim was looking for.

[00:19:32] He was very eyes wide open on what I was looking for.

[00:19:35] And we kind of talked about and we would regularly check in on, OK, are we achieving those objectives?

[00:19:39] I want to switch gears and go back for a moment to you mentioned the aggregators, which I suppose is probably the antithesis of your model.

[00:19:51] Tell me more about that.

[00:19:53] A lot of things you could say.

[00:19:54] I mean, technically, we are an aggregator, right?

[00:19:56] We buy lots of MSP brands.

[00:19:58] I think what's most distinct about our approach is we're not forcing integration.

[00:20:03] Yeah, that's like I think that's the at least mental model of the playbook is you're going to buy a bunch of companies and you're going to drive economies of scale because we're going to get better discounts on buying the software or maybe we'll have expertise around it or whatever that is.

[00:20:21] I'm curious, why is this model that you guys are executing different or you're better?

[00:20:27] I think we're I think different and better in that we can still get those scale economies, but they're slightly different.

[00:20:34] We can still get vendor procurement savings and we do.

[00:20:37] We negotiate with vendors.

[00:20:39] We have a Lyra MSA.

[00:20:40] We have preferred partners.

[00:20:42] But again, it has to be win-win and it can't just be top down.

[00:20:45] It has to have the buy-in of our team.

[00:20:46] So we can be a guide on which products and tools are effective, what our MSPs think about it, and we can still get them the benefits.

[00:20:53] But I think a lot of times people overweight the scale economies and the benefits you get.

[00:20:59] There's also a cost to integration and it can destroy value and it can be very time consuming.

[00:21:03] And there's a reason that the aggregator strategies that do integration have to staff people to work through those pain points.

[00:21:11] And I think our approach is more at the end of the day, we just need to have good data about our businesses to be able to help them inform where they might be weak or strong in some areas.

[00:21:20] You can do that without forcing integration.

[00:21:22] And in fact, if you do integrate, it also probably means that you might need to actually shift your end customer.

[00:21:29] And for our model, I think the reason that it works and it's different is that we say we're going to continue to work with the end customers you're working with.

[00:21:36] We're just going to give you access to the knowledge and resources to scale and do what you're doing at a higher level rather than saying we're going to shift all of you to the same tech stack, same customer base.

[00:21:47] And I think that's the other approach.

[00:21:49] And I think both can work.

[00:21:50] And I think that's the interesting thing is we see both models work.

[00:21:53] I just find that I think the people in our businesses would say the same.

[00:21:57] And one thing we're really proud of is we do an employee net promoter score survey and we surveyed founders of our businesses and we got a score of 100 out of 100 who would say they would promote the business.

[00:22:06] And I think that speaks for itself.

[00:22:07] And so it's just a very different model of what you're trying to solve for.

[00:22:10] But I think you can solve problems in many ways.

[00:22:13] I personally believe in the way that we're solving a problem.

[00:22:15] Yeah, I would hope you do.

[00:22:19] I want to boil that down a little bit more, another level or layer, maybe, you know, first principles.

[00:22:25] It sounds like what you're saying, and I don't want to put words in your mouth because, but it sounds like you're saying something akin to aligning the people and helping the people and coaching the people and introducing metrics and working with people is fundamentally more important than your tech stack.

[00:22:48] Because you don't have to integrate.

[00:22:50] Right.

[00:22:50] So I don't want to put words in your mouth, but I'm kind of curious because it as I just reflect on what you're telling me, it's like, huh, it sounds like it's more important to help the people.

[00:22:58] And they already have a great business to figure out where they are great and figure out when they need help.

[00:23:01] But at the end of the day, you've got an integrator who's if they had 70 MSBs that would try to bolt it all into the same stack.

[00:23:12] And that can have, I suppose, advantages.

[00:23:15] But, I mean, I know I talk to MSPs all the time.

[00:23:18] They're thinking about switching one arm to another, this or that.

[00:23:20] And you're like, it's got to have a really strong payback and ROI to do such a disruptive thing.

[00:23:27] Why would that be any different for what you're doing?

[00:23:31] So I'm kind of curious.

[00:23:32] I want to hear from you, not me.

[00:23:34] But what do you think the essence of that is?

[00:23:38] So there's two things I would say.

[00:23:39] The first is, in a previous life, I worked as a software engineer and also worked on leading a large migration for an HR system, payroll system.

[00:23:48] And I think my firm belief in learnings from that was process and good inputs lead to good outputs.

[00:23:56] The tool is just a tool.

[00:23:57] And a tool can be an opportunity to update your processes.

[00:24:01] It can be an opportunity to clean your data.

