Bonus Episode: Delicious Feeling

 

In this special bonus episode of MSP Chat, sponsored by Datto, Erick and Rich discuss why cyber resilience services continue to be a source of revenue and growth for MSPs and what that says about how they should construct their service portfolio and refine their tool stack, as well as why client proposals are sales tools, not technical documents. Then they’re joined by Dan Tomaszewski, Kaseya’s EVP of channel, for a deep dive into some especially interesting findings in the 2026 Kaseya State of the MSP Report, and what MSPs should do in response. And finally, one last thing: An April Fool’s Day gag that turned into a hit product for chronic doom scrollers.

 

Discussed in this episode:

2026 Kaseya State of the MSP Report

On-demand webinar: The MSP playbook: Insights from the 2026 State of MSP Report

Which brand won April Fools in 2026?

 

Some guests on this podcast are clients of Channel Mastered. Compensation plays no part in their appearance or the content of the discussion unless the episode they appear on is a “bonus episode” explicitly labeled as sponsored.

 

Transcript:

Rich: [00:00:00] This episode of MSP Chat is brought to you by Datto, BCDR, the all in one backup and disaster recovery solution built for MSPs. Let’s be real. Your clients don’t care about backup. They care about uptime. No disruptions, no lost data, no downtime. That’s where Datto BCDR comes in with. Built-in ransomware protection, instant virtualization, and 24 7, 365 Human support.

Datto helps you keep your clients running, even when disaster strikes. You get fast, reliable recovery and a single pane of glass to manage all your client backups locally and in the cloud. So if you’re still juggling backup tools or patching together, DR. Plans, it’s time to upgrade. Visit datto.com to see how you [00:01:00] can deliver continuity as a service with Datto.

Request a demo and see the solution live to appreciate the power, peace of mind, and the recurring revenue stream. It can bring you now onto the show. And 3, 2, 1 blast off. Ladies and gentlemen. Welcome to another episode of the MSP Chat podcast, this one being sponsored by our friends at Datto. This is your weekly visit with two talking heads, talking with you about the services, strategies and success tips you need to make it big and managed services.

My name is Rich Freeman. I’m chief analyst at channel Mastered of the organization responsible for this show. I’m joined virtually for this portion of the show by your other co-host, our CEO and chief strategist at Channel Mastered. His name is Erick Simpson. Erick, how you doing?

Erick: Doing well, rich. I slept in my bed last night for the first time in quite a few days, and I know you did as well,

Rich: I think even more days than you.

Yeah I just got back yesterday from eight days in [00:02:00] fabulous Las Vegas, Nevada, and yeah, it was nice having a night in my own bed as well. Yeah.

Erick: And a few more before we travel once again next week.

Rich: Indeed. Yeah. I am flying back in your general direction California, on on Sunday, a couple of days from now as we record this you’ll be motoring out there to join me midweek.

And we will have a an interview for you. Actually, this sponsored episode of the show is gonna run on a Tuesday, and the Friday of that same week you’ll get to enjoy an interview that we’re gonna be recording on site at nios Nerdio Con event with Joseph Landis there CRO. But for now, we should actually, before we plunge into this episode of the show, sponsored by Datto, let me just say Erick do you know what’s special about today?

Erick: Other than it being Friday.

Rich: And as we’re recording this, it’s May 1st, 2026. Does that ring a bell?

Erick: [00:03:00] May 1st. May 1st may day. Help me out. Rich, you’re throwing things at me. I’m working on one night back of

Rich: sleep. Yeah. It’s a Friday. This is our birthday. This is Channel Mastered’s birthday, our three year birthday.

We now in reality, Erick and I were working on this business behind the scenes, behind the curtains for, weeks, months before this. But the official launch to the world was May 1st, 2023. We are now, we are free. Erick,

Erick: you’re absolutely right. Rich. Wow. Yeah. Three years. It just went by in the blink of an eye.

Huh?

Rich: Absolutely. Absolutely. And it’s probably all that travel as much as anything else that that fun.

Erick: Yeah. Believe it on the jet lag from Vegas to California. 34 minutes in the air.

Rich: Yeah. There you go.

Erick: Well, rich, happy birthday.

Rich: Yes, happy birthday to us. Indeed. Then let’s dive into our story of the week now.

We are going to be joined again, sponsored episode from the folks at Data. We’re gonna be joined during [00:04:00] our Spotlight interview segment by Dan Thomashevsky of Kaseya. We’re gonna get into some of the interesting numbers in Kaseya 2026, state of the MSP research report. There will be a link to that report in the show notes for this episode.

If you’re into research like I am, I really do. Advise you to take a look at it. This is always one of my favorites that comes out every year. So we’re gonna get into some numbers in that study, in the interview segment. But there are a few I wanna get into here Erick, ’cause these are things that don’t come up, won’t be coming up during the interview segment.

See if you can find the pattern in what I’m about to discuss here. Kaseya asked people responding to the survey, what are your customer’s, top IT problems or service needs in 2026. Number one on the list was AI and automation services. Numbers two and three were security and backup. Say, I asked folks what this is now they’re asking the MSPs, what are your top revenue [00:05:00] sources in 2026?

Number one on the list, endpoint network management. Not a big surprise there. What are numbers two and three? Security services, backup and recovery. Then they asked people that was revenue sources. Then they asked MSPs, what are your top revenue growth areas? In 20 26, slight exception to the rule here, Erick.

Numbers one and two instead of two and three are security and backup. Biggest growth or revenue growth area for MSPs? One more question. Business areas where automation is utilized the most. Number one on the list, monitoring and alerts. Numbers two and three. You guessed it. Security and backup.

So there is I think there are three morals to this story here that I wanna call out before. I hear your thoughts. So first of all we were talking about cyber resilience in a recent episode of the show and framing that as business resilience perhaps with the customer, that’s the outcome that you are bringing [00:06:00] to the business.

