Michael Roth of Evo Security

[00:00:02] Hello, ladies and gentlemen, welcome to a January 16 edition of the MSP Initiative, MSP Talk. It is two weeks into the year. I know there's some people in different parts of the world that really don't start getting going here for another week and a half or so. You know, I have this extended, you know, sleepy time here in January. But as far as I'm concerned in technology land, it's all moving.

[00:00:27] I talked to a ton of MSPs that we're working through, you know, New Year's, Christmas, the holidays, lots of projects. I mean, time is definitely ticking for all. We'll get some housekeeping out of the way. We'll do it real quick here because, you know, we're still seeing how the year is unfolding here at MSP Initiative. So you can find everything we do at MSPinitiative.com. There's going to be a listing of all these recording podcasts that we do under sessions.

[00:00:54] You're going to see the industry-wide calendar that we keep updating, I feel like, daily as more and more events continue to trickle in. So you'll find that on MSPinitiative.com in the upper right-hand corner. We are working on our schedule here at MSP Initiative. So like block parties, MSP community minds, all the cool things we do throughout the year, which for some reason all slam, I feel like a majority of it slams together in September, October, November, like the rest of the industry, but I digress.

[00:01:24] But, you know, we're still unfolding all that. You'll find that at MSPinitiative.com. We'll surely announce them on these podcasts as we, you know, we'll get more information. But here we are, 2025. You know, this is our third episode in on the year. We started off with Ken Patterson over at, you know, in Boston. We talked about, you know, how did 2024 end up and predictions for 2025. Not sure Ken gave us a lot of predictions, but we read a lot of predictions from other people out in the industry. And then we added some more people behind it.

[00:01:54] So, you know, I'm going to do, you know, because we're still early in the year, right? It's the 16th. I mean, we're basically two weeks into 2025. I think, you know, if you haven't figured, you know, you know, this used to be a thing. I know everybody's typing on keyboards and phones. Like it used to be the, oh, I forgot it's the next year, right? Scribble out 2024, right? 2025. But since we're still so new into 2025, our next guest, Michael Roth, is in the hot seat. I don't think it's the hot seat. We're just having a conversation.

[00:02:23] Maybe we talk about beer and sports and everything else, but it's all good. Hot seat. That's fine. Michael, welcome to the podcast. How are you doing today? Yeah, George. Thanks for having me. Appreciate it. Awesome. Well, I'm going to give you a second to talk about yourself in a moment because I always love people to learn about backgrounds, right? Kind of gives a lot of context to some of the stuff we talk about. But let me actually open this up to, I want to hear your predictions, even if it's just one or two, just, you know, put your finger up in the air.

[00:02:52] What do you think happens in technology land this year in 2025? Any bold predictions? I think, yeah, some of them may seem obvious and some of them I've been thinking about. And you'll, when I talk about my background here in a second, you'll know more why I'm thinking this. But I think that the health and wellness of like the M&A world and technology is going to improve.

[00:03:21] I think companies are going to have like more predictable paths towards, you're going to see IPOs increase. I think probably in the MSP world. And I wouldn't be surprised if both ConnectWise and Kaseya both IPO'd. I think a lot of companies were IPOing or waiting to IPO until this year, until you get through the election cycle, you get through some of the hard, kind of hardline thought processes

[00:03:48] that were unfolding amongst all the VCs in the world of private equity and just general markets. And, you know, I also think that we're going to be surprised on how fast some of the more advanced technologies really start to impact more traditional methodologies of doing things. So, I don't like, if I might, I'll just go ahead and sprinkle some AI conversation on this. Let's go for it, right? Go for it. Let's, let's pull in all the buzzwords.

[00:04:18] Yeah, I think that's really going to start to make a big impact. And I think people are going to start to have these aha moments and like, oh, okay, there is a legitimately awesome, better way to go do stuff. I think that is going to start to emerge a little bit. I don't know if it's going to just like, it's going to be a binary situation where it's like, you're going to wake up tomorrow. And then like, all of a sudden you have a 10 X better way of doing something. I think the aha moments are going to begin. Yeah.

[00:04:47] And, you know, I just wonder too, about like the MSP consolidation, like how that's going to continue to unfold. It seems like there's been a lot of acquisitions and movement around that. And I just, I just wonder how long that goes on before kind of the market starts to settle into where it's at and people start making decisions based on how they're building their MSP based on those conditions instead of these, this tumultuous sort of past three or four years that we all experienced. So those are my high level thoughts.

[00:05:17] All right. Let me give you a quick reply and then we'll get into your story. Right. So some of the stuff you're talking about is like the, the end of what it's almost like, you know, if we take time into chunks, right? Like, you know, 2020, 2021, right. We all know what happened coming out of 2019 gangbusters, machine guns, everything was at the top, top, top, top, top, enter COVID. Right. Took a year for that to kind of do its damage. Right. And do what it was going to do.

[00:05:47] Now we're at kind of, kind of came out of that. And like the result of that 2021 till now kind of, you know, is some of the stuff you're talking about. Hey, people have been waiting consolidation. The market's readjusting now going into a new time period, all of that stuff. Right. We've heard about Kaseya sitting in the wind, waiting for an IPO. We probably would have IPO'd had they not had their security event back in 21. Right. That's everyone suspected that would be the case.

[00:06:17] Um, connect wise going IPO. It's interesting. Um, I wonder how, and again, this industry analyst, not me, not you, but Canalis came out and said they got displaced from the top spot, you know, on, on that PSA RMM, you know, kind of staple category for the first time in a long time. Uh, Kaseya then hops them into the top spot. So, and they also said that their growth and churn percentage in that category is really not good.

