Two Major Challenges Facing MSPs - What do I do...

[00:00:00] and Master Opportunity for managed service providers, and it is billions of dollars in size,

[00:00:05] and it's just one of these recommendations that let's just make sure that we're in time for that opportunity.

[00:00:13] And we're not giving up other opportunity in our own territory by getting too fast too quick.

[00:00:21] And so that's the rule when you think about gender to the I.

[00:00:25] Hey guys, thank you for being on MSP mindset on your host Damian Stevens and I'm really

[00:00:34] excited to be talking to Jay McBane today. He was channel influence of the year,

[00:00:41] worked at IBM as a futurist in help to evangelize deep blue which was the first

[00:00:48] to be the world brand master at chess which evolved into the Jeopardy champion Watson so before

[00:00:55] we, you know, the AI hype was crazy, was at IBM as a futurist, evangelizing this sort of things

[00:01:04] and moved to the US with Lenovo and then gave up corporate life to become an entrepreneur

[00:01:10] and focus on channel eyes which was the first indirect sales platform to increase designing

[00:01:15] increased channel revenue. Jay is now the chief analyst for global channels at Canalis. The world's

[00:01:22] leading analyst firm with a distinct focus on channel's partnership alliance and ecosystem. So

[00:01:28] lot of big words from my perspective, the reason that we're talking or reason I'm so excited is

[00:01:34] he's been in the channel, he's been in the trenches at auto task and all sorts of things he's been

[00:01:41] on both sides of it and it's been his days appearing into the future. So I thought what better

[00:01:49] person to ask than Jay. Thanks so much for having me and I don't think anyone has ever read my

[00:01:54] bio before so that was the, I was talking through memory lane there so glad to be here. Yeah yeah

[00:02:00] it's a long way. It's like you know it's funny you asked the people help the show prep at

[00:02:05] almost like German down a little bit but you know leaving some of the fun stuff. Yeah so

[00:02:11] just since I was talking about it right the, I don't know at least I remember

[00:02:17] certainly the big moment of Watson beating you know becoming a jeopardy. I kind of remember the

[00:02:25] chest thing with deep blue but what just to help her meant me know now that we're in

[00:02:30] 2024 and all this journey I, I stuff when, when was this? Brock's not. Yeah this was 30 years ago,

[00:02:38] almost to the day. I joined the IBM 30 years ago in 20 days. Wow and you know young right out of

[00:02:46] college kind of that intern you know excitable always you know love technology and you know from

[00:02:53] very, very early age was programming my own you know computers and my mom was a computer teacher so

[00:02:59] in the late 70s she's lug home an apple too for me to play with and program on so that came

[00:03:06] from early age so when IBM was looking around the office and said hey you know we're doing all these

[00:03:11] cool things and it wasn't just AI at the time they had just invented what was called the

[00:03:16] personal area network where you could shake somebody's hand and in the electricity that runs through

[00:03:22] your body and if you've ever sparked yourself you know that. Yeah you could experience the business

[00:03:27] card in one handshake you look at a palm pilot in your back pocket all the information got transferred

[00:03:34] wirelessly from just shaking somebody's hand this is in the mid 90s it's crazy and then the biggest

[00:03:40] news bigger than AI at the time was that some IBM fellows along with Harvard and MIT and Oxford

[00:03:48] in the UK a bunch of the smartest people in the world got together and studied teleportation just like

[00:03:54] Star Trek but beam me up Scotty teleportation in an 8,000 page report came back and said it's possible

[00:04:03] so they were looking around the office and said hey you know we need somebody on this TV show we

[00:04:08] need somebody to go to universities and go talk to kids at schools and governments and go talk

[00:04:14] to business audiences and I was the first to put up my hand just a little spiky here you know

[00:04:21] kid right out of college but boy were things like that but the big news you know coming out the next

[00:04:27] couple of years it was 1996 1997 getting ready to play Gary Casparov at chess but this wasn't

[00:04:35] really AI this was not singularity this was not what we're watching today around generative AI

[00:04:41] this was brute force compute and so game of chess and the complexity in chess is in and can go back

[00:04:50] to a mathematical problem and so to solve the game of chess and what makes a grand master is that

[00:04:57] they can look ahead on average three moves and Gary Casparov could see further ahead moved-wise than anyone else

[00:05:05] those of us who are just amateurs you know we might be able to see one move ahead if we could see a

[00:05:10] bit more than that we would win tournaments but the grandmaster level is just completely off the charts

[00:05:16] in terms of the ability and the brain wiring to be able to do that at that scale but we figured out

[00:05:23] the game of chess you know involves openings and there's books and volumes written about every opening

[00:05:29] ever made by every grandmaster going back a thousand years so the idea was if you could get past we didn't

[00:05:36] have the computational power to play the game of chess from the opening moves backwards the time

[00:05:44] you're a lot at per move only gives you enough time so once you get past that standard opening

[00:05:49] we now have the ability to process the entire game every move played forward and backwards

[00:05:57] and then back to the trillions of permutations and then choosing the next best move every single time

[00:06:05] you would win the game every single time I mean against a normal player but even a grandmaster

[00:06:10] if you could play every move ahead not just three moves ahead it through brute force you could beat

[00:06:16] a grandmaster and that was the story of deep blue it was a it was kind of a representation or

[00:06:23] celebration of where the IBM mainframe had got to at that point with all the storage memory compute

[00:06:32] networking technologies that were at the time we now have that ability to process that much

[00:06:38] and show it in this public environment. So this is what was coming for.

[00:06:48] Yeah so maintaining the futurism through AI it was like okay that wasn't AI that was showing how

[00:06:56] fast a supercomputer could run and then push it towards a particular set of objectives on the game of chess

[00:07:05] so when the jeopardy opportunity came along and this was like 15 years later but for the next decade

[00:07:11] IBM moved on from brute force which was kind of a deep blue technology into Watson

[00:07:17] and jeopardy you know beating Ken Jennings and beating the three big you know biggest players

[00:07:22] of jeopardy at the time wasn't a brute force even though there was some brute force in there

[00:07:28] it was actually a general to the AI problem. Alex Trebek asks you a question and it presents

[00:07:36] two computing challenges. One is that you quickly within milliseconds have to respond and click a

[00:07:43] button whether you have the confidence that you have know the right answer given another three or four

[00:07:49] seconds to go back into your gray matter and everything else and get those synapses going back

[00:07:55] to fetch that answer but for computer it's the same thing it's when you do a Google search.

[00:08:01] I don't know if they still do it but they used to show the actual milliseconds that it would

[00:08:05] take to search and then how many were false and so the initial before you press the button part of

[00:08:13] that was am I getting enough quality back links in that Google search type of algorithm knowing

[00:08:21] that if I got three or four more seconds I could go read the first 20 30 40 50 or 100 results.