If you’re delivering cyber resilience services, however it is, you frame it or describe it, I think you can pretty clearly see from this data that is still a robust portion of an MSP’s service roster. Right now. It’s not only producing a lot of revenue, it’s producing a lot of revenue growth.

And that is because customers need and want it according to their MSPs. So something good to know, cyber resilience, you should probably be building that into your strategy, making sure you’re delivering that in an effective way to your client. Stepping back a little bit, cyber and backup and security, could there be.

Anything more expected of an MSP than both of those services? We talk a lot on the show about the dangers of investing too heavily in, in services that can feel commoditized because everyone in your line of work is offering those to their customers as well. We are, we’re absolutely not in advising anyone to build their entire [00:07:00] practice around business continuity.

However, it is a useful reminder now and again that even though ai, for example, AI and automation is an example of that sort of strategic. Outcome oriented boardroom, not service server room conversation you wanna be having with your customers. Don’t sleep on some of the stuff that you’ve been making money for from before.

As a result of that there is still need for that. That still really needs to be something that you excel at and deliver to a hundred percent, 100% of your clients given the threat environment that we’re in right now. And then one other thing Erick, and this is inspired partly by the fact that we are just back from the Kaseya Connect event in Las Vegas, where they were talking a lot about AI and automation in terms of the internal operations at at managed service providers, including in the context of cyber resilience.

In that state of the MSPK, say a state of the MSP report. And one of the questions they asked which was interesting, is. [00:08:00] How many employees do you have supporting BCDR and spending at least 80% of their time on that one task? And the single biggest response was one 40% of the people they surveyed that we’ve got one person on our team spending at least 80% of their time on BCDR.

But, 21% said four or five. There are a lot of company and some of them are, those are probably very large MSPs, but there are a lot of MSPs devoting a lot of time and attention to BCDR. They need to do that for all the reasons we’ve just described, but this kind of points to automation or cyber resilience being an area that is right for automation.

And you should be looking for cyber resilience solutions that can help you automate the work. That even if it’s one person on your team spending 80% or more of their time you are looking so that you have more time for strategic conversations with the customer. You’re looking for [00:09:00] ways to automate that work and hand it off to agents and ai.

And so I would just say, and this applies by the way, this goes beyond cyber resilience or wherever it is you’re evaluating tools somewhere very high on the evaluation list. You need to be looking for how much automation. Can this vendor deliver through the solution that I’m evaluating right now today?

And what’s their roadmap for increasing that and getting more autonomous and more powerful down the road? We’ve talked about the real world results. MSPs are getting not just theoretical white board stuff. OIA has numbers about how MSPs who automate the service desk are, increasing technician productivity.

15 to 25% automation works. You need to be doing it in cyber resilience at the service desk everywhere. And so when you are evaluating tools, you need to be looking at how automated those tools are.

Erick: Yeah, absolutely Rich. And, a couple things. I guess the first [00:10:00] thought of going backwards is it’s amazing, how much things change, about how much they stay the same, like the number of hours that technicians take to manage backups and things like that.

15, 20 years ago when I had my MSP. That was the thing that took the most time on the service desk for us as well. And boy, it was way more manual than it is now on the promise of automation and AI to assist us and things like that. What a welcome. It can’t come fast enough. It can’t come fast enough for MSP, I’ll tell you that right now.

And thinking about how you were tying together this, the business of resilience and then talking about AI and the opportunity for security and things like that, and the transformation of our value proposition to be more boardroom friendly and boardroom led.

I’m thinking now, instead of saying it’s business resilience that we deliver to clients, maybe it’s business growth and resilience or business growth, efficiency [00:11:00] and resilience. Because if we’re doing these other things that held that organization. Do what we’re trying to do in our own MSP practices and, automation, ai efficiency, productivity, things like that.

I’m starting to, expand my definition of the value in a, that one sentence elevator pitch of what MSPs deliver to their clients who are now security first AI led and helping their clients benefit from that.

Rich: You remind me years ago I worked for a guy who had worked earlier in his career at IBM and I remember him saying often that the rule of thumb in sales at IBM is if you are talking to a customer about something other than making money or saving money, you’re wasting their time.

And the making money piece of that equation is what you’re talking about there. So absolutely you wanna lead the conversation with how you are going to help them make money or save money every single time. And then follow that up with the things that you are going to [00:12:00] do for them to make sure that they are not disrupted by a natural disaster or a cyber attack, et cetera.

That, and that’s where the business resilience message comes in. I, we’re gonna make sure that whatever it is that comes at your business, you’ll continue to have a business that’s like the definition of a business continuity. But yeah, business growth. That’s what you wanna be. You don’t wanna be the guy who’s keeping the computers running.

You wanna be the business growth consultant who knows how to use technology to generate growth.

Erick: Yeah. And at the end of the day, that’s what’s gonna win you business against your competitors. How can you reflect that value proposition to prospects and existing clients? And if you’re delivering that value proposition to your existing clients, how good are you capturing those testimonials and those outcomes in order to build more revenue with new, excuse me, with new future clients?

Rich: All right. Let’s get into your [00:13:00] tip of the week. Erick and I, folks cod a session actually at the Kaseya Connect event we just attended here. And at one point, Erick, I remember you talking about how when you were an MSP, you told everyone on the team that we are a sales organization. That sells technical services and that’s actually a nice lead in for your tip of the week.

Erick: Yes. Rich. So I think during that session that we led, I was really speaking about the culture of sales. We do a lot of these sessions together and sometimes we will do a hand raiser and ask, Hey, how many of you folks are on the engineering team? How many of you folks are on the sales team?

And it’s interesting how few people raise their hands when, I’m asking, are part of sales and everyone rich should raise their hand. Everyone should raise their hand and say, we not only do we help during the pre-sales process when you send a technician out to do a network assessment or you’re doing it [00:14:00] remotely, or connecting folks with other members of your team now who they have not yet had the opportunity to engage with.

They’re basing their decision on hiring your MSP practice to manage the, the crown jewels of their business, right? The technology, the infrastructure, the data. You have access to pretty much everything. And they’re basing that decision on how well your marketing hits, your website defines what you do accurately, your sales process, and then who they’re engaged with before making that buying decision.

