ERP077 - MSP Insights Series 3

They were hourly, they were break fix and we said, listen guys, you guys are a large organization that need like the full boat, like you need everything. We need to get in here and we need to run you through the full MSP experience. And they ended up firing us because they didn't want to pay, and I was giving them a break moving from break fix to that new model. Well, they went through two other providers, low cost providers trying to get the same service. I think it was two years, it was back to back, every year they switched and then they came back to us and they're like, we can't do this anymore. So yeah, the churn in our industry is crazy. Welcome to Evolved Radio where we explore the evolution of business and technology. 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, we're continuing our series of interviews with MSP owners and operators. We peel back the curtain a bit to hear from the people working inside their MSP businesses. We focus on revealing the lessons learned and experiences in building a managed IT service business. Joining me today on the MSP Insight series is Paul Vetter with VXIT. Paul talks about the division of responsibilities running his MSP with a partner. How to handle the conflict created by winning a new client away from a competitor. We also chat about one of VXIT's superpowers, which is brand sophistication. Paul is also one of the co-founders of the MSP community, MSP Pool Party. So we chat about community building as well, it was great to connect with Paul for a very friendly and open conversation, a bit like catching up over a beer. So please enjoy the discussion and lessons learned, 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. Paul, welcome to the podcast. Thank you, sir. Thank you for having me. So, running a series here, you're uh kind of next in line in the series. And uh kind of kicking things off with everybody with the same question. And understanding, why did you start your MSP? Was there a particular event or something that brought you to this? And and how did you say, okay, that's it. I'm going to start my own IT company. How did that come about? Yeah, so we actually had an interesting start, it's kind of unique how we got started. The long story short is that there was a company that existed back in around 2014 or so. They were a marketing and software development firm, they did some graphic designing, websites, things like that, built some software. They had explosive growth and I actually was friends with the guy. They got to a point where they needed IT services, so instead of hiring an IT company, he goes, shoot, why don't we start an IT company? You know, Letos, which was the name of the company at the time, will be the first client and then you guys can go out and get get other clients. So, he actually called his cousin in New Jersey, who's my business partner. And he's like, why don't you move from Jersey back down to Florida or to Florida? He had never lived there. I think before they got off the phone, my business partner Craig had packed his bags because he was very anxious to move down away from the cold. Yeah, so basically Craig and I started in January 2015 with an anchor client. And we had about 90 days of runway based on kind of what they were paying us. And I was from the area, so I I kind of had all the connections and I was networking already because I had been in the MSP space previously. And um I just started going out and selling, and we've existed, there was no real money, it wasn't like a startup that got funded sort of a thing. And it was just like I said, we had that anchor client that allowed us to get started. We've paid our own bills ever since since January 2015. And we're now 16 people, we're hiring like crazy right now because we're super busy, but 16 or 17 people now including myself and my business partner. So, we didn't necessarily start with why, which is side note, great book by uh Simon Sinck. But it's kind of evolved out of that, I I always, you know, when I was working at MSPs before in the IT industry, I always wanted to do something different, I always wanted to bring good change to the industry. So it was just a very natural thing for me to go, yes, let's do this thing. I don't think any of us thought it would work out as well as it did because we're actually running a real successful company now. And when I say not real successful company, like real comma successful company. So, you know, it didn't necessarily start out that way, but we we've kind of evolved through that. And it's funny, we've we've hit this point, I think this year with it's obviously based on revenue, but but when we have, when you have the number of people that we do. You start to have departments and people are starting to stop being, you know, you're not a jack of all trades anymore. We have our own lanes and we're actually driving in those lanes. So it's cool to see we're starting to grasp at what I would call and probably everybody would call operational maturity. So yeah, so that's kind of the the short story of how how we got started. So I'd say a number of businesses have partners and it's particularly prevalent in in the IT space as well. Are you guys intentional about how you divide your roles within the company? Do you have separate focuses and was it always that way or is that something you had to find your way into? Yeah, it's interesting because that was something that was very easy for us, so I'm the managing director, my business partner Craig is the director of technology. And then our other business partner, he's kind of a silent partner, so he's off running another company, he's loosely involved, kind of like a shareholder basically. But Craig and I work so well together, we're Ying and Yang, he and it's not that he's bad