What If Everything Goes Wrong?

What’s shakin? CJ, you are president of some amazing things.

The President of Kaseya is absolutely amazing. Yeah. And thrilled to be thrilled to be I could say and loving every minute of

Yeah, that’s incredible. You know, I saw that it was in your title, customer relations.

Chief customer relations, yeah. 

How did that title come about? I was reading that. I’m like, “Wow.”

So Fred, and I started talking about coming in and working at Kaseya and he wanted to impress upon me and everybody else. It’s about the customer first and we need a chief customer officer, and you’re the perfect guy to come in here and help me create that culture, and put the customers first and start doing the right thing for the customer.

That’s awesome.

It was humbling and I was thrilled to be able to do it.

I know from the moment we met, you know, I was like, “Oh, my gosh, I love your disposition.”

Thank you. Thank you.

 You’re out here to try to do good things. 

Yeah, we’re trying to help the customers, you know, we try to help them with our solutions or services, we try to help them with the relationships. Our whole thing is managing the customer relationship and that means getting folks to know the customers, getting folks to understand the customers. That means us hiring more account managers so that they can have less customers so they can really get really understand the business and what solutions we can help them with.

That’s cool, man, yeah. I’m glad we got the backstory established. Now. You know, when we’re talking because we’re here to connect and it’s just been a phenomenal event so far,

Yeah, we’re really thrilled to be here in person to write. It makes all the difference in the world. 

It does. I mean, the after party last night was just stellar. I mean, the event team is incredible hearing Fred talk about the state of M&A in the industry, as well, right before I was on stage with Kevin Harrington, the original shark from Shark Tank. That was a lot of fun. Where is in your opinion, because everyone’s you know, there’s a lot of buzz man, you know, m&a in the MSP space? Where do you see it now? Where do you see it in the next three years?

That’s a great question, right and I’ll tell ya it’s like a pot that’s on the stove and it’s on high and you see the temperature, you see it bubbling more and more, I think this thing’s gonna bubble for the next three years and bubble over. I’ve never seen so much interest. I used to talk to customers, maybe once every six weeks, eight weeks, and the MS on a roll up conversation would happen. Or somebody would ask me Do you know an MSP that would want to acquire or do you know, an MSP that’s buying another MSP? Now, two, three conversations a week? It’s that crazy. I’ve never seen anything like this and I, you know, personally, I think it’s with all the private equity money involved now, and all that interest, it’s just driving so much demand. I was talking to a gentleman earlier today and he said to me, you know, I never had that as an idea. I never had that as the end game but now I kind of got a listen.

Yeah, that’s incredible. I know, private equity plays in that space, when you’re doing a top line of really 5 million plus, do you hear about some of those smaller MSPs? Like 5 million, and you’re talking about m&a as well?

I do. It’s funny. Again, I was just having this conversation but I’m seeing a tremendous interest in that 2 million, 3 million and I’m seeing it as a roll up for what eventually would be the private equity play. So folks have created these companies that are rolling them up to become, oh, let’s get a couple of them. Let’s get a regional and then let’s get a national and I think that it’s proven to be a very successful business model and I think you’re gonna see more.

That’s intriguing. So you’re seeing some of the smaller ones saying, like, hey, let’s group together, I think I saw one of these in Dallas or something, you know?

I think you’re gonna see more and more striving to be what we’ll call the Super MSP, and those super MSPs coming together find these to really create a national presence.

Yeah, that’s cool man, as the chief customer officer, too, you know, there’s a couple things I think around that, you know, how do MSPs that are looking to be acquired, or actually even looking to acquire, how do they continue to achieve in your opinion, because you’re the dude. How do they keep that customer relationship solid?

That’s a great question and I think it’s really about separation of duty. You got to keep the core team, keeping the lights on doing the business and making it all happen and you take the one person that’s going to go out and try and understand what’s it, what’s it going to take to get acquired or what’s going to take to acquire someone and you see the interest? Right? I mean, even here at Connect IT we had the m&a as you talked about. That thing used to be a half a day, right now, full day agenda. More and more people have packed that room? 