And so everyone is part of the sales motion and even when the sale is closed, we’ve talked on the show before, rich, about. The folks that your clients work with the most after they are a client of yours, and it’s your technicians and engineers, from on a day-to-day basis. And I’ve made the argument that, [00:15:00] everybody should have a little bit of sales training, a little bit of, soft skills training, right?

To deliver the experience that clients are paying for. Clients will pay more for a better experience. We know that for a fact. So today’s tip of the week is about how to position your sales proposal during the sales process. And when you are delivering your sales proposal, rich, this should not be the sales tool that you leverage.

Closing that deal with the sales proposal should be constructed as the understanding and agreement that you’ve already reached with that prospect. Through your sales process. I like to deliver sales presentations with a slide deck. You’ve seen me do it rich. And the reason why I like doing it with a slide deck as a structured slide deck, after we’ve met with a client with a meeting or two, understand what their pains and [00:16:00] challenges are, I wanna make sure that I reflect that in the slide presentation, here’s what we heard, here’s and here’s what, how we would like to help you solve those issues.

And when you’re doing it that way, it makes it easier to train other sales folks on your team when you’re sharing that process and that motion with the rest of your team. Everyone understands how you deliver your value proposition and you’re building a culture of sales accountability here. So it’s a culture that we want to foster so everyone understands what our unique value proposition is, how we communicate it.

How we deliver on that promise to our clients. So the sales presentation happens before the sales proposal is delivered. This is basically just confirmation of what we understand. The client signs, that proposal, that agreement that is confirming that they now will be moving forward. We [00:17:00] don’t need a super long technical sales proposal.

I’ve seen too many of these rich. The longer and more technical the sales proposal is, the more we tend to see clients say, you know what, maybe I should let our, legal team look at this before we sign it, right? So again, there has to be some legal, copy in there to protect both you and the client.

But you don’t need to go into how we deliver the service. It’s basically what we’re delivering at high level. You can do a little SLA, you can, define what they’re buying from a bundle perspective. Are they in your good, better, or best bundle? But that’s really to get them to say, yep, this looks like exactly what you’ve shared with me during the sales process.

Let’s sign this and then I’ll expect your agreement. A lot of MSPs Rich, try to combine the two, a sales proposal and an agreement. The sales proposal is a sales tool, but it is not the sales tool in my opinion. We use to [00:18:00] present all of that value. I wanna do this in a conversation with a client during, with a slide presentation and talk about what we found how we address these issues for other clients.

And then if you agree, here’s what our monthly fee is, here’s what we’ll need in advance. Are we good to go ask for the business? That’s another thing that I see a lot of MSPs they just present sometimes and then just wait for the client to say, okay, I’m ready. What are our next steps?

Ask for the business. You wanna let the client know you appreciate them, you want to work with them to deliver these outcomes, right? So again, not how the pasta is made, but how delicious you’ll feel after you being begin consuming that pasta. So remove all kinds of technical jargon from your sales proposal, just confirming what you’ve already got the client to agree to.

Yes, I agree. Let’s move forward. Alright. Authorize our sales proposal. We’ll get our agreement over to you. Or sometimes you can move right to the agreement, but again, there might be a little bit more technical jargon in there with the [00:19:00] agreement. So I like sales presentation, short proposal, reflecting the outcomes, and then the agreement which goes into the detail that protects you and the client.

This is what you are delivering to the client. What you agree to deliver to the client and what they agree are their responsibilities and your responsibilities. You’re leading with outcomes in the proposal and you’re adding the clear Next step. Next step will be, we’re gonna set our kickoff meeting. So just repositioning how I think some MSPs are looking at these things.

And remember, the sales proposal is a sales tool. It is not an agreement, it’s not a technical document. It is a sales tool that confirms. What the client has already verbally expressed that they like and want to move forward with you get them to sign the proposal and then you’ll get them to sign your agreement.

Rich: So it’s not a presentation or an agreement. It has a separate function in between the two of those [00:20:00] things. Talking about or talk about outcomes. Erick, this is like a perfect case where you really want to think about the intended outcome the wished for outcome when you’re doing more or less anything in business.

And in this particular case, if the thing you are doing is creating a sales proposal, you want to understand what that outcome the desired outcome is. And as you’re saying the desired outcome is just to get confirmation of what you agreed to verbally in the sales presentation, and then set yourself up for.

The agreement that will come later. And therefore, if that is the desired outcome, that is all that document needs to do. You don’t need to have any further detail. And, the as little detail as possible is probably a good thing.

Because the moral line items there are in there to think about and think twice about and line up, like you said, you don’t want the going to the lawyer.

You have one goal in mind for this document. [00:21:00] Confirm what the two of you agreed to before and that’s gonna set you up to to complete the deal at the agreement phase. And that logic applies, to the presentation and to the agreement. What am I trying to accomplish here and what is the best way to design this document, this presentation to accomplish that goal?

Erick: Yeah, you’re absolutely right, rich. And the other thing that this also helps guard against. Is not sending out a proposal or an agreement where the client then stalls because they wanna change something, right? So if you’re doing that live sales presentation with a slide deck, you’re getting their feedback and you’re doing, you’re checking along the way, you’re doing some trial closes.

Does this make sense? Do you agree with this? Is there anything in here I always like to ask at the end, is there anything in here that I missed from our earlier conversations? Or does everything look right? Sometimes they’ll say, yeah and sometimes it’s not even like we missed something. [00:22:00] It’s like they are now excited to begin working with us.

And now you get that, the, they’re, they’ve made the mental decision, yes, I like you guys, I wanna work with you. And they say, Hey, by the way, can you also do this? Can you also do that? And then you have an expanded proposal now, and then you can say to the client, absolutely. Let me go ahead and make sure that I include that in the proposal.

