Multiple Acquisitions, Crazy Retention Numbers - How a Top 500 MSP Handles M&A, with Chris Caprio (MSP Titan #7)

[00:00:00] [SPEAKER_00]: We as an MSP need to build a relationship with the right people at our customer.

[00:00:05] [SPEAKER_00]: Because things are going to go wrong, but also on the other side they're going to have a special need that's unique.

[00:00:12] [SPEAKER_00]: It's maybe not in the contract, it's a favor, whatever it might be.

[00:00:17] [SPEAKER_00]: Because I think they understand that help desk ticket could get delayed,

[00:00:22] [SPEAKER_00]: but making sure that we're building relationships with the right people

[00:00:27] [SPEAKER_00]: will lead to greater customer retention.

[00:00:34] [SPEAKER_01]: Hey guys, Damien Stevens host of MSP Mindset. Today I continue my mission to interview 100

[00:00:42] [SPEAKER_01]: of the fastest growing MSPs on the planet. Joining me today is an MSP Titan, Chris Caprio.

[00:00:51] [SPEAKER_01]: As a CFO he has a really unique perspective on number one how to sell to the CFO and the CEO

[00:00:58] [SPEAKER_01]: and earn their trust and keep it. Number two, while people are the secret ingredient and how he's

[00:01:04] [SPEAKER_01]: done the math to figure that out and retain his team like nobody else. And lastly, how they view M&A

[00:01:11] [SPEAKER_01]: and organic growth and how they're able to do both and grow at record pace.

[00:01:16] [SPEAKER_01]: If any of that sounds interesting don't miss out on today's conversation.

[00:01:21] [SPEAKER_01]: I actually want to go kind of back to the beginning for folks with you because you're

[00:01:26] [SPEAKER_01]: one of the few folks that I'm interviewing that knows what the heck a 10k is.

[00:01:32] [SPEAKER_00]: I've read a few in my day, yes.

[00:01:35] [SPEAKER_01]: Right. So how did you go from 10k filings to CFO of an MSP? You tell me about that.

[00:01:46] [SPEAKER_00]: Yeah, so honestly it was the M&A background. So my initial background going back to the

[00:01:55] [SPEAKER_00]: early 2000s I got hired in 2004 by a French public company that was trying to grow. It was

[00:02:03] [SPEAKER_00]: engineering around the utility space and I got heavily involved in growth so organically but

[00:02:09] [SPEAKER_00]: also M&A. And then that led me after 10 years I went to work for a private equity which led

[00:02:16] [SPEAKER_00]: to more M&A. And I think when I interviewed for this role which the CEO, the former CEO and

[00:02:25] [SPEAKER_00]: the recruiter who was looking to help him fill the CFO role had a mutual relationship.

[00:02:33] [SPEAKER_00]: So he brought me in and I think he interviewed tech CFOs, MSP, VAR CFOs and

[00:02:40] [SPEAKER_00]: kind of probably had some good candidates. Obviously my background other than procuring MSP and being

[00:02:48] [SPEAKER_00]: around technology was more on the services growth and M&A side. And it was the CEO and it was

[00:02:56] [SPEAKER_00]: that the founder realized that they needed M&A likely to springboard them into a more of a

[00:03:04] [SPEAKER_00]: services business, managed or professional. And my second interview was explaining to them how

[00:03:11] [SPEAKER_00]: they could acquire a company just logistically taking on debt beginning to end how we would find

[00:03:18] [SPEAKER_00]: a company integration all that and it was something neither of them have dealt with

[00:03:23] [SPEAKER_00]: and I think led to them hiring me and taking a chance on me in 2017 to come on board.

[00:03:30] [SPEAKER_00]: And I guess the rest is history because we acquired two companies in a three-year span

[00:03:36] [SPEAKER_00]: and have been able to organically grow our MSP. And then about a year ago we did take on some

[00:03:42] [SPEAKER_00]: investment from a private equity and trying to accelerate some additional M&A growth over the

[00:03:47] [SPEAKER_01]: next few years. Yeah, so tell me about that. From my eyes, sea coast, capital, there's two

[00:03:56] [SPEAKER_01]: interesting things. One is, instead it was like a $280 million fund so not the largest would,

[00:04:06] [SPEAKER_01]: you know, I think that me, you know, I won't let you speak but I think that means there's

[00:04:08] [SPEAKER_01]: a specific reason that they're maybe not going to rip and replace a lot of things. And the other

[00:04:15] [SPEAKER_01]: that's really cool, right? CFO to CEO during that same time period. So tell me,

[00:04:21] [SPEAKER_00]: tell me more about that. Yeah, I mean obviously the, you know, there was two gentlemen that

[00:04:25] [SPEAKER_00]: owned the company and I think one had already taken a kind of chairman role and the other one was

[00:04:32] [SPEAKER_00]: looking to retire. And, you know, at the end of the day they wanted to, you know, get some money

[00:04:39] [SPEAKER_00]: on their investment. My favorite line that I say often is, you know, when I responded to them,

[00:04:47] [SPEAKER_00]: I'm the father of three teenage daughters so I don't have the capital but I have a background

[00:04:51] [SPEAKER_00]: that can help us find capital. And what led me to sea coast is I think they fit that, you know,

[00:04:59] [SPEAKER_00]: to your point, they're local to Boston and they invest differently in that they're

[00:05:04] [SPEAKER_00]: non-controlling interests so they're investing in management teams and they're investing in a

[00:05:08] [SPEAKER_00]: story and a strategy and a path forward versus they're buying a company and they're going

[00:05:15] [SPEAKER_00]: to control it. And not that any other private equities right or wrong, it's just their methodology

[00:05:21] [SPEAKER_00]: is different and I think fit the time and the inflection point that focus was at to be able to

[00:05:28] [SPEAKER_00]: really, we had a good story. A lot of our competitors around us are getting rolled up

[00:05:35] [SPEAKER_00]: and we need to grow and organically was not enough, you know, it hasn't been enough,

[00:05:41] [SPEAKER_00]: won't be enough, I guess. So that's where we needed this capital but had the strategy in place and

[00:05:47] [SPEAKER_00]: yes, we're always tweaking in have to make changes but are fortunate that they believed in A,

[00:05:53] [SPEAKER_00]: the strategy and B, the team we already had in place to be able to grow and develop that over

[00:05:59] [SPEAKER_01]: the next, you know, five to seven years. Hey guys, today's episode is sponsored by

[00:06:06] [SPEAKER_01]: Servosity. Servosity does two things very differently from any other backup and DR company.

[00:06:12] [SPEAKER_01]: The first is they are maniacal about testing your work backups, daily, weekly, monthly and quarterly.

[00:06:19] [SPEAKER_01]: Last, they're crazy enough to manage the backups and take over 80% of the operations so it's done

[00:06:25] [SPEAKER_01]: for you proactively but allows you to put your hands on it to be the hero when needed. If you

[00:06:31] [SPEAKER_01]: want all of that plus immutable and unlimited storage, make sure to take a look at Servosity.com.

[00:06:40] [SPEAKER_01]: Yeah, so there's a lot of I think fear and trepidation in the space because there is so much MNA

[00:06:46] [SPEAKER_01]: activity and you know some people want to acquire, some people want to be acquired, some I think

[00:06:51] [SPEAKER_01]: the majority if we're being honest, we're kind of like what do we do? And I think there's

[00:06:57] [SPEAKER_01]: also a lot of unfounded fear about private equity because it only takes a couple

[00:07:02] [SPEAKER_01]: horror stories to scare everyone. So if you don't mind put on your CFO hat since doing,

[00:07:09] [SPEAKER_01]: you know, understanding MNA and trying to kind of vet the right investment firm

[00:07:16] [SPEAKER_01]: is something that you have far more experience than the average MSP

[00:07:21] [SPEAKER_01]: for folks that are listening, right? Other MSP owners and CEOs like what process do

[00:07:26] [SPEAKER_01]: you recommend and how did you, how did you arrive at that?

[00:07:30] [SPEAKER_00]: So, you know, in this case specifically I had met Seacoast three, three and a half years ago.