[00:08:28] Without reading the top 100 results do I think I have a point nine confidence

[00:08:33] that if given that time I could come up with the right answer nine times out of 10 and that

[00:08:38] was the formula of beating jeopardy and so the answer you know the computer could do that and it could

[00:08:43] make a good enough probability statement in the time it took to press the the button and then

[00:08:51] in the time that Alex you know gave you to reframe it as a question you're going through and

[00:08:58] reading the internet cover to cover actually frame up that proper question and so nine times

[00:09:04] and it ended up becoming more times than nine out of ten it was a better result than that and that

[00:09:09] was enough to beat the best human at a gain that required gender to AI you know context it

[00:09:18] involved language it involved you know communication the ability to frame it as a question

[00:09:24] all these things had to come together and that was a long time ago like we're talking over a decade

[00:09:28] ago that that happened 13 years ago that that happened yeah it's an eternity in in that computer

[00:09:33] so you know you know the Googles of the world and open AI and all the other companies going all in

[00:09:40] are rethinking this entire approach to where we're talking singularity now now we're talking

[00:09:47] about replacing humans and and keep tasks and you know you have people saying 44% of us

[00:09:54] and now be replaced and the exponential curve this is on is now become you know one of those

[00:10:03] things that people are writing letters to governments open letters to governments and you know

[00:10:07] the the Davos conference last week was absolutely the richest most powerful people in the world

[00:10:12] 99% of it was on Gen AI so it's become the topic of the day yeah and so that that screams

[00:10:19] it really well I feel like Jay so what if you're listening in your MSP like if we have a lost

[00:10:23] you yet like here what what I want to get into and I want to ask you about Jay is there's so much

[00:10:28] going on right and before we even get into Gen AI we're I would say the a lot of MSPs we're still

[00:10:37] thinking on prem or we're in some hybrid of on prem and cloud and trying to figure out my role

[00:10:43] as I've given up the the physical infrastructure and then you have how do I do

[00:10:49] the main services in cloud how do I do main services in SAS which is obviously a little bit

[00:10:54] different giving up perhaps another layer I would say most of them is piece of talk to I have no

[00:11:00] idea what to what to do with AI you know I don't know what to do with it my own business I don't know

[00:11:06] how to advise clients protect them secure them advise them anything and have some ideas and

[00:11:13] tinkering it in a not taking away from any you know all of them are playing with whatever GPT or

[00:11:19] barred or whatever latest release but you know it's changing much faster than it seems like the

[00:11:27] average human can change or perhaps comprehend and then I wanted to kind of position this with

[00:11:36] I've talked to so many of MSPs that for the first time that I have been working in the MSPs

[00:11:43] which has been a couple decades talent has become the chief issue you know used to be sales

[00:11:49] I gotta get more sales and now get more talent and now it's like I've got sales I just don't

[00:11:53] don't have the talent um so in the reason I want to position that is right we keep having a

[00:12:00] more complex world to deal with as an MSP and anybody in the channel and then we need perhaps

[00:12:07] people to be more functional and multiple domains and then we hear 44% can be replaced so you know

[00:12:17] I'm gonna ask some more specifics but like you know what's your take on that?

[00:12:22] Yeah I think you asked four questions there so I'll kind of take them in order

[00:12:26] you know this whole point of on premise to cloud is obviously a huge opportunity and obviously

[00:12:33] the cloud side of the equation the infrastructure the SaaS everything else has been growing fast much faster than

[00:12:38] yet so figuring out hybrid strategies and figuring out how to make things work but there's a

[00:12:43] gender that AI story there as well 85% of the world's data sits on premises and I spoke at Google

[00:12:51] next I spoke at Microsoft's Inspire I spoke at AWS reinvent the CEO is of all the major

[00:12:57] trillion dollar value companies are very aware and they're very much supporting the fact that these

[00:13:03] data sets and the backups and everything around them are not going to be forklifted

[00:13:09] into the public cloud public clouds are already full they're already consuming too much power

[00:13:15] for many utility companies they're already consuming too much fresh water to the point where we have

[00:13:20] a couple of countries in Latin America now fighting these companies for fresh water for their citizens

[00:13:26] so no there's not room to fork lift what's at the edge back into these language models that

[00:13:32] sit in the public cloud so a lot of the opportunity around gender to AI is going to be at the edge

[00:13:37] where MSPs and other system integrators and bars digital agencies solution providers of all types

[00:13:44] is about 20 different kinds of companies that are going to succeed in gendered AI at the edge

[00:13:50] and you know for those speeches we wrote a really detailed report showing 158 billion dollars

[00:13:57] in services around the world by 2028 it's a 59.3% growth rate compounded year after year after year

[00:14:05] so it's one of those things it's a fastest growth rates across almost every category of software

[00:14:11] hardware and services so can't be ignored but the summary of the report is that MSPs should not get

[00:14:18] to excited either we already know that about a third of MSPs are pretty skeptical and are taking away

[00:14:25] approach a third on top of that are skeptical and kind of dabbling and a third of them are pretty

[00:14:31] excited so there's some general consensus that you know we've been burned by IoT we've been burned

[00:14:38] by the metaverse last year and every time there's one of these new VR AR I don't get on in front

[00:14:45] of it and get popped with the bubble all right so we'll take a very mature we'll take a very stage

[00:14:52] to approach before I go line up and get everybody certified and build competencies and and find out

[00:14:58] so this is going to play out over the next five years but I'll tell you right now you know it's not

[00:15:04] companies building out huge large language models with the two name and stuff people are in

[00:15:09] exploration mode which means consulting there's very little design and architecture but that'll

[00:15:15] probably be coming later this year but right now if you don't really run a consulting business you're

[00:15:21] not in the GSI RSI regional system integrators you're not competing with Accenture they're the ones

[00:15:28] that are in Pharma and banking insurance automotive manufacturing trying to rethink what that

[00:15:34] industry might look like when we achieve singularity or when this gender to AI starts taking over

[00:15:41] all the tasks and stuff like that so they're trying to think with those companies how to change

[00:15:46] the world and obviously profit and benefit their shareholders but there's nothing to do where

[00:15:53] we're not rolling up our sleeves we're not installing new gear we're not putting new instances and

[00:15:58] we're not securing that we're not building backup disaster recovery strategies around it you

[00:16:03] gotta understand this is going to be a roll-up and while there's huge opportunity we end up

[00:16:08] have to understand where the opportunity is in our region in front of our types of customers

[00:16:13] in their industries and their size and scale and the buyer types that we serve and 2024 you'd be

[00:16:19] better off focusing on security you'd be better off focusing on you know backup and disaster

[00:16:24] recovery you're better off focusing on growing in those areas that are more near-term

[00:16:30] and then working as a team you know the average larger customer that's looking at gender

[00:16:35] AI right now has seven partners they trust and it's something there'll be ready for us to go

[00:16:41] think about the compute and where that happens and the networking in between these large language

[00:16:46] models back over to the edge where the data is and when the work actually gets going that's

[00:16:51] when those consultants you know don't know what they're doing at that point

[00:16:56] no they're cloud on whiteboards they're not you know you know

[00:17:00] they did those cloud there is a massive opportunity for managed service providers

[00:17:05] and it is you know billions of dollars in size and it's just one of these you know recommendations

[00:17:10] that you know let's just make sure that we're in time for that opportunity and we're not

[00:17:16] given up other opportunity in our own territory by getting too fast too quick yeah

[00:17:24] and so that's the that's the rule when you think about gender to AI you also talked about

[00:17:29] no talent it did but no I before you go there I've won one quick thing to clarify so

[00:17:35] you said 59% compound annual growth rate what that's the growth rate of services

[00:17:47] okay wrapped around uh gender to AI so okay our firm analysis Latin for channels

[00:17:54] so all we think about is MSPs and we think about it for partner opportunity outwards

[00:17:59] well such a the CEO of Microsoft is on TV this morning talking about four trillion dollars

[00:18:07] while McKinsey who's in you know advising all the biggest boards of the Fortune 500 companies

[00:18:13] are talking about their whole world economy you know being half gen all these people are talking