And sometimes Rich, then there’s another meeting. Again, this is a consultative sales process. So it’s going to take, how long does it take to close an opportunity? It takes as long as it takes because you’re working together with that client to really understand how best to deliver what they need to get them to say yes.

And there’s a great book that I recommend all the time. It’s called Secrets of Question-Based Selling by Thomas A Freeze. And it teaches you the right questions and the types of questions to ask to ensure that you’re overcoming objections early on. They’re [00:23:00] really reflecting the value of your services and you’re getting that client buying temperature to increase along the way so you don’t wanna rush through.

A sales process. You wanna make sure and be mindful of working your way through it to ensure that you do achieve the outcome that you’re looking for. Like you said, rich, I want that client to sign the proposal. And when they sign that proposal, then signing the agreement is just a paperwork exercise at that point, right?

It’s like they’ve already committed, so there should be no pushback when we want them to sign the actual agreement that establishes the working relationship between us.

Rich: All right. Folks, Erick and I are going to take a quick break on this episode of MSP Chat, sponsored by data. When we come back on the other side, we will be joined by Dan Thomashevsky, the EVP of channel at Kaseya to talk about some more numbers.

We spoke about some cyber resilience stats from the. Say a [00:24:00] 2026 state of the MSP report. There are some a lot of other interesting numbers in there, and we’re gonna get Dan’s perspective on what is responsible for those numbers. We’re gonna get some advice from Erick on what MSPs can do about those numbers, advice from Dan as well.

And I will just have, before we move on to that interview that Dan is the EVP of channel over there. He is an interesting, informed and as you’ll see, enlightening person and also extremely gracious because the first thing you’re gonna hear in this interview is me mispronouncing his last name.

Didn’t bat an eye, didn’t say a thing. I think I got it right at the end of the interview. I certainly hope so. Dan, thanks for letting that go. We’re gonna take a break. We’ll be right back for a conversation with Dan Thomashevsky. You don’t wanna miss. Stick around

and welcome back to part two of this episode of the MSP Chat podcast, sponsored by our friends at [00:25:00] Datto. We are coming to you live from Kaseya Connect. We are very pleased to be joined by the EVP of Channel at Kaseya. His name is Dan Toski. Dan, welcome to the show.

Dan: Thank

Rich: you. Appreciate

Erick: you

Rich: having me.

Erick: Yeah, it’s gonna be a good.

Interview. I can’t wait to get into some of these stats.

Rich: Me neither, because as regular listeners and viewers know, I am a hardcore data nerd and I was very happy a few weeks ago when Kaseya published its annual state of the MSP report poured off through it, found all sorts of interesting stuff in there.

And so what I wanna do is bring up a few particular data points that jumped out at me as interesting. Alright. I want to get your take on what’s going on there. And then I wanna take advantage of the fact that sitting in between us right now is one of the industry’s foremost MSP consultants and see if he can shed a little light on what to do about some of these trends you guys have identified.

Dan: Let’s crack the code. Alright, no pressure.

Rich: Let’s start with this one. You guys found the percentage of MSPs who are [00:26:00] breaking even or not profitable has gone up from 10% last year to 16% this year. Some of that could be geopolitical, economic, there could be other issues. What do you think explains that?

Dan: Look, I think we’re seeing a few different things in the report from this year. Is it’s getting harder to win deals. So that, and we’re really seeing that as a challenge, but MSPs don’t really know their numbers correctly. They don’t know if their stack is profitable. They’re, they have a lot more tools than ever before to solve a lot of the issues and sometimes they’re not going back.

And upcharging the customer correctly, they’re absorbing it. And I think it’s really impacting a lot of their margins is what I was reading into it as. It’s something we see common, with a lot of the MSPs, just really understanding their stacks, their profit margins and just getting their arms around it.

But costs are going up and that probably not, hasn’t passed all the way through yet to, to their customers.

Erick?

Erick: Yeah, it’s the historical. Challenge the [00:27:00] conundrum of MSPs that, are building their maturity, operational maturity level to the point where they’re starting to understand the financial drivers of success and understanding that it’s probably not a great idea to keep legacy clients that aren’t really profitable for you.

And of course, like you said, Dan, understanding what their true cost of service delivery is. And then establishing a profit margin on top, and then maintaining that when they’re going out to market to sell these services and candidly reviewing their agreements year over year to ensure that they’re meeting that profit margin goal

Dan: a hundred percent.

Rich: So you mentioned before it’s getting harder to win deals. It is getting harder to win sizable deals. Another data point from the study that kind of caught my eye, the share of customers, end users spending $25,000 or more per year has plummeted from 75% to [00:28:00] 41%. An average MRR per client is trending downwards as well.

That 75% to 41% change is enormous. Any thoughts, theories about what explains that?

Dan: I have some thoughts and I’ll be interested to hear. Hear what your thoughts are on this too, but I think that what you’re seeing is that MSPs. Have struggled on this point is demonstrating the value to the customer.

And the end customers are, the prospects are smarter. They have AI technologies advising them and giving them questions to ask to the MSPs that are coming into the room. And this is probably their third, fourth, or fifth MSP. Right. And I think it’s really important that MSPs start focusing on the success of the customer.

They’re across the table from how can I help get you from being a cog on the it being a cog to it being an ROI and the MSPs that are doing that aren’t seeing the decrease that number said. And those folks are seeing growth and profitability, but the ones that are just looked at as an expense and as a line item and are just doing your ba [00:29:00] your basic password resets and you’re not really helping advance the businesses, I think those people are seeing the shrinking deal sizes.

They’re seeing that as a big thing because those customers are like, I can get anyone to do password resets and do those different activities for me, and they’re just purely going off cost. But I think if you’re helping a business drive their OI up, those deal sizes aren’t shrinking. They’re increasing.

Erick: Yeah.

Rich: I just gonna say, ’cause I, I do wanna get your advice, first of all, just in, in general dealing with shrinking deal sizes, but then we should talk as well about proving value. ’cause that was another interesting statistic from the study that that came up.