[00:24:03] And it can be an opportunity to find ways to get more out of the tool.

[00:24:07] But if you have bad processes, if you don't have the right team or the right people and you don't have the right inputs, it doesn't matter what tool you're going to use.

[00:24:16] You're not actually leveraging the full power of the tool.

[00:24:18] And so that's the first thing I would say.

[00:24:20] The second thing I would say, and this is probably the biggest question we get, is so what do you do to drive value?

[00:24:24] And I would say it's not just people.

[00:24:25] I think people is one of the fundamental pillars under which we are able to drive value for our businesses.

[00:24:30] But I think people aren't a strategy in and of themselves.

[00:24:33] So part of it is get the right people.

[00:24:35] But the other piece is how do we focus on pieces around productivity?

[00:24:39] How do we focus on pieces around volume?

[00:24:42] How do we focus on process and give them access to those tools?

[00:24:47] Because with the right people, how do you shorten the time frame for them to be successful?

[00:24:51] And so that's not about the tools.

[00:24:53] That's about, or I'll call it the infrastructure that they're using.

[00:24:56] That's about do I have the right data and insights?

[00:25:00] Do I understand common pitfalls that other people in my position are running into?

[00:25:05] Do I have a playbook on how to approach hiring or how to approach pricing?

[00:25:12] Can I go ask what a best-in-class VCIO or customer success organization looks like?

[00:25:18] Well, here's five within our portfolio.

[00:25:19] And here's different ways that they're approaching the problem.

[00:25:22] That I think is much more interesting and compelling than just saying, well, if you use this tool, you'll be successful.

[00:25:26] I don't think that's true.

[00:25:27] I think it takes people in process to be able to use the tool effectively.

[00:25:30] If you're missing the people in process, the tool won't save you.

[00:25:34] No.

[00:25:35] It'll just be a lot of money out the door, a lot of pain, and not necessarily for the right gain.

[00:25:41] Yeah, I think if half the market listened to that, it would be a lot less vendor churn from point A to point B to point C.

[00:25:49] I think the hard part, though, is like, right, we work in technology.

[00:25:52] And new technology, it's fun.

[00:25:53] It's exciting.

[00:25:54] It's sort of sexy.

[00:25:55] It's the next new thing.

[00:25:56] And it'll solve my ills and my problems.

[00:25:58] And that might be true.

[00:25:59] There are some cases where that might be true that you need a different tool.

[00:26:02] But I think you have to really ask yourself, what's the motivation for the change?

[00:26:06] What's not working?

[00:26:07] What can I control within my domain?

[00:26:10] And instead of just waiting for the new tool, how can I start to act the way today that I want to operate in the future?

[00:26:16] So I want to go back to what you said earlier because I'm curious.

[00:26:20] How do you create that value?

[00:26:22] Because at least from my perspective, not being an M&A expert, I kind of see it's like, well, we're going to buy all these companies and we're going to integrate them.

[00:26:32] And then after all that pain and time, then maybe there's some commonalities where we all understand the same system.

[00:26:40] Or some other things.

[00:26:41] And maybe there's some savings to be realized or some increased capabilities for the customer or what have you.

[00:26:47] And I kind of see that.

[00:26:49] And if you're, it's probably not the wrong way of buying them and holding them, for lack of a better way of saying it.

[00:26:57] You're allowing them to operate the way they are, which is, I think, beautiful.

[00:27:01] But does that mean value is not created in the first year or shorter term?

[00:27:05] And is this really a long-term play because of that?

[00:27:09] Or am I interpreting that kind of wrong?

[00:27:12] It's a great question.

[00:27:12] So we are a long-term hold strategy.

[00:27:14] So we invest in our, we're backed by Evergreen Services Group.

[00:27:18] Their whole mission is how do we create the best home for businesses and a permanent home for your business?

[00:27:22] But what that means is it's not just the long-term play.

[00:27:25] It is.

[00:27:25] And I think we have the benefit of looking to the long-term.

[00:27:28] But we also still have to drive short-term results.

[00:27:30] And so my answer is do we not create as much value in the first year?

[00:27:34] Absolutely not.

[00:27:35] I think we create a lot of value the first year because we deeply understand the businesses we partner with.

[00:27:40] We've seen so many of these at this point in time that we're pretty effectively able to look at them and say,

[00:27:46] these are a few opportunities that we see.

[00:27:48] Then you have a motivated leader who can go from that and say, okay, I'm going to go work on fixing these things.

[00:27:53] Now, what are some tools that you have available to me that will help me be able to do that more effectively and do that faster?