[00:07:39] [SPEAKER_00]: So my recommendation is if you do not have a succession plan meaning you don't have

[00:07:45] [SPEAKER_00]: a management team you want to give it to or a family member or a strategy in place

[00:07:51] [SPEAKER_00]: to go out and start talking with people. And that's what I did. I mean, yes, I had,

[00:07:56] [SPEAKER_00]: you know, experience in this in the PE world and the VC world and public companies. So,

[00:08:02] [SPEAKER_00]: you know, maybe my experience was a little bit different but even as a CFO

[00:08:07] [SPEAKER_00]: at focus I was doing it and just out talking with people understanding

[00:08:11] [SPEAKER_00]: true valuation of the company or what are the things, you know, I didn't know

[00:08:15] [SPEAKER_00]: five, six, seven years ago when I first came in this industry how companies were valued.

[00:08:21] [SPEAKER_00]: So what's important? Obviously it doesn't take long to learn that recurring revenue is probably the

[00:08:26] [SPEAKER_00]: number one item that certainly investors are excited about. So okay, we need to focus on that

[00:08:33] [SPEAKER_00]: part of our business and grow that business for sure. But definitely, you know, don't feel like

[00:08:39] [SPEAKER_00]: as an owner just because you go talk to private equity that you have to sell.

[00:08:44] [SPEAKER_00]: I mean, you know, you may not have it may not be the right route for you.

[00:08:48] [SPEAKER_00]: I think I'm just fortunate that, you know, CFO background now the CEO

[00:08:54] [SPEAKER_00]: that I understand their language. I mean, at the end of the day, they're making an investment

[00:08:58] [SPEAKER_00]: like any investor whether you're investing in a mutual fund, a stock obviously a business,

[00:09:04] [SPEAKER_00]: you know, you know, gold crypto whatever it is, you know, you want to make a return on

[00:09:10] [SPEAKER_00]: that investment, you know, why else would you make an investment? A non charitable investment.

[00:09:17] [SPEAKER_00]: So that's what they're looking for. And to be as open as possible, like don't feel like,

[00:09:23] [SPEAKER_00]: you know, if you need an NDA fine sign an NDA but I think having both private equity and I think

[00:09:30] [SPEAKER_00]: another big area is bankers could be commercial bankers could be investment bankers have them

[00:09:36] [SPEAKER_00]: look at your numbers or, you know, give you an understanding of here's what's good about your

[00:09:42] [SPEAKER_00]: business. Here's what's bad about your business and here's where I think you could be worth

[00:09:46] [SPEAKER_00]: what multiple of EBITDA or, you know, multiple of recurring revenue depending on how small or big

[00:09:52] [SPEAKER_00]: you are and just get an understanding of, you know, a realistic view and then they're pretty

[00:09:59] [SPEAKER_00]: open as far as, you know, what your holes might be and go work on those. And I think

[00:10:06] [SPEAKER_00]: you have to be if you're an owner, you have to be aware and acceptable of this space because

[00:10:13] [SPEAKER_00]: this is for most owners in the SMB space, you know, say under 25 million maybe or more of revenue.

[00:10:21] [SPEAKER_00]: This is their retirement, you know, this is their way to retire. And you don't have a

[00:10:28] [SPEAKER_00]: choice but, you know, and I've seen it some people are still running companies that

[00:10:34] [SPEAKER_00]: in age where I would say I don't want to be still running a company, I guess. So,

[00:10:40] [SPEAKER_00]: you know, to put a plan in place and the second thing I would say is that that I've tried to do

[00:10:46] [SPEAKER_00]: here at Focus since I acquired the company with the help of these investors is get some others

[00:10:52] [SPEAKER_00]: involved, you know, as far as in the success of the organization, however that might be

[00:10:58] [SPEAKER_00]: whether that's equity or whether that's, you know, a piece of, you know, growth or whatever it is,

[00:11:05] [SPEAKER_00]: that's what people you want people around you to have the same feeling. So I think owners that are

[00:11:11] [SPEAKER_00]: 100% owners and really don't talk numbers with their people and things like that. I would suggest,

[00:11:18] [SPEAKER_00]: you know, I'm not saying you have to publish it to the whole company, but at least start creating

[00:11:22] [SPEAKER_00]: a smaller group of people you trust and then sending them to help whatever goal it is that you

[00:11:29] [SPEAKER_00]: achieve or want to achieve and involve them. And I think that's really important.

[00:11:35] [SPEAKER_01]: Can you give us, I feel like there's some folks that have been down this path and then there's

[00:11:40] [SPEAKER_01]: everybody that hasn't. And if you've never been in, you know, invited to a deal room,

[00:11:46] [SPEAKER_01]: you know, you're in different spots. So for folks that are kind of like, where do I start?

[00:11:50] [SPEAKER_01]: Where do I reach out? What do I even get prepared? You know, what's your advice?

[00:11:55] [SPEAKER_01]: Because you said start talking to people. So maybe I can talk to bankers.

[00:11:58] [SPEAKER_01]: But how do I get started to start talking to these people?

[00:12:02] [SPEAKER_00]: Yeah, I mean, it starts to me with gap financials. I mean, you may, you know, as an owner,

[00:12:08] [SPEAKER_00]: you know, traditionally starting a business, you may be more on a cash basis or tax basis

[00:12:13] [SPEAKER_00]: and understandably, you know, when you first start out, that's, you know, cash flow and

[00:12:17] [SPEAKER_00]: tax returns is really all you care about. But I think, you know, preparing, even if it's

[00:12:23] [SPEAKER_00]: some summary information, it doesn't have to be, you know, again, if you're just going out to talk,

[00:12:28] [SPEAKER_00]: you don't have to go out and get an audit or go out and get a quality of earnings or anything

[00:12:31] [SPEAKER_00]: like that at that initial point. I think it's if you have some accountant on staff,

[00:12:36] [SPEAKER_00]: or if you have to hire somebody to just put some financials together, you know,

[00:12:40] [SPEAKER_00]: last three years, revenue revenue growth, try and get some, you know, definition of,

[00:12:45] [SPEAKER_00]: you know, kind of gross margin overheads and kind of give you an EBITA number just so you have a

[00:12:51] [SPEAKER_00]: place to start with. Because I think every, you know, banker PE firm is just going to want to know

[00:12:57] [SPEAKER_00]: some of those things. I don't think you have to go crazy, but preparing that

[00:13:03] [SPEAKER_00]: to, I think another reason is to maybe, you know, bringing in a member or two of your team

[00:13:10] [SPEAKER_00]: after a certain point, because you got to take the emotion out of it. Obviously, in many cases,

[00:13:16] [SPEAKER_00]: you know, you started this business, maybe it's been 10 years, 15 years, 20 years, whatever.

[00:13:21] [SPEAKER_00]: Of course, it's your, it's who you are. It's your lifeblood. Obviously, you have your family,

[00:13:26] [SPEAKER_00]: but this is your work lifeblood. And you kind of have to put emotions aside and realize,

[00:13:32] [SPEAKER_00]: I may be a good looking MSP, but, you know, we all have holes and we got to work to fill

[00:13:37] [SPEAKER_00]: those holes and really putting that aside. Don't get overly emotional, certainly early on in those

[00:13:44] [SPEAKER_00]: discussions. And certainly, you know, look at all listen, I guess, and meet with these individuals,

[00:13:52] [SPEAKER_00]: bankers, PE firms, other MSPs. I mean, I've been fortunate to speak with a dozen CEOs or

[00:13:59] [SPEAKER_00]: former CEOs of MSPs because I don't have all the answers. They have grown businesses. They've

[00:14:06] [SPEAKER_00]: been running businesses longer and just getting feedback from them. It's a pretty great community,

[00:14:11] [SPEAKER_00]: as far as, you know, there's different vendors that we all use that bring us together and,

[00:14:16] [SPEAKER_00]: and, you know, we're pretty regionalized. So, you know, have no issues with talking

[00:14:21] [SPEAKER_00]: with somebody in different regions to get their feedback and kind of where they're at and

[00:14:27] [SPEAKER_00]: just listening to different sorts of people and getting an opinion from them about how

[00:14:33] [SPEAKER_00]: they took the path down. So it's, you know, it is, it can be overwhelming. I think that's why

[00:14:41] [SPEAKER_00]: starting early and just having some conversations when you're even a couple years away,

[00:14:45] [SPEAKER_00]: you know, kind of sets the stage for you to be able to, you know, go along that path and not

[00:14:52] [SPEAKER_00]: feel like you ever get to a point where I have to sell by next month for whatever I'm retiring

[00:14:57] [SPEAKER_00]: or I have an ailment or something changed in my family, you know, you never want to get to

[00:15:02] [SPEAKER_01]: that point. No, I think that's a really good point because I think I talked to too many of these

[00:15:09] [SPEAKER_01]: that of course it's kind of their baby, you know, but they've had us so long, it's really now

[00:15:14] [SPEAKER_01]: their, you know, teenager or their adult, you know, and it's hard to separate emotionally.