[00:18:18] in such big numbers we're actually breaking it down to the 200 services

[00:18:23] who's going to consult who's going to design an architect and implement and integrate who's

[00:18:27] going to back all this up and plan for disasters who's going to secure this who's

[00:18:33] going to reduce the hallucinations who's going to make the business value out of all this

[00:18:38] and there you know hundreds of services that we may or may not be able to perform given you

[00:18:43] talent and skills and everything else but knowing what that is and the numbers that we can go

[00:18:48] against it it's a market target addressable market or a serviceable addressable or service

[00:18:53] obtainable market and we just got to narrow it down to the perhaps millions of dollars

[00:19:00] that might happen in our local region or the customers that we cover

[00:19:05] and we just want to make sure we get more than our fair share of that and pick the most

[00:19:09] profitable parts of that opportunity and and capture when it comes because last year it was 15 billion

[00:19:16] that's the 59% growth rate it's going to take five years to get up to that bigger number

[00:19:21] but in last year's 15 billion that's not a big number you know to in comparison last year's

[00:19:27] managed services number was 488 billion it's now a half a trillion dollar business

[00:19:35] and there are now 335,000 companies I'm not going to call them MSPs they're 335,000

[00:19:42] partners who have now at least one managed contract you look at those companies that are more than 30

[00:19:48] percent of their revenue is recurring it's now 86,000 around the world and if you go to 50

[00:19:55] percent in above it's about 43,000 so that gives you kind of the numbers and that's more of a

[00:20:01] opportunity and you know I'm going to say the 15 billion dollars last year maybe only one to two

[00:20:07] of that was ever in the managed services space. So am I going to think about the 488 or am I going

[00:20:13] to think about the two? Yeah I'm not going to disregard something that's growing at 59% but I'm also

[00:20:20] going to understand again through the lens of my customers when where and how I'm going to go

[00:20:27] again front of that. Okay that helps a ton and then just for the last one all the numbers you're

[00:20:33] giving us in terms of count of companies and then MSPs in a certain level was worldwide not national

[00:20:41] yeah I'll always say worldwide if you want to break it down the interesting thing about

[00:20:46] managed services it started in North America many of the RMMs came out of Ottawa Canada

[00:20:52] I worked at auto task in the pre you know data stage and our friends at connect wise and Tampa

[00:20:58] and our friends at Tiger Paw over in Nebraska you know and all the emergency companies in this space

[00:21:04] if you got together back in like 1999 and told everybody in a holiday in with a hundred people but

[00:21:10] this was going to be a half a trillion dollar business and if you were to tell two of them

[00:21:15] you know the the guy from data and the guy from connect wise that they were going to be billionaires

[00:21:20] that they were going to exit for 4.5 billion we would have all had a big laugh over it right yeah

[00:21:26] that's the thing that would be a not- how multiple companies were billions yeah that's where

[00:21:33] I mean by the way MSPs themselves are rolling up you know via private equity and other things

[00:21:39] into billion dollar multi billion dollar entities so this is a real large mature and it's kicking

[00:21:49] out millionaires hundred millionaires and now billionaires almost on a weekly basis so this is

[00:21:55] this is huge and so many other kinds of professional services companies want a piece of it

[00:22:00] and that's why we have 335,000 companies now with at least one managed contract back then

[00:22:06] though you know 95% of the business was North American mostly US we had you know one or two people

[00:22:13] over in Australia I think we had one we had you know a few people in the UK before we put a hundred

[00:22:19] people in Europe was one of the last things I we did before I left there but this was you know

[00:22:26] really really an North American thing but last year for the first time ever Europe plus Asia

[00:22:31] Pacific plus Latin America is now larger than North America so North America where it started and

[00:22:38] was was everything is now the minority around the world as well it's truly a global business

[00:22:45] have you ever wondered if you could recover your backups let me ask a better question have you

[00:22:51] ever had a backup failed to recover have you ever lost data yeah that's me here's what's crazy

[00:22:57] 58% of recoveries failed to recover so if you think it's just you you couldn't be more wrong

[00:23:04] what are we going to do about that well you've got two options inter surosity what we do

[00:23:09] what we exist to do is test your backups and manage them for you we test every volume every

[00:23:15] single day we do weekly testing monthly testing and quarterly testing and you can hand off the

[00:23:20] directory and babysitting of backups and the data management to our team that monitors your backups

[00:23:26] for you it's time to level up your backup key one way you can do that is visit surosity.com slash

[00:23:32] learn more if you'd like to take the process that I've spent the last 18 years building

[00:23:37] and steal it and apply to your MSP so that you can level up your backup key check out the link

[00:23:43] below in the description or visit surosity.com slash learn more I think with all the

[00:23:50] so it's not all but with so much of the new technology and startups and you know the large companies

[00:23:56] you're mentioning open AI you know Microsoft what have you being in the USA just to see them

[00:24:02] still the majority so I knew it's a complex question I want to dig deeper but how do we reconcile

[00:24:10] the on one hand maybe 44% by some estimates of jobs might you know be replaced and then on

[00:24:17] the other hand I feel like talent has become one of the if not the top issue stopping even growing your

[00:24:24] MSP. Yeah it absolutely has and it part of your question and it's actually directly related

[00:24:32] is why haven't MSPs succeeded in this space of hyperscalers AWS Microsoft and Google.

[00:24:39] Why haven't they did that space the same way they did with Dell HP and Lenovo and Cisco and yet

[00:24:46] because we know now that you know for every dollar of consumption of public cloud like an AWS

[00:24:51] there's six dollars and forty cents that is available that a customer could you know in source

[00:24:57] and outsource to get it to work so the customers going to buy a hundred thousand dollars in

[00:25:03] consumption of a public cloud they better have seven hundred thousand dollars you know in the bank

[00:25:08] to get it to work so this whole like in this is what's got you know integrators and this what

[00:25:13] got agencies and all kinds of people consultants are really excited about these big numbers but MSP

[00:25:19] is about a dollar of that six dollars and forty cents but if I were to go to the average MSP today

[00:25:25] and say you know your clients I added up all the credits I added up all the future commits

[00:25:30] and there today consuming $10 million of public cloud today are you getting $10 million divided by

[00:25:42] 36 over the first three years yourself have you signed ten million dollars of commitments from

[00:25:48] those same client the answer's no right so the answers were missing skills you know development

[00:25:55] certifications competencies somebody else is picking up that money managed service providers were again

[00:26:01] a little bit too plugged into on premises and perhaps blocking cloud adoption and this is also

[00:26:09] blocked MSPs from going more enterprise calling on the bigger banks calling on the bigger companies

[00:26:15] manufacturing companies in your territory it wasn't how many PCs they had you could scale that

[00:26:22] it was their hybrid infrastructure the other thing that MSPs totally missed a boat on

[00:26:29] over the last 25 years and you mentioned it was sass so the one thing that was different about sass

[00:26:35] than anything else in technology or telco it had a different buyer and seventy five percent of

[00:26:41] sass today this is sales force service now work day marketo net sweet hub spot you recognize all

[00:26:48] these things these are big company sales forces a thirty five billion dollar revenue company

[00:26:53] the NSAP there were value higher than oracle for a while so the question is why didn't we win

[00:26:59] not only the sales force resell it's mostly direct it's 99 percent direct but sales force today

[00:27:06] has a six dollar and nineteen cent multiplier so every dollar again of sales forces you know

[00:27:12] six dollars available to us as technology people well we're not calling on the sales buyer 75