[00:06:46] Like single digit percent. So like, if you're going to go IPO, something tells me got to fix some of those numbers before, you know, you know, they have something successful. Um, I'm not a finance guy by any means. I know other people in there that are, but now I'm not the first person to say this, but say now, cause it's timely, like data went IPO that they, you know, they, they, they set a number, bunch of shares were sold. Stock price went down from the IPO price and never made it back.

[00:07:16] So like, you know, how do we, how, you know, does that play into the plan here? Because that doesn't look good either. I mean, so I don't know, just throwing that out there. And then, uh, go ahead. Oh, I say good thoughts. Yeah. I, I, you know, I, what I'm looking at is, um, if you, so insight partners is the primary backer with Kaseya. Right. And then Toma Bravo for connect wise.

[00:07:47] Yep. And before I launched Evo, I was actually in private equity, totally different industry for about five years. See now this ties right back in your background. Go for it, Michael. Tell us your background. Yeah. So that, that's why I, um, I kind of look at things through that lens and I'm starting to see the clock tick, right? You have holding periods that a PE firm likes to have. It's usually five to seven. And then with kind of the world being crazy for a while, those time periods got elongated.

[00:08:15] So maybe it's more like five to nine, five to 10 or whatever. Um, I don't know. I don't have a crystal ball, but I. What happened to three to five? Yeah. Used to be three to five. I've, that's more VC, but, um, yeah, totally. I mean, uh, I know that Toma has done quite well with connect wise. I've heard the same thing that their, uh, PSA RMM business hasn't been performing and, um,

[00:08:43] they were expecting like other areas of the company to be, um, uh, maybe carrying the torch, uh, that would lead to an IPO. So you're probably right where they need to kind of go look at things and, and, and get the company ready for IPO. But when you look at the number of PE firms above Toma Bravo, they're pretty big. You know, the, the pool of PE firms where they can go like up to the next level is very small. Like Bain. I, I've heard their name a lot. Bain Capital.

[00:09:13] Somebody told me that I think they acquired Virgin Australia or a large stake in them. And I was like, oh, okay, cool. Like I didn't realize that. Yeah. I guess they go anywhere where it makes sense for them. Yeah, exactly. And so you have to have a lot of conviction around that because the only next place they could go other than a Bain or, or like kind sort of PE firm would be public. Um, and, uh, uh, unless there's some other crazy strategic stuff you start thinking about like, Hey, we're going to go sell off these divisions of the business.

[00:09:43] We're going to tighten up focus. We're going to go really do this thing instead of trying to be everything to everyone. Um, so I don't know, it's going to be really interesting path, uh, for, for them moving forward in Kaseya. Uh, usually when you start to see like the executive teams transition out and they bring other people in, um, that usually signals that they're positioning the company for something, uh, whether that's a total exit or you're going to go public, or maybe it's just like,

[00:10:12] you need to reinvent kind of the ways that you're executing and where you're focused. I mean, there's another reason why that would happen. I'm, you know, I'm, I'm not talking from experience. I never took money. It seems like you have a lot more experience. We'll learn more about that in a second. But like whenever I've heard of a founder owner or executive in any company, taking some money from out somebody else, P V C seed round, whatever. But usually the P V C people come with a lot of fine prints.

[00:10:40] Now that print usually says, Hey, like we did this deal. We offered you a term sheet. We gave you the, the, the whole package here based on what you told us was going to happen. Right. You made his educated guests based on you knowing your business better than anyone else. And if you don't hit these markers, if you don't hit these numbers, if you can't hit these thresholds that you gave to us, then we have these red buttons that can be pressed that give us the ability to come in and take control. Right. Right.

[00:11:08] I mean, we don't have to go too far outside of MSP land to see that this does happen. I mean, we've seen it many times, actually. It's not comfortable when the CEO founder of a company takes the backseat or even gets booted out completely. Completely. And outcomes, somebody from outside the sandbox that got placed in at the top. And now all of a sudden you're like, Oh, seeing this picture before. Yeah. I think there's, I mean, it, it always raises eyebrows and there's question marks.

[00:11:37] Sometimes it's very well planned. I mean, I would say in most cases it is planned months and months in advance. And you never know quite no other reason. And it could be that the top leadership is like, Hey, look, I'm, I, they come to the board and they'll say like, Hey, I think I'm kind of at our peak here. Like the company's ready for a different direction that maybe I don't think that I'm well equipped to go do. And I think it's time to transition.

[00:12:07] And there's, so there's that level of responsibility and accountability. Other times you're right. Yeah. Anytime you take capital from a venture capitalist or a private equity firm, you've basically handed over control of your company. That's just the way it works. You no longer. Now the only, the only ways that you typically do have control, it really comes down to like board votes and number of seats. And then what percent ownership you have.

[00:12:33] But a lot of times what the, the, the shares, like the class of shares, it breaks down. So if you take VC or private equity and you are a founder or you're a business owner, you will have common shares. And those are below what the VCs or the PE invests. What they get is called like a class A share or, or something above it. And those have different rights and privileges. And so typically, and then it also depends on how many board members you have.

[00:13:02] You could have three, five, seven. Sometimes there's strategies behind that. So like, as soon as you take a dollar from, from an institutional investor, everything changes. Like companies start to get stretched and pushed. They do these unnatural things that maybe they wouldn't do if they were self-funded or they were organically. Um, uh, you know, they had, they were cashflow positive or whatever. And so you'll see that happen in, in the clock is always ticking. Right.

[00:13:30] And, but things, that's why I find this, the, the transition from private equity backed like connect wise or say over to public because the, the dynamic totally changes at that point. When you go public now it's more, it's less about like, okay, I have to do all this crazy unnatural stuff just to like squeeze my margins down and rent my revenue as fast as possible. And we get really aggressive about it. And I think that's a lot of the reasons why you saw Kaseya, they're like, Hey, three year contracts, we're going to do this. We're going to do that.