Erick: Yeah. I think again, it’s one of those scenarios where MSPs have to stop delivering technical outcomes and start delivering business outcomes.

Taking that conversation from the server room, if you will, to the boardroom and being much more strategically valuable to a client and really, maturing their understanding [00:30:00] of what their client’s needs are, and then adapting to stay in front of that. And I think that, a lot of MSPs like myself are kind of engineer led, right?

The business owners and things like that. And we’re missing some of that people person. Understanding. So we have to surround ourselves with folks that have, can have real conversations with clients to really listen and understand beyond what their pain points are, but what their growth strategy is.

Where are they moving to in the next two or three years? How are we going to help assist you in adopting AI internally in your organization, in, in a thoughtful and secure and governed way? And again, just talking about how we can help them move the needle for their organizations so that, like you said, we’re not seen as a cost center, but more as a value add and a strategic necessity for them to grow their business.

Yeah,

Dan: and that’s where a lot of the MSPs though, that I’ve heard about the deal sizes shrinking. It’s [00:31:00] really into what we’ve just been talking about. So I do think that the value is playing a big role. I think the cost. And just really being strategic, it’s real important

Erick: and differentiating yourself against those competitors.

If we’re just sewing the same stack, then there is no differentiation other than price

Dan: a hundred percent.

Erick: So that’s the other thing is that we have to be uniquely different and uniquely valuable. And I would say focus on, a vertical that you’re really good at, rather than trying to be all things for all customers.

’cause at that point you are delivering the same kind of stack. But if you can start focusing in on a specific vertical market a specific business type and get upside down and understanding what drives that business, then you can bring in solutions and business outcomes that are very specific to that company and that they find more value on.

And then you can, get paid commensurate to that value, you deliver a

Dan: hundred percent.

Rich: And that is the antidote to commoditization. And I just want to test the, my thought to you because the percentage of [00:32:00] MSPs who said that they are having trouble proving value almost doubled between 2025 and 2026 from 10% to 19%.

And how much of that basically is MSP? Because the way you were describing a phenomenon before, that’s a perennial issue, and yet it has gotten worse. And so is part of the problem that MSPs are explaining their value, the way they have always explained their value and the value of those services is declining.

What really translates, what has impact with the end users now is more about the strategic stuff. How are you gonna help me transform with ai, et cetera?

Dan: A hundred percent. You look at everything you have now. Almost every SaaS application has AI built into it. And, I’ve been talking to MSPs here, and in the last couple of weeks I met with an MSP that just won a deal.

It was AI related, a law firm was using chat GPT in the open, the open space training, the model, and was training the model with a bunch of court records and documents [00:33:00] and it put that company into a major risk. Like it put a lot of stuff that was out there. Obviously you can imagine what’s gonna come to that law firm, for scanning and putting all that things through.

But the current MSP knew nothing about it. They weren’t advising them. They weren’t a strategic partner there. They ended up losing it to a company that is investing in AI is helping make sure that it’s compliant, is helping make sure that AI is being implemented across all of its different tools and stacks.

There’s a massive opportunity for MSPs to keep innovating. You can’t wait. I think too many MSPs in the space, wait. To go. I don’t know enough about ai. I am just gonna wait and see what other people do. I personally think if you wait, you’re gonna get passed. I think AI is gonna advance too much and too fast that if you wait to see what the industry’s gonna do, we’re already starting to see it, right?

It’s passing some are losing deal sizes to MSPs that are doing it because that’s, again, helping drive value when you can make a business more cost effective, efficient, and helping employees have better workflows. Yeah, [00:34:00]

Erick: and I think the number one priority for MSPs is making sure they’re not churning out their existing customers.

And I’m not talking about the d, e and F, customers. I’m talking about the clients that they need to retain and maintain and refocus the energy and effort that they’re taking to try to win new business from, external prospects and refocus that time and attention on those a, a and B clients, because that’s where you’re gonna see retention increase.

Net revenue retention is, a big driver of valuation now as MSPs are, graying out and exiting and try and trying to get the highest, value for their businesses. And it’s also a way to increase per customer revenue growth. That’s another metric that more as ma MSPs mature, they should be tracking.

Of course, if you’re not retaining the customers and the clients that you have and you’re sharing them out and trying to replace ’em with net new, I think that’s a, a backwards kind of outcome.

Dan: A hundred [00:35:00] percent.

Rich: Interesting segue to our next statistics though and talking about perennial issues.

71 of ms, 71% of MSPs say that acquiring new customers is their number one challenge, and that, that has been a huge challenge in the top three, let’s say, forever for MSPs. Dan, for starters, any sort of change there in terms of the degree to which that’s difficult.

Dan: So it’s interesting, and we’ve been talking to a lot of MSPs.

If you watch everything, I was an MSP as well like you’ve seen it. How many years has sales and marketing been like one of the number one things they need help with and things. It’s just not the native land. It’s not what a lot of folks are, but this is more than that, right? This says that.

I’ve talked to a lot of people that they’re getting the AT bats.

They’re getting more at bats than they’ve ever had, but they’re still not winning the deal.

And it goes back to what we were talking about in the boardroom. A lot of that conversation has to get out of the server room and be about the business.

And man, I talked to so many MSPs that are doing it about the business is what does success look like for you? What are the [00:36:00] KPIs, the metrics, the goals? That’s what they’re asking the prospect.

And they’re latching into what success is for that business. They’re looked at the ROI that is the boardroom conversation.

And I think so many of us miss that opportunity because that’s not our strong suit. We go in there, we start preaching tech to them. We can do your security, we’re gonna do your compliance, we’re gonna be like your internal IT department. When you get to that type of conversation, they’re gonna pick purely on price.

And normally if you’re the high or the middle, they’re not going with you. So you really gotta put that focus on business outcomes in that boardroom. I feel like those folks are winning. Are doing a great job at it, and the ones that aren’t and then that are just struggling and it’s, it is, it’s more competitive than ever.