[00:27:19] percent of sass is bought outside of IT so when we ask MSPs I know who you're you're calling

[00:27:26] on the owner principle as the company gets larger over a hundred employees you start calling

[00:27:32] on vice presidents and then as a company gets you know really large into the mid market 500

[00:27:37] employees even a thousand employees you're you're calling on directors at that point so while sales

[00:27:43] force is selling to a VP of sales or director of sales we might not even know who that person is

[00:27:50] or not meeting with that person we haven't built a relationship and when they're ready to buy

[00:27:54] that six dollars on top of the thirty five billion if we're talking two hundred billion dollars

[00:27:59] a service opportunity bigger than genuine I will be by twenty twenty two eight just on sales force

[00:28:05] wow now we're looking at that for all the hundred biggest sass companies the world there's 200

[00:28:10] thousand sass companies but just take the top hundred and there's a ridiculous opportunity it's

[00:28:15] close to one point two trillion dollars of services but you have to know the head of HR and work

[00:28:22] in the work day kind of ecosystem know the head of CX work in the service now ecosystem

[00:28:29] know the head of marketing and work in the market of L.O.Pardot HubSpot ecosystem this is

[00:28:36] line of business led technology which doesn't really flow through the CIO if they have one

[00:28:43] doesn't really flow at all through the CSO and so the IT tech people are kind of off to the side

[00:28:50] that's why there wasn't success and this market grew up to be a really really big one

[00:28:55] without really dedicated managed services monthly services wrapped around. Yeah that makes it

[00:29:01] ton of sense it's an interesting one because right I think some of mine was

[00:29:06] some of my assumptions were let's wait and see and the let's wait and see took too long

[00:29:12] in terms of you know not everybody thinks this way but I think some are still like you know

[00:29:19] hey cloud I have less damage and sass I have almost no you know at least in a cloud server

[00:29:25] maybe I can put an arm in agent on it maybe I can back it up maybe I can do something I can update the

[00:29:29] OS and but you know with sass there's a there's there's a little less surface area there

[00:29:34] and so you know it assumed that a lot of it was just fear if you're the unknown you know waiting

[00:29:39] for the market of a tour and but you know what makes it ton of sense right you're not

[00:29:44] VP sales is making decision on the CRM you know they they don't they they're not talking to the

[00:29:49] CIO especially in this day in age because you're not nobody's putting an on-prem CRM in.

[00:29:56] So ask the question though like who is making that money right so let's talk about how it's

[00:30:00] off from in there's five dollars and eighty cents available to get for every dollar of

[00:30:05] hub spot to get it to work hmm in that five dollars and eighty cents guess what there's hundreds

[00:30:10] of thousands of digital agencies who used to be marketing agencies these were the madmen during the

[00:30:16] 50s then years ago they decided to help you build your website you know 10 years ago they

[00:30:23] helped you get on front page of Google yes you own so they've become a more digital yeah

[00:30:27] where do they see the opportunity where the MSP isn't is going to help this buyer

[00:30:33] in HubSpot the marketing buyer in HubSpot help them consult at how they should do a design and

[00:30:40] architect the solution how they should build the seven layer stack which is a seven products

[00:30:45] on average that could sold in every HubSpot deal hmm this price it is 13,000 and 80

[00:30:50] ISVs to be exact to compete for those six other spots then you your past the initial procurement

[00:30:56] it's subscription consumption so every 30 days forever upsell cross-sell enrichment but looking

[00:31:02] at the implementation services the integration services these long term you know managed services

[00:31:08] it could be built around all this this is the you know a massive opportunity and it's one

[00:31:15] that again MSPs shy away from because they don't know who the CMO is and they're not

[00:31:21] disappearing in that kind of broader question but to your point you're sending a lot of

[00:31:25] your company data your customer data across public wires and sitting in public clouds

[00:31:33] and so backing that up you know planning for you know fallback and disaster recovery

[00:31:40] the security of all that right from the edge where the password is the identity you know at

[00:31:47] the edge through the network the applications the web the network security there's seven

[00:31:52] layers of security to talk about surrounding every dollar of SaaS there are things in our world

[00:32:00] of all the vendors that we represent and the portfolio that we've created that added that five

[00:32:06] dollars and 80 cents but we're just not in front of that buyer yeah it makes sense that you know

[00:32:12] most of us P's are used to speaking to the C to the IT manager this yeah somebody in IT department

[00:32:18] and CMO wants to talk about you know cost to a fire lead velocity deal pipeline right those

[00:32:27] are probably not the terms you're using and and so yeah it's a different language to and I'm

[00:32:34] sure with same thing with HR work day and you know sales force with your CRM and so on and so on

[00:32:41] but it is a technology conversation because they're not just talking about lead velocity for

[00:32:45] the sake of lead because it makes them sound cool they're literally under KPIs and they're going

[00:32:49] to lose their job if they don't solve for it. We're not just to wish it up on a whiteboard it's

[00:32:55] of the 13,08y martek ad tech tools out there what three would you recommend that could get me

[00:33:01] the best lead velocity in my industry in my geography be compliant be well governed you know

[00:33:08] for my particular use case should I be using gna i and that or not blah blah blah blah blah blah

[00:33:14] yeah so in that that's totally a technology conversation and somebody's got to come implement and

[00:33:20] integrate that that buyer by the way is now a millennial by the end of this year and psychologically

[00:33:28] they're also in integration first fire so out by a lead velocity tool that might even be 80

[00:33:35] percent as good as the competitor tool if it fits better in my environment and if the people

[00:33:40] that I trust those circle of trust of seven partners can better implement integrated into what I do

[00:33:46] get me success faster cheaper better again I'll would like all for go a couple of features

[00:33:55] maybe even higher that MSPs I don't think have evolved to the point to respond to a

[00:34:03] younger or more integration first buyer because integrations is not exactly a matter service

[00:34:10] but it actually is you have to charge project rates and with the amount of change orders

[00:34:17] and the fact that a sass 25 years later there's no sass integration that's ever completed

[00:34:23] itself because every day in the new and some other you know last week google announced the end of

[00:34:29] the cookie there goes my lead velocity i can't go about a third party data now now i have to flip

[00:34:35] at the second party data there's this channel text act with hundreds of new companies that do

[00:34:40] the second party data that looks like a managed service to me when it's just a recurring thing

[00:34:47] that goes on forever and it gets reopt on change orders and never ends yeah that's something

[00:34:54] that integrations technology integrations is something that MSPs know how to do and the fact that

[00:34:59] there's you know changes moves that changes every month just add to the fun and obviously add

[00:35:04] to the profit margin yeah and it won't turn things so i don't know why we're caught up on trying

[00:35:10] to create something recurring when it just ends up becoming recurring anyway and maybe there's a

[00:35:14] point where the customer just says you know I've done so many change orders and you're charging

[00:35:19] me so much for these change orders just give me something predictable and just let's assume

[00:35:25] there's going to be a thousand changes in the next three years and build that all in and price

[00:35:29] that all in and make it a bit cheaper than what you're charging me now and i will commit to a

[00:35:33] three-year monthly agreement with you yeah makes me think of like uh... twilio

[00:35:38] of which technically does not do most of the revenue is not recurring and uh... years ago

[00:35:44] that would have been a horrible thing going public and now you know their revenue is more predictable

[00:35:50] than most recurring revenue companies because uh... while it's usage based right for anybody

