What's the Future Look Like for MSPs? with Rob Rae

[00:00:15] I think the role of the MSP is potentially changing as far as the end user goes. So it's not, hey, come fix my computer, right? That was the superpower of the MSP was, you know, we were technical enough that we could go and fix a computer or something that was completely foreign to somebody else. Well, these technologies are now easier to use. They break down less. Troubleshooting is, you know, YouTube videos these days and people will default to that before calling somebody.

[00:00:39] The role of the MSP is becoming more of consultative, more of like, let's look in this direction versus that direction, more involved in planning, budgeting, strategy, like really more intelligent business conversations with their end users as opposed to just fixing stuff.

[00:00:57] Hey guys, Damien Stevens, host of MSP Mindset. Today I am blessed to be live and in person at Grocon 2024.

[00:01:06] And I'm so excited to be with Rob Rae, who is the Community Vice President of Ecosystems.

[00:01:15] Corporate Vice President of Communities and Ecosystems. I know it's a mouthful. It's a mouthful.

[00:01:19] CVP.

[00:01:19] Of Communities and Ecosystems.

[00:01:21] Of Communities and Ecosystems. That's, yes.

[00:01:23] A very long title.

[00:01:24] Yes.

[00:01:24] Had a short name. Taxate.

[00:01:26] Yes.

[00:01:26] There we go. That's the easy part.

[00:01:27] Rob Rae, too. Very simple. Two syllables.

[00:01:30] I like that part.

[00:01:31] Yeah.

[00:01:32] So, I wanted to kind of get right in it.

[00:01:35] I think there's very few people that have a handle on the channel like you do.

[00:01:39] And I would like to know, what do you think is the biggest challenge facing MSPs right now?

[00:01:44] Wow. Big question right out of the gate.

[00:01:47] You know, I think the biggest challenge, and it's kind of been the same challenge that we've always had as time goes on, is just staying ahead of the curve, right?

[00:01:55] There's so much innovation in our space and everything is moving so rapidly, so fast.

[00:02:00] And it's really hard because human nature is just procrastination and, look, everything's working well right now.

[00:02:06] Why mess with it?

[00:02:07] Why change it?

[00:02:08] You know, why do we have to look at new tools?

[00:02:10] Why do we have to look at new vendors?

[00:02:11] Why do we have to look at new services?

[00:02:13] And I think, you know, we're at one of those moments.

[00:02:15] We saw this a couple of times with, you know, the cloud coming in and all of a sudden we all had to take a relook at the technologies and how we're doing it.

[00:02:23] And then cybersecurity became, you know, critical and important back 2016, 2017.

[00:02:28] And we all had to focus on that.

[00:02:29] AI is now the next big thing.

[00:02:32] So, you know, but also through those challenges comes opportunities, right?

[00:02:36] And I do think, like, you know, right now AI is a perfect example of that.

[00:02:40] It's like if we embrace this and kind of really, you know, get out of our stuck mode or comfort zones and learn this stuff,

[00:02:49] we could actually, meaning the SMB, MSP, and even vendor market could really take this by storm.

[00:02:54] So I think it's this, you know, to answer the question, it's just constantly staying on top of everything because it's exhausting sometimes.

[00:03:00] It really is.

[00:03:01] Yeah.

[00:03:04] How do you even attempt to do that?

[00:03:05] It's like as an MSP.

[00:03:07] I think you just got to force yourself, right?

[00:03:09] And there's a couple things, you know, we have the luxury at some of the larger vendors that I've worked with where, you know, you can take time,

[00:03:17] like give time, especially to engineers to be able to go and just play around with something, right?

[00:03:22] It's not necessarily related to the job that they're doing, but give them a few minutes every day or a couple of hours a week where, you know,

[00:03:29] it's part of their responsibility to go learn something new or go play around with something, you know, find something creative or something new.

[00:03:36] And I think, you know, if we kind of force ourselves to do that, even as, you know, business leaders or executives in some of these MSPs, same thing.

[00:03:43] Like you just, you have to force yourself to go out and look for something else.

[00:03:46] I think the other big thing too, and I've been very bullish on this, is coming to trade shows like this one.

[00:03:52] Because, you know, especially these days, when you're going to a trade show, whether it's ours at Beyond or IT Nation with ConnectWise or Grocon here with Marketopia,

[00:04:00] like there's vendors here you've never heard of.

[00:04:02] That's right.

[00:04:03] There's technologies here that you have not seen before.

[00:04:05] And sometimes coming and doing it and putting yourself in this environment, taking yourself out of the business for a couple of days to work on the business for a couple of days,

[00:04:13] you'll find some really cool new things.

[00:04:16] And there's peers you haven't met and talks you haven't heard.

[00:04:19] Yeah, absolutely.

[00:04:20] And, you know, we say this all the time that whatever's keeping you up at night, somebody else is solved.

[00:04:24] Yeah.

[00:04:25] And you don't necessarily know how to find that person.

[00:04:27] But a lot of times, especially at these events, it's another huge value is that you can really, you know,

[00:04:32] meet somebody that you've never met before that maybe has solved a problem that you're dealing with.

[00:04:36] And vice versa, you might be able to help them with a problem that they're dealing with.

[00:04:39] So, yeah, we see that all the time.

[00:04:42] This episode is brought to you by Serbosity.

[00:04:45] I started Serbosity because I was an MSP that lost data because I thought backup success meant I could recover.