[00:15:21] [SPEAKER_01]: First of all, secondly, everybody I've talked to almost universally believes,

[00:15:27] [SPEAKER_01]: let me just grow up bigger before I start having any conversation. And I feel like

[00:15:34] [SPEAKER_01]: it's kind of like saying, I can predict the market and I'm going to sell at a peak.

[00:15:38] [SPEAKER_01]: And you know, you really can't. And if you can, you wouldn't need to be running this business.

[00:15:46] [SPEAKER_01]: And but I'd love your feedback because I also feel like they wait to do any of the

[00:15:50] [SPEAKER_01]: market research that wait to have the discussions. And I've found too many people,

[00:15:55] [SPEAKER_01]: they don't understand what drives the valuation. Maybe they've missed that you don't have the

[00:16:01] [SPEAKER_01]: management team you need or the owners are responsible for 80% of the sales,

[00:16:06] [SPEAKER_01]: you have a sales team or some other things that would really give any investor, you know,

[00:16:12] [SPEAKER_01]: cause and then you go to market and you know, I've seen people that their revenue is up

[00:16:16] [SPEAKER_01]: 50% from a couple of years ago and they're like, this is going to be great.

[00:16:20] [SPEAKER_01]: But their valuation could have been up 5x instead of 50%.

[00:16:25] [SPEAKER_01]: If they had done some foundational things, do you have any recommendations on like what I should

[00:16:30] [SPEAKER_01]: be thinking if that sounds like me and I'm listening and I'm like, maybe that is me.

[00:16:35] [SPEAKER_00]: No, absolutely. It's really, you know, heard the term get your house in order.

[00:16:40] [SPEAKER_00]: It's understanding, you know, what customers you have, making sure you have proper contracts

[00:16:46] [SPEAKER_00]: in place, making sure you have proper language for those contracts that they don't have an easy

[00:16:51] [SPEAKER_00]: out because you know, a firm could walk in and you know, if you're most some of your biggest

[00:16:57] [SPEAKER_00]: accounts are on month to month and they could leave and 60 days notice or things like that.

[00:17:02] [SPEAKER_00]: You know, you can start to pivot away from that. Understanding, you know,

[00:17:09] [SPEAKER_00]: the team as you mentioned, you know, what tools are you using?

[00:17:13] [SPEAKER_00]: Why are customers profitable? Why are customers not profitable? Understanding at least the number of

[00:17:19] [SPEAKER_00]: tickets and the number of, you know, hours your team is spending, you know, utilizing some great

[00:17:26] [SPEAKER_00]: PSA tools to be able to track some time sheets. And to your point, where are the customers

[00:17:31] [SPEAKER_00]: coming from? And then, you know, thinking about if you had funds and you wanted to invest,

[00:17:38] [SPEAKER_00]: where would you invest them? Maybe you need more security. Maybe you need some cloud talent.

[00:17:43] [SPEAKER_00]: Maybe it is M&A like, you know, that we can get girls. Maybe it is, you know, domestic expansion

[00:17:49] [SPEAKER_00]: or things like that. Maybe it's utilizing overseas where applicable. Just really looking at things

[00:17:56] [SPEAKER_00]: within your business that could to your point make it more profitable and at least start

[00:18:01] [SPEAKER_00]: thinking about those that, you know, clearly you can't do all of them, but you may be

[00:18:05] [SPEAKER_00]: able to put a few of them in place over the next year or two to kind of head in that direction.

[00:18:12] [SPEAKER_00]: And as you mentioned, you know, taking on more revenue, that is not necessarily the answer.

[00:18:18] [SPEAKER_00]: You may be, you know, low bidding it and it's costing you more money and you're actually less

[00:18:24] [SPEAKER_00]: profitable on a percentage basis than you would be if you just, you know, had a strategic plan

[00:18:30] [SPEAKER_00]: and rolled that out and focused on a specific industry or two or a specific size customer,

[00:18:36] [SPEAKER_00]: really, you know, honing in on the targets that you have versus just trying to go and sell to

[00:18:42] [SPEAKER_01]: everybody. Yeah, I love that. Really good advice, Chris. Tell me about, yeah, everybody wants to

[00:18:50] [SPEAKER_01]: talk about M&A right now. It's so hot. And I think some are in a spot maybe like you or

[00:18:58] [SPEAKER_01]: the larger, maybe they have a, you know, they plan to be an acquirer. Some that are smaller

[00:19:03] [SPEAKER_01]: are looking to be acquired. But I think most of the MSPs I talk to, they don't know.

[00:19:08] [SPEAKER_01]: Like do I get to a certain size and then start acquiring? I think most of them

[00:19:12] [SPEAKER_01]: miss like you mentioned that there's multiple levers, not just equity but debt and other things.

[00:19:16] [SPEAKER_01]: So let me just ask you what's your take on the M&A market right now for MSPs?

[00:19:23] [SPEAKER_00]: I mean, I certainly think it's heavy in the consolidation aspect, I think. But

[00:19:31] [SPEAKER_00]: it also seems like there are so many out there from, you know, every region, I think, you know,

[00:19:38] [SPEAKER_00]: people have thrown numbers, you know, 20,000, 50,000 whatever the number is that are out there.

[00:19:44] [SPEAKER_00]: So I think there are plenty of them starting. And I think certainly, you know,

[00:19:49] [SPEAKER_00]: now private equity is heavily in this space and as they are in most spaces.

[00:19:56] [SPEAKER_00]: You know, timing matters. Obviously interest rates being what they were, I think has,

[00:20:03] [SPEAKER_00]: you know, put some, you know, additional spotlight on this because, you know, higher

[00:20:09] [SPEAKER_00]: interest rates lead to less ROI on the dollar. So looking at that, but look, it's going to

[00:20:16] [SPEAKER_00]: continue the recurring nature, the companies that know, you know, what's my lifetime value of a customer,

[00:20:25] [SPEAKER_00]: how much is the cost to acquire a customer, things like that and just the recurring revenue. And

[00:20:31] [SPEAKER_00]: most have, you know, that I'm talking to have gone to multi-year contracts, which,

[00:20:35] [SPEAKER_00]: you know, makes it more attractive. And I think it is a tough business to,

[00:20:41] [SPEAKER_00]: you know, scale without investment. You know, I think to your point, and I agree with you that a

[00:20:49] [SPEAKER_00]: lot of these companies started with the CEO being 80% of the sales. So that's not scalable.

[00:20:56] [SPEAKER_00]: And anyone, you know, that's, I'm not saying anything that people don't know.

[00:21:00] [SPEAKER_00]: So in order to scale, you know, you're either looking at acquisition,

[00:21:04] [SPEAKER_00]: you're looking at hiring a sales team or some other, you know, new service line that would

[00:21:11] [SPEAKER_00]: differentiate you and all require money, capital and risk, which, you know, a lot of times people

[00:21:19] [SPEAKER_00]: are risk adverse or certainly cautious in some sort of way. So I think that's, you know,

[00:21:26] [SPEAKER_00]: you get to a point where you either have to get involved in this M&A, whether it's selling

[00:21:32] [SPEAKER_00]: or buying, or, you know, run the risk of just kind of riding out the life cycle of your company.

[00:21:40] [SPEAKER_00]: So I think, you know, many people say you're either requiring or looking to be acquired if

[00:21:46] [SPEAKER_00]: you're kind of caught in the middle, you might be stuck. So it is going to continue. I think

[00:21:51] [SPEAKER_00]: it's certainly an extremely popular industry. And from what we're seeing, you know, where 20

[00:22:00] [SPEAKER_00]: years ago, most small companies were, you know, maybe selling or, you know, looking to procure

[00:22:07] [SPEAKER_00]: MSP services. Now, you know, I don't know the percentage, but, you know, a significant amount

[00:22:14] [SPEAKER_00]: of companies are utilizing managed services, whether it's, you know, fully outsourced or

[00:22:19] [SPEAKER_00]: co sourcing some level of service for them. So it's, you know, it's everywhere.