[00:13:59] And it feels unnatural and there's friction there for the market, but they're being pushed. Right. But when you go IPO, um, the dynamics change. And it's like, you just have to demonstrate to wall street that you're building shareholder value. And in this like a creative way, so you can go acquire a company, you can go launch a new product. You can do things that start to become a little bit more natural. Now you have different people who are now judging your company and deciding your thumbs

[00:14:26] up or thumbs down, but you, you, it's a little less out of the pressure cooker and you could start to have like longer term, more sensible, um, time horizons on things. And then you start to feel the pressure and the experience in that company may be increased, but now you're playing a different game of politics and, um, you know, stringent regulations and other things. So your costs start to bloom out. And so, I don't know, I just find this fascinating, um, as you might be able to tell.

[00:14:57] No, no, no, this, I mean, listen, what we're talking about here, I'm sure we're about to flip in a second, but what we're talking about here, we talk about it at the bar. We talk about it in the hallway. Like we, we, you know, because at the end of the day, things flow downhill. Right. I mean, something happens here and like, what happens to the guy at the bottom? Right. Uh, we all, you know, can be grumbly about what that means. Uh, Keith Nelson pops in. This is a real life choice for some people.

[00:15:25] Um, for some reason people use lifestyle businesses as a negative. However, having more control as a lifestyle, you can manipulate, you can manipulate expenses, family income deferment, and also live a life of luxury, uh, like George. That's not true. This often, this often changes as you bring in investors. So listen, um, let's go this way. Right. We talked about the guys at the top. Maybe you have a lot more background in it than I do.

[00:15:52] I, you know, I know there's a lot of companies that have been waiting to go IPO in our sandbox, not Microsoft, not Apple, right? Come downstream into MSP land. Uh, connect wise. It's interesting. Um, cause I, I think it's been waiting, uh, probably PAX eight I hear has been waiting, right? Other companies like we've heard about, you know, enables already a public company. They were talking about merging with Barracuda. There was all these rumors there. There's other companies, right?

[00:16:16] Um, that being said, um, I've heard, I don't know what you've heard, Michael, that for the guys a little bit, not a little bit, a lot downstream, right? The startup guys, you know, like me, like you, like all these other guys, right? Seems to be like the money is absolutely a lot easier flowing than it was even six months. Like the mail, the phone calls are happening. The letters and emails are showing up.

[00:16:43] People are getting a little bit more willing to gamble on, on things, right? They're, they're, they're loosening up on their, on their requirements. And listen, I've not taken a single dollar from anyone, but I hear people who are in it right now saying completely different world from six months ago. Is that what you're hearing? Yeah. And, you know, we've raised capital now, um, from VCs, uh, at Evo over the last couple of years, um, you know, you kind of get to a point in a software company where unless

[00:17:12] it hits immediately or, or if you acquire, let's say you acquire a company that already has revenue and then you just got to go put gasoline on the fire. That might be a little bit easier, but you have to have the resources to be able to do that, et cetera. It's a different path. But if you're trying to grow a really robust, um, company that you believe can properly serve the market and, and you have the vision and you have the, the talent and the innovation

[00:17:39] and the company, then you typically are going to want to go raise some money and accelerate that time horizon because in the world of software, uh, and I'm, I'm speaking as like a software founder building SAS solutions, right? Not, um, not being a managed service provider, which is totally different. Who's utilizing our tools, but you have a different outlook. I actually liked the comment that was made there a minute ago where you have a really

[00:18:06] nice opportunity to build a lifestyle business and live a life of luxury as an MSP. And I actually really admire that about MSPs. And it's one of the reasons why I'm so motivated, uh, to sell to them as a person. This is actually my first time as a SAS. Uh, I've been on this side of the fence. I've usually, I've been an engineer in the past and then got into PE. So it's kind of interesting now having to sell my solutions.

[00:18:31] Uh, sometimes it just feels so unnatural, but, um, at the end of the day, like you want to try and build something that is, that can, that's really meaningful. Uh, that's going to make them money and it makes you money. Like at the end of the day, like if we can do that, then, Hey, we've got something here. Right. But if you have a bold vision, you can't do it without capital. Um, and, and to your point slash question, I do think that this year and over the last six months, things are starting to loosen up.

[00:19:01] I've seen a lot more seed rounds get done. Um, the crux and the really critical round, I think for a software company is when you go from seed to series a, um, which is what we just did last year, because at that point in time you're saying, Hey, like, this is a cool idea. We're going to sell it to everybody in the universe and we're going to make a bazillion dollars and it's going to be amazing. And we're all going to ride off into the sunset and all that stuff. But then you start to get deeper and deeper into the market.

[00:19:29] And it's like, Oh wait, this is actually quite difficult. And what we thought was true is no longer true. And we have to pivot and do all these things. And, um, sometimes those decisions you can't come back from and other times you can. And so you just have to be super decisive and super fast. Again, going back to the kind of unnatural decision-making that institutional investing causes. But I think, um, I don't know if I've seen the total rebound yet from the seed to series a or series a to series B.

[00:19:59] I think those are still pretty tight. Um, people come like firms are really want to know like, okay, do you really have something here? And is this a repeatable scalable company that can lead to something extraordinary? Um, but ideas, especially in the AI world right now, I saw this amazing presentation the other day, the majority.

[00:20:22] So 55% of all deals that got done in 2024, uh, were from the Bay area, uh, where I am in Austin, it was about 10 or 15%. So that's, that's definitely increasing. So you're seeing a broader distribution of capital. Um, and then you're seeing more and more AI deals getting done. That was by far the highest percentage. So that's why I say the future is coming. It just may not be here yet. Um, you're going to see more and more innovation. Okay.