[00:04:53] And boy, was I wrong.

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[00:05:21] Now, you can do that by either hiring Serbosity or we'll take all the workload of managing backups off of your plate and test your backups daily, weekly, monthly and quarterly.

[00:05:30] Or you can keep the tech stack you have in place, your existing backup into your provider and steal my 18 years of knowledge and download that process and add that to your operational maturity today.

[00:05:44] What do you think about AI?

[00:05:47] And what I specifically mean is some people will say this is, you know, technology continues to change faster.

[00:05:52] Cloud changed faster than on-premise and cybersecurity faster and AI even faster, perhaps.

[00:05:58] So things keep getting faster.

[00:05:59] Like how do mere mortals keep up with this stuff?

[00:06:02] Yeah, that's well, use AI to keep up with AI.

[00:06:05] Right.

[00:06:06] Now, you know what?

[00:06:07] I think it is.

[00:06:08] I mean, first of all, we're in the technology space.

[00:06:10] So it's kind of everybody's responsibility to kind of know this.

[00:06:13] And there's so much bad information out there, especially in the end user community that don't live and breathe IT all day.

[00:06:19] So, you know, this is, again, where kind of our responsibility is kind of sitting and what we should and have to do with these kinds of things.

[00:06:26] But here's the thing.

[00:06:29] And we see this all the time, right, where some new technology comes out and immediately there's this rush to try to figure it out and be the first one that's kind of doing it in the market.

[00:06:39] We know over, you know, if we look at history, like you have time, right?

[00:06:45] We do have time to be able to figure this out, to understand what it is, the capabilities of it.

[00:06:50] What can it do for your individual end users as a business or the individuals within, you know, those businesses that you serve?

[00:06:56] I think, you know, there's time to be able to sort through that and figure that out.

[00:07:01] And then at the end of the day, we all have to figure out how to make money at it, too.

[00:07:04] Right. That's going to be the critical part, because, you know, as cool and sexy as AI might be, if there's no way to make money, nobody's going to do it.

[00:07:11] Yeah. Right. I mean, we're capitalists.

[00:07:13] That's what we do. We go and make money off of these things.

[00:07:16] And, you know, so that still has to flush out a little bit.

[00:07:19] You know, some of the easy stuff, like if you, you know, you look at Microsoft as a perfect example, making significant investments in ChatGPT and Copilot.

[00:07:27] Like that's like an early, easy kind of start.

[00:07:30] But then just become a student of the game and just kind of pay attention to it, because, you know, I'm very bullish on AI.

[00:07:36] PAX 8 is very bullish on AI.

[00:07:38] We're investing a significant amount into innovation around the AI piece of it.

[00:07:43] And, you know, there's an expression that I keep referencing as John Oliver, the comedian, said that AI will change white collar jobs the way the Industrial Revolution changed blue collar jobs.

[00:07:54] And, you know, if history is always deemed, it's always going to repeat itself, like we should take a look at this.

[00:07:58] And, you know, there's going to be a point where all businesses, including MSPs, are going to have to kind of reinvent themselves to make sure that we are the ones that are on the forefront of this.

[00:08:08] And rather than raging against the machines, we kind of need to embrace the machines and figure out kind of where all those opportunities lie.

[00:08:14] But it's a journey. It's not a it's not a sprint. It's a it's a journey.

[00:08:18] So good news is we have time, but we should also start really kind of digging into it as as much as we can.

[00:08:24] Hmm. What do you think is the right time for MSPs?

[00:08:29] Is it now to be engaging with clients and kind of helping them walk through?

[00:08:34] Because ostensibly they know less. They have less time.

[00:08:37] Yes. And they're going to look to the MSP.

[00:08:39] Yes. So how should they engage and win?

[00:08:41] Exactly that. Like the if if the MSP becomes the source of truth around these things. Right.

[00:08:49] Right. You know, there was remember when the cloud came out, there was still a lot of confusion as to what the cloud actually was.

[00:08:55] Meanwhile, we've all been living in the cloud for like 20 years.

[00:08:58] Like things like Hotmail was already a cloud solution. We just didn't call it the cloud.

[00:09:01] Now everybody wants to be in the cloud. So the more knowledge that we had about it, the more intelligent conversations we could have and steer business conversations that way.

[00:09:08] So, you know, cybersecurity has been that thing. But again, that's been a eight year journey for cybersecurity to get us to the point where not only do MSPs understand it and know how to sell it.

[00:09:19] And now we know how to make money with it. But getting end user adoption towards it has been taking some time.

[00:09:24] The whole it's not going to happen to me, you know, that kind of stuff like we're overcoming those objections.

[00:09:28] We're seeing more and more examples of the threats. So, you know, the adoption of that is is coming.

[00:09:33] AI is going to be no different. And, you know, that's I think just being a part of that and just, you know, making sure that we're on top of that.

[00:09:40] But I think it's a it's an ongoing thing. And I think the time is now. Yeah.

[00:09:44] So the time now to engage with your clients and figure out what the heck their challenges are.

[00:09:48] And there's so much misinformation that's out there. Right.

[00:09:51] And again, we still see this with cybersecurity on the misinformation that's out there. Every time there's a big cyber hack, everybody assumes something.

[00:09:58] And you can even hear it like in social settings. You know, I'm sitting at a restaurant listening to a conversation behind me about cybersecurity.