Every I see more MSPs in my area, even where I live, there used to be 10 or 15. Now there’s 30 some odd so there’s more and more, and you got bigger roll-ups. You’ve got a lot more to play with. So competition is strong and you really have to start demonstrating your [00:37:00] value.

Erick: I’ll just, be very candid about how MSP business owners perceive the need for training.

Between the technical team and the sales team. And we know for a fact that, MSB business owners are absolutely gonna pay for their technical trained technical teams to get trained. It’s certified because that’s the bread and butter they have to deliver that service. But I feel damn that they don’t have the same perspective or the same sense of urgency to do so with sales team.

How many MSPs have you talked to that have just had a revolving door of salespeople that let the salesperson dictate what the process should be and things like that? Or they elevate someone from a technical role to be a sales person without any training on how to conduct.

The consultative sales process. I think that is a huge missed opportunity if we’re gonna put the face of the organization in front of prospects where the only [00:38:00] thing that potential buyer knows about us is how good our marketing material is, and how good our sales process is to make a decision before they even engage with us.

Dan: Yeah.

Erick: Then we should be applying the same lens on getting our sales team trained, and if we don’t have anybody and we’re just fit, putting people in these roles, to do that, then we need to go and find the right folks and put them through training. I just hope that all, here’s your first day, here’s our client list, here’s our prospect lists.

Good luck. Let’s talk in a month.

Dan: Yeah, I agree. Like I, I’ve been having that conversation with all of MSPs here. I’m like, look, you all want to grow your business, but you guys are spending 95% of your time on the technical and 5% on the sales and marketing. Why isn’t it? You’re spending 50% on the technical and 50% on the sales and marketing, like you just said.

Put that same level of effort, training, certification, process, standard operating procedures. You have to work together, right? Like your teams need to know when you’re [00:39:00] out here, you represent the company.

When they sell that vision, like you just said, then that vision better become the reality.

Or they’re that customer’s probably walking out the door because they’ve been mis-sold

Erick: and it’s a culture thing, right? Because I remember in my MSP, we used to say, Hey, we are a sales organization that delivers technology solutions and services to our clients. It’s sales organization. We’re led by that first and what we deliver.

Is comes because we’re such a good sales organization.

Dan: A hundred percent.

Rich: So if you’re gonna spend more time and attention on sales, let’s talk about what to sell. And I’m gonna stick with the magic number 71% because that’s exactly how many MSPs said that cybersecurity is their number one growth opportunity.

So let’s give some folks in the audience here, maybe a suggestion or two on how to go after that opportunity, which obviously is enormous, but there are a lot of different dimensions to it.

Dan: Yeah, I look, I think a lot of the different dimensions are is that you need more cybersecurity [00:40:00] tools than ever before to protect your customer.

The shortage of things, now it’s, there’s X-D-R-M-D-R-E-D-R you know what I mean? The list goes on. You got sim you have, so you have. There’s a lot of different things that are needed. So

Erick: don’t forget A IDR.

Dan: That’s right. Ai. Yeah. We got, and there’s gonna be about five others that are gonna happen between now and probably the end of this month, right?

In the quarter. It’s the reality of where we’re at. So MSPs that have a good relationship with their customers, understanding the value that, Hey, look, we need to put a SIM in, or we need to go put a sock in, or an EDR. They’re having those business conversations on a regular basis because it’s what’s truly needed to continue to protect the customers.

I go back to 2013, when I started my MSP, dark web monitoring was just coming out. And man, I’ll tell you, I was closing deals. I was going through, look at dark web monitoring. Now it’s way down on the totem pole. It’s still there for monitoring and it’s needed, but there’s now 55 other things that are on top, right?

So I think that’s why MSPs [00:41:00] consistently report that it’s a huge revenue part for them, because there’s always new threats, there’s always new compliances, and there’s always a need to continue to add and make your defense in depth stronger. And so I think they’ve locked. I think that’s one thing MSPs probably do pretty well now is having that security conversation, the threat to the business and why the tool is necessary, and it’s why I see it continuously growing on the reports.

Erick: Yeah, and I’ll go back to just the, the sales readiness. That MSPs need to develop and maturity so that we can succeed here. And I’ll just give a couple of, low hanging fruit examples for MSPs that are struggling to have that security conversation.

They’re still trying to figure it out. It’s awkward. The clients are saying, no, nobody wants our data. All that. What are you nuts? But, one, one way to position the security conversation that can have a real impact beyond just what the MSP says the organization should do, is to tie it back to the organization’s cyber liability insurance [00:42:00] policy and say, Hey, let’s take a look at your cyber liability insurance policy.

We need to be doing these things. Or, guess what? You’ll just get any claim. Just reject it. You can’t afford that, right? So let’s work together on this thing. So that’s a bit easier way to ease into it. I think the second. Low hanging fruit opportunity is to, position AI that every business owner wants to adopt and is probably adopting and their users are adopting four or five different, models internally, like you just said, like exposing internal data and say, Hey, this is an opportunity for us to evaluate your desire to leverage AI and to do it thoughtfully and to make sure that we are securing the data so that you can achieve those business outcomes that are readily available when AI is deployed conscientiously and correctly and securely in your organization.

So I think those are two ways to have a conversation with different types of clients that might make [00:43:00] it easier rather than, more awkward for some of these MSPs.

Rich: So you set the table nicely. Erick, for our last question here, 48% of the MSPs Kaseya surveyed, said AI is their number one customer need, but only 13% said it is a meaningful source of revenue right now.

So give folks some ideas on closing that gap.

Dan: Yeah, look, they’re struggling right now. It’s like a lot of people are waiting to see. I think you watch though I will say this, I just came back we spent a week at our bootcamp in Dallas here just a couple of weeks ago, and the AI rooms were packed.

It was standing room only. People were sitting on the floor and there was MSP after m Ms P getting in there and talking about how they’re having the conversation, like how, like even mean just a standard one, like you got Microsoft copilot, which is a part of your subscription. How can people use that effectively and what’s the training the MSP’s doing and how do they do it from a secure and a compliant way that [00:44:00] there are people getting in even deeper.

