ERP075 - MSP Insights Series 1

It's an intentional sales process. It's I wake up in the morning and I think, who am I going to call, what am I going to do to grow my business? And I have up on my whiteboard all the deals that we closed, all the deals that are open right now, revenue targets, etc. Welcome to Evolved Radio, where we explore the evolution of business and technology. I'm your host, Todd Kane. The Evolved Radio podcast is brought to you by Evolved Management Consulting. It's our mission to help MSPs increase profit and decrease stress. If you're in the MSP industry and manage people, you should really check out my service manager training course. It's like the missing manual for how to run high performance service delivery teams. Most managers in the IT space have never had any formal training. If you'd like to step up your game and become a successful manager, check out the Evolved Service Manager training course. at training.evolvedmgmt.com. That's evolved with a D as in Delta. Or you can visit my homepage and scroll down to the training section. Today, I'm kicking off a series of interviews with MSP owners and operators. We peel back the curtain a bit to hear from people working inside their MSP business. We focus on revealing the lessons learned and experiences in building a managed IT services business. My first guest to kick off the series is Brad Rubin, president of Archway Computers. Brad's business isn't a typical MSP. Brad's early experiences in the IT industry shaped some of his decisions about how he runs things. His approach is intentional and has served him really well in growing the company. Brad's primary role in the business is sales, so we also chat about how he thinks about sales and growth. Please enjoy this insightful conversation with Brad Rubin. If you enjoy the show, please consider leaving a rating and review in your favorite podcast app. It really helps to spread awareness and bring more listeners to the show so we can share the message with more of the community. Now, on with the show. Brad, welcome to the podcast. Hey, Todd, thanks for having me. Really enjoy your podcast. Cool, I appreciate that. Love to have you here, uh, we're going to talk through a bunch of different topics related to to your experience running your MSP. I think just to give people an encapsulation of your business, you want to give us a a quick snapshot of sort of the size of MSP and and the focus that you have as well. Sure. So, we're a managed service provider that only works with independent insurance agencies. We're not geographically bound. So, we're in 27, 28 states. We provide the great majority of our work remotely. We have the capability of getting people on site. In terms of our revenues, this year we should probably be around $4 million. It's pretty pure revenue in that. We don't sell equipment, we don't sell software, we don't sell hardware, we don't sell internet. And we also don't do project work for companies that aren't on managed services agreements with us. Cool, and we may have to uh circle back to that, that's a I would say is not the norm as far as business models go as well. There's a few things that I think are are quite unusual about your organization and in the way that you approach things. This will be kind of a different take as well, so part of my interest in in having you as a as a guest for the podcast as well. One thing I I do want to ask as we go through this series kind of talking to owners and operators of MSPs. kind of framing the same question because I'm always curious about, you know, why people started their their IT company? Like, do you have a a sort of recollection or a memory of where you were or what the situation was where you said, you know what, I'm going to start an IT company? Yeah. So I was working for a outsourced software development firm. that basically provided software programmers offshore. And a software salesperson for an insurance software approached me and said, Brad, I hear you're back in the IT business. And I said, no, I'm not. And she said, well, I need you to be. She had been referring business to an IT company that went out of business. And she had a lot of upset clients. So she had about 10 clients that she needed support for. So that's how we got started. And I thought it would I had a friend of mine who needed a job, who was a very good technical person. And I thought, well, we'll have this mini MSP, managed service provider in the LA area, right? And now we have over I think over 210 independent agencies that we work with. Awesome, that's cool. You were drawn in. was it with any hesitancy or or were you pretty excited about that opportunity when it was presented? So I owned a VAR previous, which I had sold to a publicly traded company back in 2000. And I made the decision that if I was going to do this, there was going to be a bunch of things that I would not do. I wouldn't sell hardware, I wouldn't sell software, I wouldn't sell projects, I would sell time and materials. Because I just knew from owning that VAR before how difficult a business that is to to manage your cash flow and everything. I remembered we sold a lot of hardware, you know, back in 1999 and I would be wondering, why is my checking account balance so low? And then I'd go visit a client who had 60 of our computers lying there and I'd say, oh yeah, that's why they haven't paid for these yet. Yeah, the VAR business can certainly be a bit of a roller coaster, right? Yeah, it was rough, it was rough. So, so we made a conscious effort all the things that we weren't going to do. Cool, yeah, it's good to be