[00:10:05] And it's completely wrong, completely wrong. And I know it's wrong. And I want to jump in there.

[00:10:10] My wife always looks at me and goes, don't you dare. Don't you dare go interrupt those poor people and try to set them straight.

[00:10:15] But that's, you know, that's in essence our jobs. Right. Yeah. So what have you learned?

[00:10:21] What have you learned in your role over all these years working with so many MSPs in terms of the how we grapple with these challenges?

[00:10:30] Because like you said, these these things keep coming. Yeah.

[00:10:32] And have you seen any commonality around some people are able to change more easily than others?

[00:10:38] You know, it's I think the key to it is that you're not alone in this journey. Right.

[00:10:44] And I think that a lot of the technology and a lot of where the technology is going and a lot of the studies and industry reports are all coming from their vendors.

[00:10:55] So I think there's a certain responsibility that vendors have in this particular thing.

[00:10:58] And if you look at Pax8 as an example, you know, we have 1600 employees.

[00:11:03] We pay for industry reports and industry studies on this stuff.

[00:11:06] You know, an MSP doesn't necessarily have the resources or the time to be able to go and do that.

[00:11:10] Right. So leverage your vendors on this stuff. Ask them for this type of information.

[00:11:14] You see these events like there are educational pieces.

[00:11:18] Larry Walsh did a beautiful piece this morning on on kind of what the journey looks like for the MSP over the next short term.

[00:11:24] You know, finding that information because it is available out there.

[00:11:26] So you're not alone in this and definitely leveraging that.

[00:11:29] I think we'll we'll move you forward versus the competitors, those MSPs that are kind of sitting back and not doing anything.

[00:11:37] But yeah, I mean, we want the end users coming to this channel for information.

[00:11:43] Right. We should be the place where they're going, not going and doing their own research online or talking to their friends at a party about it.

[00:11:49] Like they should be coming to us and talking about it.

[00:11:52] Yeah. From an MSP perspective, do they need to craft their own role their own?

[00:11:57] Do we need to maybe on the other spectrum wait for, you know, the channel to say, here's the thing besides Microsoft reselling Copilot?

[00:12:06] But, you know, somebody in the MSP channel to be selling me the AI solution thing that I resell.

[00:12:10] Yeah.

[00:12:12] Where do you think that?

[00:12:13] Again, I think it comes back to the vendors.

[00:12:15] I mean, there's a reason we call this a community.

[00:12:17] Yeah.

[00:12:17] Right. And it's this whole ecosystem of of people that are all trying to solve the same problem.

[00:12:22] And yes, there's vendors that are coming out with newer technologies.

[00:12:25] There's a lot of the existing vendors that, you know, and have been around for a long time that are investing a lot into AI.

[00:12:31] Ask them the questions.

[00:12:32] Where are you investing at?

[00:12:33] Where do you see this going?

[00:12:34] How is your technology going to change?

[00:12:35] What do I need to be to be prepared for whatever's next or whatever is on the roadmap that is going to move this ball forward as far as that goes so that they're ultimately prepared when they do see it?

[00:12:46] Right. And there's just there is a ton of information, but there's still also a ton of guesswork, I guess, a little bit where we're all like, you know, thinking it's going to head in this direction.

[00:12:58] And we're starting to find commonalities as far as that goes in SMBIT.

[00:13:04] Yeah. Interesting point you mentioned. There's too many people that treat vendors as vendors.

[00:13:08] Yeah.

[00:13:08] And sometimes that word is almost like attorney or probably even less stressed, you know, kind of like, I don't know, arm's length, but it's a real partnership and you can share.

[00:13:18] Yeah.

[00:13:18] And if you have a good, good vendor, you can get help. You can understand things.

[00:13:22] Yeah. That's it. It's a tough one because I do understand the hesitation from from MSPs.

[00:13:29] When I first started in IT, I had kind of accidentally got a job at Compaq Computers back in the day.

[00:13:35] And, you know, this is before MSP. This is, you know, back then Compaq was exclusively selling to resellers, which now is the MSP channel.

[00:13:42] And I remember my first day there was, OK, like somebody came to me, you know, on my team.

[00:13:49] One of the salespeople goes, OK, so we sell to resellers. Right.

[00:13:52] They don't trust us. We don't trust them, but we want them to sell our products.

[00:13:58] And, you know, like it was basically a price thing.

[00:14:01] And, you know, it wouldn't wouldn't be odd for a reseller to take our deal and go shop it around with IBM or HP or whoever it was that they were dealing with back in the day.

[00:14:10] And it wasn't odd for us to potentially bring another reseller into the deal, maybe a better reseller or some other reseller that's in there and give this person a better price.

[00:14:18] So the whole relationship has been one that legacy wise has been bad.

[00:14:23] And then you've got other vendors, which we won't name, who come into this market and then ultimately try to sell direct to their end users.

[00:14:29] So, you know, there is this kind of weird, you know, dynamic that goes back, this legacy dynamic that there is a lack of trust in there.

[00:14:38] You know, I've I've worked very hard at trying to change that with the organizations that I work at and have faith in, you know, we built a MSP only business at Datto and did that very well for a number of years.

[00:14:51] We're doing the same thing at Pax Aid.

[00:14:53] You know, I think so.

[00:14:54] I understand the lack of trust and not only that, but if I call my vendor, all they're going to do is try to sell me more crap, you know, that kind of stuff.