Charging about how they can help you architect, from the service delivery of your business, how it can help with ordering operations. And they’re getting into the weeds more as that strategic advisor and truly helping people implement real solutions that are seen. So MSPs are getting creative and they’re finding ways to go in and solve real problems with the businesses, leveraging AI and the technology and connecting the dots for a lot of people.

And I think that it’s an open evergreen field right now. I don’t think there’s a defined framework that’s out that we’re all following yet. I think we’re defining that as we go right now. But I think that’s why the number’s so low. It’s 13% are doing it and doing it, making some good money, but that 43 is recognizing they gotta start doing something or it’s gonna pass them and the opportunity’s gonna go to somebody else that’s doing it.

Erick: Yeah, and the harsh, reality is that MSPs are busy, they’re so busy [00:45:00] that, for them to come up with unique different ways to, package and deliver value and things like that takes longer than if you just said. Here’s some opportunities, here’s a playbook, here’s a way to approach it, and specifically for the AI conversation and how I think MSPs can increase that percentage is do what you said, leverage what’s already being used in the environment.

These businesses are using Microsoft products and services. Copilot now is available in lower SKUs of Microsoft subscriptions. And so an MSP can come in and say, Hey here’s a roadmap towards leveraging ai. What we’re gonna do is a pilot, this is your pilot towards ai and take copilot, create.

A set of prompts that, again, if you’re focusing on being very specialized in a vertical, you can really design some really effective prompts or even by business unit in an [00:46:00] organization. What kind of prompts would finance like to see? How do prompts would service delivery like or sales or marketing see all these things and then pilot ai do some training sessions, teach them how to prompt and then watch what happens.

All of a sudden now you’re in the conversation, you’re leading it. You’re making sure that everything that they’re doing is secure and contained in this pilot. And then the outcomes will then justify, okay, now let’s talk about a rollout. Let’s talk about AI consulting, and let us help you get those objectives done.

So if we deliver a, here’s a checklist, right? MSPs, man, we’re great at doing the checklist. That checklist. But boy, we’re working 16 hours a day, so for us to come up with a checklist, the last six hours is gonna, eat into our sleepy time.

Dan: Yeah.

I think the one last thing I’ll say is that, that lower percentage, those folks also have it going in their own organization, and I think that’s why they’re excelling, right? Is they’ve learned how to do service delivery with ai. Whether it’s their service desk, whether it’s their operations, whether they’re [00:47:00] using it for sales marketing, they’ve embedded AI typically within, into their practice.

So they’ve, they’re eating the dog food. We always use that analogy. You gotta eat your own dog food as an MSP. If you’re not embedding AI into your organization and operating internally with it, how can you go out to other customers and help them do it? I think you gotta start figuring out which ways you’re doing it internally.

Get your feet comfortable with it so you can have those better conversations when you’re outside

Erick: and be your own case study.

Dan: Yes.

Erick: Like you can be your own case city to your clients and showed them exactly how it’s benefited your organization to get them to say yes to the pilot and do the same thing for them.

Rich: Dan, I would be remiss as we sit here at Kaseya Connect, if I did not give you a quick minute or two to just tell folks a little bit about the KYA Community Organization that that you help run.

Dan: Yeah. So I get the honor, I’m a former MSP. I run our MSP Success division we’re aligned around helping MSPs see success.

So we do that through a few different areas. We have our peer programs we [00:48:00] have our sales and marketing, which we now do through our new digital offering where we’re helping people really connect the dots and making sure that their digital foundation is laid in the correct way. And then we’ve got our digital community where we’re really trying to bring all the MSPs together to help them share ideas, work with our product team, with executives, all the different things to truly make this a well-oiled machine and a community that helps each other, has each other’s backs, and is helping all of us excel and go in the right direction.

Having gone full circle from sitting on the other side, running the MSP to being on this side now and truly helping put programs and things in place, I’m honored to do it. I’m blessed with an amazing team a great group of people to work with and we work day in and day out just to try to help all of our customers see success.

Rich: Dan, if folks in the audience want to follow up with you, get in touch with you, learn more about the resources you were just discussing, where should they go?

Dan: I tell everyone, go to kase.com. You can see all of our different solutions and things there. If you wanna reach out to me, you can go find me on LinkedIn.

There are two [00:49:00] of us, so make sure you pay attention that I have to say that now on all of my my plugs for finding me. I’ll tell everyone I’m the real Dan Thomas Chesky, but he says the same thing too. But you’ll see a giant Kaseya banner on my LinkedIn profile. I’d love to connect with you and just build that relationship.

Rich: Dan Toski EVP of channel at Kase. We thank you very much for taking time out, a very busy show and joining us here folks, Erick and I are going to take a quick break. Now we come back to the other side. We’re gonna share some final thoughts about this for me, very educational conversation. And we’re gonna have a little fun wrap up the show.

Stick around. We’ll be right back

and welcome part three of this episode of the NSP Chat podcast, sponsored by Datto. One last thank you to Dan Thomashevsky EVP of channel at Kaseya for joining us on the show. Folks everyone every executive at Kaseya is booked back to back [00:50:00] nonstop from the beginning of that conference to the end.

So for Dan to take some time out and join us here on the show was not an easy thing to do, and we thank him for doing that. It was a very interesting conversation. Obviously I think. Folks in our audience maybe can get a feel for why I do look forward to the publication of this research report every year.

’cause there are lots of nuggets in there that you can chew over. I’m gonna go all the way back to the first thing that we were talking about, which is the fact that the percentage of MSPs breaking even or losing money is up from 10% to 16%. And and Dan’s angle on that basically was that this isn’t economic pressures and this is a question of are you delivering enough value to to charge the kind of prices that are going to enable you to be profitable.

And that I think it’s a good. Healthy way of looking at the state of the business is forget the economy, forget the competition and [00:51:00] competing on price and so on. Am I delivering enough value to charge the kind of rates that are, allow me to come out in the black and and to make money?