[00:20:51] I asked if anybody follows this podcast, you're going to hear me repeat a couple of things, but Hey, you brought it up. I'm going to keep saying it till somebody gives me a better answer. Here we go. At the end of 2024, McDonald's did a three state 90 location pilot where they replaced the drive-through human being order taker with the transcription turn menu selector tool, bot, whatever you want to call it.

[00:21:19] And they, they hit the red button and ejected that project. It did not go well. And by the way, McDonald's menu is pretty finite. It's not very complex, right? Like there's only so many things on there. Right. So if it didn't work for something that specific, that clear reuse case, it's just not mature enough yet. Probably. No, you tell me. I would agree with you there.

[00:21:46] I think there's, there's just that the human AI interface just needs a lot more time and a lot more work. I think more things like process automation and just kind of some of the smaller things you can kind of bake into your company here and there. I think that's, that's really where I'm referring. But anyway, that's, I think. Okay. Let me go a different, let me go a different route. I had Brooke Leon, who's now over at Lion Guard.

[00:22:15] And we were talking about a lot of her consulting background, right? Before she got into the software vendor side, she, you know, would go into MSPs and help them kind of mature themselves. Right. And a lot of her background was around people. Right. Like if you don't have the right people in the right chairs, you're not bringing the right people in, then no matter what you do, technology is not going to solve all your answers. You need people in the middle of that. Okay, cool. Over the court. Let's go from 2000 till now. That's, that's where I start till now. That's my 20, I guess we're 2025 beginning of year 25. Okay.

[00:22:45] My 25 year run here, which I think technology land is like, I don't know, Flintstones, but okay. They've been trying to figure out how to get rid of the frontline person in the MSP. chart, right? The password resetter for lack of a better explanation. So in the early days, like 2000, early 2000s, they would outsource and how many people that tried to call Dell or HP and get a really not great experience on the phone when somebody in another country was answering and that just blew it all up for everyone.

[00:23:15] Then we went to, well, let's see if we can bring that state side. Let's see if we can still outsource, but domestic outsourcing. And then we went to, Hey, you know, maybe we can take the JetBlue model and take these people that are really home-based people and like crowdsource them. Right. And try and lower our costs that way. Okay. And now we're trying to replace the frontline password resetter with the bot, which I don't know.

[00:23:42] You know, again, different people have gotten further mileage varies, right? I, you know, Delta is one of these companies that's like, Hey, we don't want you to call in, use our, use our chat bot app to try and fix your problem. Um, but there's some visceral reactions to, I just want to talk to somebody like if I have a problem and I'm, I, I'm not happy talking to the answering machine in whatever format it is, maybe not what I want in that moment, you know, human emotion, whatever, whatever.

[00:24:09] So like, it just seems to me, like we've been trying different ways to lower costs or outright displace the frontline, you know, worker. And I'm talking about MSP land, but this could apply to different industries. Right. I don't know if you've heard T-Mobile at one point were firing customers because they were calling into the customer service call center too many times. And they're like, you're cost us too much. We're getting rid of you as a customer. I was like, wow. Okay.

[00:24:38] Well, mate, why are they calling so many times? Maybe we didn't solve their problem early enough in the, I don't know. I'm just talking out loud. Um, so let me put, so putting all of that into, into picture here, 25 years later, can I make the argument, uh, if your argument is, Hey, give it time. It will get better and it will start to take cold. And my argument is what if I'm just willing to pay more to never deal with that and give

[00:25:05] me the premium experience, which one's right? Or are they both right? Yeah. It's a super good thought. I mean, I just experienced this last year, uh, with Microsoft. Uh, they, so we work very closely with Microsoft systems and, uh, we occasionally have to go through these processes to demonstrate that the technology we're building is secure and Microsoft has these standards.

[00:25:34] And, um, even six months ago or six months prior to when we were doing this, you could actually find a phone number and call a person. I saw someone actually had a, um, a comment about that. And, but since they've started, they invested in chat GPT and now they rebranded it copilot and embedded it on their systems. There are zero phone numbers and there are all these like sort of automation dead ends that we kept finding, but they were 100% wrong.

[00:26:02] And, and, uh, the ways that they were like engaging back with us, their systems were, and it was extremely frustrating. I mean, we had, we had nobody to call. We were stuck. And then we ended up finding these like this, like back, you know, loophole thing that, uh, where they hadn't unified all their systems yet. And then finally we're able to get through and get it done.

[00:26:26] But, um, I'll tell you that experience that I had, I was like, I am so put off by, uh, the, the automation component. I think you're right. I think people, uh, there's another comment here says people are willing to pay for premium service. I agree. Humans like to talk to humans. And if you've got a problem and you're frustrated and you, you know, you want to get on the phone and you just want to talk to a real person.

[00:26:50] Um, and I, I think the, uh, maybe the observation here is that it's now that there's actually a choice and we're being forced to think about that, whereas that we used to take that for granted 50 years ago or whatever. Now we're, now we're all observing and kind of reflecting upon like, okay, well, what do I value more? Do I value the cool technology or do I value human engagement and I'm willing to pay for the human engagement and I'm not going to chase the shiny ball.

[00:27:19] So, um, I think that's a super great point. Yeah. Yeah. No, that's good. So, so Keith, we touched on you and Pete. Uh, yeah, I agree. It like, uh, you know, we make fun of it now in 2025, but it wasn't, you know, like not even go back five years, eight years, 10 years, where is the support number for Google, Facebook, uh, Instagram, Amazon. Yeah.

[00:27:46] Well, hopefully AWS, you can get ahold of somehow, but like Amazon, uh, there's a very expensive premium support package to your point. And then you can talk to a person. Yeah. You know, so, so like applying this to this industry, IT and managed services, you know, I am, and there are some really cool companies that have popped up, Michael, right? Like, you know, Roost is a great example or Pia, right? They haven't really gone all the way AI, right?