[00:15:01] So, you know, it is hard.

[00:15:02] But once you develop that relationship with the people that you know and trust within that space or coming and leveraging the industry experts that are out there, you know, then you can probably get some like really good information as opposed to just worrying that you're going to get sold something.

[00:15:17] Yeah.

[00:15:17] But I understand that, you know, kind of like temptation.

[00:15:22] Yeah.

[00:15:23] Yeah.

[00:15:25] So based on what you've seen in the last decade, what do you think is going to be different about the next decade?

[00:15:30] Oh, good one.

[00:15:32] You know, like as much as we evolve and we continue to evolve and when we take a look at the evolution of SMBIT, you know, it was if you.

[00:15:43] So let's look at history 10 years ago.

[00:15:45] Right.

[00:15:45] Where were we?

[00:15:46] Technology was pretty simple.

[00:15:47] Right.

[00:15:48] We're just starting to dabble into the actual cloud.

[00:15:50] Maybe the cloud was around for a little bit longer than that.

[00:15:53] But prior to the cloud, like technology was simple.

[00:15:55] Server, laptop, desktop, you know, and it's all kind of localized and it's all kind of sitting there.

[00:16:00] Like the technology itself was pretty simple as far as what components were there.

[00:16:04] And then you start getting into SaaS applications.

[00:16:06] You start getting into the diversification of it.

[00:16:08] You know, now, you know, when you talk about the evolution of where everything is going.

[00:16:14] And I agree with you.

[00:16:15] You made an earlier statement that this is moving faster than it ever has before.

[00:16:18] I don't think we have a 10 year runway to figure out the cloud.

[00:16:21] We don't have a 10 year runway to figure out AI.

[00:16:24] Cyber security has been, like I mentioned, an eight year journey.

[00:16:27] I don't think we're going to have that time with AI.

[00:16:31] So, you know, I think that where's it all going?

[00:16:36] I think that what we're selling today, what we're servicing today and how we're doing it is going to evolve.

[00:16:42] I think that if we look back at our businesses 10 years ago, what we did back then and the people who we worked with and the vendors that we worked with is completely different than the ones that we're working with today.

[00:16:51] So you have to anticipate that 10 years from now, those same vendors or those vendors that you're working with today are not going to be the vendors that you're working with.

[00:16:58] Some are going to evolve.

[00:16:59] Some are going to die.

[00:16:59] Some are going to get acquired.

[00:17:00] Some are going to go out of business.

[00:17:01] Like all those things will happen.

[00:17:04] But I think the good news story or kind of the silver lining around it is that there's always going to be a place for the MSP.

[00:17:10] Right.

[00:17:11] When we look at AI as an example, you know, ultimately we've been talking about where AI goes.

[00:17:16] You know, we've been talking about how AI will eventually exist on a physical device, i.e. robots.

[00:17:22] And that's where everybody kind of wants to head.

[00:17:25] Or it sounds cool.

[00:17:27] Right.

[00:17:27] We're all going to head to robots.

[00:17:28] And you see some of the innovation that's going on around robot technology.

[00:17:32] Well, somebody's going to have to service them.

[00:17:33] Somebody's going to have to monitor.

[00:17:35] Somebody's going to have to, like, maintain them.

[00:17:37] Those kinds of things.

[00:17:37] It's a great opportunity for the MSPs.

[00:17:40] You know, we heard this a while ago when we started talking about IoT coming into our space, which arguably has not been really a thing.

[00:17:47] Yeah.

[00:17:48] You know, AI could make it a thing.

[00:17:50] We could find more AI or more IoT type opportunities where, you know, technology is now touching pretty much every aspect of our lives.

[00:17:59] I remember the MSP used to go to his end users and say, if it plugs into the wall, call me.

[00:18:05] If there's a problem.

[00:18:06] So he started getting calls about vending machines.

[00:18:08] He's like, okay, if it's plugged in the wall, accept the vending machine.

[00:18:11] Call me.

[00:18:12] But there might be a point where maybe we are servicing those vending machines.

[00:18:16] Not from a, you know, filling them full of candy bars again, but maintain, monitor, manage, like that type of stuff, along with all the other tools that are out there to make it very, very simple.

[00:18:26] You know, we're predicting that there will be a one-man shop that's doing $5, $6 million a year in business because of all the tools and technology that are out there that you don't necessarily need people to do, right?

[00:18:38] Just the actual owner.

[00:18:40] You know, we're predicting that there's going to be a billion-dollar MSP within the next couple of years, right?

[00:18:45] We're already seeing three, $400 million MSPs.

[00:18:47] Why not a billion-dollar MSP at some point in the near future?

[00:18:50] These are things that we didn't even think about or fathom 10 years ago.

[00:18:53] I think 10 years ago, a billion-dollar vendor was hard to think of.

[00:18:56] Yes, exactly.

[00:18:57] Exactly.

[00:18:57] Especially in the MSP space, for sure.

[00:19:00] Right.

[00:19:00] For sure.

[00:19:00] Meanwhile, you look at that.

[00:19:01] We sold it for $6.2 billion in 2022.

[00:19:05] And you guys might have been the first pure play billion-dollar vendor.

[00:19:09] Yeah, we were.

[00:19:10] I want to say that we were.

[00:19:11] Yeah.

[00:19:11] Yeah.

[00:19:12] Yeah.