And it was just a nice reminder. Basically there are a lot of operational maturity related reasons that very much factor into companies that are flat or losing money. But some of it also is just, are you worth the kind of money that’s going to help you turn a profit?

Erick: Yeah. Rich. I think that’s some of it, but I think there’s also a component of MSPs that are just such go givers, like we’re wired to, to help people, like folks that become MSPs. Really want to help businesses and help their clients and things like that. At least every single one that I’ve met with or worked with has that same kind of interconnectivity.

And I think that sometimes it’s just hard for them to let unprofitable clients go as well, right? Because there’s if you [00:52:00] look at the scales the scales of what makes a company profitable, one side of the scale is I’m selling new clients. My, my most profitable service bundles, right?

Because I’ve matured over time. But I’ve got, if I’ve been in business for 10 years, when we sold our MSP practice, we were probably, yeah, we were 10 years old, so we had clients that we signed up 10 years ago, rich, that were paying us nowhere near. What we were charging a client that we would sign up tomorrow.

Now, thank goodness there wasn’t a bunch, but we had ’em. So just think about that as well. I think that’s the client that MSPs, we wanna help so much it sometimes to our own detriment, right? So we have to be fiscally and financially responsible to look at, what services we are delivering and at what profit levels throughout our entire client base.

And, sometimes that creates this false sense of, I need more technicians, right? So [00:53:00] now to exacerbate the formula, we go out and hire, costly additional technicians to support the clients that we have. And so now it’s costing us even more to support these unprofitable clients, which drives that negative profitability even lower, right?

So I think there’s a, there’s a higher level. Objective way to, to perceive what’s happening here and why I always recommend, at least annually to do this A, B, C, D, E, F, customer assessment. And just understand that the more of those unprofitable clients that you release back to industry, your profitability will increase just by doing that.

Sometimes Rich, when I’m consulting with MSPs, I ask them, Hey, would you be more profitable if you let these two or three clients go? ’cause I, I, I know a thing or two about it. I’ve seen a thing or two. And they say, yeah. And I say, what’s holding you back? And now you have more capacity to deliver better service to existing clients, more time to [00:54:00] spend on those existing clients, to grow that existing client revenue, as well as bring on new, more profitable clients.

Rich: Yeah. Don Sizer and MSP back east I believe in Pennsylvania has this great kind of metaphor for that exercise you’re talking about, which is, you don’t think twice about going into your 401k once or twice a year. And looking at how the investments are performing, getting rid of the ones that aren’t performing, replacing them with something that you think will perform better.

You really should think about your customer base in kind of the same way for obvious reasons. There are some pretty obvious parallels in terms of your financial wellbeing. And so yeah, by all means, once a year, whatever it is that you recommend Erick, just look at that client list, like your four, your 401k, except it’s not a retirement income, it’s today’s income.

And just make some smart decisions about what is or is not performing for your business.

Erick: Yeah. At a minimum, once a year, if not more often. If you’re really up [00:55:00] underwater, then you know. Maybe take action a little bit more. Not, all at once, Asan Chop, but, in phases like this quarter, next quarter, and again, I know folks get this, get hypnotized by revenue, but it’s not revenue.

It’s net profitability that we’re talking about here. Yeah, cashflow, it can be deceptive, right? So think about it.

Rich: All right. Folks, that leaves us with time for just one last thing. So again, as we noted very early in the episode we are recording this on May 1st. That means it’s exactly one month after April 1st.

And it gives us a nice opportunity to look back that some of the many April Fools Day gags that very various businesses put out there into the world trying to get a little attention and amuse some folks. And there’s one in particular that I wanna revisit. It is from the folks at Yahoo News.

They ran an ad for a product called the Scroll Stopper. It is described in this article I’m looking at as a small weighted ring for [00:56:00] your thumb that makes scrolling physically impossible. So it’s like a little tip you put on the end of your finger and you just can’t slide your finger on glass if you’re wearing this thing.

And, it’s a wink from the folks. At the Yahoo News. People do a lot of scrolling on their website and so on. So it’s cute, it’s a cute idea. But they actually went a step further. They actually put some of the, they made some of these and put ’em on sale at 4 99 each. And Erick, they sold out.

So it turns out that this April Fools gag here actually might be a great product idea. I, now maybe some people bought one ’cause it’s five bucks and it’s a cute gag item to have around. But I gotta believe, given the relationship a lot of people have with their phone, there are folks out there who really want and need the scroll stop.

Erick: Oh yeah that’s interesting. So you can’t scroll on your phone all day. Less screen time maybe for for the kids, huh? Nice. Gag gift for April Fools. A month after April Fools Rich.

Rich: Well [00:57:00] done Yahoo News and well done. Members of our audience for joining us for this episode of the show and sticking around.

It’s all the time we’ve got for you here. We’re gonna be back actually in just a few days with a regular episode of the show, but all the time we have for you on this episode, sponsored by Datto. I will remind you as I do on every episode, sponsored or regular, this is both a video and an audio podcast.

If you are listening to us right now, but you’d like to check us out on video, go to YouTube, book up MSP chat there. If you are watching us on YouTube, but you’d like to check us out and the audio deliverable, go to Spotify, Google, apple, wherever it is, you get your audio podcast. You’re gonna find us there too, and wherever you find us, please subscribe.

Rate review. It’s gonna help other people find and enjoy the show just like you do. This show is produced by the great Riley Simpson, part of the team with us here at Channel Mastered, where we help vendors build, grow, optimize, thriving MSP channels. You can learn about the end to end suite of services we [00:58:00] provide to fulfill that mission.

At www.channel Mastered.com, channel Mastered has a sister organization called MSP Mastered, that’s Erick working with MSPs to help them grow and optimize their business. You can learn more about that www.mspMastered.com. So once again, we thank you very much for joining us. We’re gonna be back in a few days with another episode of the show for you.

Until then, we will remind you, as we always do remind you, is you can’t spell channel. Without [00:59:00] MSP.