[00:28:12] They built a lot of automation, like this called RPA, robotic process automation, right? Where they kind of like, you know, art, you know, maybe like one level below what we're now calling AI, right? Like, but it's in the back behind the scenes and the machine is learning and it's the, you know, the, the wheels are turning kind of thing. And I love that, you know, as another tool in the belt, right? I love empowering the next generation DevOps style engineering mind, right?

[00:28:41] To give them more tools to do more with less, go faster, whatever. But somewhere in the end of this circle is the experience to the actual person on the other side, the customer, the person, the human being. And I don't know how else it's sugarcoated other than I think we're not close to them being okay with the robot as that experience. It's just me. I'm going to give you one example.

[00:29:11] I've used it a lot of times. I'm going to use it again. Again, Chick-fil-A. I'm a big Chick-fil-A guy. I had Chick-fil-A for lunch, actually. Grilled chicken, guys. Grilled chicken. Not, not the fried stuff, but that's just me. I know. I know the fried stuff's good, but I don't eat it anymore. You can go through the mobile through. It's lane over here on the right lane. You can go through the regular drive through over here on the left lane. And as a guy who's eating a lot of fast food in my day, a lot, a lot, I could probably

[00:29:38] go through and give you like, you know, one through 10 stars, right? What I think of each, each fast food operator. Chick-fil-A figured out how to be super efficient at the drive-thru. They probably reset the model for everyone. Right. And so like, I don't ever have to take out my phone. I roll through the regular drive-thru lane, which by the way, at my local Chick-fil-A, it's I've never been, never. And it's been open for many years now.

[00:30:05] Never have I seen the mobile through bit like, oh, like busy, right? Like maybe a car, right? Like it's just people aren't going down the mobile through lane. And it's still to this day, January 16th, 2025. Like there was four cars in the regular drive-thru, one car in the mobile through. Okay. So like, I think they made a bet that people would shift and that over time that's going to happen. And maybe they're right. But today it still hasn't happened for my local Chick-fil-A because I can go in, they

[00:30:34] can take my order, take my payment, and I have my food in like three minutes. Right. So it takes me more time to fumble with my phone, to process my order than to just go through the normal lane. So like, I don't know, I guess to each their own. And maybe my opinion differs five years from now. But I'm just telling you right now, today, 2025, when Frontier Airlines, Michael, did what you just said, deleted their phone number.

[00:31:02] You could not call anyone to complain, book a ticket, rebook a ticket, ask for a refund. You can only go to their app. For me, not that I would have booked a ticket on there to begin with. I'm not the first class flyer like Keith Nelson says that I am. I'm not the bathroom backseat guy. Put me in the middle. OK, like give me American Airlines. Is that all right? Give me, give me, give me, give me United. Right. Don't, you know, I think Frontier Spirit, right? Spirit still, I think they filed for bankruptcy, whatever.

[00:31:32] You if you can't give me a phone number to call my airline, I am not flying that airline. That's me. That's George. What are you? What do you think? Yeah, I'm with you on almost everything you said. Um, I, I, uh, I also wonder what the influence was from COVID when everything became app centric, hands off distance. And so people are like, Ooh, this is really working.

[00:32:01] Oh, Hey, let's envision the new future of how human beings engage with one another. But it turns out when we all came off the back end of that, we're like, to heck with that. Like we want normal life again. And not only do we want normal life, we want really, really normal life. Where like, when I see you, I'm just going to give you a bro hug, right? Like none of this handshake stuff. Cause you know, I, so I think, um, I just wonder how it, if like, there's going to be

[00:32:26] some place where you settle in the middle over time, um, there, where they figure out the tweak. Uh, I don't really know. And that's, that's one of the reasons why I mentioned earlier that we might see some of these aha moments where they, they kind of like, they figure out a good middle ground of what is actually practical, what people want and what is, uh, actually relevant versus kind of the human nature and the human behavior of like, Hey, look, I'm just not willing to do that.

[00:32:53] Like I'm, um, and you know, it's interesting. We've talked internally about, Hey, why don't we should offer a premium service for support? We should sell that we should, because identity is a, uh, it can be a very complex thing and privileged access management can be very complex. Um, we're integrating sometimes with systems that are, uh, hard and we may not have all the things, right. And that's just kind of normal.

[00:33:19] And so what if our engineers can go in and help the MSP set this up? And we've ended up like, uh, saying, uh, no for now, because we just, we don't really have the answer and we don't have a megaphone to like, you know, 10,000 MSPs up behind my desk. But, um, you know, I've always, I've always wondered like, how far though does that take you? You know, like how practical is that?

[00:33:44] How many realistically, how many systems could we get into on their behalf and go set things up in a secure and safe manner? And so there's always like, as I've gone down these decision trees, whether it's what you're saying or, you know, in the business, uh, I like, I think for me right now, the goal is let's just figure out where the roadblocks are and let's kind of get innovative and figure out how to go around them and through them and stuff. So, um, I don't know. I think, I think people are going to continue to do that, uh, this year and trying to, uh,

[00:34:14] there's some really creative ideas out there that are going to start to, some of them aren't going to make it at all, but there's going to be a few of them that are going to start to sprout. I mean, think about chat GPT, like just a couple of years ago, I was, I know that I wasn't sitting around my living room watching football and going, Hey, you know what? I got to write this email and I think it sounds pretty good, but you know what? I'm just going to go toss it over and chat GP and tell it to like spruce it up a little bit, make it a little bit more professional. And then, and then I'm going to send it right. Like that's our world now.