intentional that early as well. I think that that's a an important early lesson for you as well. Yeah, yeah. It served us well. And we're always getting hit up by vendors that want us to sell their wares. And it's an easy no. Yeah. So, I think a great story especially given sort of the security incidents that are prevalent in the industry. You have a a really interesting story about earlier on in your business that you had a pretty severe ransomware event that impacted, I think, a good number of your clients, if not the majority, if I'm not mistaken. Can you tell us a bit about that event and sort of how you fought through that and and why it was not, you know, a business ending event? Right. So, I'd rather not talk about it because it was so awful. Right? But yeah, we did have an event, we got through it. Everybody worked their tails off to get through it. We communicated very clearly with our clients of what happened, what we were doing. We had insurance. And any MSP out there that doesn't have cyber insurance, you know, God help them, right? Because a good insurance company is going to provide you not only with money so that you can help people out, but they're also going to provide you with skills where they had a cyber security firm. that they were able to immediately bring in and were able to be very helpful. But I made it a goal not to sell any new clients for six months. And to go meet with all of my clients. And we lost some clients, right? And it was. In some respects, it was the best thing that ever happened to us because me as my focus being on sales, it forced me to get involved in the customer service side of things and the way we were delivering services. And the way we weren't delivering services and how we had to be better. And I always say, you know, people talk about their key hires. I will tell you for for our company because we've grown a lot since that event. It's your key fires. It's finding the cancers in your organization. You know, that I I say one bad tech. can screw up five to 10 good techs and make them completely ineffective. And so just finding those people and getting them out of the organization was was key. Yeah. No, I think that's 100% true. You're you're often determined more by by those those negatives than than the positives though because they it really limits the the stars to really rise above, right? If they're constantly being dragged down by those those negative performers, right? Right. You bet. And you helped a lot. You know, you came in and and took a look at our organization and had some really helpful advice. And and technology that we implemented and we're a 10 times better organization now. And maybe we wouldn't have been had we not had that event, that ransomware thing. Yeah. And this this was quite a while ago, this was not sort of the the near term recent event, right? No, we weren't part of the recent event, thank God. Uh we put in a a lot of additional security, etcetera, in place. Obviously. But yeah, it's been almost three years. Right. And feel free if you can't sort of talk about the specifics of this, but I'm curious like, were you in a situation where you had to rely on backups for recovery? Or was there there situations where there was lost data, what what did sort of the fallout of those events look like from a client level? Well, I don't know if any any lost data that happened. But we did have to rely on backups. And when you have, you know, you're running a triage center in in that, you know, you have a lot of customers down. It's it's one thing if one or two of your customers go down. But if 50, 75% of your customers go down, it's quite another thing. No kidding. And nobody on the planet is prepared for that. Yeah. Well, I mean, at least you had the backups. Like backups are are an absolute bacon saver, like if anybody has to learn anything about the the cyber events is you air gapped backups. will will quite literally save your business in some circumstances, right? Oh, absolutely. You know, I think because we don't sell equipment. We've always sort of emphasized the cloud to our clients. And, you know, we're an IT company with zero physical servers. And we haven't had a physical server, I don't think in the last nine years, right? We've been on the cloud. And it's really served us well. Yeah, that's amazing as well. that's another one of sort of one of those things that I would say is is not typical of your organization and how you may sort of run run counter to a lot of the norms in the industry. So that certainly one of them is being very, very cloud focused. Another is that that I find interesting is that you guys are a very geographically distributed organization. That and that, you know, you serve primarily North American based clients, but your your staff is like, I don't think you have more two people that live in the same city, do you? No. No, we don't. We don't, we're we're all over the world. Right? And we have a lot of people offshore, but we treat them identically except having to take payroll taxes out to our US employees. Right? And so I think a lot of these offshore people have just been absolutely abused. by foreign companies. You know, just one day they decide decide to fire 10% of the workforce. And it's going to be all the offshore people because they don't want to. They don't want to fire Americans, right? And you know, so we treat them very, very well. We pay them more than market. And people don't leave us. I Todd, I'm in California, we call it Hotel California. You can check it any time you like, but you can never leave. And our people just don't leave us. And I