with people or doesn't like people. It's that I'm the people side of what we do, I'm kind of the face, I do all the public speaking, I meet with clients for new business and and things like that. He's really the brains behind what we do, I'm a certified IT guy, I've been doing IT for over 15 years, but to sit in a room and like engineer solutions is not what I love to do. I love to meet with business owners and talk high level and do budgeting and, you know, initiatives and and and things like that. So that's kind of that natural flow that we found ourselves in. And and we just work really well together, I think that there there can be a lot of ego in our industry because people are proud of what they're able to build or the solutions that they're able to bring. Especially if they've custom built it, and Craig and I are we just we know what we don't know and I'd say we're we're mildly humble. I know that's kind of uh backwards for me to humble brag about being humble, yeah. But that's that's kind of the reality. Like I I I'm very aware of my shortcomings and I don't, you know, I think like every business owner, I have imposter syndrome sometimes because I look around sometimes I'm like, what the hell am I doing? Like, who am I to be in this position? Especially as we continue to grow and and we find success, it's it's it's kind of scary. I think that's a important point, I I think you're right, like imposter syndrome pops up a lot in this industry. And you sort of nailed it, like especially as you become more and more successful. You're like, do I know what I'm doing here? Like is are the wheels suddenly going to come off? And I think it's important to sort of be able to to have a bit of self-doubt to keep you on your toes, right? Are you conscious about how you manage that imposter syndrome? Any tips or tricks of people potentially facing the same thing? Yeah, I mean, I think I'm I'm such in the height of that right now that. Well, I mean, the reality is, I actually had a conversation today with one of my employees who who's been with us since the beginning. He was literally like the second or third employee. And, you know, back then when you're two, three, four people, you're very, very close. And we're starting to put middle management in place, they're starting to see, you know, I just bought a new car and it's a nice car. And they're starting to kind of see me break away from that person that shared a desk with them. You know, and my success is our success, so we we and I told him that this morning, like I I want him to I want him to succeed, I want to pay everybody more money, I want to give bonuses out and I want everybody to be successful. But yeah, I mean, just you got to stay grounded. And I don't know what that looks like for everybody individually. You kind of have to figure that out for yourself. But I think that you just need to realize where you came from, keep in mind that, you know, you shouldn't be the smartest person in the room, you should always be learning. You've never ever made it, I don't care what you've done in your life, there's always somebody better, there's always a bigger fish. So I think just keeping that in your mind, but be confident, yeah, and that's the flip side, you have to be confident in what you're doing. You know, there's a level sometimes of faking it until you make it with certain things that you encounter. But the reality is is, you know, for us, IT guys are very resourceful, like we we are just able to find answers to things. Period. Like we just we find answers to things, nobody nobody rarely comes to us and go, oh, you know, I can't figure out this problem. I mean, rarely do we go, yeah, me neither, sorry, I don't have an answer, like we have to find those answers. So I think that that makes us resourceful, so there's a there's a confidence level I think that naturally comes out of that. Hopefully that answered your question. No, no, it's a gray line, right? Because you're right, like there's so many things that we're just expected to know, but there there's not a justifiable reason that you do know them. I think positioning it as a humble student, right? Like we're in an industry that is a six-month shelf life, like you're like the fact that you're learning is just embedded in the industry that we've chosen, right? So and I think that that naturally extends into business. Is that, you know, you know, you know enough to get by, but as the business grows, your challenges change and you you have to sort of be adaptable enough and be uh sort of a student enough to be able to say. You know, I'm not really sure, but I'm going to pull on some threads, ask some people, kind of reach out to the industry, talk to my peers and and see kind of what I can dig up. And to some degree, you have to be comfortable with the idea that, hmm, I'm not sure exactly sure what to do at this juncture, right? But you can't just so to say, I don't know and then just kick your feet up, right? That that's the sort of the burden of leadership is is always pushing forward and and finding the answers that you need, right? Yeah, and staying connected to community is hugely important to to being able to do that. So I just went to the channel companies exchange event in um San Antonio, Texas. Literally just got back last night. And, you know, just solidifying vendor relationships and and connecting back with your community. I hate to even say this and and it's mostly because we don't operate in this space, we don't do any work with government contracts now, but I just learned what CMMC was. Didn't really have an idea. I'd heard that word thrown around, but there's compliance coming to our industry for those that that work with government agencies here in the US and, you know, I didn't know about it. But had I not gone to that