[00:27:59] So we create a lot of value in year one, but then we also continue to add a lot of value to these companies.

[00:28:04] And I think we grew about 14% top line last year, 15% bottom line last year.

[00:28:10] We're on pace to do roughly the same on a bigger base of business, which I think is a pretty powerful testament to our leaders.

[00:28:16] And so it can work.

[00:28:17] What it looks like looks very different.

[00:28:19] But still, I think the way you grow a business is, sure, you get the volume discounts, but you get the right people in there.

[00:28:25] But we also have a team of analysts partnering with our businesses, a board lead and our regional CEOs who are able to go pretty deep

[00:28:32] and understand each of the businesses' unique reality and then get them access to whether it's a people, a tool, a peer group,

[00:28:40] benchmarking data that helps them have really just the right gauges on the plane.

[00:28:44] So there's so many things you could be doing.

[00:28:48] Why is this the time you want to be doing this?

[00:28:51] I think it's a really exciting time in Lyra's history.

[00:28:54] So we used to have three different regional MSP strategies.

[00:28:57] I actually came from one of those strategies and we merged into a single strategy with Lyra.

[00:29:01] And it makes a lot of sense, but I think it's so exciting.

[00:29:04] We, to our knowledge, are the largest MSP in the world with as many businesses as we have.

[00:29:08] We're building something new and novel.

[00:29:10] And I think we're building something that our teams are inspired by and that I think can have a positive impact on our leaders,

[00:29:18] their employees, the end client of our businesses.

[00:29:21] And so I think right now is a super exciting time to be at Lyra or to be doing this work

[00:29:26] because we're trying to solve problems we've never solved before.

[00:29:29] And the job changes every year.

[00:29:30] The job changes for our CEOs.

[00:29:32] It changes for our regional CEOs.

[00:29:34] But I think that's what makes it so exciting and fun is finding the new problems,

[00:29:38] finding the new opportunities, and then working to come up with solutions.

[00:29:41] Do you view kind of the industry challenges as something that the individual CEOs of the 7D businesses and growing,

[00:29:53] that they need to kind of grapple with and solve individually?

[00:29:58] Or that your corporate team needs to solve for lack of a way of saying it?

[00:30:05] So if they're concerned about cybersecurity or, you know, probably a little less about M&A now that they're part of you,

[00:30:12] but whatever the, you know, AI is going to take jobs or AI is going to create opportunity,

[00:30:17] like, you know, there's a lot of trends and a lot of opportunity, but there's also a lot of uncertainty.

[00:30:22] So I'm curious, do you see, is that something that you guys try to take a deeper look at and say,

[00:30:29] hey, we've, maybe you don't know all the answers, but we've spent some time and effort into this,

[00:30:36] and here's where we stand or where we think?

[00:30:38] Or do you kind of leave that up because they might come out with different answers to the individual companies?

[00:30:44] I'm going to say it's a both.

[00:30:46] So it's a yes and of we need to have the buy-in from, and we want the ideas to come from the ground up.

[00:30:53] A way to think about Lyra is with 70 companies, it's almost like many think tanks operating, trialing idea,

[00:30:59] and having a battle of the best ideas and what works bubbles up.

[00:31:02] And so I want people to be passionate about automation, how they can leverage it in their business,

[00:31:08] and to be trying different things.

[00:31:10] Then I also want us to be looking at the market to say, what are the trends?

[00:31:14] What are we seeing?

[00:31:15] What can we share back with our businesses that we've identified as a pain point

[00:31:19] or something to consider of what are trends around non-recurring revenue products and sales,

[00:31:26] and where is that market going?

[00:31:27] And can we find some businesses where we're seeing success there

[00:31:30] and we're seeing them grow rather than contract?

[00:31:32] Can we look at where the market's going in automation?

[00:31:35] And I'll give a tactical example.

[00:31:37] A lot of our businesses are trying to experiment with automation, AI, whatever you want to call it,

[00:31:43] and have been.

[00:31:44] They've been doing things like using automate.

[00:31:46] They've been automating within their PSAs.

[00:31:49] They partner with different vendors to automate workflows.

[00:31:52] But I would say where we can help, though, is say, okay, are you a good candidate for this?

[00:31:57] And is this actually a panacea that's going to fix all your issues?

[00:32:01] Or who actually really benefits from this?

[00:32:03] Because I think too often, a singular business, it's actually really hard to get the ROI there.

[00:32:07] You have to staff someone full-time or staff several people full-time in order to build those workflows.

[00:32:12] It becomes a little bit more compelling if you're doing that on a broader scale.