[00:19:12] So it's kind of crazy.

[00:19:13] 10 years ago or so, that was not really a thing.

[00:19:17] Yeah, we lived in our little dark corner of SMPIT.

[00:19:20] We were quite happy.

[00:19:21] Everybody was quite happy.

[00:19:22] But the opportunity is massive.

[00:19:24] The amount of money that's flowing down here is massive.

[00:19:26] Look at the investment community alone, how much venture capital and private equity is there.

[00:19:30] Like back in the day, back in the day, like 10 years ago, if an acquisition happened, somebody came in to buy an MSP vendor.

[00:19:38] A lot of times it was an enterprise technology.

[00:19:41] And they were buying the technology to bring it up market.

[00:19:44] They weren't buying it to stay in SMP.

[00:19:46] Yeah, they didn't care about the customer.

[00:19:47] We saw this repeatedly.

[00:19:49] And you can name those vendors where good technologies went to die.

[00:19:51] That's right.

[00:19:52] Right?

[00:19:52] And then that created opportunities for other smaller vendors to come into this market.

[00:19:57] We're not seeing that anymore.

[00:19:58] Instead, we're seeing enterprise companies acquiring smaller ones to get into the MSP space.

[00:20:03] We're seeing private equities starting to invest in – it's pretty much everywhere in the vendor community.

[00:20:09] But now we're seeing PE actually in the MSP community and making investments there.

[00:20:14] So it's an interesting time for sure.

[00:20:16] And now we can comfortably say there's billions of dollars that are running around this space when it just used to be maybe millions.

[00:20:23] Yeah.

[00:20:23] Yeah.

[00:20:24] It's cool.

[00:20:25] So I want to go back to what you said earlier about a one-man show doing five, six million, something like that.

[00:20:31] I mean, I could see because everything's getting bigger and more dependent, even though it'll still be an amazing milestone to be a billion-dollar MSP.

[00:20:37] But I could see that just scale more hits.

[00:20:40] Hopefully you get more efficient, but you could scale that.

[00:20:43] What I'm curious about is like how do you see a $5 million single person MSP?

[00:20:49] I mean, it's an interesting concept, right?

[00:20:53] But you look at – and we're seeing a lot more outsource as far as tech work goes, right?

[00:20:59] The menial tasks, right?

[00:21:00] And we're heading in that direction where – and I think it was – part of the problem was a couple of years ago where we had this mass shortage of tech talent, right?

[00:21:10] Real good tech talent to be able to serve these customers because all the MSPs are growing.

[00:21:15] And we can't find people or grow people fast enough to actually do level three, level four type tech, level two, level three type tech.

[00:21:23] So you kind of force us to look for other solutions, whether that's offshoring, whether that is automating those things.

[00:21:29] You take a look at some of the RPA tools that are coming into this market now that are starting to automate.

[00:21:34] Like Roost is a perfect example of that, trying to automate a lot of those things.

[00:21:37] So you can turn a level one tech into a level two tech by using technology to actually do that.

[00:21:42] That self-service options are going to become, I think, a really big thing.

[00:21:46] And I'm not talking about chatbots.

[00:21:49] Those are, I think, a thing of the past where AI's ultimately replaced those with more intelligent troubleshooting of problems.

[00:21:55] And even if you look at – and we've been talking a lot about the buyer journey where, as humans, when we want to consume things, we don't necessarily want to deal with other humans while doing it.

[00:22:05] We want to do our own research.

[00:22:06] We want to do our own buying.

[00:22:07] We want to feel like we're in control of the actual sale.

[00:22:09] Well, the same thing is going to happen from a service perspective.

[00:22:12] So imagine a day where your end user is working with an AI tool to troubleshoot a problem.

[00:22:22] And at any point, you can zero out and then get a hold of an actual human being.

[00:22:26] But if AI is smart enough to be able to take them on that journey and solve this problem right then and there, and if you believe some of the numbers, it's going to be like 95% of the issues we'll be able to troubleshoot.

[00:22:36] But, you know, that's ultimately where the market may go.

[00:22:39] So what role, I'm curious, do you see fear playing when you see these things from cloud to cybersecurity, maybe now the AI in terms of who's going to adopt it, who's going to wait and see?

[00:22:55] As far as the MSB and users?

[00:22:58] Adopt AI, just like they had to adopt cloud.

[00:22:59] Yeah, the end users and the MSBs.

[00:23:01] Yeah, I mean, that's the thing.

[00:23:02] It's evolution, right?

[00:23:03] And we need to continue to evolve those things.

[00:23:05] If you're still selling the same technology you were selling 15, 20 years ago, you're not going to be in business today because somebody else is going to come in with something newer, better, sexier, cheaper, whatever the case may be, and is ultimately going to replace you.

[00:23:17] You know, and again, I think that's just where that evolution comes from.

[00:23:20] That's just that continual learning.

[00:23:21] I think the role of the MSB is potentially changing as far as the end user goes.

[00:23:25] So it's not, hey, come fix my computer, right?

[00:23:28] That was the superpower of the MSB was we were technical enough that we could go and fix a computer or something that was completely foreign to somebody else.

[00:23:37] Well, these technologies are now easier to use.

[00:23:40] They break down less.

[00:23:42] Troubleshooting is YouTube videos these days, and people will default to that before calling somebody because I'll try to solve the problem myself before I'll call you kind of thing to try to save money or something along those lines.