[00:22:26] [SPEAKER_00]: Every company you talk to probably has an MSP or some high percentage of them.

[00:22:32] [SPEAKER_00]: So being involved in this M&A space is really the only way to support some of those larger customers

[00:22:37] [SPEAKER_00]: to be able to expand services. But it comes at a price for sure, and it's how much you're

[00:22:45] [SPEAKER_00]: willing to risk as an owner in doing any of those things, whether it's M&A expansion of

[00:22:49] [SPEAKER_01]: services or building a sales team. Yeah, there's always risk involved. I think a lot of us

[00:22:58] [SPEAKER_01]: in the technology side, we are actually pretty decent at trying to manage risk, right? Because

[00:23:06] [SPEAKER_01]: you started a business, you didn't just bet it all on black or you wouldn't be around. So you're

[00:23:10] [SPEAKER_01]: making some risk, I think far too few of us manage technology risk or cybersecurity risk

[00:23:15] [SPEAKER_01]: and forget about the other risk, like the sales risk, the marketing risk, the M&A risk.

[00:23:22] [SPEAKER_01]: So I'm curious, Chris, what's focused technology playing? Like, do you guys see

[00:23:31] [SPEAKER_01]: organic growth? Do you see M&A as being like the key, especially with your, you know,

[00:23:36] [SPEAKER_01]: background between public companies, VCPE? I'm curious where you guys stand.

[00:23:41] [SPEAKER_00]: Yeah, I think we're going to try and do both. I think organic growth is a must

[00:23:48] [SPEAKER_00]: to grow in this space. I think M&A right now, you know, we're trying to make sure we're in a good

[00:23:57] [SPEAKER_00]: spot and we're certainly going to look. It's tough all the time to say we're going to be

[00:24:04] [SPEAKER_00]: acquisitive. We're certainly going to be looking to be acquisitive and hopefully find the right

[00:24:09] [SPEAKER_00]: suitor. But the market is expensive out there, I would say, and trying to find a deal that works for

[00:24:18] [SPEAKER_00]: us and certainly works for the company we would acquire remains to be seen. But we want to be

[00:24:24] [SPEAKER_00]: acquisitive, but we absolutely will be growing organically, investing in additional service

[00:24:31] [SPEAKER_00]: lines and certainly investing in a sales team and technical talent to support the

[00:24:36] [SPEAKER_01]: the customers that we're bringing on. Is there anything, is there a kind of an avatar for anybody

[00:24:43] [SPEAKER_01]: that's listening where you're kind of this multiple revenue or this in this region? Or is there a

[00:24:50] [SPEAKER_01]: sweet spot for you guys that you're thinking about? Yeah, I think right now obviously the bulk

[00:24:54] [SPEAKER_00]: of our business is in, I would say greater Boston. We have some customers throughout New England.

[00:24:59] [SPEAKER_00]: We have some spread out throughout the country, but those are more opportunistic.

[00:25:04] [SPEAKER_00]: So we are looking to remain, I would say in the Northeast. It doesn't necessarily mean New England,

[00:25:08] [SPEAKER_00]: but definitely in the Northeast looking to expand. And as far as multiples,

[00:25:17] [SPEAKER_00]: we're looking at it on an EBITDA basis. And obviously we've seen numbers in the

[00:25:26] [SPEAKER_00]: mid to upper single digits and even some that want to get low double digits up to 12 times. So

[00:25:36] [SPEAKER_00]: you know again, every company is different depending on the percent of recurring revenue,

[00:25:40] [SPEAKER_00]: how long they've had customers, what their contracts look like, if they have some skill set

[00:25:46] [SPEAKER_00]: around, you know, they've leveraged AI more than the average help desk or knock

[00:25:52] [SPEAKER_00]: things like that, or they have some unique security skill set that we don't have. So those

[00:25:58] [SPEAKER_00]: definitely areas that we're looking at. But yeah, happy to have a conversation with anybody.

[00:26:06] [SPEAKER_00]: Again, as I mentioned at the top, you know, I think it's if you're interested,

[00:26:10] [SPEAKER_00]: you know, talking even with potential acquirers, whether that's private equity or whether

[00:26:14] [SPEAKER_00]: that's an MSP looking to grow, just, you know, I'm happy to have a conversation with

[00:26:19] [SPEAKER_00]: anyone that has questions that either is potentially willing or hasn't even thought about it. I think

[00:26:26] [SPEAKER_00]: talking with more people that are more familiar with the space than they are is extremely important.

[00:26:32] [SPEAKER_00]: And I think, you know, most people are respectful and appreciative and, you know,

[00:26:37] [SPEAKER_00]: more than willing to have a conversation, whether it's over the phone or in person.

[00:26:42] [SPEAKER_01]: Definitely, if you're listening, it would say take your work, take the opportunity to reach

[00:26:47] [SPEAKER_01]: out to others, including Chris. And sometimes I get stuck thinking, you know, we're all alike,

[00:26:53] [SPEAKER_01]: we're all this, we're all that. And there's no standard multiple because there's no standard

[00:26:57] [SPEAKER_01]: company, right? Everything is a little bit different. Not only things that are easier

[00:27:01] [SPEAKER_01]: to quantify like contracts and revenue mix, but you just have different talent.

[00:27:06] [SPEAKER_01]: One's super cybersecurity focused maybe it's strategic given what's going on.

[00:27:10] [SPEAKER_01]: One is really behind on that, but there may be, you know, maybe you're really strong and a vertical

[00:27:17] [SPEAKER_01]: to your intentions off the charts, right? So everybody has a little bit of a different

[00:27:22] [SPEAKER_01]: niche, you know, whether they know it or not. So I think discussing this sort of things,

[00:27:26] [SPEAKER_01]: but keeping that in mind, don't miss that opportunity to take, you know, Chris up on that offer.

[00:27:32] [SPEAKER_00]: Yeah, I think the majority of, you know, we're in a services business, right? So

[00:27:37] [SPEAKER_00]: very few MSPs that I've talked to have a product or some sort of software solution.

[00:27:44] [SPEAKER_00]: Those companies are unique when you're selling products or software, but when it comes to

[00:27:48] [SPEAKER_00]: an MSP or any other services business, the people are the most important thing at the end of the

[00:27:54] [SPEAKER_00]: day. People in process anyway. So, you know, you do get concerns as an owner, you have a staff,

[00:28:01] [SPEAKER_00]: what's going to happen with them? And I'm not saying some of the massive MSP rollups don't

[00:28:06] [SPEAKER_00]: do things to, you know, fill in some efficiencies. But certainly from our perspective,

[00:28:13] [SPEAKER_00]: you know, we've done two acquisitions and got rid of zero people. And that would be the expectation

[00:28:19] [SPEAKER_00]: of us moving forward is, you know, we're trying to buy talent. We're trying to buy

[00:28:24] [SPEAKER_00]: to your point a specific vertical or skill set. And, you know, I can only speak for us that,

[00:28:30] [SPEAKER_00]: you know, our goal is not to say, well, you have 10 of this and I have five of this.

[00:28:35] [SPEAKER_00]: So let's make 12 and get rid of people. That's not our plan at all. Our plan is to continue to grow

[00:28:41] [SPEAKER_00]: and utilize their talents. And, you know, we strongly feel, you know, service companies in this space,

[00:28:48] [SPEAKER_00]: in order for us to grow need to have those people. So we're respectful of that.

[00:28:54] [SPEAKER_00]: We're trying to go in and get it, you know, if the two that we have done and certainly my

[00:28:59] [SPEAKER_00]: background is talk to those people face to face when the deal starts happening or has happened

[00:29:05] [SPEAKER_00]: and gets announced to make them comfortable that, hey, this is, you know, a situation that occurred.

[00:29:14] [SPEAKER_00]: And here's why we did it. Here's what we're about. Happy to listen to what you're about.