[00:32:15] And so we actually have now a consortium of 15 or so companies who, as part of the automation council, our CTO runs,

[00:32:22] have been talking together around what are you trying to automate?

[00:32:25] Can we share some of the process-y flows and code that you're using to do that?

[00:32:29] And what are the right use cases?

[00:32:31] And so I think that's a combination of seeing there's a need bubbling up from the bottom.

[00:32:35] There's people trialing things that work.

[00:32:37] And then we can also come in and say, guys, just signing up for, again, back to tools.

[00:32:42] Signing up for the tools is not going to fix your ills.

[00:32:44] Like, are you a good candidate for this?

[00:32:45] And can we figure this out with a smaller group of people before saying, like, let's cascade this as an idea that you should run after?

[00:32:52] We can be more the other challenging voice or voice of, have you considered this?

[00:32:59] So I love that it's bubbling up from the top and that, you know, you can provide those resources to help because whether it's automation,

[00:33:08] whether it's cybersecurity, even some of the largest are struggling to get their arms around what do we do about it.

[00:33:15] And even if things can't be done, maybe, you know, it doesn't warrant a full-time person.

[00:33:19] And I'm curious with being perhaps the largest MSP, what do you see in the next 5, 10 years as opportunities and maybe threats?

[00:33:33] But I'm kind of curious, what do you see and what are you looking to pay really close attention to?

[00:33:40] I think some of the things we're looking at, we're definitely seeing as opportunities.

[00:33:44] And I think also threats is that I think a lot of, yes, automation is a buzzword right now.

[00:33:48] AI is a buzzword.

[00:33:49] But I think many, much of that, it's not necessarily marketable yet.

[00:33:53] And we're not necessarily seeing the demand from the end clients.

[00:33:56] But I think you need to start getting your arms around where the market's going to see how you might leverage it.

[00:34:00] Because I think that is a trend that is going to continue.

[00:34:03] And so you need to figure out how to leverage it.

[00:34:06] But I think the interesting piece is not just looking at it from a service perspective of what can be automated,

[00:34:11] but how can you actually start focusing on top-line growth opportunities?

[00:34:16] Or I'll call it even more customer service, not just the fast resolution, the operations back end,

[00:34:22] but how am I actually able to speak more in the language of my customers, make it a more seamless experience for them?

[00:34:27] I think we're going to continue to see, and we already see it, of rising demands and expectations for how things work

[00:34:33] and how people interact with the world.

[00:34:35] And so I think you're going to start seeing more and more demand for voice interaction.

[00:34:41] You're going to see, rather than typing, you're going to see more and more customers wanting to work in their native apps

[00:34:45] and not really care about what that looks like from the front.

[00:34:49] I think the benefit of working in our industry, and particularly with SMBs,

[00:34:54] is we kind of follow the curve of the enterprise, mid-enterprise market.

[00:34:58] And so we can watch where they're going and see what those trends are

[00:35:01] and start trying them on for size and digesting what makes sense to bring to our businesses.

[00:35:05] So I think that's one area.

[00:35:07] Obviously, cybersecurity, very top of mind.

[00:35:09] It will continue to be high demand.

[00:35:11] I think the big question is, what do you do to actually make your businesses more secure

[00:35:15] and make your clients more secure in a way that mitigates your risk, mitigates their risk,

[00:35:20] just knowing that threat actors are getting more and more sophisticated every day.

[00:35:25] And then I think you're really just getting what I'm keeping my eye on is

[00:35:31] you really have to think about how you're a strategic technology partner to your businesses

[00:35:35] because technology continues to evolve.

[00:35:37] I think that's why there will always be a demand,

[00:35:39] but it needs to go beyond just the base, captain obvious, refresh this, do that,

[00:35:45] to actually be a partner to think about how do you add value to your customers' organizations

[00:35:51] in a strategic way that is not just a refresh cycle,

[00:35:54] but is the true technology partner who is planning out the next few years,

[00:36:01] next few quarters, next few years with your clients.

[00:36:03] And I think that demand won't go away.

[00:36:05] I think, if anything, that will just continue to accelerate.

[00:36:08] And that's going to be the businesses that rise to the top are the ones who are really good

[00:36:12] at actually delivering true customer or client value.

[00:36:16] Do you think there'll be a change?

[00:36:18] For example, a lot of people point to like,

[00:36:21] to if I really want to understand and partner,

[00:36:24] then maybe I need to have a VC.

[00:36:27] So that sits down with the customer kind of at a board level.

[00:36:31] Do you think that will become more prevalent?

[00:36:32] Do you think that'll become more cost effective so that it reaches further down the SMB?