[00:35:56] not familiar with every almost every text you get to log in for him if they are calls

[00:36:00] you get whatever a lot of it is powered by that by twilio and you pay for every single one

[00:36:07] and so you know your or you may not and you know at the higher levels there may be a commitment

[00:36:11] but you may not be locked in they might not be guaranteed anything but the

[00:36:15] cost of getting out of it and reintegrating you know into a different solution is just

[00:36:21] not worth it so uh... you know it's it's you know do they have a contract that guarantees

[00:36:26] it no but do they their turn as proven to be lower than many uh... recurring revenue

[00:36:34] so if i'm an MSP what do i do with all this right i'm guessing the answer isn't

[00:36:43] build competencies with the top hundred task companies and the six or seven providers

[00:36:49] needed to perhaps capture all the dollars within all of those

[00:36:55] unless i did your recommendation but that seems pretty ambitious we're back into your talent

[00:37:01] question here all right so in the end you've you build your company you built the skills necessary

[00:37:07] to go get the revenue you've you know quoted for and and been successful at creating

[00:37:14] you know delighted you know returning customers every 30 days forever you know customers for life

[00:37:20] so now i'd want to take this industry of the five trillion dollars that businesses

[00:37:25] government are going to spend on technology and break it down into my local

[00:37:30] focus area again a lot of MSP's focus on a region a town a city of fifty mile radius

[00:37:36] others focus on an industry others focus on a particular type of buyer others focus on a

[00:37:42] particular segment you know i i focus on you know twenty five to forty nine employee companies

[00:37:49] others focus purely on a product area that might be amped up on back up disaster recovery

[00:37:56] that's kind of what they focus on and and find opportunities and then others are just you know

[00:38:01] kind of business model specialties now they're you know they they live in you know different

[00:38:06] shape themselves by their recurring model or product like growth model or or whatever that may be

[00:38:12] but in the end i mean there's six choices on how you specialize your company but i'd want to get

[00:38:17] better more numeric or quantitative on my target addressable market sizes

[00:38:23] you know how big is the jen AI of the hundred and fifty eight billion how much of that

[00:38:29] rolled right down into my market is going to you know be there and available

[00:38:34] if that answer is let's say ten million dollars if i built out the right skills

[00:38:40] you know i had the right sales the right marketing built the right right web page i had the right

[00:38:46] lead process and work with the right vendors and if i get all the right things and i one more

[00:38:51] than my fair share let's say ten percent of that i could build a one million dollar

[00:38:56] jen AI business by twenty twenty eight cool um so what does that entail what do good jen

[00:39:06] AI businesses look like do do i have can i do it with the people that i are in work with

[00:39:11] or will i need a different set of skills you probably need a different set of skills

[00:39:15] you probably a closer to companies like snowflake and data donk you definitely have to get closer

[00:39:21] to open a i Microsoft and google an AWS up and down there stacks you may have to get closer

[00:39:27] the Nvidia and some of this so the stack looks different there's five thousand companies today

[00:39:33] in the jen AI i as v world so and then i have to become integration first because all in jen

[00:39:39] AI the opportunities around it there's no resell opportunity because it's going to be a part

[00:39:43] of every other product from your to brush to your car it's going to be embedded everywhere

[00:39:50] for all the companies like Microsoft copilot i'm stine gpt who are trying to sell you something

[00:39:56] for five bucks a user that's going to be gone in a couple of years and it's just going to be everywhere

[00:40:01] every SaaS product is going to have it every hardware products is going to have it everybody's

[00:40:05] building it into everything in every industry mm-hmm so it comes for partners it becomes for MSPs

[00:40:10] an integration problem and it becomes obviously a security compliance governance it becomes a backup

[00:40:17] because the opportunities across the board so i want to just break down that 10 million

[00:40:23] the million dollars that i can go get reasonably and say hey do i want to staff up against that

[00:40:29] and then what would i have those people would i repurpose somebody who's maybe working on a

[00:40:35] lower value thing to that opportunity or would i maybe do a merger acquisition to kind of acquire

[00:40:41] that talent would i build that from you know somebody in an intern level up up or what i just go

[00:40:48] you know find a superstar locally mm-hmm and they're out how to um how to hire them but

[00:40:55] how you approach it should be top down kind of quantitative and assist a business i want to be

[00:40:59] and because i bet there's a lot of other businesses are going to be much larger than a million

[00:41:03] perhaps more profitable and perhaps easier to obtain given the resources and the skills

[00:41:10] and the competencies that are already built in sure so there's so much buzz right now about

[00:41:16] 489,000 big tech layoffs mm-hmm you know yesterday google just you know whacked another set and

[00:41:23] today it was room and you know two days ago it was uh someone else i did literally every day

[00:41:30] i mean there's a layoff stud FYI there's websites like track this but this whole idea that 489,000

[00:41:37] people would go from a $300,000 a year no show job at google or $60,000 a year for a local MSP

[00:41:47] when you've built your lifestyle around $300,000 working remotely here i mean there's a break there

[00:41:53] i mean you may have jade i skills but you know there's no way within a million dollar business five years

[00:41:59] from now can i afford $300,000 per year all right so i'm not going to go spend $1.5 million dollars

[00:42:05] to go get one you know at a it's 10% profit so it just the math doesn't make sense so you know

[00:42:12] do these people re-setting the channel maybe at some point do they become entrepreneurs themselves

[00:42:17] it's more likely mm-hmm no but i've become MSP is probably not you know an MSP has an average margin of

[00:42:23] 17% EBITDA you know a local jen AI consultancy you know you hire 10 or 15 of your friends

[00:42:32] you run yourself at 50 60% EBITDA and then you know at some point you know before that big number hits

[00:42:39] you sell yourself off to Deloitte or PWC or kept jeminine you know everybody's happy your retirement level

[00:42:44] happened interesting so how you know that i think that frames talent and one of my questions

[00:42:54] is before we've been getting to that it's like you know how to handle AI do I staff into it or not but just

[00:43:00] any idea why so many MSPs are saying just in the services i already sell I'm already struggling

[00:43:08] i can't find enough talent i feel like in the last few years it's gone just from you know direct

[00:43:14] phone conversations i've had with with 100 and 100s of MSPs i just you know what are your

[00:43:19] top issues and not always but you know would say anecdotally it seemed to be you know some

[00:43:26] something along sales leads marketing and even more and even more clients and now it's well you know

[00:43:32] not that we've solved that forever but like i can't find it talent to keep up well i mean there's

[00:43:38] a number of issues all compressing at the same time or inflecting themselves at the same time when

[00:43:42] it's price compression you know when there's 335 thousand companies now with one managed services

[00:43:48] contract that's a lot of you know quotes going into every customer and a lot of people knocking on

[00:43:54] a lot of doors not a lot of phone calls a lot of emails being transferred over so a lot of people's

[00:43:59] brothers friends uncles and connection points so then the markets very saturated which is driving

[00:44:06] down prices hmm the workers also not that profitable if you read the research by service

[00:44:12] leadership and and some others when they upload you know thousands of P&Ls across MSPs now there's

[00:44:19] a quarter to a third of MSPs that actually don't make money every month and then struggle

[00:44:24] profitability wise and their local market may have driven up per user price down to 113 dollars

[00:44:30] and you have to deliver 20 things for that and then the talent comes at the other end which is

[00:44:36] in that price compressed market you know now i have to you know there's no way i can make money

[00:44:40] unless i can send out a $40,000 person in a white van well guess what inflation's out of control