[00:34:43] And so I think some of those little things are going to start to kind of pop and emerge here and there. Um, and, uh, but I absolutely think you're right about the desire for human engagement and how it juxtaposes to like the tech and what we value more or less. I think it's going to be really interesting to see how that. So we came off our, my last call with Brooklyn and we said the concept of the premium MSP,

[00:35:10] the premium lane for the MSP, I think is legit thing here. I think there's a word that I want to walk away from if anything else practical. I think like, we all love the shiny, cool new thing. I'm right there next to everybody that ever swiped their car, walking down a trade show floor. Trust me, I'm guilty, but practical. I like that word. We're going to, we're going to remember that one. A couple, a couple of comments I want to get out of here. Break the foe $300 per device and offer a service.

[00:35:39] You know, Keith, uh, I was just having conversation with somebody literally yesterday and maybe not even 24 hours ago where I tried to explain to an end customer of an MSP that if your MSP is not making money, you're going to have a bad experience and they're probably not going to be a good fit for you in the long run. So as long, unless there's a win-win for everyone, like the, the alternative to the MSP is you hire someone that sits in your business full-time and come with all the problems and expenses of a full-time person.

[00:36:08] That's actually good, right? Not the person who knows how to plug in a vacuum, somebody who can actually do the job correctly, which in this case would be a six figure person for this particular business. And I said, you can't keep on asking to spend less and get more. There's a breaking point. So back to the $300 per device. I just want to make sure that the MSP is profitable. And there's a lot of ways to profitability. And we're talking about some of the new ways that might be popping up here with Michael,

[00:36:34] but bottom line, if the MSP is not profitable, why bother? Why are we even doing it? If I can't get up in the morning and see that I can make money doing it for myself, I'll just go work for somebody else, not have the headache, which is my two cents, but I digress. Pete says, I've got your vendor. That's a really good point.

[00:36:58] And one of the things that I've, so we started to get pretty involved in the peer group, MSP peer group, Evolve that ConnectWise puts on. And we also did Truepeer last year. It was our first year to do it. And I mean, we're not a very old company. I mean, we just started going to market in earnest first part of last year and maybe a little bit in 2023.

[00:37:23] So, but one of the things I really like about what ConnectWise is doing is they said, hey, you know what? We've got these solution providers or the dirty word vendor that are coming to the, I mean, we're paying a lot of money to go to this, right? Like, and, and so I want to make sure that it's valuable. And something that I really liked that they did is they actually had all of the solution

[00:37:50] provider people that were there presenting, whether you're doing lunch and learners there, sit in a room and they actually ConnectWise presented to us. They said, hey, look, these are the things that we're teaching our MSP partners that are here in the Evolve Peer Groups. And this is the data that we're showing them. This is, these are the tweaks that we're suggesting that they make to their business. And one of the big ones that I was really glad to see, it was really cool actually, is on

[00:38:19] maximizing gross margin percentage. So if you're an MSP to your point and you're making two and a half million a year, right? Work really hard. You've kind of got this awesome lifestyle business. You're making a ton of money every year. You got it kind of on autopilot, but you have so much like overhead because every time you go to a show, you're buying a new tool and you're buying this and you're buying that and you're doing this and you're doing that and you're making two and a half million dollars on top line revenue.

[00:38:48] But then when you actually go and look and say, okay, well, what's my profitability? Like, what is my profit? And you have a very small margin. And then you might go to the MSP next door or maybe in the city over and they're making 1.8 million a year. But because they have a super efficient business, they have actually, they're actually making more money that's going in their pockets at the end of the year because they've consolidated things.

[00:39:17] They've focused on efficiency. They've created automation. They've, you know, they've really tried to maximize their gross margin percentage. And so I think for me, like when I look at this year and you mentioned profitability for the MSP, I really hope as someone who's like super passionate about all of those things, like the mechanics of that, how the fiduciary stuff all kind of like pans out.

[00:39:41] I really hope that every MSP can take a look at their financials and say, how do I legitimately do that? I think they're going to have a much healthier business and it's actually become more enjoyable and they're going to make more money. And so I'm with you on everything. Going back to that conversation 24 hours ago with the end customer of the MSP.

[00:40:05] And I was just like, if there's an MSP domestically here in North America and they're charging less than a hundred dollars for their combined service, whatever it is, all in per person, per employee, however the math breaks out. Either they're not offering anything in their service other than their time or they're not making money.

[00:40:33] It's one or the other, like there's no, there's no middle. Right. And like, that's the average. I didn't even say what their billing mechanism is. I just said, take the number of employees in your business, take the number that the MSP is charging you, divide it. If that number is below a hundred, I find it very hard to believe that that MSP is making any profit off that engagement. Yeah. Yeah. You know, the other chart that I saw that was really interesting that ConnectWise showed

[00:41:03] us is that, and they've been tracking it for well over a decade now. It's every election year, right before the election year, the MSP's customers start to pull the purse strings back because there's just a lot of uncertainty in the world and you don't know what's going to happen. And then, so like this year, 2025 would be the year that things start to open up back again.

[00:41:27] And then, so the next 36 months for an MSP should be a really enjoyable time because you're, you can grow your business. You can get things going. And then, so I just found that fascinating. So if you're an MSP owner, well, it translates to us too, right? Like as, as solution. The vendor who sells the MSP should be a good time. Yeah. So we know that let's go make sure that we're doing good business and over the next 36 months

[00:41:54] and then in year four, we know that we might run into some things and it's not because of the MSP, it's because of their customers. The market does go downstream for sure. A couple other ones in here. I changed a vendor last week because we couldn't find a support number. I agree. If I can't get ahold of you and I, you know, like then I can't do my job. A hundred percent with you. I think we're on the same page. I always say Mercedes and Porsche do not sell cars. They sell an experience. They sell a lifestyle. Yeah.