think one other thing I would say is that we've all. for the last eight or nine years, we've we haven't an office. We've all worked at home. And I've got 55 people now. And we don't have an office. AWS is our office. Amazon web services is our office. But I think that that is a huge sell to a tech who might have a family. that needs to take their kids to the doctor or whatever. or wants to pick up their kids from school. I think it's a huge draw and a huge huge reason why we don't have a lot of turnover here. So the the the shift to work from home during the pandemic was a bit of a scramble for a lot of organizations and you were just like, oh, you know, business as usual then. My wife said to me, she's like, that thing's really changed for us, has it? Well, no, not really. Yeah, and nothing changed really for our organization. And it changed for a lot of our clients and we were able to to give them some guidance from personal experience of working from home. And how to maintain camaraderie and stuff. I was I was just on a Zoom call with one of my team leaders. He said, you know, Brad, we haven't had a team meeting. in a long time and it's it's been two months, right? And we try to we try to do them at least every two months. Have everybody on board and we take pictures. And we have a little contest like find the craziest thing in your refrigerator. And it's a it's a lot of fun. We have a lot of fun and drinking contest. That's that's always great when your IT company is drinking. Yeah. Yeah. Someone else is manning the desk though. those events I assume. One man out. So any lessons learned or things that you would pass on to other people as maybe they consider kind of a a geographic expansion for their hiring practices? Like obviously you guys have leveraged this really well and it's it's been a a benefit for you guys. But there must be some struggles that you see in managing a disparate team like that over lots of time zones and and you know, the difficulty of having to sort of force some of that camaraderie or at least be intentional about it, right? Yeah. I would say just being respectful of and understanding of people's culture, right? What I've seen like if we take the Filipino culture, it's very much customer service. caring oriented culture, right? Where out here in California, almost every nurse is a Filipino man or woman, right? And they they just have that built into their culture. They also have it built into their culture that they have 100 cousins or a thousand cousins. who would be great for our organization. So it's it's a it's a great way of uh hiring folks. But then we'll a lot of our Eastern Europeans, they're more like the surgeon that I would want to have. Right, the one who maybe doesn't give the greatest bedside manner, but it's going to take the cancer out of my body quickly and efficiently and and all that. And so just recognizing the cultural differences has been helpful to us. But treating everybody the same in terms of, you know, not having favorites and not not having your onshore people treated differently from your offshore people. Yeah. That's amazing. Uh, appreciate those insights. I I wish, I hope, actually, I hope that more people kind of expand their geographic region from a hiring. I think it's an incredible opportunity with that's been gifted to us with. sort of the the the evidence that work from home works well. I think a lot of people were really surprised by that. A lot of nervous executives on, you know, are people going to be as productive, are they going to be watching Netflix? And almost categorically, the indications are that the productivity was at least stable, if not up, right? I think that you avoid a lot of got minute meetings. Totally. Right? Walking by the desk, hey, do you want to get a smoke? And let's talk about this client, but let's also talk about the Rams game or or whatever. And then a five minute meeting turns into an hour. Right. We don't have a lot of got minute meetings. Although we use our phone system for that and we have to be careful about that. About, you know, interrupting people. One of the books I read when I was in college was Zen and the Art of Motorcycle Maintenance. And one of the things that he talks about in that book is the retooling cost. of your working on something and somebody takes you away for two minutes to do something else and then you got to get back, but there's the time to reorient yourself, get your tools in place and figure out where you're at. And I think working from home, you have a little less of that retooling going on. Yeah, definitely. One of the other areas of interest for me on your business is uh not that this is unusual, but I would say it's certainly not the norm is that you're a non-technical founder of your company and you're primarily responsible for sales and account management, business development. Whereas most MSPs, I would say, majority being are are technically founded. What has been your experience in kind of not being the king tech or having that deep technical history to draw upon? I I certainly see there's benefits in that that, you know, your your sales skills are are really useful. And a lot of other MSPs tend to struggle in that department. But I I wonder about your experience in sort of having to rely on others when it comes to sort of the technical ends of that business. What's your experience in that department there? Well, first of all, I sort of I started as a tech, right? God, 40 years ago or whatever. 