[00:23:55] So, you know, the role of the MSB is becoming more of consultative, more of like, let's look in this direction versus that direction, more involved in planning, budgeting, strategy, like really more intelligent business conversations with their end users as opposed to just fixing stuff.

[00:24:13] I want to go back to what you're saying about private equity and other capital.

[00:24:19] What role do you see M&A playing in the market?

[00:24:21] That's creating a lot of opportunity, concerns, all sorts of things.

[00:24:26] Yeah, I understand the concerns.

[00:24:30] You know, I've had a very positive experience with M&A in my career and the organizations that I've worked for.

[00:24:38] We had a private equity invest in our organization, probably one of the earlier ones.

[00:24:42] And in all honesty, it was an actual pleasure working with them, more so because, you know, they create this level of comfort where you've got this, this, like, they want to make money.

[00:24:53] They want you to grow your business and stuff.

[00:24:56] And there's this old adage that says, like, revenue solves all problems.

[00:24:59] And, you know, private equity and venture capitalists are great if you continue to grow your business, if you continue to achieve your numbers.

[00:25:05] When they start getting involved and when you see more involvement of them is when you continually, repeatedly miss your numbers or all of a sudden you start shrinking.

[00:25:12] That's when they start worrying about their investment.

[00:25:14] Because let's be honest, they don't really care about technology innovation.

[00:25:17] They care about making money.

[00:25:18] That's what they're here to do.

[00:25:20] So as long as you continue to make money and grow your business, this could be a very positive relationship.

[00:25:24] But I also understand that, you know, a lot of people think that that's just a cold, you know, the community aspect, the people aspect is gone from that.

[00:25:34] Yes, to a certain extent.

[00:25:35] But at the same time, it's also maturity, right?

[00:25:37] There's a maturity growth that needs to happen, especially with vendors that are getting better and growing, with MSPs that are getting better and growing.

[00:25:46] You know, a lot of the people that you started your journey with are not the people you're going to finish your journey with.

[00:25:50] Right.

[00:25:51] From an M&A perspective, we're seeing, you know, I've been around long enough that I know a lot of these MSP business owners, they want to retire, you know?

[00:26:01] And what are they going to do with their businesses?

[00:26:03] So, you know, you're seeing a lot of organizations doing a lot of acquisitions of people that just are ready to retire.

[00:26:09] We heard a presentation here.

[00:26:11] There was a panel, a great panel today, and all three of them had exited their businesses for various reasons.

[00:26:15] One guy's just tired of doing it and just wanted to, you know, had enough money and was able to sell it enough just to do that.

[00:26:22] One was dealing with an illness for their spouse and wanted to spend time doing that instead of focusing on their business.

[00:26:28] You know, so, you know, there's many different reasons as to why they're actually doing it.

[00:26:32] The good news is that it's actually, there are abilities and the ability to exit your business successfully with money,

[00:26:38] as opposed to just walking away from it, which was a problem 20 years ago when we were doing one-time revenue.

[00:26:44] So, you know, there's pros and cons to it, and I do understand, you know, both sides of it.

[00:26:50] But at the end of the day, if you can retire comfortably of having built a business in this space, I mean, that's a glorious thing.

[00:26:57] Yeah.

[00:26:58] Do you think we're going to end up with more or less MSPs in five or ten years?

[00:27:04] More.

[00:27:04] More.

[00:27:05] And I'll tell you why.

[00:27:07] I do.

[00:27:07] And so we're already seeing more, right?

[00:27:10] And it's coming from many different ways.

[00:27:12] Like, there are definitely startups.

[00:27:13] We're seeing, like, these individuals that are potentially, like, leaving those MSPs because technology is replacing them,

[00:27:21] potentially AI is replacing them, whatever the case may be.

[00:27:23] They're going to start their own MSPs.

[00:27:25] We're starting to see younger generation that's actually coming into this space and actually looking at MSP as an opportunity for them to create a career.

[00:27:34] Right?

[00:27:34] So we are starting to see, really, and you've got our entire generation with our Gen Zers that are very entrepreneurial.

[00:27:39] Right?

[00:27:40] And, you know, our space is very creative.

[00:27:43] And it's going to attract a lot of people.

[00:27:45] The good news is, is that SMBs, first of all, are, because of the pandemic, there's more of them than ever before.

[00:27:56] There's more money being made by SMBs because of the pandemic.

[00:28:00] Because now you've got a global market if you've just got, like, a home business kind of thing.

[00:28:04] I'll use my wife as an example where, you know, she started an interior design business pre-pandemic.

[00:28:11] It was herself doing this alone.

[00:28:13] You know, it's been four years now.

[00:28:15] She's up to four employees.

[00:28:16] She's now got an actual physical location that she's doing this.

[00:28:19] She's got a plethora of business.

[00:28:20] She's looking at hiring a fifth right now.

[00:28:22] Like, that's what's happening in the SMB space everywhere.

[00:28:24] Those SMBs need IT.

[00:28:26] They need IT support.

[00:28:27] And that's where the opportunity for the channel is going to come from.

[00:28:30] And, you know, there'll be more business to be had, even though there'll be more MSPs in the space.

[00:28:35] And a lot of the indications and the reports are saying there's more and more happening,

[00:28:39] despite the fact that we're seeing M&A and even some shrinkage there.

[00:28:42] But again, that also creates an opportunity for somebody else in that market to take over.