[00:42:21] And, and the people who can afford that lifestyle like to spend a lot of money for sure. Differences in Eagles fans sitting in the upper deck versus American football fan watching the Cowboys. And then, Hey, I like to sit with the people, Keith Nelson and the people of Philadelphia can afford the people upstairs. Right. And I'm like, I, I, I relate to those people because you know, I didn't have a lot of money growing up. So like, those are my people, the people who sit downstairs row one 50 yard line. Yeah. I call them the suits.

[00:42:50] They can afford those seats. They're, they're hobnobbing with the other suits. You know? So it's all good. And then you got the people in between who are the club box owners who like have somebody else's money that they're spending in order to get those club boxes. So I digress. I don't know if you want to be spending any money, any money going to watch Cowboys right now. So, Oh, I didn't even say that. I didn't even say that. That that's this guy over here. I live in Texas. I live in Texas. So I, you know, I got some, I can say it.

[00:43:16] I was just about to say, I have a playoff game here in Philadelphia in the snow on Sunday. What are you doing? You whatever? Anyway. There you go. So, Michael, I mean, this is actually a pretty good podcast because we, we, we, we touch on a lot of hot button topics that are about the business. Talk to us a little bit about Evo. Like I've seen you around. I've, you know, I know that you guys like had a strong, close thing going with ConnectWise for a minute.

[00:43:44] I can tell you, you know, you said you're in, you know, identity, right? So like, you know, I think there was some MFA and two factor, multi-factor. And then you said privilege access management, right? So like the, Hey, don't giving everybody God mode access. I'm just talking out loud of what I think I know. Here's what I do know for all those people out there. And I can name three off the top of my head, MSPs that you may have probably heard their name before.

[00:44:12] Hey, you know, put all our sauce, put all our eggs in the Microsoft basket and, you know, less vendors, not more. And I'm like, Microsoft doesn't have it all right either. They've had problems and their own stuff's been compromised. So like, can't put all your eggs in one basket. I think you have to assume that, you know, that's a problem. That's just, you know, that's my experience for as long as I've been around 25 years. So that's what I know. Tell me more.

[00:44:42] Yeah, I think some of it I alluded to earlier, but so I, again, I started my career. As an engineer, totally different industry. It was actually the oil and gas industry. And that's kind of where I started seeing all these cybersecurity. This is in the early 2000s. Hold on time out. Have you watched Landman on Paramount Plus? You know, I haven't yet. And people are telling me all the time, but I probably would watch that show and be like, that's true. That's totally, you know, not true.

[00:45:10] And so I feel like I'd be a little too judgmental. Well, I'm sure Keith Nelson's going to stop and go watch it because Jerry Jones was in one of the last episodes. I heard that. Keep going, Michael. Oil and gas. But I will say when I was in that industry, I've seen some wild stuff, very wild stuff. But anyway, so I was an engineer there for many years, worked on some very complex, very crazy projects, very dangerous projects.

[00:45:37] So I don't know why I just had this affinity for doing like really hard engineering things, which kind of led to Evo's thesis. But that's how I kind of fell in love with cybersecurity, though, because there were just a mountain of problems. That was back when like SaaS was just starting to emerge. There's password sprawl. There's effectively no privileged management.

[00:45:58] You've got remote access with industrial systems like OT type of stuff with your internal network. It was just a total mess. And it still is. Good. He says, here's Keith Nelson coming back. I'm not a Jerry Jones fan. He's old, senile, destroying the only American team of all sports. All right. Two second response.

[00:46:24] Well, your old buddy, current offensive coordinator here in Philadelphia, just came out on the wire this morning that they request. Yeah, the Dallas Cowboys requested to interview your old buddy here for the head coaching position. So we'll see. Now, Jerry Jones can't coach this team. That's all I got for you. Keep going, Michael. That's so good. Yeah.

[00:46:47] So anyway, that's kind of how from there I was like, okay, how do I, I learned that identity and access management, what it really wasn't called that at the time. But that's where my passion really was. And I actually pitched the concept of a password manager at like the local startup incubator all the way back in like 08 or 09. I didn't know what I was doing. I didn't know what I didn't know. I was like, well, that's kind of a silly thing, because if you just crack the main password, then you get all the rest of them.

[00:47:16] So I just didn't really do much with it. But that was kind of my first attempt at saying like, okay, I'm going to go do something about this one day. And coming off of private equity thereafter, I decided that, okay, I'm going to take an analyst approach to the market. Where, where is the need? What's happening in the enterprise? And what was happening was MFA and SSO.

[00:47:40] So if you think of your OCS, your DUOs, those companies, all that technology was merging with the privileged access management technology. So if you've ever heard of companies like SailPoint or CyberArk, really big privileged access management companies that focus on large enterprise. All of the, all of that technology and even password management, it was all merging. And it's still today is continuously merging. I was going to say, I don't think it's 100% merge, but I hear what you're saying. Yeah. Yeah.

[00:48:09] So it's interesting, like SailPoint and CyberArk, they used to call themselves PAM companies or privileged access management companies. Now they call themselves identity companies because identity has become like the moniker for the umbrella of all of it. And so, and I was starting to look at that trend. And then I was starting to see that private equity and venture capital is getting involved in the MSP space. Okay. Now we have an institutionalized market.

[00:48:33] And I want to go build the consolidated identity platform for the MSP space. And I, my initial concern was that it was going to be a little too early and it was going to take time for things to kind of mature as regulation and compliance pressures and insurance started to continue to become a thing.

[00:48:52] But so instead of investing millions of dollars that we've now raised into building a really narrow product and doing something like, Hey, MSP, like chase this shiny ball here. And then now I'm contributing to the vendor sprawl. I said, let's do the inverse. Let's invest all the money upfront into building, building the consolidation. So a, we are actually helping increase efficiencies and optimize.