[00:29:19] [SPEAKER_00]: And certainly we have no intention of walking in and making any rash decisions on any

[00:29:27] [SPEAKER_00]: employees for sure. I mean, we want to maintain that relationship and work together,

[00:29:32] [SPEAKER_00]: figure out a way to integrate things and be a better company as we come out the backside of

[00:29:38] [SPEAKER_00]: that acquisition and continue to grow. Yeah, I love that. Zero people, right,

[00:29:44] [SPEAKER_01]: that's an amazing takeaway. Two companies acquired zero people, you know, let go from

[00:29:48] [SPEAKER_01]: the acquisition is amazing. I think that allays a lot of years that not only the team has,

[00:29:54] [SPEAKER_01]: but even owners, right? Most owners are like, I've built this amazing team. Some of them have been

[00:29:58] [SPEAKER_01]: with me and I've worked with them 50 hours a week for, you know, a decade or two. So I think that

[00:30:04] [SPEAKER_01]: is really helpful. Give me some of your thoughts. I want to keep on this kind of talent.

[00:30:10] [SPEAKER_01]: How do you, a lot of people, I feel like it's easy to assess hard numbers,

[00:30:15] [SPEAKER_01]: right? What's on the balance sheet or the P&L or what have you.

[00:30:19] [SPEAKER_01]: How do you assess the talent? Obviously, because, you know, to, you know, company A,

[00:30:28] [SPEAKER_01]: company B both doing five million and recurring revenue, even if they are both recurring revenue,

[00:30:35] [SPEAKER_01]: still could have very different talent, very different level of performance,

[00:30:39] [SPEAKER_01]: very different level of skill. Perhaps even some people that are wonderful and some that are not.

[00:30:45] [SPEAKER_01]: So obviously none of that gets reported on a balance sheet, but I'm kind of curious

[00:30:50] [SPEAKER_01]: if you have any way to figure that out before you start trying to integrate.

[00:30:54] [SPEAKER_00]: Yeah, I think pre-deal, you're trying to meet as many people as the owner will allow,

[00:31:03] [SPEAKER_00]: which I've been in deals where that number was zero and I've been in deals with that

[00:31:08] [SPEAKER_00]: number was maybe the top five or six people. So whatever you can do to meet management team

[00:31:14] [SPEAKER_00]: or whoever their direct, the owners direct reports are, get a better understanding of what type of

[00:31:20] [SPEAKER_00]: people they are, make sure their culture fits. But you are in pretty much any acquisition I've

[00:31:27] [SPEAKER_00]: ever done, you know, taking a leap of faith when it comes to the rest of the employees,

[00:31:31] [SPEAKER_00]: right? You're never going to meet the whole staff. So you're trying to meet as many people

[00:31:35] [SPEAKER_00]: as you can to typically, you know, the culture of management tends to be the

[00:31:42] [SPEAKER_00]: culture all the way down, not always the case. But so, you know, let's say you do that,

[00:31:46] [SPEAKER_00]: you meet with a few of the people, you do the deal. Now you're during integration and I really

[00:31:52] [SPEAKER_00]: think it's extremely important to invest a lot of time meeting with those people,

[00:31:57] [SPEAKER_00]: not necessarily, you know, the CEO, the CFO, but getting my help desk manager talking with

[00:32:04] [SPEAKER_00]: the help desk people, getting my knock manager meeting with the knock team, any professional

[00:32:10] [SPEAKER_00]: services or field engineers meeting with others. I guess this will give away a little bit, but

[00:32:17] [SPEAKER_00]: you know, I'm always a fan of, you know, grabbing a beer and some appetizers if there's a way to

[00:32:22] [SPEAKER_00]: get the group together post acquisition and just, you know, everybody kind of puts their guard down

[00:32:27] [SPEAKER_00]: a little bit and gets to know people, married kids, where do you live? You know, again,

[00:32:32] [SPEAKER_00]: in this post COVID environment, it's not as easy because people are so spread out. We're

[00:32:37] [SPEAKER_00]: seeing most companies, at least in this space have hired some people not at their HQ. But, you know,

[00:32:45] [SPEAKER_00]: that's the only way to do it is that and then certainly post acquisition.

[00:32:51] [SPEAKER_00]: I'm going meeting with customers, you know, top five, top 10, some level of customers,

[00:32:56] [SPEAKER_00]: a to make them feel okay that hey, nothing's going to change, you know, Mary was your VCO,

[00:33:04] [SPEAKER_00]: Mary's going to be your VCO, your, you know, your engineering, you know, your network engineer used

[00:33:10] [SPEAKER_00]: to call Mike. He's going to keep calling Mike if he has a problem, you know, alleviate their fears.

[00:33:15] [SPEAKER_00]: But also, hey, how's it been going? You know, you've been with this company for 10 years and,

[00:33:22] [SPEAKER_00]: you know, and they're usually pretty open with yeah, I mean, a great company. I was

[00:33:26] [SPEAKER_00]: a little hesitant when I saw the news, but you know, just getting to know them and making

[00:33:31] [SPEAKER_00]: sure, look, there's going to be no disruption to you right now. And then if we ever do decide that

[00:33:38] [SPEAKER_00]: we're going to integrate tools or something's going to change, you're going to be communicated to

[00:33:42] [SPEAKER_00]: in plenty of time. And we're going to introduce you to the new process, new staff,

[00:33:47] [SPEAKER_00]: whatever it might be. So it really is both customers, potentially vendors, depending who

[00:33:53] [SPEAKER_00]: those vendors are, and certainly employees, shaking hands and, you know, breaking bread,

[00:34:00] [SPEAKER_00]: as they say, and getting to know them before you even start the integration. You know, before you even

[00:34:05] [SPEAKER_00]: say, all right, you have connect wise, we have auto task or whatever it is, you know, obviously

[00:34:10] [SPEAKER_00]: you got to figure out our RMM or whatever it might be that you're going to get into the nuts

[00:34:15] [SPEAKER_00]: and bolts of the actual integration, you're going out and talking with people. And I think

[00:34:21] [SPEAKER_00]: that works well because we're all human and we want to be appreciated and want to be heard.

[00:34:29] [SPEAKER_00]: So, you know, go out, ask the right questions, listen. And, you know, we've had great success

[00:34:36] [SPEAKER_00]: with that in the past where people have said, look, you know, we understand now we were acquired,

[00:34:42] [SPEAKER_00]: there was a lack of investment over the last couple years. And we really have lacked this

[00:34:48] [SPEAKER_00]: skill set or we didn't buy this tool that we need or whatever it might be. And, you know,

[00:34:53] [SPEAKER_00]: looking at that and listening to that and making sure, look, we want to make this better for you.

[00:34:59] [SPEAKER_00]: So hey, we have that tool. So okay, now we know that's probably one of the first areas of integration

[00:35:03] [SPEAKER_00]: we want because let's say you don't have IT glue and we do or whatever it might be,

[00:35:09] [SPEAKER_00]: that we're trying to make their job easier and they appreciate it and say, wow, this is actually

[00:35:14] [SPEAKER_00]: better for us, better benefits hopefully or better opportunity. I mean, that's a big

[00:35:19] [SPEAKER_00]: sell of ours. We have a career path and we're walking into what tended to be the two that we did,

[00:35:24] [SPEAKER_00]: smaller organizations where people didn't have that career path and we've been able to promote from

[00:35:29] [SPEAKER_00]: within and make them supervisors and eventually managers and I think they appreciate that for

[00:35:34] [SPEAKER_00]: sure and expand their skill sets. Oh wow, we didn't have a cloud team. Now we do. I want to

[00:35:39] [SPEAKER_00]: be a cloud engineer. I want to get some AWS training, things like that. And that's,

[00:35:43] [SPEAKER_00]: you know, definitely extremely important is to make those employees and certainly customers

[00:35:48] [SPEAKER_00]: feel at ease even though there is some disruption that everything's going to be all right.

[00:35:53] [SPEAKER_01]: I think there's this misperception that I'm just going to say directly which is

[00:35:58] [SPEAKER_01]: CFO and folks with a CFO background tend to be just about the P&L, just about being counting.