[00:44:48] the end of free money you know housing costs are through the roof people walk in and saying you

[00:44:53] know you got millennials that are a jenzia college saying you know listen i can't live in this

[00:44:57] town within 50 miles of you let's you pay me 80 or 90,000 base i need six figures

[00:45:04] and you're looking at this per you know price and where the price has been set the consolidation

[00:45:09] in the price compression and then obviously the private equity backed roll ups because there's

[00:45:15] an interesting thing because this industry is very profitable if you can run at at scale

[00:45:22] if you're looking to roll up the countents or digital agencies or hback plumbers i don't care

[00:45:28] what industry a 17% EBITDA is actually a really nice business to have if you could run at at scale

[00:45:36] the problem is when the average MSPs has eight people seven pretty much deployed trying to get

[00:45:42] you know hours build yeah the one person who's you know being absolutely smothered by marketing sales

[00:45:51] finance operations customer success and a hundred other things they got to run the entire

[00:45:56] company they're going to be the vice president of twelve different things plus be this you know plus

[00:46:02] no being the bill collector and and playing beef to go break me's being the head lawyer it's just

[00:46:08] a ridiculous thing to ask and the owner principle is always this is back to the e-meth book

[00:46:15] the owner principle is the one that could garner the biggest hourly rate

[00:46:20] and an opportunity cost of the you know the the most skilled person sitting back in doing

[00:46:29] operational tasks is a ridiculously bad model if i can pay that company and then this is where

[00:46:36] money people in Wall Street they don't know the first thing about technology or managed services

[00:46:40] but if i can buy a 17% business and roll up marketing sales operations finance brandy

[00:46:47] like a McDonald's like a Starbucks you know franchise the thing out but more importantly than that

[00:46:54] picking up 17% at a national level in national level is actually nicely profitable but if i can read

[00:47:00] before that owner principle get them back doing maybe the things they love to do back into the

[00:47:06] server room back in building out Kubernetes and back in you know VMware but you're not doing that anymore

[00:47:13] but doing all of them yeah um you know they may be happier they're now making money month to month

[00:47:20] and paying their mortgage so they might be they feel more stable and every time you know somebody

[00:47:25] has to send out an email campaign or every time somebody has to go collect money you know

[00:47:30] incomes headquarters you know you've taken the profitability of those eight people from 17 to 22

[00:47:37] and rolled it up and you have a bunch of 22's that you roll up oh my goodness you're buying new

[00:47:42] yachts you know for money in New York right so that's the equation that we're in like as an

[00:47:49] eight person average MSP given all the things that are happening it's almost impossible

[00:47:57] to succeed against bigger more scaled more skill and and talent filled companies

[00:48:06] bigger skills more expensive skills also get to more profitable more futuristic projects right

[00:48:13] now this is why Accenture makes a business acquisition every seven business hours

[00:48:18] as why Accenture now is 750,000 people that the biggest tech company in the world by employee

[00:48:23] science because all they're doing is these rollups and one last thing I'll say about that the majority

[00:48:32] of their rollups in last 18 months surprisingly have not been MSPs it's been digital agencies

[00:48:39] interest so in marketing the head of marketing and many companies spends more money on technology

[00:48:45] than the head of technology um digital agency has the relationship going back a hundred years

[00:48:50] to their running TV ads together 50 years ago it's got that long-term relationship now 78% of

[00:48:57] them are in tech services an Accenture gets to roll up that relationship and fly in a bunch of

[00:49:04] specialists on Gen A I or whatever else they need interest so that's the ultimate model of

[00:49:11] private equity is to become one of these you know GSI type firms yeah become that's how it's in scale

[00:49:18] well uh speaking of you know things that you may not have really signed up to do usually I found

[00:49:24] that when I was MSP that was backups so just real quickly this is sponsored by some of

[00:49:31] we do two things differently everybody has backups their redness disaster recovery some do it well

[00:49:36] we manage it for you so you quit babysitting backups and do the things that differing to you

[00:49:42] might be your owner might be your senior service person um if you're doing a well or if you're

[00:49:46] not doing a well it's probably the junior person and you know it's liability and you know it's time

[00:49:52] better spend that you could spend uh doing these things hiring the right people growing your business

[00:49:57] instead your stock babysitting backups because they're so critical secondly we test backups for you

[00:50:03] daily weekly monthly and quarterly all built in not optional so you can actually sleep at night so

[00:50:10] if you were interested in talking further about any of this or what we do is velocity just visit

[00:50:16] svacity.com slash call I'd be happy to have a call with you directly just to talk about any of the things

[00:50:22] you've heard today or how we could help you get the managing and testing of backups off of your

[00:50:28] work late. Jay you said something that really was interesting to me um that you know it's

[00:50:39] you know you made it sound like it's becoming mission impossible so what's your thoughts on an MSP

[00:50:46] I mean is it that uh you know only the super large will survive where we we're we go you know

[00:50:53] you probably have thought about this a lot more than I have um what does that gonna look like um

[00:51:00] you know let's you name the time frame but I'd love to hear your thoughts because

[00:51:04] certainly see more more private equity I've seen owner led MSPs that have gotten you know

[00:51:10] figured this out and banded together to figure out efficiencies emerged I've seen different flavors of this

[00:51:17] so uh we're going to end up with everything is a mega there's gonna be a few

[00:51:22] or well there'd be some you know super tiny and super large in the no middle

[00:51:28] what do you think this is gonna be? yeah it's definitely number two you know there's a lot of

[00:51:32] people that think consolidation because that you know the human brain that seems like the logical thing

[00:51:37] to think about you know when you buy a car there's you know three major manufacturers in North America

[00:51:45] when you buy a CRM tool there's three majors so you buy a hyper scale tool you know it's three

[00:51:51] there's a rule three you know jim well you used to say hey for not number one or number two

[00:51:56] you know making light bulbs or making nuclear turbines we're getting out of the we're getting out of that

[00:52:00] market mm-hmm not one or two anymore now with the platform levels it's all up to five like marketing

[00:52:07] has you know four platforms across the market owes part dots L.O.K.E. as in Hubspots and they all are

[00:52:13] great and they're all highly valued so the rule though is I also said that there's 13,000 ISVs

[00:52:22] plain in that market and that keeps growing by thousands every single year so every time you look at

[00:52:28] that market stack that's Scott Brinker and Hubspot puts together it grows every year and the

[00:52:33] fact of the matter is there's that many nuances there's that many what we'll call

[00:52:39] you know specific hyper personalized solutions stacks that are necessary again by sub industry

[00:52:46] by geography by compliance level by segment but all these things I've talked about in the past

[00:52:52] so that the average sastial today has seven layers and growing I mentioned that the average customer

[00:53:00] has seven partners they trust and growing the average infrastructure deal out of AWS

[00:53:08] Microsoft has seven layers the average security deal today has seven layers it's this rule of

[00:53:14] seven and the rule of seven will be the rule of eight will be the rule of nine we're in an integration

[00:53:20] first fire that's okay by him from eight different companies and surrounding themselves with eight

[00:53:25] trusted people so this is where the world's going and those numbers will continue to climb

[00:53:31] into the world we will have super platforms Microsoft over took Apple last week as a $3 trillion

[00:53:38] big company in the world and they're gonna jockey back and forth and there'll be others in that

[00:53:44] you know kind of the wonderful seven or whatever they call the top trillion dollar companies but

[00:53:49] outside of platforms there is tons of opportunity for new innovation hyper niche hyper local hyper