35 years ago. I was a certified network engineer and I was a CNE. Was that what they were called? And so I think I have the ability to call BS on text. and know BS when I'm I'm hearing it. I also have the ability to know that if some a tech says that's a piece of cake. that I'm in for several days of of horror. Um, so I do have that capability. But I think that again, if we go back to Zen and the Art of Motorcycle Maintenance, it's so important for me to stay in a zone, right, of of sales. And to not be distracted by the everyday customer service issues that are going on. A book I read Jeb Blunts writes many books on sales. And I think he said you got to eat the frog. Which means first thing in the morning, I got to do all my calls. We use hubspot, so I and hubspot has this great routine of forcing me to to get through it. And all the calls that I have to make, etcetera. And my people know not to bother me unless it's, you know, a four alarm fire. that they have to deal with. But yeah, I mean, I I talk to IT people all the time. that say, oh, I get all my business from referral. And referral's great. We get business from referrals too, but you're never going to grow your business just off referrals. It's impossible. Yeah, and you've seen some pretty pretty explosive growth as well. And I I would have to attribute that to that that being an intentional sales process, you know? Yeah. Yes, it's an intentional sales process. It's I wake up in the morning and I think, who am I going to call? What am I going to do to grow my business? And I have up on my whiteboard all the deals that we closed, all the deals that are open right now, revenue targets, etcetera. I have also on my whiteboard all the initiatives technically that we want to do. the things that we want to add. But it takes up a pretty small portion of my whiteboard. Yeah. Got to pay for the those technical projects with new revenue, right? You know, sales solves everything, right? And when we had the ransomware incident and I was meeting with clients, one of my clients who said to me, he said, Brad, you're going to have to start selling again. You're going to lose some clients over this. And we did. And he was right. And so I did. And and thank God I did because, you know, we're probably probably double the size of what we were. For some of the folks that know that they need to do more sales and marketing, a lot of the IT people and MSP owners tend to do a lot of rumination and a lot of reflection. And maybe that paralysis analysis. Any suggestions for them around what they can do just as those simple steps? I think reading some of the books from Jeb Blunt is is a great one. He's I love his style and his approach of just no excuses, no bullshit, just get out there and start selling. So that that's certainly the first tip that I would I would pass on. Pick up the damn phone. Right? Everybody thinks, oh, there's a new way to sell. It's people aren't calling me. They don't want to be talked to, etcetera, etcetera. Pick up the damn phone. And I think also having a niche where you're an expert in that niche. really helps. There are a lot of MSPs out there, right? There's a lot of MSPs. We generally replace what I call Joe down the street. The IT owner that plays softball with the insurance agency owner. And we're not that. And so, but they've never heard from an IT guy like me. that knows enough technical stuff, but also knows about their business and about the challenges that an independent insurance agency owner faces today. They haven't heard from a guy like me. And God forbid, we're ever referred to a lawyer or a doctor. I can add zero value to them and they need to find a different MSP. So it's an interesting approach, like I I think a lot of people hear that advice of of go vertical. Find a niche, all of those and I I see the value in that. But I suppose there's some inherent risks in that too in kind of having all of your all of your eggs in one vertical, right? Uh what are sort of the pros and cons that you see around having a vertically focused IT company? Well, the cons are. Thank God I wasn't in hospitality last year. Right, exactly. Right, right, if that had been my vertical. you know, there would have been nothing I could do about it. So independent insurance, we're doing a lot with mergers and acquisitions, right? And so through no fault of our own. we lose clients every month, but it's because they're acquired by a big agency. that has by big, I mean thousands of people. agency that has internal IT and systems and things like that. that are in place. So that's definitely a drawback of of being in a a vertical market. But I think the pros are so much more. Like every salesperson, I'm my quote unquote lazy salesperson. I want the easy sale that I can get. Right, and the easiest sale I can get is with an independent insurance agency owner. And we've been pretty darn successful at getting the word out to those organizations, making the partnerships with the vendors that are in tight in those organizations. doing the webinars for the people the associations that are out there. I couldn't imagine having to be a generalist. And duking it out, you know, and trying to be able to differentiate yourself. not being in a niche. Right. I'm sure there are plenty of MSPs that do it, right, Todd? But they're far smarter than me. I couldn't pull it off. So earlier you mentioned not doing intentionally not selling a lot of product. I think that that would sort of fly in the face of a lot of other people's assumptions about what an IT company does. So I I am curious like when people say, hey, I need a new laptop. What's your approach if you don't sell it to them? Right, so our approach is, hey, we'll we'll find you that laptop. on