[00:36:06] [SPEAKER_01]: And what I love about what I've already heard and then some of the research is

[00:36:12] [SPEAKER_01]: it looks like you're really big on focusing on keeping the talent and because you have this

[00:36:19] [SPEAKER_01]: better understanding the most of why it's so expensive in so many areas if you have that

[00:36:27] [SPEAKER_01]: turnover. So tell me more about kind of your talent and why that's important. Yeah, I think

[00:36:34] [SPEAKER_00]: you know understanding the numbers is extremely important but again in a services-based business

[00:36:43] [SPEAKER_00]: all those numbers are telling you is about people whether you've had success selling,

[00:36:49] [SPEAKER_00]: you've had success keeping customers, supporting customers.

[00:36:53] [SPEAKER_00]: In any services business I've been involved in it really is about the people

[00:36:58] [SPEAKER_00]: and that will drive the efficiency of your numbers. And numbers start to tell a story

[00:37:07] [SPEAKER_00]: but maybe don't always. You know you see my gross profits higher or lower or whatever.

[00:37:12] [SPEAKER_00]: I mean that's all a factor of what their accountant decided to do. At the end of the day

[00:37:18] [SPEAKER_00]: if I want to put the sales team in cost of goods sold nothing prevents me, there's no rule that

[00:37:23] [SPEAKER_00]: prevents me from doing that it doesn't make sense but you know so there's a numbers that give you

[00:37:30] [SPEAKER_00]: a list of questions that hey this is different than what I've seen in the past or this is a

[00:37:36] [SPEAKER_00]: good way bad way but really the people are the ones that are able to answer those questions

[00:37:41] [SPEAKER_00]: and be able to understand those numbers better. And you know look I've been in business for a long

[00:37:49] [SPEAKER_00]: time sometimes you do have to make tough decisions some people aren't the right cultural fit some

[00:37:54] [SPEAKER_00]: people aren't the right you know I'm performing at the level that you expect whether it's you

[00:38:00] [SPEAKER_00]: know within your own organization and you have to have tough conversations those do happen

[00:38:06] [SPEAKER_00]: but you know being able to separate you by using the numbers but not only making decisions

[00:38:14] [SPEAKER_00]: in an office and just barking out orders because you know overheads are too high get rid of three

[00:38:20] [SPEAKER_00]: people you know how do you know what three people to get rid of you know maybe you do need to get

[00:38:24] [SPEAKER_00]: rid of some people it certainly comes up but how do you know just because one manager says well

[00:38:29] [SPEAKER_00]: here's my stack rank you know looking at some data behind that to better understand that.

[00:38:35] [SPEAKER_01]: I wanted to pivot for a minute and talk about something that I think most of us miss which is

[00:38:40] [SPEAKER_01]: you've got the CFO background we were kind of talking earlier about like selling to the CFO

[00:38:46] [SPEAKER_01]: and I feel like even with your selling literally to the CFO as a title or you know when

[00:38:52] [SPEAKER_01]: you're smaller MSP a lot of times you're selling to a CEO owner you should be speaking business

[00:38:57] [SPEAKER_01]: language and I think the common unfortunately if you're listening if your website says no

[00:39:03] [SPEAKER_01]: geek speak you know you're not unique right well I think the industry is realized you know we need to

[00:39:08] [SPEAKER_01]: quit showing up and talking speeds and feeds but it still ends up being either too technical or

[00:39:16] [SPEAKER_01]: not tied to some business initiative some ROI something like that so whether it's literally

[00:39:22] [SPEAKER_01]: the CFO or the owner like give me your perspective because you I think have this superpower Chris

[00:39:26] [SPEAKER_01]: if I've been a CFO I can kind of understand what they're looking for help folks unlock that

[00:39:33] [SPEAKER_01]: because I feel like that's a the average MSP is a tech one and you know I gotta tell you a lot of

[00:39:39] [SPEAKER_01]: the technical stuff um and work ship maybe missing some of the business details yeah I think that

[00:39:45] [SPEAKER_00]: comes from conversation right so the first thing is not everybody thinks the same whether they're

[00:39:52] [SPEAKER_00]: all CFOs CEOs doesn't matter why you're in that room again right you're trying to propose

[00:39:58] [SPEAKER_00]: or maybe just an initial meeting um letting them talk about like you know what do you want to do

[00:40:05] [SPEAKER_00]: better from a technology perspective what are you not satisfied with what are you trying to

[00:40:10] [SPEAKER_00]: accomplish and you find out very early on what their top two or three issues are

[00:40:17] [SPEAKER_00]: very you know I guess we see it somewhat that it gets into the you know responsiveness

[00:40:23] [SPEAKER_00]: you know maybe the company that they're using is growing too fast and they're not responding so

[00:40:29] [SPEAKER_00]: that may come up but you know this business you know other than the very top technical

[00:40:37] [SPEAKER_00]: you know problems that come up it's it's a relationship like they want to know okay I

[00:40:43] [SPEAKER_00]: have the CEO in the room I have the CFO of the room like anybody that's rolled out technology

[00:40:48] [SPEAKER_00]: and oversaw technology know something's gonna break and you know you have to build a relationship

[00:40:54] [SPEAKER_00]: enough for that prospect or customer to know we didn't do that on purpose right we're gonna

[00:41:00] [SPEAKER_00]: make a mistake but you know we have good people we've trained our people but stuff happens um so

[00:41:06] [SPEAKER_00]: the confidence that they have to say all right I know that's gonna happen who can I call

[00:41:12] [SPEAKER_00]: and and focus is you know position on this is having either an executive sponsor or executive team

[00:41:21] [SPEAKER_00]: members to build relationships with the other side you know I don't you know especially with

[00:41:26] [SPEAKER_00]: some of our medium and larger customers if we're you know selling to a CEO or CFO and they're

[00:41:32] [SPEAKER_00]: involved in the contract and they feel like they have to call a help desk engineer if they

[00:41:38] [SPEAKER_00]: have a problem or you know some other um you know low to mid-level individual it doesn't give them a

[00:41:44] [SPEAKER_00]: lot of confidence versus all right I have the CEO's number I have the CFO's number and I'm able to

[00:41:51] [SPEAKER_00]: have a conversation with them and and you know I don't know the percentage I'm making up a

[00:41:57] [SPEAKER_00]: percentage here but it's high 80% of our business is relationship selling like I'm not

[00:42:02] [SPEAKER_00]: walking into that customer saying my help desk is better um you know my field engineers are better

[00:42:08] [SPEAKER_00]: I think they are but I'm not selling that way it's more our process and our people

[00:42:15] [SPEAKER_00]: and if they believe the people in the room um during those conversations as I mentioned earlier

[00:42:22] [SPEAKER_00]: kind of from an acquisition perspective if they know hey this team is is well developed

[00:42:28] [SPEAKER_00]: they have experience they're going to make that leap to say all right they're going to hire good

[00:42:33] [SPEAKER_00]: people so they don't need to meet my help desk I don't have to meet my network engineer they're

[00:42:38] [SPEAKER_00]: going to believe in you know I hired the right people and certainly may get into references

[00:42:43] [SPEAKER_00]: and have to give the company you know a reference but I don't you know my opinion on

[00:42:49] [SPEAKER_00]: managed services is there's still a small piece I mean if they have a AWS cloud environment

[00:42:55] [SPEAKER_00]: that runs their software program they want to understand that you know what you're doing around

[00:43:01] [SPEAKER_00]: AWS so there is some level of selling from us from a technical perspective but still the

[00:43:08] [SPEAKER_00]: significant percentage is based on you know do I like these these people in front of me do I

[00:43:14] [SPEAKER_00]: think they can build a good team do I think they have the right process in place are they

[00:43:18] [SPEAKER_00]: responsive during the sales process are they you know reasonable you know in their discussions

[00:43:24] [SPEAKER_00]: and I think that allows us to to be more successful by you know bringing technical when it's needed

[00:43:31] [SPEAKER_01]: but it's still a relationship sale I want to switch gears for a minute and get your

[00:43:37] [SPEAKER_01]: thoughts on some questions that I want that I want to ask to each of these interviews which

[00:43:43] [SPEAKER_01]: the first is what's the biggest lesson that you've learned over these years

[00:43:51] [SPEAKER_00]: being in an MSP it is all about the relationship you know as I said and I guess I'm repeating it but