[00:53:58] personalized and this isn't both cracked hardware software mostly software because hardware's a

[00:54:06] difficult thing at low volumes to manufacture and be profitable but in software and services it's

[00:54:13] almost exponential so wrapping myself with the right people and services wrapping myself with the

[00:54:18] right software products to take it to that end-th degree means that this world to go from 200,000

[00:54:25] ISVs to a million within the decade it means that now that we have over a million partners out there I

[00:54:34] mentioned 335,000 have one managed contract that'll probably reach a million by the end of the decade

[00:54:41] there will be partners out there that service mid-sized banks a marketing buyer in

[00:54:47] Invernous Scotland that's literally their entire market tam and they're gonna be in a group of seven

[00:54:55] today all profitable all delivering value and all with a different spot in the world so I think

[00:55:02] things continue to explode technology is the fastest growing industry in the world it will be for the

[00:55:08] next 10 years every company in every industry every car company every bank every farm up

[00:55:15] are becoming tech companies every professional services firms big venn diagram over my shoulder here

[00:55:21] every professional services firm in every industry I mentioned 78% of digital agencies 81%

[00:55:28] of accounting and CPA firms are now tech services companies everybody is flooding into this massive

[00:55:35] opportunity we're not the single throw to choke we're not the trusted advisor non-plural

[00:55:43] team sport we're chasing down five trillion dollars which will probably be 10 by the end of the decade

[00:55:52] it's a fastest growing industry and we're trying to get our fair share of our small little

[00:55:57] sub niche and we want to employ people we want to help them pay their mortgages and change their

[00:56:04] lives we want to retire you know with our goals and our objectives and never have to

[00:56:11] don't want you know for money again this is the reason we're entrepreneurs

[00:56:15] or in the right industry to go do it we just got to kind of take a really pragmatic approach

[00:56:22] at how we move forward and manage our own expectations so I want to go back to what I

[00:56:28] asked earlier and then on the follow up once you just said a lot of folks are saying I can't get

[00:56:34] the talent and in your review is that a business small issue as you mentioned you talked about

[00:56:41] the price squeeze and the inflation and that sort of thing is it a business issue is it

[00:56:46] that there's I don't know for like a better way of saying I need somebody with 10 years experience

[00:56:53] in Oven AI or I need you know I need you to be proficient in you know 12 different

[00:57:00] disparate technologies that this is you know there's very few people to do that and I needed you

[00:57:06] in this market do you think it's a business issue in terms of like it's not really

[00:57:11] tractable like it's only solved by the the the roll-up MSP that's perhaps pe backed or

[00:57:20] is there do you think there's a fundamental talent issue and end or that you're you know you're going

[00:57:24] about it the wrong way yeah I think it's a lot of things obviously a business issue but

[00:57:32] in the end the economics need to work you know blind man need to match you know entrepreneurs have

[00:57:40] to within whatever their risk profile it is have to invest in the future whatever that future

[00:57:46] may be and not do everything behind the curve but you know this access to talent I mean there's

[00:57:53] 500,000 unemployed talented people out there or at least you know their resumes only did would show

[00:58:00] that but you know the economics have to match for for the opportunity ahead what we can build

[00:58:06] clients what we can be profitable with it comes down to also capacity so again average MSP

[00:58:13] with eight people one owner principles seven kind of deployable hourly you know billing

[00:58:18] employee there's not a lot of room in an organization of that size for development

[00:58:24] no education training certification competency building actually takes money vendors ask for money

[00:58:30] to go get these things why because big companies like Accentures spend billions doing it so

[00:58:35] you know they're happy to sell that access to the opportunity the thing through osmosis

[00:58:42] you've got people all over the place you don't have that office environment that I might have had

[00:58:46] with IBM when I work there with 450,000 colleagues that I just learned through osmosis

[00:58:52] you know everybody is working hard working long hours and you know absolutely focused and this

[00:58:58] idea that you can develop from within with that right level of experience and mentoring and

[00:59:05] stuff like that is tough to do in a smaller company so this idea that you got to pay and

[00:59:12] there's money involved to building to where you want to be or you have to buy into like you said

[00:59:17] the tenure I'd love to see somebody say they have 10 years of open AI experience has an

[00:59:22] existed for that long right as the thing you've got to pay for every year they do have in it

[00:59:27] now nowadays for every month they have in it no 10 thousand dollars yeah

[00:59:33] you know keep in around open AI since it started last year before the March break through

[00:59:38] you know you're probably making 300 thousand dollars a year right now right because somebody can sell

[00:59:42] that to somebody else for a million dollars in a contract so this is what we face

[00:59:50] you know can we find more people that can go do the things that we've done historically over the

[00:59:54] past decades running cables patching PCs you know fixing like help desk it well that's not what

[01:00:01] Jen is the in millennials wake up to do the other circles on my venn diagram oh I can go consult

[01:00:09] I can be the smartest person in the room I could re-imagine a certain industry or re-imagine a certain

[01:00:15] job role with Jen AI I mean this sounds so much cooler I don't have to get my hands dirty

[01:00:21] so there's a lot of forces against this you know talent this this idea that I can just

[01:00:25] scale up and so the industry needs to come together the associations have to come together the

[01:00:33] media the peer groups the user groups podcast like this one all the thousand watering holes

[01:00:38] that surround all of us that's the bottom thing over my shoulder all the thousand watering

[01:00:43] holes have to come together and work together to raise all boats the young person coming in to

[01:00:50] to help us in industry you know to build those skills and to get that level of value you know

[01:00:57] throughout their career and I don't think we can rely on you know what traditionally we've looked at

[01:01:03] as you know kind of a skill shortage and a challenging environment matching demand with you know

[01:01:11] what we see out there in the supply yeah yeah and based on what you said it sounds like right

[01:01:18] if the jinsie would rather much rather be the expert in the room solving more of a niche problem

[01:01:24] just on on me right that means you don't have to you know do a truck roll

[01:01:31] which means you don't have to only draw talent out of your metro

[01:01:34] um you know and you know and you know and you know and you know and you know and you know

[01:01:39] deliver bedroom that's right which is which you know broadens the talent pull will give you more options

[01:01:44] yeah so that that makes a ton of sense so any pragmatic advice on you know I'm an MSPE there's

[01:01:50] so much going on there is change like what what what do you have if you know I'm listening and I'm wondering

[01:01:56] what what do I do you know how how do I want to jump so far ahead then I'm you know

[01:02:01] spending millions of half to build a million dollar business and but how do I not get left behind

[01:02:06] because there's there's a lot of change coming well there's a couple of action a whole

[01:02:11] things I would do one is the next time I visit my clients if they allow you to um I would look

[01:02:16] backwards on the guessbook every single person signing into the guessbook there's an 80% chance

[01:02:22] now that they're talking about tech hmm hmm are less of who they're talking to right from the owner

[01:02:29] right through the organization left right horizontally vertically they're talking tech hmm hmm

[01:02:36] so getting a community built getting your own networking don't understand who all the buyers are in

[01:02:43] your organization what your entire um and this is maybe the second part of it is starting to quantify

[01:02:52] a bit more so much of this industry for decades has been built on opinion and sometimes vendors with

[01:02:59] most money and the biggest so-box you know have the biggest opinions but

[01:03:03] now I would literally be watching this industry and watching it through my clients eyes

[01:03:08] and just making sure that I'm matching up where they're going and and being the one that can