the Dell website, we'll give you a link to that laptop. And you can buy it there. Or here's a vendor that we work with. They're great. But, you know, being a hardware specialist. Number one, the margins aren't good. No, really not. You're putting yourself out there like selling them something that might blow up, right? And now that's your fault and I paid you $1,500 for the laptop that blew up. It just seems to me that it it makes your top line look a lot nicer. But it it when you get into all the administrative costs of doing it. it has a poor effect on your bottom line. That that was my experience selling equipment. You know, 20 years ago. And the margins. I don't think it's gotten better. They certainly haven't. 20 years ago. And I and the the clients are smarter about, hey, I I went to New Egg and saw it for this. Well, you saw it for this because it doesn't have this, this, this and this. And now you're just spending a lot of time to make nothing. So I wanted also to to be able to count on our revenue. Meaning it's a lot easier to scale an organization. when you know X number of dollars is coming through the door every single month. And when that covers your nut and then some, you're in great shape. I just see so many of these companies that sell hardware that it's like, God, we got to sell 50 grand worth of hardware to to break even this month or whatever. Because they they've been concentrating on hardware sales and not monthly recurring revenue. That's much more profitable. Yeah, we're certainly seeing a shift a lot of the VARs are are now looking to add the recurrent revenue to their business. But it's a difficult shift for a lot of those organizations from what I've seen. There's just sort of the old habits die hard and they're they're still so much of that focus on on product and project. And you get those big balloon effects where like, all right, we sold $250,000 project with hardware. And it's like, we're focused on this for the next four months and then and then kind of back to zero. And you're scrapping again, right? It's really difficult. It's a difficult management process for that. And how do you just scale an organization off of that? I I I just don't know how to do that. And you know, more power to the organizations that can do it. But we don't. Yeah, so you rely on third parties for onsite deployment then, right? You have do you have sort of a a standard company that you're using under contract or how do you manage the those onsite deployment needs? Yeah, so we use field nation. And, you know, because we've been using them for such a long time. We've gotten, you know, a lot of good ratings on there, people want to do work for us, they know they're going to get paid quickly, etcetera, right? So generally when we're we we have a pretty detailed on boarding process. And I think that's been another key change and success measure. is that your onboarding better be good. Absolutely. Right? If your onboarding isn't good, it's just going to have ripple effects forever. And you're going to always be playing catchup. So it's about organizing your data and and having a a good onboarding process. But part of our onboarding process is we interview field nation text. that are located within a certain radius wherever the client is. And because we have a lot of clients now, we may have already identified those field nation tests. That's really smart, actually, kind of planting those seeds early and being proactive about who that person is. that would be serving that that that local client. that's that's a that's a really good idea. Yeah, we we say to our our prospective clients. We say, look, if we're going to be in your office all the time. We're doing something wrong. Totally. And, you know, I think the pandemic sort of proved out our model. Right. Because they just who wants a a unshaven un showered IT guy in their office. during the pandemic. Nobody did. Nobody does. And so it just, you know, it proved out the remote is better. Yeah. Do you still get clients that kind of push back on you? I find that there's sort of this psychological need in some businesses. where like, I, you know, I want my IT guy here. And just send someone over to fix this type thing. How do you push back against that from a account management standpoint? Right, so we see that less and less. We send out people every week to various clients that that need help. on site, etcetera. And, you know, some of our clients have become very fond of the onsite text that we've we've sent. But because we're associated with field nation, we feel protected from them trying to poach the client. Plus, we think that we offer something really special to the independent agency community that we work with. Right. Excellent. Well, Brad, this has been really insightful, appreciate you coming on and giving us sort of a perspective on your experience in in growing your MSP. We'll link to your LinkedIn bio and and your company page. Is there any parting words or areas that you'd like people to follow you, have a blog if you want to have plug that as well? Well, if they want to visit our website, it's www.myarchway.com. And I do write a blog. that goes to a bunch of independent agencies every every week or so. And that blog is not really about technology, it's just about fun things that I think uh my clients would be interested. my clients and prospects are interested in. Okay. Cool. Well, we appreciate your time, Brad, and all the best. Keep up the great work and building your business. Yeah, thank you, Todd. Thank you for everything you've done for us. And love your podcast. Thanks, take care.