[00:44:02] [SPEAKER_00]: you we as an MSP need to build a relationship with the right people at our customer because

[00:44:09] [SPEAKER_00]: things are going to go wrong but also on the other side they're going to have a special need

[00:44:14] [SPEAKER_00]: that they're like you know that's unique it's maybe not in the contract it's a it's a favor

[00:44:19] [SPEAKER_00]: whatever it might be you need to build those relationships because I think they understand

[00:44:26] [SPEAKER_00]: that you know a help desk a ticket could get delayed but you know making sure that we're

[00:44:35] [SPEAKER_00]: building relationships with the right people will lead to greater customer retention for sure

[00:44:41] [SPEAKER_00]: and I think where early on I thought it was about you know what is our help desk ticket

[00:44:48] [SPEAKER_00]: metrics how long is it taking us to get back to customers and that's important don't get me wrong

[00:44:53] [SPEAKER_00]: but make you know making sure we as C level executives are doing our best to build relationships

[00:45:00] [SPEAKER_00]: with the right people at our customers and making them feel comfortable that if there's ever any

[00:45:06] [SPEAKER_00]: issue they can come right to us and we're going to solve it too we don't just ignore it

[00:45:11] [SPEAKER_00]: you know we're driving all the way to success for their request that comes in that's you know

[00:45:18] [SPEAKER_00]: important to them and they need it you know accomplish for them building that relationship for sure

[00:45:25] [SPEAKER_01]: what's the one thing if you could do over that you would in your time now you've grown a time

[00:45:32] [SPEAKER_01]: you've had management value at m&a right I'm not saying that's on the list but you know

[00:45:36] [SPEAKER_01]: you've done a lot of things you've gotten further than most MSPs usually there's some scars I'm curious

[00:45:41] [SPEAKER_00]: what's the one thing you do ever I feel like I'm trying to narrow it down to one thing I feel

[00:45:47] [SPEAKER_00]: two or three I would say you know there was a couple hires that you know we look to do and

[00:45:56] [SPEAKER_00]: decided for probably financial reasons not to make them but we should have invested in some of our

[00:46:06] [SPEAKER_00]: people you know beefing up our talent a little bit sooner than I think we did

[00:46:12] [SPEAKER_00]: as we were growing so you know reiterate you know most years we're growing 20 plus

[00:46:18] [SPEAKER_00]: so you're adding in more and you're trying to see if you can get a little bit more profitability

[00:46:22] [SPEAKER_00]: out of it and I think in a couple instances we were delayed in hiring to beef up whether it's

[00:46:30] [SPEAKER_00]: a help to ask or there's a field team or this the onboarding team that you know we probably

[00:46:35] [SPEAKER_00]: should have made some different decisions that led to maybe a more bumpy onboarding than it should

[00:46:40] [SPEAKER_01]: have been yeah I appreciate you being raw and open with me Chris and in for context I know

[00:46:48] [SPEAKER_01]: you don't like to brag about yourself but just to give folks some insight right you're

[00:46:53] [SPEAKER_01]: somewhere around 100 employees we are yep right so 20 percent just 20 just 20 percent it's pretty

[00:47:00] [SPEAKER_01]: significant amount of revenue and I know how misspeak works so it means that you're you know you may

[00:47:05] [SPEAKER_01]: not need 20 more people but you need more than one or two so that's a lot of uh you know when

[00:47:10] [SPEAKER_01]: you say 20 plus percent that's a that's much easier to do on a smaller number um it's getting

[00:47:15] [SPEAKER_00]: hard and we'll admit that the number is getting a little bit bigger but um no continuing to hire

[00:47:21] [SPEAKER_00]: great people and I think what we've decided to do years ago was open up the location you know

[00:47:28] [SPEAKER_00]: we were kind of in a hybrid model before COVID hit less hybrid obviously but certainly

[00:47:36] [SPEAKER_00]: New England focused as far as employees go and about four years ago or so we've opened that up

[00:47:42] [SPEAKER_00]: and and now have employees in 12 states and that certainly has allowed us to you know

[00:47:49] [SPEAKER_00]: and going back while I was hesitating on what we did wrong so I would say our remote processes were

[00:47:56] [SPEAKER_00]: a little bit behind our remote hiring um having help desk people in two states on the same time zone

[00:48:04] [SPEAKER_00]: is easier than having you know 15 help desk people in three different time zones

[00:48:11] [SPEAKER_00]: plus some overseas support um so I think but you know being able to

[00:48:18] [SPEAKER_00]: have a great recruiter that we have and being able to really have a specific process to

[00:48:25] [SPEAKER_00]: hiring making sure we're monitoring what type of you know not only technical skills but

[00:48:32] [SPEAKER_00]: personality those people have and have allowed us to you know really be on track with our

[00:48:38] [SPEAKER_01]: hiring alongside that growth that's amazing um what's a common myth about running an MSP

[00:48:48] [SPEAKER_00]: that you'd like to debunk common myth um there are plenty of technology

[00:48:59] [SPEAKER_00]: that can solve the same problem so but I still think it comes down to the people so

[00:49:07] [SPEAKER_00]: a lot of times you have we're growing and we just want to add people but really taking a step back

[00:49:14] [SPEAKER_00]: and identifying better process and better technology um can help um limit and grow profitability but

[00:49:24] [SPEAKER_00]: limit the you know one-to-one hiring that I think you have to do if you don't have that right tool

[00:49:30] [SPEAKER_00]: or right process so I think you know a lot of times as you mentioned you know you know

[00:49:34] [SPEAKER_00]: you're growing you have to hire people and that's true but I don't think you have to hire at the

[00:49:40] [SPEAKER_00]: same level I think it's important to take a step back and really analyze what your escalation

[00:49:46] [SPEAKER_00]: processes are and what what talent you need at the top and at the bottom of that funnel

[00:49:53] [SPEAKER_00]: to make sure you're solving problems more efficiently and more effectively

[00:49:58] [SPEAKER_00]: and it's not just throwing people at it it's really making sure that process is down

[00:50:03] [SPEAKER_01]: what are you looking forward to there's a lot of change a lot of things going on

[00:50:08] [SPEAKER_01]: you got our family you got all kinds of cool things I'm curious what what are you looking

[00:50:12] [SPEAKER_00]: forward to at this point Chris um you know professionally I'm just looking forward to

[00:50:18] [SPEAKER_00]: you know I've only been in the CEO role for nine or ten months now and you know I still

[00:50:23] [SPEAKER_00]: don't think I know what I don't know um so just I love really learning from other CEOs

[00:50:30] [SPEAKER_00]: I tried to do that as a CFO and then when I had what I thought was very good CFO experience I've

[00:50:37] [SPEAKER_00]: tried to you know pass that down to others that have been willing to discuss it and the same

[00:50:44] [SPEAKER_00]: you know result I'm trying to learn from other CEOs talk to them I enjoy talking with technical

[00:50:51] [SPEAKER_00]: CEOs I enjoy talking with kind of traditional sales people that have grown to the CEO role

[00:50:57] [SPEAKER_00]: and even you know had lunch two weeks ago with a woman that was promoted from CFO to CEO

[00:51:03] [SPEAKER_00]: the first one I had that that was you know in the same realm as me that recently got promoted

[00:51:09] [SPEAKER_00]: to a first time CEO role so just continuing to learn I think we're in a tremendous business

[00:51:16] [SPEAKER_00]: I tell we've hired four sales people in the last year and I've told every one of them

[00:51:22] [SPEAKER_00]: you know I don't know what you did prior in detail of how you sold but you know basically everybody

[00:51:28] [SPEAKER_00]: you talk to works for a company that can buy something that we're selling I'm not sitting here

[00:51:35] [SPEAKER_00]: saying we may want to sell one laptop but the point is literally any company in the world

[00:51:41] [SPEAKER_00]: we can do business with which not many industries can say that from a B2C perspective

[00:51:47] [SPEAKER_00]: and it's really you know any conversation you have could lead to an opportunity because everybody

[00:51:56] [SPEAKER_00]: is growing from a need of additional tech support whether it's physical hardware whether

[00:52:02] [SPEAKER_00]: it's software whether it's services whatever it might be they're continuing to spend every

[00:52:07] [SPEAKER_00]: year and usually that number is going up even in a roller coaster economy it's still going