Oh I Know. I was talking with Fred before. It is like Rick, you know, back when we first started this m&a, I think it was four years ago, right? He said we had 15 people in the room. That’s it. Just 15 people and now there were, you know, like 400 here yesterday. It was not 250 at the after party. Alone. I mean, you throw I’ll go on and on. Yeah. Yeah but it was fantastic and I like how you’re talking about that separation of functions too because that’s something that I did in our public offering because we’re the first public MSP now we’re filed, you know.

Congratulations. 

Thank you, man. It’s been a long time coming and that was something I noticed early on was separating the regular MSP operations because I’m not in private equity. I’m actually a freaking MSP owner now and the CEO of a public company, and separating out the operations of the MSP and then a completely separate team that’s focused on acquisitions and growth that way.

Yeah, listen, I’ve been around a long time, and I’ve been in technology for a very long time, I’ve got around a lot of smart people early and they had this model and I think that it really works. If you’re gonna do that. You got to keep the core business running and this, this person over here doing the m&a, they’re going to get distracted and if you let it, it will take down this part of the business and we’ll make this less valuable. So you got to keep the business on, you got to keep the lights on, you got to keep the business running and that’s what it’s all about.

It’s almost because I like to position myself. Take a look at I’m in the theater, the shoes of the MSP, that’s looking to be acquired. They’re the sellers and that seems to almost be like a qualifying question they should ask because it’s a dating relationship both ways. Right? That’s right. Got it absolutely. Like school. Do you have an m&a team? Or is it just an owner of a larger MSP? Like, I think I’ll try this m&a thing.

I think it’s a great qualifier. I think that would be because again, you want if you’re going to get acquired, you want to come across something that’s solid, you want, you want to be a part of something where the business is important and that would tell me that, hey, these people know what they’re doing.”They’re focused, and they’re worried about business and serving the customer. 

I’m going to shift gears a little bit because the customer relationship piece of this, I mean, that’s, that’s your thing completely and Kaseya had a security incident earlier this year and when I did my appearances on Bloomberg and some other global media, I was just so impressed and I spoke so highly of the transparency and even more so like the communication, that you had the constant levels of communication in that customer relationship, it blew my mind, you know, 

Well, thank you for that, really appreciating it. Great leadership with Fred and, and great preparation by the team, the executive team, we had a runbook and opened up the runbook and the thing that probably impressed me more than anything was, there was never a second of doubt what we were doing. We knew when we saw this, and we’re like, take it down, you know, take it down and then the runbook kicked in, and nobody questioned anything. It wasn’t like, what’s this gonna look like? ended up looking pretty good, right? From the standpoint of being transparent and trying to help our customers we didn’t know and you can’t when your critical thinking is really challenged in an emergency situation like that. So to have a runbook, where things were thought out under calmer times, really makes it I recommend that for anybody, any MSPs anything like go prepare, while you’re the your critical thinking is intact, have it all down and then when the event happens, unfortunately, it’s probably when not if you’re ready.

You answered the question before I was even going to ask it because I was gonna ask, “Hey, what’s a tip for MSP?” Even just two days ago, I was in an elevator with somebody here. I talked about this on stage, he made my keynote because I had this conversation with him, right? And he’s like, man, it’s hard to manage my five guys back at the office, they don’t know what to do. I’m trying to work because I got this business and he goes, “Rick, what do you do?” Cybersecurity? It goes, Oh, my God, he’s like, we just had a client breached and we don’t know what to do right now. So I talked him through some steps. But that was my question to you because Kaseya handled it so well in the public relations and transparency and the customer communication but you focus on the runbook. Was that the customer communication in your runbook? 

Yes, the frequency and, and the tenor. Right. But obviously not the specifics. Sure. Yeah. But then we all looked at each other, the executive team, we looked around and we’re like, hey, we thought about this. This is what we do and more often and more is better. Yeah, and let’s go lets and let’s get more people involved, let’s let him see different faces and let them know the role here and we’re all working on us.

That’s incredible. Man. I was so impressed with that. I think he wants MSPs to take a look at that. I think it’s just this is key advice. You know, coming from the chief customer officer, I said that right? It’s having those things in calmer time. So it’s like do it now is what I’m hearing you say 100% the runbook down now and this isn’t even just with security breaches and those types of things now it’s every all aspects of your business.