event, would I've eventually learned about it? Yeah, but staying connected with the community, being able to ask questions, connect with peers on things that I don't know. You know, you don't know what you don't know, so it's an important thing to stay connected with the community, with your peers. You know, and sometimes even competitors, I I have relationships with my competitors, it's kind of a weird weird friend of me sort of a thing. It's it's interesting. Yeah, I I don't know if this is unique to our industry, but I've certainly heard from other people that get into the IT side of side from telecom. And they say like, this is such a breath of fresh air, like everyone is really open and and willing to share. Which is like which is not their experience sort of from previous industries. Maybe it's it's industry dependent, but I really appreciate that about the IT industry. Is that no one really sort of looks over their shoulder and says, this is mine. You can't know what I know. Because like it's a plentiful ocean out there, there's so much work available, there's really no reason to be cagey and protective of the information that you have. Within limits, obviously, but I really appreciate how open and and transparent the industry is, how much you can share and and sort of bounce things off of people, right? So let me let me ask you a question. I'm going to I hope you don't mind me putting you on that on the spot here. Because I I'm dealing with this currently, so I had a competitor here locally and basically we're we're about to take over one of their clients. I had a relationship with this guy or I have a relationship with this guy. And he just found out that we're taking over. He's not super happy about it. And he texted me kind of pissed off quite frankly, and I was just talking to my business partner like, I'm unsure, this is me being candid, like I'm unsure how to handle this. So he's saying that, you know, if the shoe was on the other foot, he would have let me know. So and the client came to us, you know, there there were some initial conversations and I didn't know that they were being serviced by this one company. The client, there were some initial conversations, but when those initial conversations happened, like they were super happy, they didn't want to leave and it was totally not a thing. But then a year went by and they got upset and they weren't happy anymore. So they reached out to us and we started talking to them and, you know, I didn't let this guy know because I obviously it's a sensitive thing, um and they, you know, they wanted to keep that to themselves. So what do you think about that? Like, how have you handled that in the past? Have you ever gotten into that situation? Yeah, certainly. I mean, it comes up, I think like you touched on it is I don't think that, you know, in most of those cases, it's not our responsibility to tell the other person. I think depending on sort of the context of the situation, those types of conversations are incredibly sensitive, right? Yeah. There could be reasons that the the client doesn't want you to tell those things. At the very least, like if you feel sort of strongly enough that you want to sort of give someone a heads up, you probably have to clear it with the client first. And just saying, hey, you know, I I know the person that works here, do you mind if I just let them know that that we're having some level of conversation? Granted, I don't think that that's even even necessary. Because that relationship and the sort of the the strength of that relationship is contingent on that provider, it really has nothing to do with you in outside of sort of that that initial prospecting conversation. So if you were going to tell them, I think it's appropriate that you clear that with the client first, right? And if they say, well, no, I don't really mind, but I I would guess most clients would be like, look, man, like, you know, that that's between us. I don't really necessarily need you getting involved in. And kind of creating a bit of a love triangle there, right? Yeah, no, totally, and you know, that doesn't negate me from feeling bad, I still feel a little bad about it. Because I, you know, at this point, the the text going back and forth between the two of us are not not necessarily uh the most friendly text and I and I I do feel bad. There is a part of me that feels bad, but I but I totally agree with you that it's it is between them. And, you know, at the end of the day, it is business, you know, and I hope the transition smooth and whatnot. So, sorry, I wanted to wanted to ask your opinion because we're literally going through that. I think it's an important issue because you hear those horror stories of. You know, hey, we're taking over this client and the existing IT provider refuses to hand over the documentation. And those things happen, right? And I think the only thing that you can do is be sort of a a professional corporate citizen and and just look for the moral high ground in all of those situations. And and make sure that you represent yourself well to your peers for sure, but also especially to the clients, right? Because if you're in the other situation of losing that client to someone else, you want to act professionally. Because if you get all stompy and refuse to release information, they go to that other provider six months from then, they find they're unhappy and they actually want to find another provider after that. Then if, you know, the experience was otherwise good with you, they may come back to you, right? And I've seen that dozens and dozens of times where, you know, some company potentially gets dragged around by, you know, a new CFO, for example. And they come in there, they're like, I'm going to start slashing costs just so I look good. And they go for