[00:52:13] [SPEAKER_00]: up over time so it is amazing that being involved in this tech space and you know trying to figure

[00:52:22] [SPEAKER_00]: out how we can leverage AI and generative AI to help our business is exciting and I'm looking forward

[00:52:29] [SPEAKER_00]: to that for sure what's the top book you'd recommend to someone so as a CEO it actually

[00:52:37] [SPEAKER_00]: got implemented before but Traction is a book that we we've read as a management team and we do our

[00:52:45] [SPEAKER_00]: level 10 meeting every Monday from 4 to 5 30 and the company is aware of that and I think it gave

[00:52:53] [SPEAKER_00]: us a different view of having a regular cadence with our leadership team and you know

[00:52:59] [SPEAKER_00]: identifying issues within the company and working together to solve them so

[00:53:04] [SPEAKER_00]: you know Traction's the name of the book and it talks about you know creating quarterly rocks

[00:53:10] [SPEAKER_00]: and you know start every meeting by good news you know and certainly the overall level 10

[00:53:17] [SPEAKER_00]: meeting having a successful weekly meeting has been extremely important and you know we've done it

[00:53:24] [SPEAKER_00]: the prior CEO put it in place it's probably been it was pre-covid so probably five years now

[00:53:29] [SPEAKER_00]: maybe six years we've implemented that and it's a part of who we are and you know it's great to see

[00:53:36] [SPEAKER_00]: because some of our you know leadership team have implemented it with their teams and it's

[00:53:43] [SPEAKER_00]: really just making sure we're all on the same page and it was extremely valuable and it was

[00:53:48] [SPEAKER_00]: you know EOS entrepreneurial operating system it's a great book Traction for sure.

[00:53:55] [SPEAKER_01]: We use EOS so I totally get the quarterly rocks right the L10s yeah if you haven't heard of it you

[00:54:03] [SPEAKER_01]: don't have it read that book definitely do that read that did you guys to choose to self-implement

[00:54:08] [SPEAKER_00]: or hire an implementer? We self-implemented it's funny we met with a couple companies and

[00:54:14] [SPEAKER_00]: rightfully so I think our CEO at the time you know it was a high price tag I would say

[00:54:20] [SPEAKER_00]: at least at the time so we did self-implement we've you know they have a great LinkedIn page

[00:54:27] [SPEAKER_00]: and they now have some great material that helps you know self-implementation

[00:54:32] [SPEAKER_00]: so we did decide to self-implement and it's worked out well for us. Well that's awesome good for you

[00:54:39] [SPEAKER_01]: you know the horror story to hear is we self-implemented and then we didn't use it

[00:54:43] [SPEAKER_01]: so you know it's like a lot of things you the few of those take out so the ones so hearing

[00:54:48] [SPEAKER_01]: successful one and especially as you guys have scaled so a minute ago you mentioned you're interested

[00:54:57] [SPEAKER_01]: I know you mentioned interest in automation and a moment ago you said AI and Gen AI

[00:55:04] [SPEAKER_01]: what's interesting what do you have your eye on right now?

[00:55:08] [SPEAKER_00]: I just think both from a finance side so being able to you know streamline some

[00:55:15] [SPEAKER_00]: some payables some invoicing being able to do some of that to handle it and then certainly on our

[00:55:24] [SPEAKER_00]: help desk side we're looking at ways within our phone system you know a great we haven't procured

[00:55:33] [SPEAKER_00]: it yet but we're looking at it which is you know putting AI on top of your phone system

[00:55:39] [SPEAKER_00]: and being able to you know read language tone and in direct calls to the right supervisors

[00:55:48] [SPEAKER_00]: and managers for calls that seem like voice escalated there was tension on the call

[00:55:55] [SPEAKER_00]: keywords obviously four letter words for instance things like that that can identify

[00:56:03] [SPEAKER_00]: problem calls right away versus you know maybe you don't hear for a day or two when the customer

[00:56:10] [SPEAKER_00]: calls you back or or so on and also helps with training you know it's you know I think we're

[00:56:15] [SPEAKER_00]: getting a couple thousand calls a week so it's impossible obviously to listen to every call

[00:56:20] [SPEAKER_00]: but if you can segment them by certain keywords or a certain escalation of voices things like

[00:56:27] [SPEAKER_00]: that I think are extremely important and something we're looking at and just any other ways to automate

[00:56:34] [SPEAKER_00]: you know from onboarding and offboarding of employees from our customers

[00:56:41] [SPEAKER_00]: new laptop setup password resets things like that that you know doesn't have to be generative

[00:56:47] [SPEAKER_00]: AI it can just be you know general AI but making our customer experience more self-service

[00:56:55] [SPEAKER_00]: I think especially as companies hire earlier career individuals you know they want to be

[00:57:03] [SPEAKER_00]: able to be self-sufficient and certainly with you know you know I don't look at remote work as a big

[00:57:09] [SPEAKER_00]: deal from us and our customers but certainly flexible schedules so you have people that may

[00:57:15] [SPEAKER_00]: be a working later at night because they're they're dealing with their children or their family

[00:57:21] [SPEAKER_00]: members that need things done during the day you know it's eight o'clock at night and they can't

[00:57:26] [SPEAKER_00]: reset their password you know if they could just do it in 30 seconds via some automated chatbot

[00:57:33] [SPEAKER_00]: verses having to call in and deal with you know overnight calling and things like that I think

[00:57:40] [SPEAKER_00]: are extremely important and then obviously the you know time zone difference and some of our

[00:57:45] [SPEAKER_00]: customers that people overseas so I think just giving them as much self-service as we possibly can

[00:57:53] [SPEAKER_00]: is I think extremely important and hopefully will differentiate us from some of our competitors

[00:57:59] [SPEAKER_01]: that's awesome so this is amazing I wanted to ask you to one more thing to kind of focus on is

[00:58:07] [SPEAKER_01]: you know you guys inkfab thousand been on seer in a channel futures just amazing the growth

[00:58:12] [SPEAKER_01]: is just admirable I'm not sure everybody's familiar with this is you have the triple crown award

[00:58:19] [SPEAKER_00]: seer in triple crown awards so what does that mean yeah they do their top 100 which is you know

[00:58:29] [SPEAKER_00]: we were in the security space their top 150 which is growth and then overall 500 which is the top

[00:58:39] [SPEAKER_00]: 500 technology firms so they do three separate things and if you make all three

[00:58:44] [SPEAKER_00]: a few years ago we did and we got the triple crown so it's cool I mean we're obviously you know I

[00:58:51] [SPEAKER_00]: appreciate we're 100 people but at the end of the day that's a small business still not everyone

[00:58:56] [SPEAKER_00]: knows who we are so whatever we can do to leverage free advertising where CRN or MSP 501

[00:59:04] [SPEAKER_00]: or any of these other organizations that are promoting us as a part of their you know

[00:59:10] [SPEAKER_00]: subscription or online magazine or whatever it is we're leveraging all that we can which

[00:59:17] [SPEAKER_01]: definitely helps get the word out there for sure I love it I love it well Chris thank you for being

[00:59:24] [SPEAKER_01]: on MSP Mindset this was a gift to me I believe to everyone else out there so from the bottom of

[00:59:28] [SPEAKER_00]: my heart thank you for this I appreciate it Damian thank you so much it was a pleasure

[00:59:32] [SPEAKER_01]: and I thank you for having me on your podcast absolutely one last thing how should folks reach

[00:59:39] [SPEAKER_01]: out to you you said hey if you're an MSP you want to talk about M&A something like that

[00:59:42] [SPEAKER_00]: what's the best way to find you yeah I would say the easiest way is to go on LinkedIn and

[00:59:47] [SPEAKER_00]: reach out to me and connect with me but certainly you know feel free to give me a call or email

[00:59:53] [SPEAKER_00]: me at Ccapprio at focustsi.com but definitely utilize LinkedIn a lot look me up send me an

[01:00:00] [SPEAKER_01]: email I'm happy to have a conversation all right well you guys heard it take advantage of Chris's

[01:00:07] [SPEAKER_01]: generosity have a wonderful conversation I know I've enjoyed it thank you so much for being

[01:00:13] [SPEAKER_01]: on MSP Mindset today Chris thank you so much for having me