[00:49:19] And B, maybe if you start to lean in to the platform approach to solving identity at scale, then you can actually make money from it. Brilliant concept, right? Because most identity in PAM today is like viewed as a cost center where it's like, you know, Duo, for example, they advertise all their pricing on the website. How are you going to make money from that? Some of the other tooling that we see out there, it's just like one product, right?

[00:49:46] And so then we started to get deeper into it. It's like, wow. So if right now today in the world, you would have between two, three, four, sometimes up to five agents that you're deploying on a machine to solve identity and to solve privilege access management. That's just unreasonable over time. At least two, but definitely could be more. Yeah, exactly. Yeah. So our thesis as a company is that we want to solve that.

[00:50:14] We want to bring it all in-house, the MFA on the machines and the single sign-on for web apps. The technician elevation tools that we've seen now gain some traction in Steam. We've built our own and we built a bunch of advanced technologies into that. And user elevation. So like eliminating tickets, removing privileges from users on their machines and creating rules and policies around what they can and can't do on their machine. So some zero entering kind of the zero trust world.

[00:50:44] We're legitimately, so we have actually six products now that we're consolidating all into one platform. And we've got some areas still need some work, I'll be honest. In our platform and other areas people are using and they really love it. And so this year is going to be, I think, a really big year for us. And we're super passionate about the vision. And we want to just offer a new future, a new option where you don't have to sit around and go, you know what? I need to go solve this MA thingy over here.

[00:51:13] And I need to solve the SSO thingy over there. And I need to solve the technician thingy over here. It's like, no, you don't, that doesn't need to be your path anymore. And yeah, I'm just, you know, kind of approaching it from the private equity analyst mindset as well. Like, I want to enable MSPs to make money. And I like that you're Peter. Thanks, buddy. Great, great catcher and broadcaster. Yep.

[00:51:43] Good, good, good. Yeah. I'll send that to ESPN, but thanks for the heads up. That's Evo. That's what we do. And so, so real quick, what are the six thing products that you are merging together real quick? Multi-factor authentication on endpoints. So PCs and Macs and Linux. Single sign-on. So web apps, right?

[00:52:10] Radius, which is basically MFA for network devices and appliances. Technician elevation. So that's eliminating the sharing of passwords, removing local admin rights from machines, all that good stuff. And then we even have an integration with like IT, Blue, and Hoodoo. The fifth one is going to be help desk verification.

[00:52:37] So you want to verify the identity of a user calling into your help desk. And we integrate with ConnectWise Manage and that sort of thing. So you can just send them the request from the ticket. And then the sixth is end user elevation, which is eliminating privileges of end users on their machine. So if they want to go install an application or do like it's EXE or MSI, whatever the executable is, we intercept it. We say, nope, you can't do that.

[00:53:06] You have to ask for permission. And then the MSP can create all kinds of policies and rules around whitelisting, blacklisting, all that good stuff. So right now, that's three companies you would have to go to. Actually, four. Probably four companies to go get all those tools. Okay. So because all of that is in there, how, and again, you don't need to get pricing out on here, but just the scheme of it, right? Is it a per device, per person, both? Like how do you consume that?

[00:53:37] Yeah, it's both. Both what we're starting with is offering pricing that is familiar to the market so that they don't have to like just totally reimagine how they're paying for these sorts of tools. But over time, we intend to just truly simplify that. But yeah, right now it's typically a per user cost or a per endpoint. Okay. Really simple. No, I like it. Hey, six products, one platform.

[00:54:06] Makes sense to me. And there's a reason that all six of those things exist on their own. And I'm thinking to myself as you're going through the six, well, historically, when I think of this, I would think this company and I think this product and I would think this brand. And like, you're right. It's not all the same, right? It's multiple, you know, and they're all not interconnected, right? Like you would use different things for different reasons. So I'm tracking what you're putting down.

[00:54:34] Man, you could probably take, I could probably without even blinking go another half hour with you. This is a great conversation, by the way. Yeah. That, yeah. So for your marketing people, like the hot seat, I think you did great. Where do people find more information about Evo? You know, how to get ahold of you, talk to somebody a little bit more to get into the six products, all that, James? Yeah, I'm super responsive on LinkedIn.

[00:55:00] So if anybody wants to look me up on LinkedIn and DM me, I am, I'm, I'm there. And I really enjoy building those relationships. Otherwise, our website and, you know, reach out there. We actually have a lot of our team on the go-to-market side of the house is all from Datto. And so we actually have an office in Connecticut that we've opened. So super friendly folks. They know the space. They know what to do.

[00:55:29] They understand how it all works. So we're, we're, we built a good team that can interface and engage with really. I've said to my own, I said to my own people inside of my organizations, it is very hard to value the MSP tribal knowledge. When you try and bring somebody from outside the sandbox and for them to get to the point where that's at a good point, it, it takes time. No.

[00:55:58] So I like your, the pedigree of people there. That, that makes sense. Pete says, very cool how you're putting it all together at Evo. I agree. And Ken, fabulous webinar, brass tracks, conversations about PE IPO. We talked about that human interaction versus bot. Definitely talked about that. MSP profit math trifecta. Michael, thank you for joining us for an hour. This was one for the books. We're going to get this online later on today. Looking to talk to you more in person. So hopefully I'll run into you in an event real soon.

[00:56:28] Sounds great, George. Good to see you and really appreciate it. Yeah. Thanks for everyone else. This session was recorded. You'll find it on mspinitiative.com under session shortly. And on YouTube, our podcatcher, all that good stuff. Check out Evo security and we'll catch you on the next one. Thanks guys. Thanks.