[01:03:14] take the multiplier out of it if it's gonna if they're gonna pay today they pay $2 in services

[01:03:20] for every dollar of hardware and software but that's for all services manage services is you know

[01:03:27] close to one out of every ten dollars they spend now as an advantage contract so I just want to be

[01:03:32] making sure that I'm looking left and looking right picking up manage recurring dollars where I can

[01:03:36] because they're great for valuation and and stickiness and predictability but understand that nine

[01:03:42] of the dollars don't come managed hmm it can sure I'm adding value and reducing friction in the way

[01:03:49] the customer wants to attain that value but getting more quantified than you ever have like if you're

[01:03:55] covering Cleveland if you're covering in vernis Scotland you should be walking around and

[01:04:00] sounding like me a little bit my market 10 is this this is how it's broken down hard work software

[01:04:06] services this is my service available this is my service attainable this is my coverage model

[01:04:11] this is my capacity this is I mean that's how a business owner thinks and I want to go get my

[01:04:16] share of the bigger number hmm I'm going to wait 10% of my bigger number and this is what my

[01:04:22] company's going to have to look like to go do that hmm I'm in money aside and whether that takes

[01:04:27] investment whether that takes you know kind of hanging out a little bit and you know jumping off

[01:04:33] a cliff or it takes you know a partnership or anything else how do I go if that's what I want to

[01:04:40] do if I want to engineer and go build a 10 or a hundred million dollar company now this is actually

[01:04:47] what it would take and if if I happen to be one of those you know Wall Street trust fund babies that just

[01:04:51] you know time and money aside this is how they would approach it what I do and you know

[01:04:58] and how can I get there with the lowest hanging fruit so rethink about your customers kind of

[01:05:04] inside rethink about your market and then the decisions on how you hire and what businesses

[01:05:12] and products that you get into and where your expansion plans fall whether it's to build out another

[01:05:20] 50 mile radius whether it's to go after another industry whether it's to go up market and by the

[01:05:25] way that's where more money is there's well more than 30% EBITDA in mid market and enterprise right

[01:05:33] and there's no reason you can't scale what you're doing in 10 to price the biggest company in the

[01:05:39] world I mentioned Microsoft started in SMB salesforce.com which is the biggest SaaS company in the world

[01:05:45] started in SMB this is how they beat IBM Oracle and SAP they didn't go not in the door of

[01:05:54] Bank of America when the RFP they went into rogue shadow IT they went in through the departments

[01:06:00] they went through through the side doors and back doors and they got so much market share and so

[01:06:04] much business through SMB that all the sudden Microsoft could walk through the front door

[01:06:12] and what surprised all of us were in three piece suits when some guy in a golf ship walked in

[01:06:17] looking for a million dollars of business out of the bank we laughed at it until it happened

[01:06:24] and then IBM almost didn't make payroll by 1993. The number one stock of the 60s number one stock

[01:06:32] of the 70s number one stock of eight all of a sudden didn't make payroll a few years later

[01:06:38] in a company to a person those are richest in the world that they gave away the farm August

[01:06:44] the 12 1981 two. That's it I mean you laughed until you don't right but winning in SMB is so

[01:06:53] important because that's where you build the volume that's where you build the skills that's what

[01:06:57] you can do at the most cost effectively but start knocking on some of those 500 person firms

[01:07:04] and make them aware of you not just at the key buyer but everywhere and then go start

[01:07:10] departments divisions rogue shadow places within the biggest companies in your region.

[01:07:17] There's no reason you can't do key projects and can't be working on that team of seven

[01:07:23] they can some grunt rolls if you have to but all the size they're already trusted you're in

[01:07:27] that room you're in the room of seven when that GNI project comes at the edge who knows that

[01:07:33] storage he knows the backup and stuff better than you do yeah they're going to sign you up for part

[01:07:39] of that multi million dollar project at 50 67% margins huge difference so that's it I would never laugh

[01:07:48] ever again after almost not make a payroll right I would never laugh again at where people start

[01:07:54] their businesses and how they grow them just as long as they're dedicated to that growth

[01:07:59] and where their customers are interesting I think I could talk forever with you about this J.

[01:08:05] Time permitting I had one more question that should be sound odd but what's what do you feel like

[01:08:10] most people are missing the mark on what's most Mr. understood is it is your future is where

[01:08:15] you know it's maybe it must be related maybe not but where's the part that's just like nobody's

[01:08:20] driving home this part or nobody's paying attention you're sleeping the wheel what are we missing

[01:08:26] well I think there's so many things happening at once you know we pretend to not and it's really hard

[01:08:32] there's so much noise and clutter it's hard to kind of get a level of clarity in the market

[01:08:40] but one of the areas that I do see as a big miss is the majority buyer for every single person

[01:08:47] listening here today this year will convert over to be in a millennial that'll be the majority

[01:08:54] buyer by volume and majority buyer by budget millennials have a different psychology they have a

[01:09:01] different behavior they have a different germinated that they're on last week Google took away the cookie

[01:09:07] in the first 28 moments before they make a purchase with or without you are changing so more than

[01:09:14] just technology changes we can talk about Gen AI and backup all day long it's your customer's

[01:09:19] changing but if you get out in front of that you can actually win in this market because you have a new

[01:09:25] buyer and some of the people that have one in Gen X and one in baby boomers they may also be an

[01:09:33] aging baby boomer you know one job away from retirement or a few years you can start to grow

[01:09:41] based just on demographics and the firmographic changes that are happening and so this is

[01:09:47] the thing that I think we're all missing as we get excited about products and new innovations

[01:09:52] and is the metaverse going to be you know as bait no it failed is Gen AI you know they're

[01:09:58] meta who cares right we're going to have the ability to talk tech and telco we're going to

[01:10:04] reimagine how our customers automate how they communicate how they collaborate how they go to market

[01:10:10] how they do business we're always going to be on top of the layers of technology that that takes

[01:10:17] but we have to be winning in the market and understanding who the buyer is and how they buy

[01:10:22] and getting starting to be psychologists a little bit in terms of understanding these first 28

[01:10:27] moments understanding all the other things that are happening in the market that's what I think is missing

[01:10:32] the most is we take our eyes off our customer too often it happens at events that happens

[01:10:38] too many places that we get just we start smoking our own exhaust and you know we think this new

[01:10:45] product innovation is going to just win on itself yeah and it's going to go and thought it through

[01:10:51] to that meeting you have to have with the customer and convincing them to step on board too

[01:10:56] so it's kind of the in some startups you know the good mentality which is there there are no

[01:11:02] great ideas in the building right you got to get out there make contact with the customer and see

[01:11:08] what they're really thinking and you know no matter how cool your new GNA I think is or whatever

[01:11:13] you're building it matters is only if it solves the problem delivers value and they can actually

[01:11:20] figure out how to get it integrate do something with it well awesome Jay this has been a blessing

[01:11:27] thank you for being here on MSB mindset today I'm sure a lot of folks will want to connect with you

[01:11:32] what's the best way if they want to say hi reach out follow us question etc

[01:11:37] absolutely I'm all over LinkedIn Twitter I guess X Facebook email and you can find them everywhere

[01:11:45] I said I don't go to bed without a zero inbox or with any red circles on my iPhone so

[01:11:51] if you do reach out anyway I'll probably see it okay we'll make sure to get those links in for

[01:11:56] you guys that are listening Jay this has been amazing thank you for being on MSB mindset

[01:12:02] all right thank you so much all right bye