[00:36:36] Because if you get smaller into the SMB,

[00:36:39] VC so is a little harder to digest from a cost perspective.

[00:36:44] Just like, you know, you have to reach a certain size before you even get the,

[00:36:47] you don't have a full-time CFO,

[00:36:48] but you don't even have a,

[00:36:50] you're not even ready for the fractional CFO when you're small enough on the SMB scale.

[00:36:54] So I'm curious if you see, like, is the VC so the current state of the art there?

[00:37:01] If not, do you see it something else?

[00:37:02] Or do you see that becoming maybe more common or even cost effective?

[00:37:09] I haven't thought about the cost effective piece of it.

[00:37:11] What I will say is I think you have a lot of businesses that claim they have a VCIO or VC so that do not.

[00:37:16] And I think you have to start somewhere.

[00:37:18] And so it is fine to start somewhere with what you are able to deliver to your customers,

[00:37:24] but like call it what it is and be very clear on what you're going to deliver to them.

[00:37:28] I think it could become more cost effective if you're getting fractional resources and partnering with other businesses.

[00:37:35] But my hunch is that you need to invest in ways in which you create leaders like that

[00:37:41] and find compelling ways for them to stay with your business.

[00:37:44] Because when I think about the larger businesses who are really good at that,

[00:37:47] there are people who understand the technology,

[00:37:50] but they are exceptional at listening and understanding the customer needs

[00:37:55] and having an executive conversation.

[00:37:57] And I think that's such a hard skill to train.

[00:37:59] It's a hard skill to find.

[00:38:00] But when I look at the businesses who are really good at it,

[00:38:05] it's typically either it's often a person who comes from the technical side

[00:38:08] who has gotten the training, the coaching, the opportunities to evolve into that role.

[00:38:14] Or in some rare cases, someone who comes from the sales side,

[00:38:17] but has gotten very close to the technology and tools

[00:38:20] and is very much in lockstep with how operations works.

[00:38:23] So that, again, they're able to have that executive conversation

[00:38:26] while also considering the technology needs.

[00:38:29] And so I think you want to create more people like that and train them.

[00:38:34] And hopefully they stay with your business.

[00:38:35] But even if they don't stay,

[00:38:37] if you can get really good at training and developing that type of background,

[00:38:41] your business becomes a really compelling place for someone to start their career.

[00:38:44] And maybe they stay.

[00:38:45] And that's wonderful.

[00:38:46] And they're going to grow with your business.

[00:38:47] And maybe they go on.

[00:38:48] But now they're part of an alumni network

[00:38:50] that pulls in additional people to your business.

[00:38:52] Is there one piece of advice that you would leave for any MSP owner

[00:38:58] to be paying attention to or to be developing right now?

[00:39:03] I think maybe my one piece of advice would be to be thinking about succession planning

[00:39:09] and how do you make your business resilient.

[00:39:11] And by that I mean how are you making sure that you invest in the layer underneath you

[00:39:16] and invest in building competencies in areas where you don't have competencies?

[00:39:22] Because I think too many of the business owners I see,

[00:39:25] again, going back to earlier conversation, try to wear five hats.

[00:39:28] And that's not sustainable.

[00:39:30] But another way to look at that is what opportunities are you not giving other people

[00:39:35] to rise and elevate and grow with the business that actually should enable you

[00:39:39] to achieve all of the aims you want to achieve,

[00:39:42] but to be able to do so in a faster time horizon.

[00:39:45] And so be looking at what is currently on your plate

[00:39:48] and how could you get it off your plate in the future?

[00:39:50] And if you're not able to get it off your plate, why is that?

[00:39:53] And what are some tactical steps you can take today

[00:39:55] so that you have a business of leaders,

[00:39:58] a business of people who are thinking about the same problems

[00:40:02] and thinking about the world in a similar way to you?

[00:40:05] Amazing. I love that advice, Kelsey.

[00:40:07] For folks that are listening, if they would like to connect,

[00:40:11] learn more, get in touch in any way, how would they find you online?

[00:40:15] They could go either to our LinkedIn page, Lyra Technology Group.

[00:40:18] They could go to our website, lyratechgroup.com,

[00:40:22] and they can reach out to our head of marketing, Jay.

[00:40:25] I'll give his contact information to you, our head of growth, or myself.

[00:40:29] And we're always happy to chat.

[00:40:30] Awesome.

[00:40:31] Well, Kelsey, I appreciate you making time to speak with me

[00:40:34] during the Build IT Live event.

[00:40:36] I know it's a busy schedule, and thank you for being on MSP Mindset.

[00:40:39] Thank you for hosting. This was wonderful.

[00:40:41] Thank you.