[00:28:47] If some big conglomerate MSP comes in and buys local little Houston-based MSP,

[00:28:53] you know, all of a sudden those end users potentially want to deal with a smaller organization,

[00:28:56] that's a great opportunity for somebody to jump in and do that.

[00:28:59] So, you know, we're going to see this continued, like, you know, shrinkage and growth.

[00:29:02] But, I mean, all the indicators is that it's very bullish.

[00:29:07] I want to go back to something you said earlier around a lot of people that got you here won't get you there.

[00:29:16] How did you manage to be that guy?

[00:29:20] It's a good question.

[00:29:22] It is a good question.

[00:29:23] Right?

[00:29:23] That is a great example.

[00:29:25] Like, where were you, like, number three or 12?

[00:29:27] No, no, it was probably like 40 or 50.

[00:29:30] Employee number 40 or 50, yeah.

[00:29:31] But still, like, you're pretty early.

[00:29:33] Yeah, it was very early.

[00:29:34] And then made it to the, you know, we eventually took on some VC.

[00:29:38] Then we did the private equity.

[00:29:40] Then we went public.

[00:29:40] And then we delisted and sold privately.

[00:29:44] Yeah.

[00:29:45] So, I don't know what the difference in headcount is.

[00:29:47] It was about 1,800 employees when we sold it.

[00:29:50] Okay.

[00:29:51] Yeah, it's hard, right?

[00:29:52] Because you're right.

[00:29:54] Like, the people that are there at the beginning aren't necessarily the people that are going to take you on your journey.

[00:29:59] And if you, you know, if you're a million-dollar shop and your journey has become a billion-dollar shop,

[00:30:03] you want to find somebody who's been a billion-dollar shop because they know the journey,

[00:30:07] they know what they need to do in order to get there.

[00:30:09] There's only, you know, a handful of individuals that you can pull along on that journey.

[00:30:13] But, you know, for me personally, I actually learned this.

[00:30:16] I'll give Austin McCord credit for this.

[00:30:18] He was the founder of Datto.

[00:30:19] Very young individual.

[00:30:20] When I first met him, he was in his 20s.

[00:30:22] I'm in my 40s.

[00:30:24] And he wants me to come and work for his company.

[00:30:27] And, you know, because he needed, like, an expert, somebody that's actually been around the block,

[00:30:32] to come in and help them to kind of take it to the next level.

[00:30:35] So, you know, I come into the org, and he's like, what should we do next?

[00:30:37] And I said, you know what?

[00:30:38] First step is we've got to go to Disty.

[00:30:40] Right?

[00:30:41] We weren't using any distributors at that particular time.

[00:30:43] My entire IT career had been through distribution.

[00:30:48] Right?

[00:30:48] You have a product.

[00:30:48] You go to Disty.

[00:30:49] They connect you to the ultimate MSPs.

[00:30:51] And he starts asking, why?

[00:30:53] And I'm like, well, that's just because that's the way we've always done things.

[00:30:56] And he's like, but why?

[00:30:57] And it was like this kind of annoying conversation because you brought me in for my expertise.

[00:31:02] I'm giving you my expertise and you're telling me I don't understand why.

[00:31:06] Right.

[00:31:06] And I realized very, very quickly that you need to evolve.

[00:31:09] Right?

[00:31:10] You need to be willing to change.

[00:31:12] You need to be willing to listen to, you know, the other opportunities, but also see that the market is changing.

[00:31:17] Right?

[00:31:18] And the consumers of that market are changing.

[00:31:21] There's going to be less of me and more of him in this particular market.

[00:31:24] And if he's asking why, there's a lot of other people asking why.

[00:31:26] And if I continue to push back on this, I'm not going to keep my job very long.

[00:31:31] If I'm going to continue to stay set in my ways and say, this is just the way it's always been done.

[00:31:35] I'm not going to keep my job very long and I'm going to age out of this industry.

[00:31:39] That's a big problem.

[00:31:40] Yeah.

[00:31:40] Right.

[00:31:41] So, you know, for me, it's, you know, there are times where you are, you know, that what you're doing is the right thing and you can, you know, leverage the experience and whatnot.

[00:31:48] But there's also times we need to step back and just be a little more open-minded to newer ideas and think more about kind of where this is all going as opposed to where we are now or what has been done historically.

[00:32:00] And I think that's probably the only reason why I've been able to continue to evolve my career in this space.

[00:32:05] But there will be a time where people are going to look at me going, who's the old guy in the corner that just won't go away?

[00:32:09] You know, because we all get to that point.

[00:32:11] And that's when retirement will hit, when nobody wants to listen to you anymore.

[00:32:16] That's hilarious.

[00:32:20] You've got a lot of expertise.

[00:32:21] You've done so many things.

[00:32:23] For folks that are listening, what's one thing that, what's something you would give in terms of like, hey, if you're having trouble with this, you've never been in this spot, like I'm the guy to talk to.

[00:32:32] Reach out to me in this scenario.

[00:32:35] Wow, that's a good one.

[00:32:38] I mean, there's a lot of things that kind of come to mind.

[00:32:41] I think what my, if I can use the term superpower is, is that I'm a big connector, right?

[00:32:49] And I've had the privilege, the absolute privilege to travel around this world and meet MSPs globally of all different sizes and variations.

[00:32:59] And, you know, I've worked for some wonderful companies that have invested quite heavily into this MSP space.