some low-cost provider to switch to and everyone is deeply unhappy afterwards, they're like, oh, this was not a good change. Let's go back to these other guys. They actually provide a good service, right? So if you if you stand out as someone who acted very professionally and morally, then you're more likely to win that business back anyway. That situation happened to us a few years ago and it was a larger client, basically we were doing break fix work and we had had inherited them from a company that kind of went out of business. So we took that there was one employee and a couple clients, they were hourly, they were break fix and we said, listen guys, you guys are a large organization that need like the full boat, like you need everything. We need to get in here and we need to run you through the full MSP experience. And they ended up firing us because they didn't want to pay, and I was giving them a break moving from break fix to that new model. Well, they went through two other providers, low cost providers trying to get the same service. I think it was two years, it was back to back, every year they switched and then they came back to us and they're like, we can't do this anymore. And unfortunately for them, we our business matured to the point where I couldn't cut them that same break. And I was like, so they they literally signed up at like a 30 or 40% increase from what our original quote was and I was like, guys, this is this is it now. So it ended up working and and the relationship's great, they love us and things are working going very smoothly and. So yeah, the churn in our industry is crazy. Yeah, but it also highlights one of the things that I I like to preach to people is never be afraid to go up market. Right? Because if your service is good, then it doesn't matter, right? You don't want to compete on price because you never want to be the second cheapest option in the market, right? That's the worst position to be in. Yes. Yeah, exactly. So a couple of lessons learned in there, is there anything else that you feel like you would have done differently or sort of reflecting a different way? Is there something that you did do that you feel was really elemental to your success? So either something you would have done differently or something that that you would repeat over and over again if you had to do it over starting your MSP? Yeah, I think we we had an advantage and and I think for anybody starting an MSP or even an existing MSP now can do this same thing. So one of the things that I would that was really good for us being birth out of a marketing company and out of out of a company that did cool websites and cool logo designs. Like our branding, I may be biased, but our branding is sexy. And that's something that's not really normal in our industry because, you know, unfortunately there's a lot of nerds out there that think they can throw together a website and a logo and their marketing just doesn't look good. We've got to call it like it is, you know, so spending that money and we paid for it because they were a client of ours and, you know, we hired them to do a logo and a website and and things like that. So putting that money into the marketing early made us look, you know, like a mature, sophisticated brand. It's kind of like that we didn't want to name ourselves like, you know, we live in Palm Beach County like Palm Beach County IT, like we wanted to wanted to kind of have a brand that that looked bigger than it was. And and we had to play that that game, quote unquote, in the beginning to kind of make sure that we looked legit. The one of the things that I regret is probably um not changing some of the bad deals that we made initially. So we still have some clients on some really legacy pricing. And, you know, it's it's really hard to undo that, undo those bad behaviors. So I I and I think that a lot of people struggle with that now. What I will say for us, it was interesting because we didn't start out as a break fix shop and have to break bad habits to move into the MSP world, we started as an MSP first. So even though we had some bad deals, we took some hourly break fix clients here and there, our focus and our our goal was to start out and do managed services. You know, traditional and be a traditional MSP shop. And uh and we've been we're we're a Gary Pika shop, we've been we've been true methods, Gary Pika since the beginning. So even though now, we we we haven't always done it right, but we've been adhering to those to those ideals as as much as possible. And, you know, we're continuing to to mature towards that. Yeah, I would say that there's sort of two things you touched on there is the transition from break fix to MSP is I think fairly typical of kind of those older entities. Your experience being different in the other side of this that I would say both experiences are true, the the true MSPs that start as MSPs and the people that convert from a break fix model. Always end up with, you know, five to eight different agreements that are out in the market, at some point you're like, okay, we need to consolidate these and start start on a just one MSA or at least maybe two MSAs if we can get away with it, right? Yep. And and the cool thing for for Craig, my business partner and I was that we we worked at MSPs previously. So we we kind of saw what didn't work as technicians and employees and we fight even to this day to not be that. So, you know, my past experience with with any of my former employers, you know, there's good and bad with every job. But we really were able to take kind of the bad that we experienced and and our and again, our fighting to not repeat those bad habits, those same mistakes, you know, treating employees certain ways. And we're really trying to value our employees because because