You don’t want to be in a critical situation and have to decide on things when all that’s going on, right? Your heart’s racing and everything else, get all that out of the way, do it calm, kick it around, iterate on it, go back and forth, sleep on it, because you can’t sleep on it, because you’re creating the runbook and then everything kind of takes care of itself.

For sure. That’s fantastic. Let’s talk about calmer times a little bit. MSPs, you know, because if they can take a say, as a model, you know, because we were talking about account managers a little bit before, and how you have a specific number of customers per account and I’m sure you probably have rhythms around that, too. What can MSPs do from your perspective to maintain that constant communication in the calm times?

Yeah, I think that’s and I think it’s understanding when’s the last time you talk to a customer, you don’t want a significant amount of time to go by when you haven’t had a meaningful conversation with a customer? Like not, hey, just checking in now for a meaningful conversation? How’s your business doing business reviews? What are your goals for the next quarter for the next 90 days? How can we help you with those goals, and it’s about that meaningful conversation, making sure that you track that across your entire customer base, and know that you haven’t missed those five customers. Because if you do, those are the ones you’re gonna lose.

At ReachOut, we have something called client engagement rhythms and we started this even before COVID, to where we’ve got zoom meetings with clients at specific intervals. So even prior to going all virtual we started these and we found that we could see our clients more often than having to roll for those quarterly business meetings and all that and we also grouped them into three different segments. That way, we can say, hey, if you’re spending, it’s just to me, it was common sense, right? If they’re spending more money with us, and we have an average seat price, they’re bigger clients. So they might need to have our top tier for our weekly plan engagements but then the in-person ones are only once a quarter, but they love those touch points that often and even pull back the curtain and say, “Hey, this is what’s going on right now. Can we make these decisions for you?”

Yeah, exactly. Right, and, you know, our theory is pretty simple. If we can reduce the number of customers per account manager, the account manager can know that customer better and when they do pick up the phone, they’re picking up on the last conversation, they don’t have to reinvent the wheel and like, “Oh, I see that you have this with us” you know, no, they know what they have. They know what their business is trying to do and they can add value. We can pick up the phone and say, Oh, wow, we just did this great acquisition, we know you guys are gonna love the solution, makes a big difference.

That’s incredible. So what are you excited about the most with the MSP space in the next couple years?

You know, what I’m really excited about is the fact that small businesses, medium sized businesses are spending more on technology and what we’re seeing is they want to focus on their core competency. They want to focus on their business. So they want to outsource technology, by the way, they want to outsource other business processes too, and I think the next exciting step is, boy, if the MSPs are doing a good job, your customers are going to ask you by the way, do you also do this? I worked at a startup software company back in the early 80s and the original founder said to me one day, you know, if you do your first thing really well, the customers are going to ask what else you do and I think the MSPs are perfectly positioned to really support the the medium size businesses out there as they begin to outsource not only technology, but other business processes.

CJ, this plays so well into M&A too, because I had a question at one of the breakout sessions that I was teaching around valuation. They’re asking, like, what if we added a service? Would that count in our valuation? Like, well, it depends, it kind of depends. Is it an extension service? You know, like, with us, we do so much media that there’s even clients, because that’s part of our marketing, right? It’s huge, you know, podcasts, everything else. There’s clients that use our studio, right and rent it, you know, and that’s an extension, add on component to our revenue to our value everything. Yeah, but then I’m like, if you’re gonna sell CBD oil or something like that. Exactly, yes. Although I may be interested. Yeah, it’s but my point around M&A is those add ons that you might think of are really outside the box, really are right smack dab in the middle of the box. 100%. It’ll increase your value as an MSP.

Yeah, think about what the MSPs are doing for those businesses and they’re right in the middle of everything that they do and they’re saying that, “Hey, I have your security. I have your cybersecurity.” Well think about the business processes that touch that and what they have to opine on oil boy, I would make a strong play for the business processes that are relying on that to say, “Hey, listen, if you’re coming to me, and you’re telling me that I got your cybersecurity, then you gotta let me do this for you.”

Yeah and make it a no option. No option. It has to be that’s how you protect yourself. And I appreciate the conversation. Absolutely.

This is great. 

Yeah, thanks brother.

Important Links:

Kaseya

Kaseya Connect IT

Kevin Harrington

SharkTank

MSP

M&A

Dallas, TX

Kaseya Breach