[00:33:03] And I think that has allowed me to kind of be a connector, meaning that if you, you know, if you are struggling with a particular issue, I can probably name two or three people that have solved that problem.

[00:33:14] If you are trying to like, you know, grow your business and, you know, I want to focus on dentists, but they're just not listening.

[00:33:21] I can introduce you to 10 MSPs that are working with dentists today, you know, that kind of thing.

[00:33:25] So, you know, I think it's more or less that kind of thing, which, you know, if you're struggling with something, you want to move in a different direction, you want to run a program, you want to do whatever.

[00:33:35] You know, I probably know somebody that's done that.

[00:33:39] I don't doubt that at all.

[00:33:40] That didn't surprise me too much, but that is an amazing gift.

[00:33:43] So if you're listening, make sure to take Rob up on that because it's very, very valuable.

[00:33:48] Yeah.

[00:33:49] I don't think there's a single individual that can solve everybody's problem, but the key is knowing somebody that will or can.

[00:33:54] If you know the person.

[00:33:55] Yeah.

[00:33:55] I get that all the time.

[00:33:56] Like, so there's people that reach out to me.

[00:33:57] There's a guy that reached out to me just recently.

[00:33:59] He was having issues with his PSA company.

[00:34:01] Nothing to do with me.

[00:34:02] Absolutely nothing to do with me.

[00:34:03] But he knows that I know the executives over at this PSA company.

[00:34:06] So he calls me up saying, hey, I know this is not your problem, but can you help me find somebody that can pay attention to this?

[00:34:12] And I did exactly that.

[00:34:14] Solved his problem.

[00:34:15] Nice.

[00:34:15] Yeah.

[00:34:16] I didn't do it.

[00:34:16] I just introduced him to somebody that I knew that could.

[00:34:18] Somebody that can fix it.

[00:34:18] Yeah.

[00:34:19] Yeah.

[00:34:20] Well, I think if more MSPs operated that way and didn't try to fix it all themselves, that might be a good thing.

[00:34:25] Fair.

[00:34:26] Or give up on it or yeah.

[00:34:27] Yeah.

[00:34:28] Yeah.

[00:34:28] Well, let's, I'm going to flip that around instead of give.

[00:34:32] What's something you would ask right now for anybody that's listening?

[00:34:35] I wish I got a list of questions before we did this.

[00:34:39] I got to stump you in at least one of these.

[00:34:41] Ask me it again.

[00:34:42] Ask me it again.

[00:34:43] What's an ask you would have for anybody that's listening?

[00:34:46] You know what I want is, you know, we, we go back to that trust relationship, you know, developing trust with somebody is really, really hard.

[00:34:55] You know, I'd, I'd ask that there, I envision a community that is a little more cohesive, a little more working together, you know, and I've always been very, very open in sharing information.

[00:35:08] You know, if, if even one of my competitors calls me and says, Hey, you know, can you share with me kind of your strategy around this?

[00:35:16] I'll share it with them, you know, because it's one thing to share your playbook.

[00:35:19] It's another, whether they can go and execute or not.

[00:35:21] Right.

[00:35:21] That's right.

[00:35:22] You know, I found that, but I'm a very big believer in given, given thou shall receive kind of thing.

[00:35:26] And I wish, um, more people thought like that, you know, if there was an ask, I would think, you know, both MSPs as well as vendors, probably even more so on the vendor is a little more conscientious that we're all in the same boat together and, you know, high tides float all boats.

[00:35:42] So if we can work together on these things and, you know, really help each other as a community, cause I think there's more than enough business.

[00:35:50] You see this with MSPs all the time where, you know, you got three or four, you know, I'm at a local event, say in, you know, Dallas, Texas.

[00:35:56] And you got three or four MSPs that all are like within blocks of each other in that community yet never run into each other from a competitive standpoint.

[00:36:05] And they're sharing all this information with each other in an, in like these could potentially be competitors, but there's no worry about that because there's, and you hear this all the time, but it's just more than enough business.

[00:36:15] So I don't need to worry about that.

[00:36:17] I wish we all kind of felt and thought more like that because I think if we all kind of work together, I think we could like, like move even faster in this space.

[00:36:29] And I think we would all benefit as a result.

[00:36:31] Yeah.

[00:36:32] I know it sounds like let's have world peace, but that's, that's kind of what I would wish for.

[00:36:38] Yeah.

[00:36:38] I mean, when you boil it down to kind of first principles, that's what makes the world go around.

[00:36:43] Yeah.

[00:36:44] Right.

[00:36:44] If we didn't have some trust, there would never be a lot of business.

[00:36:48] There wouldn't be no such thing as terms or net 30 or factoring or a whole host of things, you know, not just financial, but all sorts of other things where we have some trust.

[00:36:57] Yeah.

[00:36:57] Trust is, uh, is a key.

[00:36:58] Yeah.

[00:36:59] Yeah.

[00:36:59] Well, I could do this all day, but I know we can't do that.

[00:37:02] So thank you for making the time.

[00:37:03] It's always my pleasure.

[00:37:04] To speak with me at Grocon and thank you for being on.

[00:37:06] Always a pleasure.

[00:37:07] And thank you for the opportunity.

[00:37:08] I really do appreciate it.

[00:37:10] Absolutely.

[00:37:10] This was fun.

[00:37:11] Thank you, Rob.