we've been there. We've done that. Yeah, having that experience, I think is uh is incredibly valuable in being able to be intentional about the experience that you're trying to create for your staff. It's still a struggle. I mean, we're still, you know, we're not we're not perfect, but we try to be as well oiled of a machine as we possibly can be. Yeah, that was one point that I did want to touch on as well around your branding. I sort of view it as a sophisticated branding, I think sexy is probably a better term for it. It is it is sexy, you must sort of feel that that gives you even still an advantage in the market because, you know, you guys are not necessarily a large MSP. But if you have sort of that mature branding, it it definitely sort of sets you apart and maybe makes you look more mature or bigger. Do you get a sense of that when you're kind of interacting in a prospect with a prospecting with a a client that they compare you with someone else? And and the branding just gives you that extra level of maturity or or sophistication? Yeah, absolutely. I cannot tell you how worth it it has been to pay the money that we have paid for, you know, even down to the logo design. I mean that that logo was we did we did a whole brand exercise. Um around and we had a different logo when we started, this is our our second version and I I love our new logo. But yeah, spending the money on on that has definitely made us stick out. Because especially because our in our market specifically, a lot of the IT companies that are around here, they've been here for over 20 years. So they're kind of some of the legacy companies in there and that's not it's not necessarily a bad thing. It's just, you know, when you stack up a lot of IT providers at once, you know, you can look at the website, the logos, the branding, the material. If your stuff is sexy, it's going to stand out and and people are going to take you seriously. It's like when I when I look for like somebody to I just had my trees trimmed at my house, so like when I look for something like that, like I want to hire like a legit company. Not some van that has a Gmail address on the side. Like I want, you know, I need I need I need a guy that's licensed and insured, like a real company to do things around the house. Plumber, you know, electrician, anything, anything like a house builder, whatever it is, you know, very rarely will I do. And in fact, if I see, if somebody hands me a business card with like a Comcast email or like a Gmail email on it, I'm absolutely 100% going to throw that business card out at the at the closest trash can I can. Because it's just not that it it shows a lack of maturity from a business standpoint, that's super important. You have to have that. So, you know, even like our core values, I paid a copywriter to help us language out our core values. Like down to that down to that level, and it because words matter, like that's that's a phrase being tossed around these days. And and they do to be able to communicate well your message and what you stand for and how you how you operate and things like that. It's super important, so getting that language there is super important and that's it's been money well spent. Yeah, that's amazing, I I chuckled silently to not laugh out loud, but the the whole Gmail on business cards is always drives me crazy. I'm like, like it's strange that you see this even in very large, somewhat sort of established businesses. I've never understood the rationale of this, like you realize getting a a domain name is like 10 bucks a year, right? I actually, so we have a client, they're hiring a level one help desk guy. They're actually out of state. We're still taking care of them, so they but they're growing like crazy, they're in the marijuana space. They were interviewing a technician, guy was a little on the older side. But I got his resume and he had a comcast.net email address. And I'm like, as an IT professional, how in the hell do you have a Comcast email address? Like, I don't think that that's okay. I've heard from some people like they if they see a Yahoo or a Hotmail address, like they cringe at the same way, right? Yeah, so I I I mean I interviewed the guy, I gave him a fair shake, but in the end there's just that was one of the red flags and I I reported that back because I'm helping them interview for this for this position. And and I was like, guys, I'll be honest with you, like that's a small red flag, you know, I don't know how what the size of that flag is, but that flag is absolutely red. Not a deal breaker, but yeah, as you say, something, right? Cool. So we'll look to wrap up here with Paul. This has been great. I I appreciate kind of the the insights, the lessons learned. If uh people want to reach out to you, I know that you're pretty open to to network and. You're also uh one of the founders of the IT pool party, so you want to maybe let people know how they can connect with you or jump into the pool party. ITpoolparty.com, it's a slack group right now, there's about 2,000 people in that group, not necessarily every single one of them they're active, there's some pretty good collaboration that goes on on a day-to-day basis. So ITpoolparty.com, you can sign up there. Free slack channel, it's kind of a community in in its infancy, so we're still trying to figure out what what we're going to do with that. So more to come on that, you can check out my my company website vxit.com. You can connect with me on LinkedIn, I'm not super active there or Instagram, I do post on Instagram a lot. Paul Vetter v e d d e r uh @paulvetterjr, so p a u l v e d d e r j r is my Instagram handle. I'm pretty pretty easy to find, but if you type in my name or my company, I'm just a Google search away. And we'll uh we'll link to all of that in the show notes.